New technology is increasing at an exponentially faster rate. I think most people would agree it’s making our lives better and raising our standard of living. If you own a business this can be a threat as well as offer some huge opportunities. The opportunities can be in the form of new products or services and/or lower cost. However, if a business owner today does not keep up with new technologies their product could be rendered irrelevant or their process noncompetitive very quickly. Unfortunately, keeping up with new technologies and how it affects your business is becoming more difficult.
It has been a long time since I was in business school but I still remember what my professor taught me about this subject and it’s still relevant. In the past a typical manufacturing company would spend a lot of money to develop a product or line of products. When this upfront cost is absorbed through product sales, it then becomes what’s known as a “cash cow”. The “cash cows” could last for decades with some minor improvements. Today the “cash cow” period, or product life cycle, has grown much shorter and is continuing to do so. This forces companies to be much more careful about how much they spend to develop new products. The projected life of the product is critical and more difficult to predict.
Another lesson my professor taught me is “You must understand exactly what business you are in”. One of the examples he used was Wells Fargo. If they truly understood they were in the business of delivering passengers and mail they may still be in business today and who knows how large they would be. Instead they thought they were in the stage coach business so when that mode of transportation became irrelevant they went out of business instead of adopting the new modes of transportation as they became available.
I have been in the menu board business for almost 40 years and I am seeing a huge shift in that industry recently as the result of new menu board technology. Just as in the Wells Fargo example. Thankfully I saw the change coming and cashed out of a menu board manufacturing company I co-founded while we had a 40% market share and doing very well. Unfortunately my partners did not agree with me and refused to adopt the new technologies.
My company fabricated menu boards using metal with plastic panels. They were basically light boxes holding printed graphics. We sold the light boxes to new restaurants and sold a large volume of graphics because they changed the graphics often. As a result graphics were a large part of our business. Today these light boxes are being replaced with LCD displays (TV’s) connected to the Internet. The graphics are created on a computer and downloaded on the displays over the Internet. The content on these displays are changed automatically several times each day. As these new menu boards are installed the graphics business will be gone.
I have been a pioneer in the development of this new technology and I have tried to convince other menu board companies to make the switch with me. Unfortunately most of them have been very slow to adopt this new technology. In most cases the switch has been too extreme for them. More sales of the new menu boards are made by audio video companies than traditional menu board companies.
My digital menu board business will be 10-20 times more than what we did at my old company because the cost of the new boards are so much higher and my volume will increase. However, my total number of employees will be much smaller and the margins much lower. The jobs that will be eliminated are manufacturing jobs but some more technical jobs will be added. I think we are seeing the same switch in most industries in the US because of technology.