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In their new book, Machine, Platform, Crowd , MIT professors Erik Brynjolfsson and Andrew McAfee compare the changes in the business world brought about by digital technology to a similar period of disruption at the beginning of the 1900s, when electric power displaced steam. Even when factories designed around steam were retrofitted for the new technology, they were always at a disadvantage compared to a new factory built around electrical power. The same is true of legacy retailers trying to compete with companies born in the digital age. They’re furiously trying to reinvent themselves, but they’re encumbered with investments and processes designed for an earlier era. Sears Holdings, which also owns Kmart, has spent years trying to get shoppers to join a loyalty program, but it hasn’t stopped the 124-year-old retailer’s death spiral . Macy’s—which is closing 100 stores , laying off 10,000 workers, and cutting prices to better compete with discount chains—still saw its same-store sales fall almost 5% in the first quarter. Perhaps no retailer is repositioning itself more aggressively than Walmart, which purchased Jet.com for $3.3 billion last year to add an online brand to compete with Amazon, and to bring onboard its CEO, Marc Lore, who is now heading all of Walmart’s online operations. To leverage its massive physical presence of nearly 5,000 US stores, the company is rolling out services like grocery pickup for online deliveries, and is experimenting with converting its store associates into delivery drivers . Anxiety about the digital future among corporate executives is a business opportunity for consultants. Egon Zehnder , a global executive search firm, offers two-day seminars for board members called Digital Journeys, to help them understand that a online strategy requires more than a website.
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