An origins story

For its first 32 years, American Express was not a financial services provider. It was in fact a courier company that competed with the US Postal Service (USPS). Legions of expressmen traversed the continent on horseback, moving letters and packages faster and cheaper than the USPS, and to places where they did not venture. At the time, the majority of American Express’ customers were banks. Moving stock certificates, notes, currency and other financial instruments was considerably more profitable than large freight. In 1882, American Express entered the financial products market, first launching a money order business, and soon after traveller’s cheques.

History is riddled with similar examples of companies with obscure beginnings. Nokia began its life as a paper mill. Before becoming a major manufacture of household electronics, Samsung dealt in dried fish and handmade noodles. Logistics giant Brambles started out as a Newcastle butchery. YouTube was originally an online dating service. Not too long ago, MYOB was a developer of accounting software, but now provides everything from business solutions to small business loans.

In the same way that American Express morphed from its humble beginnings to become a financial giant, we might expect that many of today’s firms will be unrecognisable in just a few short decades?

For example, we tend to think of Rio Tinto and BHP Billiton as big dirty mining companies. But both have made significant investments in data mining capabilities. Last year, Rio Tinto launched its second Analytics Excellence Centre in India (the first was in Brisbane) and has spent millions installing sensory equipment in almost every part of its equipment fleet, from trucks to concentrators to crushers. BHP are claiming that data analytics have already created savings in the hundreds of millions.

Monsanto’s data collection capabilities seem to be leading them towards insurance products and other financial products.

Woolworth’s currently employs an ICT workforce comprising of over 2,000. “There is no aspect of Woolworth’s business that isn’t touched by technology.” ICT is being used across the supply chain in managing distribution centres, merchandising and logistics planning; for analytics around customer behaviours and to customise product offerings to customers; and in stores, with many interactions and information sources now utilising technologies such as smartphones and tablets.

UPS are investing heavily into additive manufacturing (3D printing) capabilities and turning airport hub warehouses into mini-factories. The company is investing heavily in an instantaneous inventory management capability that will reduce the need for acres and acres of shelf space.

Transformation does not have to be related to technology. Online retailer Zappos describes itself as a “customer service company that happens to sell shoes”. Their CEO Toney Hsieh talks of a world where he imagines a “Zappos airline or a Zappos hotel that is really just about the very best customer service and customer experience”.

Successful firms are the ones that are able to adjust and respond. They are able to take advantage of changes in technology and shifts in demand and spot niches made available by regulatory failure or arbitrage. Too often we associate innovation and change with small and boutique, but this doesn’t have to be the case.

(Sorry for all the American examples. If you know of Australian examples that fit this narrative, I’d love to hear about them.)