The Hudson Valley is experiencing more change than at any time in history, and the rate of change is accelerating. The Web has connected more people in five years than the phone company did in a century, and Internet traffic is quadrupling every year.

To get 25 percent penetration of US households it took automobiles 44 years, telephones 35, television 26, personal computers 15, cell phones 13, and less than 7 years for the Internet.

With the accelerating pace of change, companies will get blindsided more than ever before. John Galanti, President of Hudson Valley DataNet said: “In the last two years we have implemented at least three major technology upgrades. Each time it has facilitated better service to our customers. We view change as a constructive force; not something to avoid, but rather something we encourage.”

At Sun Microsystems 95% of revenues come from products that were not available 10 months ago. Microsoft’s Gates said, “In three years, every product we make will be obsolete. The only question is whether we will make them obsolete or someone else will.” This means that Hudson Valley companies must recognize change sooner, understand it better, and predict its impact more accurately. Why don’t we do these functions better?

In the music industry, who does all the strategic planning? The 18-year-old who listens to MP3’s, or the 55-year-old who has never downloaded a music file? Jack Welch, the former chairman of General Electric, avoided this problem using reverse mentoring; a 30-year-old GE employee taught him how to use the Web.

Bill Gates appoints technical assistants to keep him alert to new trends that could affect his company. Hudson Valley organizations should appoint people under the age of 30 also.

At its peak, February 2001, Napster downloaded 2.8 billion music files. The music industries lawsuit forced a 95 percent decline in file sharing at their site. Six months later nearly 100 alternative services sprang up to replace Napster, the top four downloaded more than 3 billion files.

The film industry faces the same problem. Morpheus and other services that allow users to share movies will affect Hollywood just as dramatically as Napster blindsided music. Television shows, video games, and feature films are being downloaded, and swapped on the Internet, with about 500,000 files shared every day.

But rather than resist, five major studios agreed to allow broadband users to watch new and old releases for $3 to $5, about the cost of a pay-per-view movie. Rather than fight the technology, the film industry is embracing it, making it legal, and gaining revenue from it.

Creative destruction eliminates old, inefficient companies and replaces them with outsiders employing innovative new technology. Two-thirds of the 1970 Fortune 500 were gone by 1995.

Hudson Valley organizations must muster the courage to make their own products and services obsolete. Failure to change will cause blindsiding. New providers will bring in innovation and render you obsolete.

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