The Impact of Technology Interventions on Leadership

Interventions and disruptions with technology are not new to humankind. They form the basis for the progress of the society. From the discovery of fire by rubbing stones together to wheels and beyond, technology has played a significant role from time immemorial in the advancement of human civilisation. Leaders understood the importance of technology and tools that were available in each era and their use or enablement in the conduct of their affairs. Technology has been used effectively by successive leaders to communicate, wage wars, govern their kingdoms and build economies. In short, technology has been integral to the successful strategies of leaders. Alexander the Great was able to rapidly conquer most parts of Asia and Egypt by leveraging the innovative Greek military formation, the phalanx. Emperor Ashoka used edicts on stone inscriptions effectively for the spread of Buddhism and for governance across his large empire. Roman aqueducts were the lifelines of the Roman empires and symbolised urban sophistication. These aqueducts influenced the later-day European architects and urban planners to build baths and fountains as part of the urban landscape. The apostles of Jesus Christ used scrolls for the rapid dissemination of Christianity across the Roman Empire. Countries like Spain and France celebrated their successful conquests by building huge statues in honour of their leaders. South Indian rulers built massive temples in India and other parts of South East Asia as symbols of their prosperity and to create awe and loyalty within the communities.

These and several such examples highlight the role technology has played in successful leadership. There are also several instances of nations and businesses languishing with identity crises on account of late adoption of technology. One of the important examples from recent times is how European countries, with their guns and superior warfare techniques, could defeat several Indian kingdoms because the latter did not have access to modern military technologies and continued to practise traditional warfare methods up until the 19th century. Similarly, businesses not in tune with changes in technology trends or other environmental factors in the past have experienced failures and, in many cases, become extinct or struggled for survival. The Indian jute industry was a major global player before and during the Second World War. However, post-Independence and Partition in 1947, the industry’s leadership failed to modernise production methods and diversify products.

This lack of innovation and foresight, coupled with increased competition from synthetic materials, led to the decline of many jute mills (although lately there has been a revival due to the reversing trend of replacing synthetic materials with natural materials such as jute). The Lancashire textile industry was once the heart of Britain’s industrial prowess. However, after the Second World War, the industry faced intense competition from abroad, particularly from countries like India and Japan. The industry’s leaders failed to modernise machinery, invest in new technologies or shift production to meet changing market demands, leading to a steep decline.33 As one of the largest steel producers in the United States, Bethlehem Steel played a crucial role during both World Wars. However, post-war leadership failed to invest in modernising its plants and technologies. Facing increased competition from more efficient global producers and declining demand, Bethlehem Steel filed for bankruptcy in 2001 and dissolved in 2003.34 HMT Watches is another example of failure emanating from its inability to adapt to changing market dynamics. Founded in 1961, it was known for affordable and durable watches. The business failed to keep pace with the emerging trends of digital and quartz watches, and eventually, in 2016, production of watches was stopped completely.35 With the advent of personal computers in the 1980s, thanks to the operating system made available by Microsoft and the user-friendly Apple’s Macintoshes, typewriter companies like Underwood and Smith-Corona went out of business. Several traditional stores such as Borders, Sears and Blockbuster went bankrupt, unable to face the competition of tech-savvy online stores of which Amazon was the prime mover. At its peak, Borders had over 1,200 stores and generated more than US$3billioninrevenue.Itcouldnotwithstandcompetitionfromonlineretailers.Itslateentryintoe-commerceanddigitalbooksinadditiontoitsfinancialmismanagementledtoitsdownfall.BordersoutsourceditsonlinesalestoAmazon,whichlentafatalblowtoitsabilitytocreateanonlinepresence.Finally,Bordersendedupfilingforbankruptcyin2011.36Searsfailedtoadapttothechanginglandscapeintheretailformatsofbusinesses.Specifically,itcouldnottransformitselftobeapartofthee-commerceboom.Originallycreatedasamailordercompanyin1898,SearsRoebuckplayedacrucialroleintherichhistoryofconsumerretailintheUSmarket.Thecompany’sreachintheruralmarketwasexcellentwithitscataloguebusiness.Later,aftertheinitialsuccessofitsfirstretailstoreinChicago,itspreaditswingsacrosstheUnitedStates.Inthe1960s,Searsdiversifieditsofferingswithitsowncreditcardandenteredvariousmarkets,includinginsuranceandfinancialservices.However,withcompetitioncreepinginfromTargetandWalmartinthe1980sandlaterfrome-commercecompanies,itwasslowtoadaptanddevelopthenewDNAneededtosurviveinthecompetitivelandscape.Ultimately,thisledtothedemiseoftheformerretailpowerhouseanditfiledforbankruptcyin2018.37DickSmithElectronicsisanexampleofanelectronicsretailbusinessthatexpandedrapidlyinthe1980sand1990swithanetworkofapproximately400retailoutletsacrossAustraliaandNewZealand.Duetoitsinabilitytodealwithcompetitionfromonlineretailers,thebusinesscouldnotbesustainedandwounddownin2016.38TheCanadianretailgiantEaton’s,whichwasknownforitsretailoutletsandcataloguebusiness,facedchallengeswithdwindlingbusinessduetoitsinabilitytoadaptandlackoftechnologicalcapabilitiestobuildanonlinepresence,thesameasSearsRoebuck.Ultimately,Eaton’salsofoldedin1999.39ThecaseofComet,amajorelectronicsretailerintheUnitedKingdom,wassimilar.Unabletoadapttothechangingretaillandscapeande-commercerequirements,thebusiness,foundedin1933byGeorgeHollingbery,wentintoadministrationin2012andclosedallitsstores,whichaccountedfor250acrosstheUnitedKingdomatitspeak.40Zavvi,amajormusicandentertainmentretailbrandfoundedintheUnitedKingdomin1971,hadatitspeakanetworkof125storesacrosstheUnitedKingdomandIreland.Thecompanystruggledtocompetewithonlineplayersandcopewithdigitalmedia.Allitsstoreswereshutdownin2008,andthebusinesswasclosed.41BlockbusterisanotherUScompanythatwasprominentinhomemovieandvideogamerentalservices.Foundedin1985,itgrewaggressivelyandsoonbecamethelargestvideorentalchainintheworldwith9,000storesatitspeak,wellknownforstockingawidevarietyofmovies.In1994,ViacomacquiredBlockbusterforUS$8.4 billion to use Blockbuster stores as distribution channels for its films. Soon, digital streaming, online rental services like Netflix and on-demand viewing started posing challenges to Blockbuster. Its attempt at an online rental service was not successful, and despite a split from Viacom to conduct independent business, it ended up filing for bankruptcy in 2010.42 Once dominant mobile phone brands, Nokia and Blackberry had to bite the dust with the introduction of low-cost, user-friendly mobile phones from companies like Apple and Samsung. The market value of Nokia dropped from over US$200billionin2000tounderUS$20 billion around 2010 as it was unable to adapt to the smartphone revolution.43 Blackberry, too, plummeted from the high of US$80billioninmarketvaluein2008tounderUS$5 billion by the mid-2010s as it, too, failed to adapt to the change.44 As the smartphone adoption rate increased across the globe, apart from new versions of Apple and Samsung eagerly awaited in the market every six months or so, markets are also being flooded with Chinese devices that are rich in features and low in cost, thus giving more options to customers. Kodak is another iconic company that failed to adapt to digital technology in time and ended up filing for bankruptcy in 2012.45 The market value of Kodak in the 1990s touched US$31billion,anditdroppedtolessthanUS$150 million at the time of filing for bankruptcy. With the steady transition to cloud computing, the physical IT infrastructure business has been impacted.

A classic example is that of Sun Microsystems, which was not equipped to provide cloud-based solutions and, hence, ended up being acquired by Oracle for US$7.4billionin2020—afarcryfromitspeakvaluationofoverUS$200 billion.46 In recent times, many taxi companies have been struggling to survive because of the digital disruption of offerings by companies such as Uber, Lyft, Ola and others. What is also unique about them is that they do not own a fleet of cars, but by acting as the aggregator and disrupting the transportation service, they have been able to offer superior services to customers, who find them to be cheaper and more convenient.

The businesses in the examples cited earlier lacked the technology firepower and the ability to adapt to the changing market scenario, unlike the newcomer Amazon. Amazon, founded in 1994, has been aggressive in its approach to consumer retail. Amazon first disrupted the retail model for book stores and later went on to become a global e-commerce giant. It has disrupted several other industries. Today, it is counted among the pioneers in the use of AI in customer engagements for business generation. These and many other such examples indicate the imperative for leaders to be alert and quick to adapt to technological changes, failing which there will be value erosion and decline in market capitalisation of the businesses they run.

The continued success of IBM is a classic example of a company that has experienced successive technology disruptions and market turbulences due to World Wars and other factors and yet has managed to sustain and grow its business through several decades. Founded in 1911 by Thomas J. Watson, the company has successfully pivoted several times—from being focused on mechanical tabulating machines to electronic computers to cloud-based services and now the AI-led solutions in the last few years. IBM has been dominating the business computing market for several decades because of its astute leadership and its ability to adapt. However, IBM, too, was too slow to transition from mainframes to personal computers. It was unwilling to take the risk and clung to familiar terrain. It took a while for IBM to recognise the need for change and adopt new ways of doing business to survive and maintain growth. After that, IBM’s downward spiral was arrested, and in 2023, it reported a free cash flow of US$11.2billion,asignificantimprovementoverpreviousyears,andrevenuesofapproximatelyUS$61.9 billion, up 3 per cent growth from the previous year. This achievement is owing to its transformation with the strategic initiatives driven by leaders such as Ginni Rometty and, lately, Arvind Krishna as its CEO.47 IBM’s thrust on the Watsonx AI platform and Red Hat OpenShift for hybrid cloud environments is paying rich dividends.