Impact Podcast | How can businesses survive today's technological disruptions?

KANINA BLANCHARD (KB)
Exclusive insights, actionable strategies and ideas that ignite change. You're listening to the Ivey Impact Podcast from Ivey Business School.

TIMA BANSAL (TB)
Hello and welcome to dialog with the Dean. I'm Tima Bansal, a professor at the Ivey Business School. In case you're wondering, Ivey does not have a new dean. In this podcast, though, we wanted to reverse roles. Instead of Dean Julian Birkinshaw interviewing a faculty member, I will be interviewing Julian about his new book titled Resurgent. This book tackles a critical challenge facing executives. How can businesses survive today's technological disruptions? Julian coauthored this book with John Fallon, the former CEO of Pearson, which transformed itself from book publishing into digital learning. Julian and John challenge conventional wisdom. They argue that businesses are not victims of technological disruptions. Most businesses often survive them. In fact, the book starts with a compelling statistic of the Fortune 500 companies founded before the internet age, over 95% are still around today. Julian makes an incredibly compelling case, drawing from his unique combination of experience as a dean, researcher, teacher, and consultant. We will cover three themes today. We'll start with insights about his book. Then we'll discuss the implications of technology in business schools. And finally, we get to learn how Julian manages to be so productive, having published 16 books in over 100 articles.

So, Julian, I want to start with a really basic question. Can you synthesize the argument for our listeners? 

JULIAN BIRKINSHAW (JB)
So first of all digital disruption is happening to us. And we've had digital disruptions before. It is very easy to get seduced by the narrative that the digital companies, the Googles and the Amazons and the Facebooks are taking over the world. This book, first of all, shows that that is simply not the case.
Many, many incumbents, as you said, are not only surviving but thriving in the digital age. And secondly, they're doing that because they are figuring out ways to harness their existing assets in very effective ways. And they're also becoming better at adapting more quickly to the faster pace of change. And the book basically lays out the ways in which they are doing that. So, it's a sort of a recipe book for any established company trying to become more effective at dealing with digital disruption.

TB
Is there a survivor bias? So, the firms that have survived this long just have the capability set to be able to survive other disruptions? 

JB
So I mean, survivor bias meaning almost by definition, the people, the companies that are around are the ones that we talk about, and we lose, sort of lose sight of the ones that that got killed. I mean, there is some of that. I mean, I one of the pieces of data in the book, which you didn't touch on the intro, is of the Fortune 500 companies in 1995, roughly 40 of those, so that's, 8% have actually gone bankrupt. I'm not trying to pretend there were no bankruptcies. And many of those, by the way, were retail companies, killed by Amazon, and many of them were tech companies. What I am trying to say is that we often look at those few bankruptcies and the famous Kodaks or whatever, and we sort of extrapolate widely from that. And some would say that if that's what happened to Kodak, it could well happen to us. And I'm saying, hold on. You know, every industry is different and we've got to be a little bit more thoughtful about the conditions that led Kodak, for example, to be killed off, because it's very unlikely those conditions will be replicated in your sector.

TB
It begs the question, so what were the conditions that caused Kodak and the others to be killed off? 

JB
Yeah, so very good question. And I like to think of Kodak facing this perfect storm whereby digital technology hit them in two very different ways. First of all, it changed the way that pictures were taken. You know, we used to have film, right? And of course, at some point digital imaging was invented, there was never any no need for film anymore. So that was only if you like the supply side, how the product was created. And then on the demand side, the ways that people consumed images changed as well, because we no longer need to print pictures because we just share them on Instagram. And that is an unusual situation to have both the way in which the product is created and the way it's consumed being completely disrupted by digitization. Many, many industries, you see the effect on one side or the other rather than both at once. And that actually, if you think about it, is a way of helping a company to both diagnose where their problem is and what their solution might be.

TB
There's two parts of this argument, though. I think one part is that, an important point that you make in the book is that the Fortune 500 aren't just tech companies, but there are a range of companies that aren't being as seriously disrupted as others.

JB
That's right. 

TB
Then there are those companies that are being disrupted by technology, but they're surviving. And so in the first set, I understand that there is this far too much attention given to the other set of two technology that seems to sweep the whole industry when there's so many more firms to think about. But what of those companies that are technology based - what are the characteristics that allow them to survive? 

JB
So, one example would be newspapers - The New York Times, The Economist, the Financial Times. You know, massive disruption to the creation and distribution, in my language, demand side of news. So people do not buy newspapers anymore? Not so much. So the New York Times and the Financial Times, as you know, what they did was after many years of experimentation, they finally moved from making money by selling newspapers to charging for online usage, subscription. And New York Times has, I think, 6 or 8 million subscribers more profitable than it ever was now. The point is that they had to completely reinvent their business model, but because they had an asset that was valuable, they were able to do it. And it took them many years of trying. There was a period for about a decade, just at the turn of the millennium, when people predicted that they were actually going to go out of business, but they were able to find a way of charging for the quality content that they created and emerged in a stronger place than they were before. So that's just one example of an industry dramatically affected by digital change finding a way through. But there are others that have failed to make that transition and found sort of different ways of surviving. So one of my favorite examples in the book is this company called Fujifilm. Kodak were killed off. Fuji was always the number two creator, manufacturer of a film,
when I was growing up, I'm sure you remember them as well. How did they survive when Kodak failed? Well, essentially they could see the writing on the wall. They had a chemical business, and rather than trying to continue to sell, you know, a product which was dying, which was traditional film-based imaging, they diversified away, first of all, into cosmetics and then into the active ingredients and pharmaceutical products they actually made drugs for Covid. I mean, not branded drugs, but the ingredients for Covid. So Fujifilm completely transforms itself, diversified away, very different than the New York Times, which of course sort of doubled down on what it had always been doing. So my point is, when faced with a disruptive threat, which is genuinely existential, there are a range of options that you face in terms of finding a way forward. And depending on your specific circumstances of course, one way is going to be better than another.

MUSICAL BREAK

TB
This is maybe a good time to ask, but you called the title of the book Resurgent. Yeah. And I think that at the heart of what you're saying is this argument about resurgence. So maybe you can draw that line between the, the stories you've talked about and the title of the book.

JB
Yeah. So, so I mean, resurgent means essentially kind of getting back on your feet after a period of either inactivity or being written off. And so we're trying to say that a lot of people had almost like written off large swathes of the incumbent population. They called them dinosaurs, you know, and we're saying that for a lot of those companies, they had to kind of figure out the new rules of the game. I'm talking, particularly the rules of the game as the internet really kind of changed the world. So, you know, we're living through another revolution now, we'll get to it, no doubt the generative AI revolution. But the real heart of the book actually is the period from 1995, when the internet first rose onto the scene through the World Wide Web through to about 2010 or so, where a lot of the in fact, almost all of the story about, its business success was the was the digital giants. And we're saying it took a lot of these traditional companies a while to figure out what their strategy might be to kind of come through that period. And now we're seeing a lot of them come back. And for avoiding false debates, I'm not saying that the biggest garbage companies are as successful as, you know, Google, Amazon and Nvidia and so forth. That simply isn't true. You look at the market value of these magnificent seven, as they're sometimes called. You can't argue with the fact that these are multi-trillion dollar companies. But I am trying to kind of rebalance the narrative by saying there's huge swathes of traditional companies that were kind of written off and everyone was saying they're going to go the way of the dinosaurs and they're bit by bit, they are reasserting themselves. They are finding homes for themselves, not at the level of a Microsoft or at Google, but very respectable in terms of market share in terms of decent market cap, in terms of the number of people that they employ. They have they have not lost out in a significant way. They haven't captured the new opportunities, but they also haven't given away much of the territory that they had before.

TB
But then you also bring to the book other types of technologies have played a role. Technologies like web 3.0 that nobody talks about anymore or the metaverse, and they were all just sort of blips. 

JB
Blockchain as well. 

TB
Blockchain. Yeah. It begs the question though, so what is that future? We have seen the resilience of these companies in the past, but is there something fundamentally different about artificial intelligence?

JB
So, I'm going to say no. And a few people are going to say I'm completely wrong about that, but let me just make the case.  Artificial intelligence, as you know full well, it's sort of existed since the 1950s, right? In terms of, you know, computer technologies that find ways of doing things that we used to think that any humans could do, and they get better and better year after year. We've gone through periods of AI winters and AI springs where the technology gets better and then it gets a bit more stuck. So there is an 80 year period, 75 year period of artificial intelligence getting better and better. The big difference of the period we're living in right now, the generative AI revolution, is that suddenly everybody could put their hands on it. When ChatGPT was launched, it made it to consumer products just in the same way that the World Wide Web was a consumer product built on a thing called the internet that nobody understood apart from a few techies. And so we've got this classic case of a hype cycle, also called Amara's law, where because everybody can play with it, they think, oh my gosh, it's going to change the world. Whereas, you know, artificial intelligence that many, many tools and technologies that were already operating just fine, when they were hidden did not capture the public imagination. So, in short, the short answer is, there are some technologies which kind of take-off and quickly, you know, go down in flames. The whole talk about, the metaverse and Web 3.0, I don t think those are coming back. Blockchain may come back, but it's going to be nowhere near as influential as people once thought. However, the generative AI revolution is real. It's potentially, almost as big as the internet revolution because it genuinely does start to allow us to do things that we really couldn't automate before, as you know. It's essentially doing the same to the automation of white-collar jobs, professional jobs in the way that many basic technologies automated manual work before robots and so forth. So I do believe that the long term potential of generative AI is substantial. But I also believe, and this is where most people, many people disagree, that it is what we can call a sustaining technology, not a disruptive technology. You know, that's the language that was used by this guru called Clay Christensen, that many of the listeners will have heard of. And essentially the disruptive technology is the one that allows new companies to come in and undermine the incumbents, whereas the sustaining technology is the one that allows the incumbents to actually grow stronger. You only know post hoc after the fact, whether a technology is truly sustaining, what disruptive? My hunch, my strong hunch is that a lot of incumbents are finding ways of using generative AI to actually help them to sustain their positions, and there's going to be very few instances, some, but very few instances where the generative AI is actually going to kill off the incumbents.

MUSICAL BREAK

TB
Is it possible that gen AI that there's so much hype, As you said, we're in a hype cycle, that this will change in the future and we will see major disruptions in the way that New York Times had to, consolidate. And arguably the resurgence argument that you're making that we have to figure out what we do that's unique and different from what AI can do. And that will lead to some business schools excelling at their more human aspects of what they do, unless technological  

JB
Thank you. I mean, you put the ball in front of the goal so I will kick it in. Right? So we got to focus on the things that make us unique. And the thing that makes business schools unique, apart from, you know, the assets of, you know, we credentialize and stuff, is that we have the opportunity to really help our students learn the skills and the judgment and the critical thinking capabilities that allow them to be successful in their business careers. Some business schools do a very good job of that. Some, frankly, do a poor job. Having only been back at Ivey now for a year, perhaps I'm not best qualified to say, but we take learning extremely seriously here. Far more seriously than most business schools. And I actually think that as AI makes the basic knowledge, the basic knowledge of how to do business more and more of a commodity, the advanced learning that we provide to our students in terms of how to make and defend an argument, how to critique somebody else, how to make decisions under uncertainty, how to essentially analyze a problem critically. Those higher order skills are actually the ones that will differentiate the higher performing business schools from the low performing ones, because they are the things that the businesses, the consultants, the banks, the tech companies actually want in their students. So for me, what the AI is doing is it's providing a bit of a wake-up call to business schools in terms of what is it that they're actually doing. And, just to finish this point, yes, we do high quality research and we will continue to do more of it. But every business school's doing that. The thing that Ivey can do, which will allow us to rise above many others, is we can take our deep, deep experience and commitment to high quality learning and embrace AI as a sort of wraparound to that to make sure that our students are actually leaving Ivey better prepared for business degrees than most others.

TB
In the earlier example that you gave of Kodak was that the demand side had also changed. And so that customers were looking for something different than film. So film wasn't offering what customers wanted. Our customers are the consulting companies and the finance, the banks, etc., etc. even the entrepreneurs, they don't need as many people now, so the demand side is changing. What will that look like? 

JB
So you're right. Scary. In other words, the data suggests that these big professional services companies, I m including banks in professional services are hiring fewer graduates. The data on that is quite compelling, actually. And some would say, you know, we're just starting so they're not going to stop hiring, but they are absolutely hiring fewer graduates. So, for the industry as a whole, that is a very, very worrying prospect. And I don't doubt for a second that the business school industry is sort of has peaked. You know, the world does not need quite as many business graduates as it's getting. So there is an industry problem here. And in most industries you'd see companies or business schools exiting, you'd see mergers very, very difficult for business schools and universities to merge. So unfortunately we are going to continue to see overcapacity. But from our point of view, as Ivey, you know, that's the nature of the competitive market world in which we live. Our job is not to worry about those macro forces. Our job is to prepare our students better than other students, so that our students are still getting the jobs that they want. Now we've got to make sure that we don't let our students think they're all going to get jobs in banking and consultancy. We have to absolutely diversify the breadth of careers that we legitimize to them, including starting your own businesses instead, including, working in government agencies or whatever. But I don't think we should shy away from the fact that, our job is, is simply to be better and smarter in terms of how we prepare our students so that they continue to get the jobs.

TB
And I can't help but think it's also going to be like the way of the New York Times, where there's going to be those succeeding, and then the local newspapers, like the local business schools that have a hard time surviving. 

JB
I mean, there is they call it a flight to quality, right? In other words, when any market gets saturated, whether it's for news, whether it's for, music and TV shows, the ones that survive, the ones that actually ultimately endure, are the high-quality ones.

TB
It's not just about high quality, though. It's also about being able to pivot. The New York Times did actually change offering. 

JB
I mean, it's a very good point. They did. The New York Times had to change its business model fundamentally. But an interesting not counter-example, but an interesting, similar but different example would be Disney, when the, the Netflix and the Amazons of this world first created streaming of content. Disney and I'm talking back in 2008 now, Disney faced the choice of, do we create a streaming service? And they didn't. They actually created a streaming service like 12 years later. For the first decade of Netflix, they became the biggest content producers. They doubled down on their content. You know, they bought out Marvel and Lucas and all those studios, and they then sold that high-quality content to Netflix. And it's only, as they say, in 2019 with Disney Plus, they finally kind of decided to play the game of streaming. So there's never a single right answer. You got to be attuned to all the different options. As business schools, we've got to be open to the possibility that our business model is changing. One of the reasons we created Ivey Online is to give ourselves an alternative channel to selling Ivey content in a different way. But ultimately, we've got to sort of figure out what our core asset, core competency is.
And I do believe it is, you know, it is research, but it's also high-quality learning.

MUSICAL BREAK

TB
I want to pivot and, just talk about you writing the book. And both of us are researchers. And so I have to say, I'm in awe, that you are able to do as much as you're able to do while also being, you were, on the, in the dean's office at London Business School, you're now the dean of the Ivey Business School, and you're still yet so productive. So, first of all, tell me how long it took you to write this book. It was a, I believe, 2019 that you started. 

JB
It was an unusual book in that we created an online course first, and we actually created a bunch of videos, which we then transcribed and then essentially rewrote as a book. So it was a slightly unusual book in that respect. But, essentially, we pulled the book together, myself, John and a guy called Adam Bouzelmate who we used to help us with some of the hard work of transcription and rewriting. I mean, look, it was a year's work in total, but obviously in terms of actual time of writing, it was probably more like a couple of months, if you see what I mean.

TB
Yeah. And you're writing about technology. Technologies change so fast. And so is there anything that you wish that you had written about that you hadn't or anything that you would have changed? 

JB
I would certainly build much more of the generative AI, the agenetic AI, which everyone's talking about now, into the book. But the nature of traditional book publishing, here's another industry which probably needs to be disrupted, right, is that you have to basically lock down the content of the book about 12 months before the book actually hits the shelves, and that's too long. It's just insane. 

TB
But you did include a chapter on AI. 

JB
We finalized the text about ten months ago, nine months ago. So we did actually almost as the final thing, we did write a whole chapter at the end on generative AI, which did the job. But, I'm very conscious that that, you know, a book like that does get a little bit dated. 

TB
How do you manage to be so productive, though, in addition to everything else that you've done? And I think embedded in that question is how do you even organize a day? 

JB
I guess I mean, I won t dispute that I am efficient. I didn't realize I was when I was in growing up, as it were, but it turns out that that is one of my skills. I mean, I'll try to be as specific as I can. First of all, I do love to give myself deadlines. For example, a lot of academics will kind of wallow in literature and writing and thinking for days on end, sometimes weeks on end. I always try to give myself a kind of a daily deadline. By the end of today, I will have finished this chapter, I will have written 3000 words. I will have handed this text over to my coauthors so that they can do some work on it. So very frequent sort of short-term deadlines. Secondly, touched on it, many coauthors. Obviously, this doesn't apply to my work as a dean, but you will see pretty much everything I write nowadays, I have multiple coauthors. So a lot of the heavy lifting is indeed done by them. It turns out I actually write text very quickly. That's perhaps is the superpower here because this is this is not something I specifically sought out to do, but I can put 800 words together in an hour, let's say, and then, of course, it needs rewriting. But it does mean that you can get a lot of different things done. 

TB
You know, that means that this could be disrupted by AI, someone like me and writes much fewer than 800 words, won t be able to do something like what you do. I'm going to have one last question. What advice would you give to the MBA looking into the future? 

JB
So they need to figure out how you know, what jobs, what are the business opportunities for them in terms of their career, five, ten, 15 years out. And they need to make sure that they are using their time at Ivey to prepare themselves effectively, as effectively for that as they possibly can. So partly it is about building a knowledge of certain industries where there will continue to be jobs. I mean, most of our students don't think about doing this, but, you know, there will be huge amounts of jobs in the regulation of AI It's a really sort of boring topic, but I can guarantee that, you know, that is an area of dramatic growth. There will be other areas which are much more exciting. But my point is, have a point of view on where the industries you're interested in are developing. That's one. The other side of it is to build the skills that employers actually care about. When you go and talk to the recruiters at Goldman Sachs and McKinsey, and Google, what do you want in your in your graduates?  They ll say we want people who are actually really good at thriving in ambiguous situations. We want them to be the sort of person who can make sense of complexity and still have the capacity to act. We want people who've developed critical thinking skills, who can think on their feet, and to actually promote and sort of develop an argument. We want people who have a passion to actually have a positive influence on the world, who are actually proactive in trying to solve problems, who bring me problem solutions rather than problems. All of those types of things are what recruiters want. And we are providing that environment here to help them to do that. So let me be very specific, because we know our students are using ChatGPT and Gemini and so forth, I wouldn't pretend that we should stop them. They're going to use them whether we want them to or not, therefore, we should encourage their use. But ask yourself as a student, am I using Gen AI, you know, to give me smart answers or to ask me smart questions? Because if you're using it to give you smart answers, all you're doing is shortcutting the learning process.

TB
You are cannibalizing your own answers.

JB
Exactly. It is essentially a way of you not learning because you are shortcutting the hard yards, the cognitive struggles of actually developing knowledge and expertise. So if you can possibly do it, use the AI to ask you smarter questions so that you figure things out for yourselves. Now that there's a discipline to that which most students really struggle with. The idea that you use AI as a coach, but if you care about your learning and the skills that will actually sustain you in your careers, see if you can actually try to use AI to help you figure things out for yourself, rather than shortcutting to the answers.

TB
Well, if you're going to bury yourself into a book, I'm going to recommend their audience read Resurgent, which I thoroughly enjoyed. And this is, been an enlightening conversation. So thank you, Julian. You've been listening to Dialogue with the Dean with me Tima Bansal the host, and Julian Birkinshaw as a guest. I will now let Julian say the final words. 

JB
A big thank you to Tima Bansal for guiding our wonderful conversation. I do hope you tune into other Dialogues with the Dean in which I interview Ivey faculty on their groundbreaking activities. Thank you for tuning in. Until next time. Goodbye, goodbye.

KB
This was Dialogue with the Dean an Ivey Impact Podcast series. For more insights from Ivey, including thought leadership on critical issues and additional podcast episodes, visit iveyimpact.ca or subscribe on your preferred podcast platform. Thanks for tuning in.