Life cycle of a typical business under 10 years – Gartner

Companies from all industries are facing increasingly short life cycles thanks to the increasingly rapid evolution of new technologies to market, according to analyst firm Gartner.

‘Long-term expansion cycles influence all businesses, and your major competitor in ten years – if you survive that long – probably does not exist today,’ said Steve Prentice, Gartner vice president, speaking at the Gartner Symposium/ITxpo in Barcelona today.

Prentice pointed to examples of companies who have failed to stay relevant and survive such as MySpace, Kodak, Borders and HMV, and stressed how these are indicative of the kind of life cycles companies will undergo in future.

Those companies that manage to survive and thrive through the ten year wave of a new technology rarely go on to dominate in the next, unless they drastically reinvent themselves at the right time.

The idea to ‘quit while at the top’ in order to regenerate, though seemingly counterintuitive, is the only strategy that will win in the face of disruptive technologies.

‘To compete in this environment business leaders must destroy and rebuild the very business they helped create,’ he said.

See also: IBM begins shift of its cloud portfoliot SoftLayer

‘It requires total commitment from the board of directors and other stakeholders, ongoing support from the workforce, but above all, the conviction in the correctness of the course of action being taken. The most challenging aspect is the need to destroy or walk away from what appears to be successful but will rapidly turn into a crippling legacy.’

A prime example of such a company, said Prentice, is Nokia, who has successfully metamorphosised in tune with current technology trends by destroying and rebuilding its business time and time again.

Beginning life 150 years ago as a paper mill, Nokia successfully refocused its business to TV manufacturing, to iconic mobile handset company in the 1990s and its current drive to focus on networking and infrastructure having sold its devices business to Microsoft earlier this year.

Other tech companies that almost came into extinction several times but went on to dominate the next technology wave include Apple with its journey from the Apple Mac to the iPad, and the divestiture of IBM Personal Systems Group to Lenovo.

IBM sold its PC arm, IBM Personal Systems Group, to Chinese PC maker Lenovo in 2004 to edge towards the servers, software and services markets.

See also: Microsoft to buy Nokia's handset division for £4.6bn

According to Prentice, companies must now prepare for the disruption that the dramatic growth of ‘smart machines’ such as autonomous vehicles, intelligent personal assistants like IBM’s Watson and advanced global industrial control systems will bring.

This next wave of emerging technologies, said Prentice, ‘will be the most disruptive change ever brought about by IT.’

Though the ‘smart’ label has been applied liberally to many technologies, the criteria for ‘smart’ will be continually rising in the next few years. The next generation of ‘smart machines’ will not only learn but adapt to their environment, seeking new information to deal with novel situations.

The potential of these smart machines and their impact, said Prentice, is vast.

‘If anything, smart machines will strengthen the forces of consumerisation after the first surge of enterprise buying commences,’ he concluded.


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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

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