In those few short years, Nokia, headquartered on the edge of the Arctic Circle, an unknown company… making snow tires and rubber boots…exploited digital wireless and became the new world leader.

Hudson Valley companies must realize that the 21st century challenge is not to compete for the future, but to create it. Revolutionary businesses are redefining every industry across the globe, as worn-out business models fail. Revolutionaries include such firms as eBay, Cisco Systems, CMGI, Ariba, Red Hat, and Enron.

In the 21st century, change is abrupt. In a single generation, the cost of decoding a human gene dropped from millions of dollars to about a hundred bucks. The cost of storing a megabyte of data shrunk from hundreds of dollars to essentially nothing.

Hundreds of Hudson Valley companies as well as giants such as Compaq, Nike, Novell, Westinghouse, DEC, TWA, Kodak, Kmart, and Nissan are struggling to stay relevant to today’s increasingly demanding customers.

Even revolutionaries like America Online are vulnerable to radical new business models. AOL UK reigned as the largest Internet access provider in the United Kingdom. In September 1998, Freeserve launched free Internet access service in Britain and in 15 months, won 1.5 million users. Its innovation was to take a small percentage of the revenue of each user’s phone connection charges.

If you went to any large telecommunications company and looked up its strategic plan from 1990, you wouldn’t find a single reference to Qwest, WorldCom, Level 3, Global Crossing, Cisco, or Enron.

When Bill Gates says, “Microsoft is always two years away from failure,” he’s expressing the competitive reality of the new age. The world is increasingly divided into two kinds of companies: those that can get no further than continuous innovation, and those who have made the jump to radical innovation.

Buying insurance on the World Wide Web is a totally different business model than going to a physical agency. You instantly compare policies and are sure that you are getting the lowest price.

Over the last two decades, banks have lost nearly half their share of U.S. household financial assets to newcomers such as Fidelity and Charles Schwab.

IKEA invented a high-volume business model for selling affordable home furnishings that is quite unlike that of a traditional furniture store. It allows customers to pay low prices for trendy designs and to take the furniture home with them.

Revolutionaries blow up old business models and create new ones. Many believe that innovation is only driven by technology. In many cases that’s true. Yet, think of IKEA, Old Navy, Virgin Atlantic, Starbucks, Southwest Airlines, and many other innovators that are not technology pioneers.

The biggest mistake that established Hudson Valley companies make is to think that their only competitors are their historic rivals. Freeserve was an offshoot of Britain’s leading electronics retailer and Nokia was in the rubber business.

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