He points to the recording industry, which never saw Shawn Fanning and his Napster coming. The music industry was not alone: Kodak, Polaroid, Microsoft, Cisco and K-Mart have all been hurt.

This excerpt, from the book’s first chapter, introduces Harris’ main argument.

Why are companies blindsided? Why is it occurring with increasing frequency? And what are the consequences for organizations that are blindsided? Polaroid filed for bankruptcy protection on October 12, 2001. The icon of instant photography was blindsided by the rapid rise of digital photography.

Kodak’s sales have slid over 20 per cent from 1996 to 2001. Traditional photography companies with long, proud histories were blindsided.

Microsoft was blindsided by the rapid rise of the Web. Netscape’s initial public offering (IPO) valued the company at $2 billion on its first day of trading.

Goldman Sachs downgraded Microsoft’s stock, citing concerns that the software giant would become irrelevant in the Internet age. Netscape’s browser was being downloaded at a rate of one million copies a month. All of this happened before Bill Gates held his famous turnaround event in December 1995 announcing that Microsoft was serious about the Web.

Finally, the United States was blindsided on September 11, 2001 when two commercial airliners were deliberately crashed into the World Trade Center in New York, killing over 2,800 people. The effects were catastrophic, causing billions of dollars damage. The resulting cancellations of travel plans pushed four airline carriers into bankruptcy, and many others to the brink.

Old, established companies are being blindsided. New economy companies are being blindsided. Financial markets are being blindsided. Whole industries and even societies are being blindsided. Why is this occurring? How can you identify early warning signs that your company or industry is about to be blindsided? What systems and structures can you put in place to prevent this happening to your organization? Finally, knowing all this, how can you take advantage of this information to blindside your competition?

The key to avoid being blindsided is increasing the speed of recognizing and responding to change.

Technology changes at a dizzying rate. The chart below shows the number of years it has taken 25 per cent of the households in North America to adopt different technologies:

Electricity 46 Car 44 Phone 35 TV 26 PC 15 Cellphone 13 Web <7

The Web is becoming the infrastructure of the new digital economy, accelerating the rate of change to Internet speed.

Because the Web eliminates traditional barriers of time and distance, it accelerates the adoption of technologies.

Here is how many years it took different technologies to reach 10 million customers:

Radio 20 TV 10 Netscape 2.3 Hotmail 1.5 Napster 1

Because of the speed of change, companies will have to employ new strategies and tools to keep up with, let alone stay ahead of, the change in the business environment. Here’s a simple fact: 80 per cent of the technology we will use in our day-to-day lives in just 10 years hasn’t been invented yet. Some people don’t believe this. The Web was born with the release of Mosaic in 1993 or Netscape in 1995. E-commerce is expected to grow to $6.78 trillion by 2004.

“The Internet runs on dog years,” the saying goes, and it’s true.A staggering 95 per cent of Sun Microsystem’s revenue comes from products that were not commercially available just 18 months ago. Bill Gates in Business @ the Speed of Thought writes: “In three years every product we make will be obsolete. The only question is whether we’ll make them obsolete or if someone else will.”

Because of the dot.com bust and the fall of the NASDAQ composite index, some people dismiss the Internet boom as being all hype. There are, however, many companies that have experienced explosive growth and profit. For example, the following table shows the growth of online sales by Dell Computers: Dell online sales (US$mil./day)

March 1997 1 February 1998 4 February 1999 14 January 2000 40 September 2001 50

Dell is an Internet company, because 50 per cent of its sales come over the Web. In 2001, Dell was the only large computer company to make a profit.

Here’s a provocative question: Can a company appear healthy and yet be dead? Think back to learning how to drive a car. When I was taught how to drive, I was told to keep 10 feet of distance from the car in front for every 10 miles per hour of speed. So at 60 m.p.h. we’re supposed to keep 60 feet behind the car in front. Imagine a driver on the highway at 60 m.p.h. Suddenly a fog descends on him so he can only see 10 feet in front. If you were to measure the vital signs of both the driver and car at that point, you’d find both were healthy.

But I argue that in reality the driver is dead because sooner or later he will come to a bend in the road, an oncoming car, a stopped vehicle, or a cliff and won’t be able to respond in time.

Driving at high speed in fog is a metaphor for organizations today.

Companies used to have five and ten year strategic plans, stable industries, and predictable customers. Today, however, whole industries are being turned completely upside down in two years.

Seemingly healthy companies that can’t recognize and respond quickly to change may be dead but not know it yet.

If you are driving at 60 m.p.h. with only 10 feet of visibility there are two things you can do: one is to slow down to 10 m.p.h. But can we slow down in our organizations today? No. We are being exhorted to go faster and faster. The other thing you can do is increase your response time six-fold.

Increased speed requires decreased response time. How can individuals and organizations recognize change sooner, understand it better and predict its impact more accurately?

Radar is a powerful metaphor for an early recognition system. The farther out the radar can see, the earlier the warning. However, the value of early warning is not great if you can’t tell the difference between a flock of geese and a fighter jet. In other words, how accurately you “see” and evaluate the threat is just as important as how early you perceive it.

Increased speed also requires increasing the speed of responding to change. How can organizations respond faster to the changing market, consumer preferences, and technological trends?

The metaphor here is reflexes.

Recognition and response. Radar and reflexes. Just trying harder won’t work. Organizations have to put in place systems and structures that increase the speed of recognition and response.

Three types of companies There are three types of organizations— those crashing into brick walls, those swerving to avoid brick walls, and those out in front building brick walls for their competitors. The principles outlined in Blindsided can be used not only to prevent your organization from being blindsided, but to blindside your competitors.