Thoughts I shared at this years TCS Innovation Forum in New York City.
I recently authored an article on ecosystems and digital transformation along with leading platform strategist Simon Torrance. Here is a brief abstract of the article. You can read it Here on the TCS website – along with other perspectives on digital transformation.
As Frank Diana and Simon Torrance explain in “Defining Your Digital Ecosystem: The First Step in a Machine First™ Transformation,” many leaders are no longer looking at strategy and industry structure in the ways of a non-digital world. Instead, they’re analyzing how emerging ecosystems—networks of stakeholders, including business partners, suppliers, customers, and competitors that interact digitally to create value are supplanting traditional industries as the organizing construct. For example, in a mobility ecosystem, automakers no longer just make cars; they must redefine the very notion of automobile ownership and how people get around.
As the world continues its march towards platform-supported ecosystems, organizational readiness becomes a critical area of focus. Four facets of an organization contribute or detract from success in an ecosystem world:
- The mental models that drive an organization
- The lens in which an organization views value creation and capture
- The orientation of an organization – which in most cases is shareholder value
- The organization’s culture
The growth engine that ecosystems represent will serve as a forcing function, pushing Organizations to Mature across these key facets. For example, I firmly believe that over time, a transition occurs from shareholder value to stakeholder value. This transition places purpose at the center, with shared value at its core (Click on the Visual to expand).
The illiterate of the 21st century will not be those that can’t read or write, but those who cannot learn, unlearn, and relearn – Alvin Tofler, Rethinking the Future.
As we all become life long learners, unlearning could be our biggest challenge. Our mental models prevent us from seeing the need for change. We are creatures of the only world we have individually known. Even if you are one hundred years old, the mental models established after humanities second Tipping Point dominate your thinking. They form our intuitions and belief systems.
As horizontal ecosystems become the primary means of value creation and capture, organizations will embrace various monetization strategies. Given the proven growth potential of platforms (the foundation of ecosystems) and the increasing collapse of Industry boundaries, the urgency to understand ecosystem dynamics is growing. Ecosystems enable producers and consumers to interact in ways that create shared value. In many cases, stakeholders will play either role at any given time – a phenomenon some have called side switching.
In a recent book titled, Robot-Proof: Higher Education in the Age of Artificial Intelligence, Northeastern University president Joseph Aoun proposes a way to educate the next generation of college students, supporting society in ways that artificial intelligence cannot. His underlying premise is that the existing model of higher education has yet to adapt to the seismic shifts rattling the foundations of the global economy – I firmly agree. It was Alvin Tofler that said: The illiterate of the 21st century will not be those that can’t read or write, but those who cannot learn, unlearn, and relearn.
This conversation is broader than a focus on school-aged young adults. What Tofler pronounced applies to all of us. In his book, Mr. Aoun presents a new model of learning that enables us to understand the highly technological world around us, allowing us to transcend it by nurturing the mental and intellectual qualities that are unique to humans – namely, their capacity for creativity and mental flexibility. He calls this model Humanics. These Human Traits represent our future skills profile, including many of the right brain characteristics visualized below. We will want explorers, problem solvers, dot connectors, continuous learners, and those not afraid to challenge the status quo.
The evolution of business in the industrial age has mirrored the progression of three industrial revolutions; moving us from its first iteration to our current form. The emerging Fourth Industrial revolution ushers in another shift, culminating in something that likely looks much different than its predecessors. A brief look at this journey shows us the linkage:
Iteration One: The first industrial revolution introduced mechanization and had significant impacts on business and the labor force. Business in this period was transformed, as the steam engine enabled us to replace human and animal-based muscle with machines.
Iteration Two: Several forces converged during the second revolution to elevate our standard of living. The post-war period that followed was defined by a high level of consumption that drove business in the mass production era. Henry Ford famously said: “Any customer can have a car painted any color that he wants so long as it is black.”
Iteration Three: The third industrial revolution revolved around information technology, electronics, and communications, ushering in a period of computerization and automation. Businesses were once again transformed through significant gains in productivity and a shift away from Henry Ford era standard products to more customization.