Build windmills, not walls

The Chinese have an old saying: “When the wind blows, some build walls, others build windmills.”

We live in a world that is constantly and at times rapidly changing. We are so interconnected (the globalization of trade, global financial markets, and the Internet), that disruptive events are rarely contained at a local level. If there is a global application, it will go global. The Internet assures that such events are known all over the world at the speed of a keystroke.

The revolutions in the Middle East are evidence of this. The “people power” phenomenon in Egypt, Libya, Bahrain and Tunisia was, in part, accelerated due to the Internet. In true domino fashion, people in these neighboring states felt empowered to revolt due to the same actions being taken by their neighboring brothers. These countries will be forever transformed, their institutions and constitutions rewritten.

Change surrounds us today. The new breed of companies that succeed in the world will be those that thrive and succeed amid change. For the better part of the 19th and 20th centuries success was in a large part measured in terms of size. In today’s world, it is not about big or small — it will be about fast or slow. 

We’ve seen newcomers quickly rival the valuations of much older and bigger companies. A few examples include Google, Facebook (US$50 billion valuation), and Groupon, to name a few. In the video game space Zynga and Playfish caught up to much older and traditionally entrenched players. Both Zynga and Playfish captured the social network games opportunity before slow-moving Electronic Arts (EA) and Activision saw it. As a result, EA acquired Playfish for more than a tidy sum of money.

A fundamental characteristic of a successful entrepreneur is the ability to thrive on change. This dynamism separates the winners from the losers.

I attended a Western Union Asia Pacific summit in Beijing last week. Western Union makes a very good case study for a company that successfully reinvented itself, which allowed it to become a true global market leader.

Western Union originally started as a telegram service company. Back in the 18th century, sending telegrams was the primary method of sending an urgent message to someone across the globe. From this, Western Union had an established network of telegraph offices around the world.

With the advent of the telephone, Western Union realized their current business model had to change. Telegrams would soon be replaced by phone calls, a superior form of communication. They quickly decided to convert their telegram offices into remittance centers.  The rest is history.

Today, Western Union is listed on the NYSE. Below are some incredibly impressive quick facts about them (based on 2009 public-domain information):

• World leader in consumer remittance “cash to cash” service

• A total of over 410,000 locations worldwide

• Processes $60 billion in transactions per year

• Revenues of over US$5 billion, and profit of approximately $1 billion per year

• Present in over 200 countries and offers cash-to-cash services in over 120 currencies.

Western Union is certainly a model and inspiration for entrepreneurs in traditional businesses that are seeking to innovate or reinvent themselves.

Change forces evolution. Change creates new market opportunities and opens up niches not fulfilled by current players in the market. Entrepreneurs that fail to evolve ahead of or alongside the world will be left behind.

Just remember the old Chinese proverb. Build windmills instead of walls.

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Any questions? E-mail egtheplayer@gmail.com.