Blog

December 3, 2018
Lessons From Sears: The Peril Of Maintaining Status Quo Technology

Someone recently came into my office with a background in database management for the financial industry over many years. He asked, “I’m not seeing a lot of needs that entail the use of Oracle products…why is that?”

My answer, basically, was that a heavy background in Oracle didn’t matter because Oracle is essentially yesterday’s news. Of course, COBOL is also yesterday’s news too yet we can still see large banks and brokerage houses running major systems that were designed in the 1980s.

Why is that?

There are a couple of realities: The fact that something is considered yesterday's news doesn't mean that there's no business there at all or that there aren’t people using it. Secondly, technology in general is often very challenging to replace as long it keeps working and until you can recognize a significant number of areas in which it is lacking. In other words, you can’t appreciate all the things technology can’t do if you never asked it to do that in the first place.

For example, let’s say a system is not friendly with a particular smartphone or designed to have 100,000 users accessing it. In many of these situations, the way to address this problem has often been to throw hardware on top of a system to handle a customer request. When a company analyzes how much it might cost to migrate to the new technology, unless it needs to accomplish things that their current technology cannot do, it’s a matter of sticking with “works good enough.”

Will such a company ever “get it” and evolve? Or will someone put them out of business before they do?

We don’t have to look beyond our own backyard in Chicago to see an example of the latter: Sears. This once iconic brand – whose creditors appear ready to shut down the company – has been built on systems that have rapidly become outdated. Consider the systems within a company like Amazon, whose underlining processes entail being able to offer a full inventory online competitively and deliver that inventory on time. This business model was simply not part of the reality that Sears lived in for most of its existence. As a result, the company couldn’t keep pace with the customer’s growing desire to order virtually everything and anything in a company’s inventory on demand.

 

Now, you might wonder why, as hard as it would've been to change systems, that a more forward-thinking leader would've recognized the investment needed for survival.

Well, it depends on the leader in many cases.

In my view, if you’re going to lead a tech company, it might not be enough to come from, say, a background exclusively in finance. You may also very well require a technological element in your education at some point in your life to get the full picture of what technology can do for you today and what technology might be able to do for you tomorrow.

The case in point for this may be Microsoft. Bill Gates, clearly a computer guy, was very in touch with what Microsoft could and could not do well. Microsoft obviously did quite well under his watch. Then the company elevated Steve Ballmer, who is a phenomenal marketing and sales professional but couldn’t fully understand certain things about what the technology in his environment could or couldn't do. He kept making bets that were technologically undoable and hurting the company. When he was replaced by more of a “computer guy,” Satya Nadella, Nadella not only abandoned things that were technologically unfeasible but then he started to figure out how we would have more Microsoft products running on lots of Android devices.

Jeff Bezos of Amazon has a background in computer science, so he “grew up” on technology and can see where many things are going and not going from a tech perspective. No, it doesn’t mean he’s perfect (i.e. Amazon Fire), but he’s certainly got more hits than misses.

So the type of technology that a company has now will quite often tell us when the design originated, as most systems will take five to seven years to become truly widespread within the organization. Is their system using Hadoop, for example? Then you know the system was designed in the last five years. On the other hand, is it using Oracle? Then the system was designed more than 20 years ago – and that’s perfectly fine as long as everyone in that industry is also using Oracle. But if someone else comes along and understands how to deploy a totally different type of technology to their advantage, then that company that didn’t budge on overhauling their systems can very quickly become the next version of Sears.

Keep this in mind as you evaluate the next potential stop in your career. Get a feel for how often real change has taken place from a technological sense and the approach that its leaders embody. Is it an Amazon? Or a Sears?

Fortunately, you don’t have to discover the answer to the above on your own – with over three decades of experience, Roy Talman & Associates can provide you with real insights on whether a company is on the cusp of technological change or generally maintaining the status quo. We also understand the trends shaping industries even before they officially arrive, which can open you up to possibilities for your career you may have never previously considered. Talk To Talman First.