This post continues a disruptive scenario analysis focused on assessing the transformative environment that faces companies, Industries, Governments, and society as a whole. Much attention is paid to several digital forces (e.g. Mobile, Social, Cloud, Big Data, The Internet of Things, AI, Robotics), but for the most part, the focus is isolated in nature. As described in The Second Machine Age, the combinatorial effect of these forces enables disruptive scenarios at an unprecedented pace. While some of these forces and their combinations are growing more visible, many are far off on the horizon, and countless scenarios are not yet visible. The visual below depicts this phenomenon, underscoring the difficulty of responding to the forces in our line of sight – and the near insurmountable task of responding to those further on the horizon. At its furthest point, lack of visibility to future combinatorial innovation drives a high degree of uncertainty.
Digital
The Future of Business
This list of 99 Facts pulled together by SAP continues to build the case for inevitable change. The title of this SAP presentation is “The Future of Business”. Here are some of the key facts from various sources. There are embedded links in the content that take you to the source documents. Enjoy.
Digital Enterprise Transformation – Wrap Up
Over the last three months, I have presented a framework for thinking about transforming the enterprise to the type of enterprise that can succeed in the year 2020 – What I call a digital enterprise.
Throughout this multi-part transformation series, I have focused on those forcing functions that push us to transform – the drivers that stir us to action. Old models that were created for another time cannot lead us into this future – we must think differently. We must invent the models that define business in the decades ahead.
So, I wrap up this closer look at transformation with the hope that I’ve convinced you in some small way that we are indeed heading towards what is likely to be the most transformative period in history. My hope is that leaders everywhere think differently to usher in a period of prosperity and societal advancement. Instead of talk of disruption, let us talk of enablement and advancement. May we each have the wisdom, vision and courage to lead in this emerging transformative period.
For a review of this entire transformation series, here is an intro and link to each of the prior posts. As a reminder, forcing functions are those things that force the enterprise to invest in a future state. The enablers are those facilitators of change that allow us to address the forcing functions and build a path towards the future. Click on the underlined title to access each post.
A Closer Look at Transformation: Descriptive to Prescriptive
Next up in this transformation series is the eighth enabler: the evolution from descriptive to predictive analytics. At the heart of future success lies the ability to leverage insight for competitive advantage. Yet, analytic capability and data driven cultures are lacking in most organizations, and most executives when assessing their positioning on a descriptive-to-prescriptive scale answer level one. The table below defines each level:
A Closer Look at Transformation: Collective Intelligence
Next up in this transformation series is the seventh enabler: Collective Intelligence. One of the key themes throughout this transformation series is the clear movement from an enterprise entity to an extended enterprise of stakeholders. This extended enterprise – or what I alternatively call value ecosystem – increases complexity and requires a new management approach to be effective. I use the term collective intelligence as an umbrella phrase that combines the critical need for both collaboration and analytic excellence. This includes other forces like crowd computing, crowdsourcing, co-creation, and wisdom of the crowd – all of which stem from the connectedness of our world, and the growing realization that value creation requires a broader community.
A Closer Look at Transformation: Sense and Respond Systems
Next up in this transformations series is the sixth enabler: sense and respond systems. These systems are critical to the transformation agenda, as most of the disruptive technologies likely to impact the enterprise in the next decade have data at its core. The resulting data explosion promises to complicate information management for most companies. As the speed of business accelerates and the amount of data flowing through company ecosystems expands, the need to sense stimuli and enable a real time response intensifies. Fortunately, rapid advancements in the price and performance of technology make realizing this sense and respond paradigm achievable and economical for a wide range of use cases – but this is arguably one of the most difficult components of transformation road maps.
A Closer Look at Transformation: Value Ecosystems
The next focus of this transformation series shifts to the emergence of value ecosystems and their role in driving the Enterprise of 2020. As we look at the Apple ecosystem and offerings like the connected car, mobile commerce, energy efficiency, electric cars, eHealthcare, and energy performance contracts, we can see the lines between industries blurring. Some even question the relevance of Industry constructs in the future. As this phenomenon accelerates, more and more companies must identify the relevant ecosystem(s) that enable their growth strategies. These value ecosystems are complex and relationship-oriented, representing future growth opportunities that are increasingly outside a company’s traditional business.
A Closer Look at Transformation: Edge-Driven Design
Next up in this transformation series is edge-driven design, the second enabler. This key enabler is growing in importance as developed economies are moving away from command and control models and towards edge interaction that is value-based. The design principles of our past where the core (Systems of record) drove design and the edge adapted do not support this shift. This future state requires the edge to drive design from the outside-in and a core that is adaptive. This reversal in design principles supports two future dynamics: 1) Value is increasingly created by an ability to connect capabilities across organizations within an ecosystem of services, and 2) The shift from a transactional paradigm to an experiential one. An edge-driven design addresses both of these dynamics and begins to instill a fast, iterative and responsive culture.
A Closer Look at Transformation: Structural Change
This closer look at transformation now shifts to the enablers. By way of summary, we have covered the forcing function piece of the diagram below; those forces that drive leaders to invest in a future state. In the absence of a burning platform, one must turn to vision as a catalyst for change in what promises to be the most transformative period in history. Once the impetus for change is established, what are the enablers of change? Where do companies invest to move towards that future state? The enabler side of the visual identifies those facilitators of change that allow us to address the forcing functions and build a path towards the future. The next nine posts will address each of these individually, starting with structural change.
A Closer Look at Transformation: Societal Change
The next focus area in this closer look at transformation is the fifth and perhaps most critical forcing function: societal change. Wikipedia refers to societal change as an alteration in the social order of a society, including changes in nature, social institutions, social behaviors, or social relations. The base of such change is change in the thought process of humans. Digital is the primary driver of a societal change not seen since the first industrial revolution, impacting every aspect of society from business to war. It was digital (Internet) that accelerated globalization, and now the broader digital platform allows even a start-up to be global upon inception.
A Closer Look at Transformation: Differentiation
Continuing with this closer look at transformation, part three focuses on differentiation; the fourth forcing function. Differentiation is a process that showcases the differences between products and services. It looks to make an offering more attractive by contrasting its unique qualities with other competing offerings. Successful differentiation should create competitive advantage, as customers view these offerings as unique or superior. In his piece on The Future of Enterprise IT, Geoffrey Moore, famous author of “Crossing the Chasm” describes the global business dynamics (Slide 10) that places differentiation at the center of a virtuous (perhaps vicious) cycle. His key message is that globalization and rapid commoditization are placing greater emphasis on differentiation, especially in developed economies.
A Closer Look at Transformation: Effectiveness & Efficiency
In part two of this closer look at transformation, we will focus on two forcing functions: effectiveness and next generation efficiency. As a reminder, forcing functions are those things that force the enterprise to invest in a future state. In the case of efficiency, the next phase in the search for gains is upon us, as companies have hit the efficiency wall. But something bigger is happening, as the pace of business will increasingly demand that we are not just efficient – but effective. Whereas the past was about re-engineering, the future is about re-imagining.
The New Machine Age
I recently participated in a panel discussion at an MIT CIO Symposium and had the pleasure of hearing Andrew McAfee talk about the book he co-authored with Erik Brynjolfsson titled Race against the Machine. Mr. McAfee has talked at length about the digital revolution and its impact on the workforce. He talked about the dawn of a new machine age, where the focus is on idea production versus physical production, and knowledge work versus manual labor. He focused on the most impactful period in human history – the advent of the steam engine that ushered in the first industrial revolution. A lengthy period that followed the first machine age was transformative and disruptive. We are on the verge of something that history may someday view as more transformative and disruptive. A quote from Mr. McAfee summed up his thoughts:
“Digital will make a mockery of everything that came before it”.
Digital Enterprise Road Map Series: Part 6 – Insight
Part six wraps up our Digital Enterprise road map series with a focus on moving insight delivery from descriptive to prescriptive. Throughout this series, I have stressed the importance of analytic excellence to long term success. But current methods such as traditional business intelligence (BI) focus on reporting and analysis that seeks to answer questions related to past events – what happened. Advanced analytics seeks to answer questions such as: why is this happening, what if these trends continue, what will happen next (predict), and what is the best that can happen (prescribe). There is a growing view that prescribing outcomes is the ultimate role of analytics. To accomplish this, analytic initiatives need to leverage an insight-action-outcome framework that starts by defining outcome-enabling insight and ends with a focus on data provisioning.
Digital Transformation
A new short Video featuring Tonya McKinney and I is now available on the TCS website. The focus of the video is the broadening role that Digital will play in the future enterprise. It’s no secret that I still see too many companies limiting their digital perspective to Marketing. Digital will eventually be viewed as the biggest disruptive force business has ever seen. Yet so many companies still have a business as usual view of the world. You can read about our perspective on the critical path forward via this Blog or through the TCS Perspective Series.
Digital Enterprise Road Map Series: Part 4 – Systems of Engagement
Geoffrey Moore introduced the Systems of Engagement concept about two years ago. This vision for the future of Information Technology is gaining broader acceptance – but a surprising number of executives are blind to the coming sea change. Is it hype or reality? For me, this question boils down to one certainty: traditional companies must infuse their organizations with digital DNA – and I believe systems of engagement accomplish this. They raise Digital DNA quotients by using consumer technology to make companies more effective. This notion of effectiveness is a key shift from a two decade long focus on efficiency. That’s not to say the importance of efficiency has diminished, in fact I’d say the next phase in the search for efficiency gains is upon us. But at the same time, effectiveness will headline a decade long journey focused on growth. The same platform that enables next generation efficiency – Mobile, Social, Big Data, Analytics and Cloud Computing – forms the foundation for effectiveness through systems of engagement.
Digital Enterprise Road Map Series: Part 3 – Social
My belief that digital is still very misunderstood is growing stronger. Instead of understanding digital to be the transformative engine that drives sustainability – it is still viewed as an offering or channel. Those are indeed critical pieces of the digital story, but it’s not the whole story. Those very innovations that drive our current disruptive environment – transform us to deal with the aftermath. Our customers have shifted – and we can’t shift with them if we are inhibited by traditional views of digital. I participated in a recent think tank discussion, where people talked of digital’s small contribution to revenue, concluding that it was not worth the focus.
Heavy sigh!
Digital Enterprise Characteristics
In the past two months, interest in the characteristics of a digital enterprise is accelerating. I believe increasingly, traditional companies understand that viability in the next decade drives the need to evolve. The list of characteristics has been refined through ongoing dialog and now looks like this:
Digital Enterprise Road Map Series: Part 2 – Experience
In part one of this six part series; I focused on Holistic Strategy – the first step on the digital enterprise journey. In part two, the focus shifts to experience-based differentiation. With the rapid commoditization of products and services, the speed at which new market entrants emerge, and the rise of Consumerization, experience is the new battle ground. When I talk of experience, I mean stakeholder experience. Ultimately, it’s about creating differentiated customer experiences – but to get there, the experience we create for our employees and partners is critical to that end goal.
The Internet of Things – The Tipping Point
The Internet of Things (IoT) is predicted to reach a tipping point in 2013. Mobile, Cloud, Big Data and Social are converging to enable countless applications of IoT in the future – and of all the disruptors in play today, IoT could very well be the biggest. With IoT, objects use tiny devices to make them identifiable by their own unique IP address. These devices can then autonomously communicate with one another. In evaluating the many IoT applications, I have categorized the path forward into four buckets: Smart Products, Smart Optimization, Smart Automation, and Smart Decisions. Here are examples across each category.
Reimagining the Future 