Amazon, with its purchase of Whole Foods, will dominate the food industry within two years. That’s what CNBC’s Jim Cramer said, and he’s certainly a credible voice on the matter.
What if he’s wrong? What if the obvious synergies between Amazon and Whole Foods fail to materialize?
For this to work, Amazon and Whole Foods have to get their marriage right. The folks at Harvard suggest that somewhere between 70 and 90 percent of mergers and acquisitions fail. You would have to agree that they are pretty smart, too.
There’s also the possibility that the first mover advantage that you would expect when Amazon applies its technological brilliance to Whole Foods doesn’t work as planned. History is filled with companies that didn’t capitalize on their innovations. IBM, not Apple, invented the first smartphone 15 years before the iPhone hit the market. Do you remember the Simon? Did you even know that it existed?
Likewise, you can bet that Walmart and the other big players in the space will apply their considerable resources to countering – or even beating – any innovation that Amazon introduces to how we shop for and purchase groceries. Even if they aren’t first, it doesn’t mean that they won’t be better.
Second movers often come out on top. Apple might have created the smartphone as we know it, but Samsung historically has the biggest market share. Do you think that the rabid fans of Publix or Wegmans will permanently change their buying habits simply because Whole Foods powered by Amazon introduces a new experience?
What it Means for You
The potential for Whole Foods and Amazon to disrupt the good industry is certainly there … assuming that they get it right. The legacy grocery companies can, however, only control their own actions. The Amazon – Whole Foods acquisition should remind you of these three truths:
1. Disruption is unlikely to come from the place you expect. It was widely known that Whole Foods was a potential target for acquisition. But tell the truth – who saw a merger with Amazon coming? The scariest change on the horizon is the one you never see coming because you never imagined that it could happen.
2. Playing from behind is sometimes necessary. Peter Drucker said, “The talk you hear about adapting to change is not only stupid, it’s dangerous. The only way you can manage change is to create it.”
That was 100 percent true when Drucker said it in the late 1990’s, and still mostly true today. In the ideal world, you will always innovate faster than your competitor. That isn’t always possible, however. It’s not like you hire all the really smart people and your competitors are left with the dunces. That’s why you and your organization must stay nimble to keep up.
3. Your perspective limits or expands your possibilities. IBM was positive that larger mainframes were the future of computing. Blockbuster couldn’t imagine a world where people wouldn’t go to stores to rent their movies.
There has traditionally been a race to see if the technology companies would learn retail before retail embraced technology. Amazon’s perspective isn’t limited by its roots as a technology company. It is a retail company that uses technology to enhance the customer experience. Its perspective creates an advantage.
Do this Now
What would happen if you woke up tomorrow greeted by a potentially block buster acquisition in your industry? If you would be deeply concerned, it’s time to act. Here are three places to begin.
1. Change the way you think about change. Thinking about change as something that happens when things are not working holds you to a past that might no longer be relevant or even real. The alternative is to continually and simultaneously look for the next opportunity and the next potential danger.
2. Generate urgency. You can bet that there is a strong sense of urgency at grocery companies everywhere. The threat of pain or crisis will do that for you. But, a looming threat loses its ability to motivate if everything is a crisis. You must bring the same level of urgency to every opportunity that you apply to a crisis. In a race where the winner takes home a fortune, would you stroll or run?
3. Combat uncertainty with curiosity. You can lament that the world is more uncertain, or you can accept it as the new status quo. You can respond to new challenges in old ways, or you can be perpetually curious about new approaches and solutions. Familiarity breeds complacency. Complacency becomes lethargy. And, lethargy leads to the inability to respond to any danger or opportunity. You must continually be asking “what else and what next?” if you want to remain relevant.
Remember – the present should be guided more by the future than the past. What will you do today to ensure your success tomorrow?
Randy Pennington is an award-winning author, speaker, and leading authority on helping organizations achieve positive results in a world of accelerating change. To bring Randy to your organization or event, visit www.penningtongroup.com , email info@penningtongroup.com, or call 972.980.9857.
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