In 2000, General Motors was at the top of the Fortune 500 list, Bell Atlantic was 33rd, and J.C. Penney was 36th. In 2019, General Motors has dropped to number 13 on the list, Bell Atlantic has become an historic footnote after experiencing a couple of mergers and fully disappearing with the creation of Verizon Communications. J.C. Penney is now ranked at 261. More recently, from 2018 to 2019, 21 companies fell off the list and were replaced by newcomers such as Wayfair. There are many reasons for the rapid rise of some companies and the dramatic fall of others, but as these cautionary tales demonstrate, one key factor is innovation. And today, the most powerful delivery vehicle for innovation is the cloud.
The cloud is rapidly revolutionizing how companies do business in countless ways. But it is not a magic wand. For example, you shouldn’t expect to save money in the cloud, especially for the first three to five years, so that’s not the reason you should move to the cloud. Rather, you move to the cloud to create something you couldn't create before, to transform your business and change what you do and how you do it, to gain agility and elasticity. The goal is innovation – to keep your business thriving and your competitors guessing – and you can only get there with the cloud.
Innovate or get left behind
One of the classic examples of why your business can’t hold still comes from the taxi industry. Traditional taxi companies cruised along unchanged for decades – not innovating. They didn’t consider how they might provide their services faster, cheaper and better. Nor did they give a thought to how they might use the cloud and other digital offerings to improve the customer experience. Then along came a little disruptor named Uber, the flagship of today’s gig economy. The hotel business tells a similar cautionary tale of long-term stagnancy followed by rapid cloud-fueled disruption by bold innovators such as Airbnb.
A fascinating example of turning disruption into opportunity comes from an unlikely source: the rail industry. From the beginning, Hitachi Rail made innovation a priority in its rail projects. For example, it asked how rail service operators could improve key issues like user convenience and service reliability with the help of the internet of things and other cloud-based solutions. The answers it came up with over the past several years have revolutionized the industry. Hitachi Rail has broken new ground with innovations such as automated train management technology, one-stop ticketing services, advanced signaling systems, smart navigation solutions – and rail as a service.
These stories of innovation all have one thing in common: Each of the disruptors focused on what they were best at, and on what makes money in their industry. They put their resources toward innovation in their core business functions – not in building and maintaining a vast IT infrastructure. And each of them leveraged the scalability and flexibility of the cloud to support that innovation. The changes on the Fortune 500 list demonstrate just how successful this strategy was, and how important it is to continually innovate.
Disruption is coming for you, too
Don’t think for a moment that your company or your industry is an exception to the rule. It’s time to think hard about what you do best, and then allocate your people and resources in ways that will help you to do that thing even better – to innovate. That could mean shifting away from some of your current work, and it almost certainly will mean moving to the cloud. To really boost your innovative capabilities, consider how you can transform your business model to an as-a-service model so that you can spend less time worrying about IT and more time innovating with new services such as mobile options, AI-based experiences and other digital services.
Your company is unique. Your journey to the cloud will be like nobody else’s, and the decisions you make along the way will make or break you. With our global team of technical, functional and industry experts, Hitachi is uniquely qualified to help you develop a vision and strategy – and execute it. What’s the best way for your organization to move to the cloud for success now and well into the future? We address this question in our next blog post, “Get on top of your move to the cloud - Focus on business transformation.”