Published 05 September 2017 Category: Compass Insights

Thinking Ahead In The Digital Age

Ever wondered how businesses thrive in the digital age - this age where the only constant is change?

As the economy becomes more digital, we’re finally waking up to the idea of companies not lasting forever. It’s not only because the digital transition triggers a radical reshuffling of traditional values.

Digital business models also generate increasing returns that intensify the volatility of the market and make organisations more fragile than ever. As a result, many companies have an unfortunate tendency to stumble and disappear at a higher frequency.

We’re now suffering through a cycle of destabilisation, whereby each new technology makes it ever easier and faster to create the next one, which, of course, leads to more and more failure. The problem is how hard it has become to make long-term provisions.

We frequently get the common but interesting question: What’s going to change in the next 10 years?’  However, we almost never get the question: ‘What’s not going to change in the next 10 years?’ The second question is actually the more important of the two  - because you can build a business strategy around the things that are stable in time.

And this is exactly what Warren Buffett does  -  looking at what doesn’t change:
One of Warren Buffett’s distinctive traits is how much he values the long term. Berkshire Hathaway’s favorite targets are companies that, over an extended period, can employ large amounts of incremental capital at a very high rate of return.

Indeed most of Warren Buffett’s investment thesis is based on the premise of a stable economy. The difficulty with envisioning the long term in the digital economy is one of the reasons why he has avoided that field altogether. The only weapon to survive in an unpredictable world over the long term is not by crunching more data, but by looking for singularity. A good way for spotting singularity is to focus both on a desire for long-term impact and the will to make money.

People who want to get rich without trying too hard and without having a real impact don’t thrive in the startup world, as they’re incapable of sustaining the effort needed to succeed at the earliest stages. As for people who want to have impact but are not interested in making money, they usually can’t access the capital necessary to make a difference at a larger scale.

In our business, we know that customers want low prices, and we know that’s going to be relevant 10 years from now. They want vast selection. It’s impossible to imagine a future 10 years from now where a customer says, ‘I love Compass Offices; I just wish the prices were a little higher.’ Impossible.

When you have something that you know is true, even over the long term, you can afford to put a lot of energy into it…and we know that the effort and energy we put into it today will still be paying off dividends for our customers 10 years from now. So just like Warren Buffett, we’re in it for the long term. What about you?