Would you consider the following situation a quagmire or a business opportunity? You are a legacy company that is very heavy in fixed assets, low in tech and (because of shareholders and Wall Street) the pressure for short term results is very high. You want to become tech heavy, asset light, and future-forward, but you have legacy assets that need to be fed and analysts on Wall Street demanding more and more earnings. Wow! This sounds like a quagmire, which upset my stomach at first, then I got chills. How exciting is this quagmire for all the entrepreneurs and doers who realize this quagmire is pure, pure opportunity.
Recently I have felt as if I am in a business quagmire of my own. Well, I wasn’t absolutely sure what a quagmire was, but the word quagmire was blatantly blaring in my head, so I once again went to Merriam-Webster because I thought it had something to do with being obsolete. One of the definitions turned out to be “a situation from which extrication is very difficult.” So what I was feeling was that dealing with obsolete ways of doing business versus future-forward, new world business ideas seemed Iike a quagmire to me. It is apparent to me that current business quagmires are shaking the very roots upon which I have built my own businesses. At the same time, it is incredibly exciting and exhilarating for me to watch.
quagmire noun quag·mire \ˈkwag-ˌmī(-ə)r, ˈkwäg-\
1: soft miry land that shakes or yields under the foot
2: a difficult, precarious, or entrapping position : predicament
I am a super fan of disrupting legacy assets with new models that are asset light and tech heavy, so every time one comes up I am excited to start following and learning. The quagmire that stunningly drives home the question of whether or not a situation is a quagmire or an opportunity is one that I have been watching for sometime. I was almost speechless when I found out that two companies that I follow finally collided in their own quagmire. How could this be?
I follow both Ford and Tesla closely. Both companies have a CEO that has built an impressive business, but each with very different business models. One, Ford, has legacy assets and a legacy business model; the other, Tesla, has a disruptive, future-forward business model. The Ford CEO, with the legacy assets, has been an environmental advocate and an example of progressive management styles that have made his company incredibly profitable. The Tesla CEO has turned the auto industry on its head and pushed through to create a totally different business model, which has added incredible tech functionality and a beautifully-styled product––all while spending billions of investor dollars.
So here is the quagmire: You are a company that has one of the most iconic products on the market, have managed the company incredibly well and compiled over 4 billion of operating earnings in 2016, but you still have to fire your CEO because a competing business model (while losing 500 million dollars in the same year) now has a market cap bigger than yours. This quagmire was exactly what Bill Ford faced over the last couple of weeks when Tesla, led by CEO Elon Musk, suddenly passed it in market capitalization. Ford had no choice but to fire its CEO and get someone in with a more futuristic mentality because the faster technology moves the faster the quagmires develop and the bigger the opportunities for the new disruptive company. Unfortunately (or fortunately, depending on your perspective) even a futuristic mentality with an iconic product like the Ford F-150 and Ford’s 4 billion of operating earnings, is still burdened by short term earnings pressure and the heaviness of legacy assets. So is this a quagmire or is it a business opportunity? I guess that depends on your perspective, but I for one think of it as an opportunity.
If you are a legacy company, you probably need to upgrade your own software system. Maybe you are used to doing things yourself and the cloud just flat scares you (plus you worry about how long it will take to transfer everything) but you already know instinctively that you must innovate even if your new software system will be obsolete within 2 years. You can think of this like you would many personal quagmires you have probably faced. For instance, you may own a home in one city, but get a job in another and are unable to sell because the housing market is soft. Or what if you painted your house a color that was popular five years ago, but now it looks dated and the expense of repainting is difficult.
Just for giggles, think about Starwood Hotels and the quagmire it faces dealing with Airbnb; or the quagmire that taxi companies face with Uber. The list can go on and on. Oh, what a wonderful world it is and such an exciting time for business.
So your challenge if you are reading this, is to decide what quagmire you are going to exploit and use to make the world a better place. Man do I love the word quagmire now! Hope you do, too. Here’s to “Future You,” loving being in a constant quagmire and disrupting everything.