Disruptive or Sustaining Technologies? Your Business Future Depends On It

by Dan Dunkel - President, New Era Associates

Published in Today's Systems Integrator

I was recently rereading a great business book, "The Innovator's Dilemma," by Harvard professor Clay Christensen. Even though it is 10 years old, it is still relevant to the physical security industry. This makes sense based on my opinion that the physical security industry is about 10 years behind the IT industry in terms of product innovation, open systems and IP networking strategies. Before you get upset, this is good news if you believe, as I do, that history repeats itself and this understanding can position your business (and career) for success during the current convergence cycle. The key is embracing this change.

That said, the issue facing the physical security industry (and system integrators) today is the same "disruptive technology" problem Christensen writes about in depth. This industry is trying hard to hold on to proprietary products (sustaining technologies) while new solutions (disruptive technologies) enter the market from new competitors (read Cisco, IBM, EMC, etc.) and eventually replace these established security vendors. The natural tendency is for the physical security vendors (and their channels) to discount or ignore the new technologies they do not understand. This is dangerous given the fact that this is the very moment vendors need to get educated and respond with new strategies to “integrate” legacy and new solutions. If not they will get displaced. Putting this off a year or two and then deciding if today’s obvious technology trends are a reality is just a historically proven prescription for failure.

For example, a recent New York Times article highlighted a new book about the famous economist, Joseph Schumpeter, titled “Prophet of Innovation.” It details the ideas of this former Harvard professor and his concept of “creative destruction” as the driving force behind capitalism. The message being that almost all businesses, no matter how strong they seem to be at a given moment, ultimately fail, and almost always because they failed to innovate. Examples over the last century include automobiles displacing the horse and buggy, computers eliminating typewriters, DVDs replacing videotape (for most people) and now the Internet is perhaps the greatest example of “creative destruction” ever deployed. Again, business history is all you really need to accept; yet while many people understand, few accept these realities and act to save their businesses.

Essentially, the physical security industry is at the proverbial "inflection point" that Intel's Andy Grove made famous. Remember that Intel was a large memory manufacturer before he recognized and accepted the trends, even though they forced Intel out of the memory business. As a result, Intel abandoned memory and pioneered semiconductors. That’s why you know the name Andy Grove. He is a business visionary. His famous book “Only the Paranoid Survive” explains:

“A strategic inflection point is a time in the life of a business when its fundamentals are about to change. That change can mean an opportunity to rise to new heights. But it may just as likely signal the beginning of the end. Strategic inflection points can be caused by technological change but they are more than technological change. They can be caused by competitors but they are more than just competition. They are full-scale changes in the way business is conducted, so that simply adopting new technology or fighting the competition as you used to may be insufficient. They build up force so insidiously that you may have a hard time even putting a finger on what has changed; yet you know that something has. Let's not mince words: A strategic inflection point can be deadly when unattended to. Companies that begin a decline as a result of its changes rarely recover their previous greatness..

Assuming some of the skeptics are finally coming around, we can realize:

1. Business history is a good guide for the future.
2. Open systems, IP networking (wireless video) and the Internet are for real.
3. Software solutions and services (integration) are the future – hardware is dead.
4. Security policy is going global over IT infrastructure (IP networks and storage).
5. The security market over the next 20 years is going to explode worldwide.
6. New IT competitors (sales and technical) are formidable. (See #5. above)
7. Our market is in a strategic inflection point: Like it or not, this is CAPITALISM.

In conclusion, are there any basic business facts in the above that you strongly disagree with on an intellectual, not emotional, level? It is easy to say “Sure, BUT…my clients are buying analog today,” or “Analog is 80 percent of the market…you don’t know my business.” Fine, but ask yourself “What If…”

1. …these IT vendors and their channels move twice as fast as I thought?
2. …the decision cycle moves to IT, where they have the buying relationships?
3. …I alienate myself with the IT group by selling analog solutions in 2007-2008?
4. …I wait two years too long to make an investment in personnel or partnerships?
5. …I’m wrong about bandwidth assumptions and/or digital camera performance?
6. …this guy Dunkel is not a stupid as he looks?

I have no hidden agenda. My background is IT sales. I’ve lived through convergence cycles for over 20 years. I pull for the underdog – that’s YOU! (This includes the majors in the physical security industry, not just the little guys.)