The primary tenet of my research has been that market share shifts happen when markets transition, so my focus is those areas that are undergoing significant change. It’s when things change that buying behavior also changes.

For example, if Cisco Systems Inc. had decided to go build a traditional PBX, it would not have the market share it does now in telephony, because people had their favorite vendors. Instead, it caught the transition to voice over IP and have never looked back. Other examples are Microsoft Corp. and personal computing, Apple Inc. and the iPhone and VMware Inc. and virtualization. In each of these cases, they caught the incumbents flat-footed and unwilling to change.

This shift isn’t just technology-related, although technology is an enabler. Airbnb Inc. has distributed the hotel industry, Uber Technologies Inc. threw a monkey wrench into the business models of taxis and car services, and Amazon.com Inc. has completely reshaped retail. Adapting to these market shifts isn’t easy and does require businesses to constantly reinvent themselves.

The downside of not doing this can be catastrophic. Just look at the landscape of big brands that have gone away in recent memory. Radio Shack. CompUSA. Kmart. The list goes on and on. These were massive companies that did not reinvent themselves and paid the price.

One company that arguably has done this better than anyone is Amazon, as it has disrupted not only retail but also the entire information technology industry. The importance of reinvention was a core component of AWS Chief Executive Andy Jassy’s keynote (pictured) at AWS’ re:Invent conference, which continues virtually this week. Jassy made his case with a couple of compelling data points.

One is that in the past two decades, half of the companies in the Fortune 500 have either been acquired or disappeared thanks to digital disruption. Although it’s difficult to build a business that stays successful for many years, it’s achievable. The companies that remain in the Fortune 500 have had to reinvent themselves multiple times over.

The need for reinvention has never been greater than in a time of crisis. Since the start of COVID-19, companies of all sizes around the globe have been focused on saving money. The pandemic accelerated cloud adoption by several years. Those that have been thinking about shifting to the cloud — without any real movement in the past — finally took the plunge in 2020.

When there is a period of discontinuity, such as a pandemic, successful companies leverage disruption as a way of pulling away from the competition. However, reinvention shouldn’t be an afterthought or a last resort for a company that isn’t doing well in an uncertain time. Waiting until things are falling apart to save the business is risky and unpredictable. As Jassy said, companies should be reinventing themselves all the time, particularly when they’re healthy so they can control things better.

During his keynote Jassy provided eight important steps to reinvention:

1. Leadership has to have the will to invest and reinvent. In any industry – tech, retail, sports and others — it all starts with leadership. This entails having insight into what competitors are doing, what customers think, and understanding what’s working and what isn’t working. Leaders must have courage to force their company to change.
2. Acknowledge that if something is going to happen, it will, no matter what. A company should cannibalize its own business by reinventing or someone else will. Jassy brought up an example of Amazon choosing to offer products through third-party sellers, which allowed the business to grow. This isn’t an easy step, but business leaders must do it. At last year’s Dell Tech World, CEO Michael Dell talked about this and said something to the effect of “If a shift is good for customers, they are going to do it no matter how hard you try and hold them back. It’s critical for vendors to lead these shifts to be successful.” This is one of the biggest reasons Lucent, Nortel, 3Com, Digital, Compaq and other companies are no longer with us.
3. Hire talent that is hungry to invent. It’s essential to have people onboard who are curious about learning and reinventing the customer experience. This will require some tough decisions as IT leaders may need to move good people out. I started my career as an open-systems person in a company that had a strong IBM presence, and few people wanted to embrace personal computers. Very quickly, the company replaced the people unwilling to change, and if you’re an IT leader, it’s likely you will need do this too.
4. Solve real customer problems with builders. Builders are people who actually solve problems for customers instead of chasing “cool” technology. Too many providers focus on what competitors are doing and try to follow, but don’t focus on what customers actually need. At the 2020 Zoomtopia Event, Nvidia Corp. CEO Jensen Huang in his keynote talked about the importance of playing the game and not watching the score. Business and IT leaders need to focus on solving problems and not chasing everyone.
5. Speed matters at every stage of the business. Enterprise leaders have resigned themselves to moving slowly since moving quickly is considered too risky. Mindsets must change to recognize that reinventing requires speed and creating urgency. The cloud era makes this possible. A mistake before could be very expensive as each project required millions of dollars in infrastructure and time. Businesses had to ensure every “i” was dotted and “t” was crossed before rolling out a new service or application. In the cloud era, it’s easy to try things and, if they don’t work, move on.
6. Avoid unnecessary or excessive complexity. Companies going through a transformation often face problems of managing different technologies and providers. But complexity is the enemy of speed. It’s much easier to be successful when choosing one partner and adding others later on in the process. Years ago I interviewed an IT leader from Tessco Technologies Inc. who told me that one the principles with which they approach IT projects is that the solution to a problem must be simpler than the original problem. That’s not always the case in IT. When things are complex, it slows things down and leads to mistakes.
7. Use a platform with the broadest set of tools. Avoiding complexity means using a platform that has the most capabilities. This not only makes it easier for a company to migrate all its existing applications, but it also enables its builders to create anything they can imagine. When Jassy said this, I thought this was a self-serving statement, since AWS does have the broadest set of cloud tools. But then he gave an analogy of golfing, which I love to do, and how hard it would be to play with just one or two clubs. Breadth of tools makes the developer and IT staff jobs easier and that’s critical to success.
8. Pull everything together with aggressive top-down goals. Setting top-down goals helps a company understand where it’s headed and what changes need to be made to get there. It’s about getting all the problems on the table, so they can be solved. I’ve talked other CIOs about this as a key to driving successful IT projects. Top-down goals assure success of IT projects. For example, one cruise line CIO explained that his IT organization was measured on the success or failure of a project to create frictionless embarkation. This stopped the finger-pointing between teams that would say their part was done and another group was at fault.

AWS has been an innovator in the IT market. What keeps it at or near the top is the willingness to continue to reinvent itself, even in the face of a trend looking bad for it in the short term. Reinventing involves good leadership. Technology is important but is ultimately just a tool. Company leaders are the ones who must embrace the change and build a reinvention culture.

I spoke more about AWS and Jassy’s management recently on theCUBE, SiliconANGLE Media video studio:

Zeus Kerravala is a principal analyst at ZK Research, a division of Kerravala Consulting. He wrote this article for SiliconANGLE.

Photo: AWS/livestream