American Airlines was the first airline to spin off their internal electronic reservation system, called Sabre, to travel agents in the late 1980s. The travel agents leveraged Sabre’s slick software to gain a productivity and information advantage over competing agents. As the product’s power users, they also provided critical feedback to improve the experience.
Just a few years later, Sabre’s ambitions grew and they entered into a joint venture to launch an extension to their original product, called Travelocity.
The rest is history. Travelocity (now Expedia) went direct to the consumer and became one of the first stories of web-based disintermediation. When was the last time you used a travel agent?
I added my commentary to this classic disruption story on my podcast show, “Unpacking the Post” this week. This is where I have a deeper conversation about my most popular LinkedIn posts.
There are other modern examples of a startup inducing obsolescence onto its own customer base:
In recent conversations with dozens of AEC executives, I’ve been repeatedly asked: “What does disruption look like in an A.I. driven world?”
My answer is that the attack surface is much larger in a post-A.I. world.
A/E firms not only have to fend off nimble startups hell-bent on changing the world in the A.I. era, but they will also have to defend themselves from market-specific software incumbents (Autodesk, Bentley, Procore, etc.) from vertically integrating and completing the project work themselves.
Here’s why. For several decades now, we have been asymptotically moving towards 100% automation of computing tasks.
A.I. is a natural extension of an incumbent software company’s core competency and it’s an area where they have a massive product advantage (their proprietary and large datasets). These companies are also technology native, have hoards of talented engineers, are well-capitalized, and hungry for growth.
If you believe that A.I. will automate a large amount of design and engineering services work because of its heavy computational load, then quite possibly the software operating system that you’ve been a loyal customer of for decades is your greatest threat.
Today, they are Sabre and selling you their software. Tomorrow, they might also be Travelocity.
My advice to compete? Innovation strategy as a defense is a losing strategy.
You must play offense and offense looks a lot like having the mentality, makeup, and orientation of a startup.