We may not know exactly what the future holds, but we can predict roughly what’s going to happen. A cycle of product evolution, leading to commoditisation in the utility services, and when things become plentiful in the utility sense, new things become possible. There’s an example when compute becomes utility in the Amazon.com and the [...]
We may not know exactly what the future holds, but we can predict roughly what’s going to happen. A cycle of product evolution, leading to commoditisation in the utility services, and when things become plentiful in the utility sense, new things become possible. There’s an example when compute becomes utility in the Amazon.com and the [...]
We take the basic view that over time leadership and digital leadership will increasingly become one and the same whereas in the past technology leadership would have been seen as something that the IT function did today the ability to lead large scale digital initiatives is essential to just about every firm and that can’t just go through the IT function, it requires engaged senior executives who appreciate the importance of technological change, it requires employees to embrace and not resist those changes and it requires in many ways working with customers and the eco systems to do those things in a wider industry context because firms in many cases can’t make these changes just on their own.
Superstar bias means we need to restructure economy
So although the overall pie is getting a lot bigger, many people aren't sharing it. In fact, the majority of Americans aren't sharing in it.
This isn't necessarily bad news insofar as the pie is getting bigger, and if we think of ways of restructuring the economy, I think ultimately everybody ultimately will be able to share in it. But over the past 10 years it's been very disruptive, and in fact, most of the gains have gone to a relatively small group of people. Andrew McAfee call this 'superstar bias technical change'. It stems from the fact that once you digitise a process, you can replicate it, and you can make a copy, ten copies, one hundred million copies. Each of those copies can be made at almost zero cost, each of them is a perfect replica of the original. Each of them can be transmitted anywhere in the world almost instantaneously.
Free, perfect and instant are three characteristics we haven't had for most goods and services before. They lead to great bounty, and the ability to access goods and services much more cheaply, whether it's Wikipedia or GPS systems, or medical diagnoses.
They also changed the distribution of income. When someone is buying a tax preparation program, they might only be interested in looking at the best program, or maybe the best two or three programs, you don't need tens of thousands of different tax preparation programs. So that means that a small number of people, or ever one person, can capture the majority of many of these digital markets. In contrast, with traditional goods and services, you usually have lots more sellers and lots more widespread distribution of income. So digital goods tend to often lead to winner take all, or winner take most markets, and a greater concentration of income, even though they make the overall pie bigger.
Consumerisation of technology brings IT to front of firm
For us the biggest issue we try to think about and research is the fact that IT is now pervasive really in every part of the firm and that is very different in the past where all of the things tend to run through central IT so the challenge for many organisations today is how do you manage technology in an environment where it touches every employee, every process and every function of the firm and what does that mean to the central IT function.
The traditional IT function was very much a back office function, it was focused on financial systems, inventory systems, management and control systems but it was very much not focused on what we call today front of the firm functions, what is going on in the market place, what is going on with the customer, what is going on with the innovation of the firm and now that is really the focus of technology in the market today.
What’s changed is just over time how much more powerful technology has become and we look at that through really two main dimensions – that technology has become consumerized so everybody has it with them at all times in all places and that certainly wasn’t true 10 years ago and just the growth of the cloud and the internet environment and its capabilities to be able to provide just about any technology service anywhere in the world for a very effective internal price has really made it much more easy to try things and do things and just greatly increase the speed of innovation. So consumerisation and the cloud have just really changed the shape of the IT business over the last decade.
Consumers drive disruption around the edges of the Energy Industry
We don’t see so much disruption from technology into our core business. Where we do see the disruption really, is around the edges, again particularly in our retail space, in terms of the expected interactional relationship that our customers have with us as a business. So being out there, having a presence on the web, then being able to access and control their energy uses from things like apps and from their smartphone devices or tablets, or even being able to control the energy consumption plans inside the house, is also becoming big. Again controlling through their smartphones, and we're expected to play in that space.I guess from a consumer perspective, people are changing the expectations they have of utility businesses. So they're having to focus a lot more around their retail relationships and become much more service focused. Particularly in the area now of energy consumption and greenhouse gas emissions, impact on the environment through global warming. People are becoming much more aware of how much energy they're using and how that compares with their neighbours, say, and their averages to make sure they can keep their consumption down both from an environmental perspective but also with the price of energy rising from a cost perspective. We now feel the obligation to help our customers actually reduce that cost.
Multinationals plugging in to Silicon Valley Ecosystem
What we are seeing is hundreds of companies that have nothing to do with tech from all over the world piling in there and opening labs and opening permanent offices and we are seeing vertical clusters form. Financial services, Telco, media, retail and there is hundreds of companies that are coming there and they are establishing a permanent presence and they are plugging into this very open eco system. Walmart has 1500 people in Silicon Valley and they are trying to catch Amazon obviously, and that was also a number of acquisitions. Marks and Spencer from the UK has a presence in Silicon Valley also in the retail sector. Axel Springer the giant German media company has a presence, a permanent presence in Silicon Valley. So we find it quite interesting for businesses globally to understand that these companies are pitching up and they are putting an office there to either in an offensive way to figure out what they need to do quickly or in a defensive manner to perhaps try to thwart being disrupted themselves.
How Enterprise IT lost its monopoly to consumer culture
The fundamental shift is that we have moved from a model where the company did everything itself and operating inside out towards the customer, pushed services and products towards the customer to the model where a great many of those activities are outside in, they are delivered outside in to the company and the company itself in fact is now confronting a customer who is more active and more engaged and less willing to be marketed passively than in the past so the Outside-In dimension also includes the customer in important ways and so the entire landscape is transformed and what it means for central IT or enterprise IT is that they no longer have a monopoly on IT within the company. Most of the services or if not most then at least the new services are being delivered directly to users or business users through the cloud and not through central IT, so central IT has lost its monopoly and the business or business users are now increasingly interested in sourcing IT services from outside and not from central IT and they do this because these new services are really very similar in style to the consumer IT they all have at home. That consumer IT is universally seen as better and more user friendly and higher quality than the services that people get from enterprise IT at the office and so what has happened is the consumer model is taking over the IT culture really inside the firm.
Research shows boards not strategic enough about technology
We have done research in technology and the board and the CXO suite and when we did this a few years ago one of the things we found is that the time the boards spent on technology issues was very much internally focused and had to do with things like returns on investments and CIO successions and compliance and the auditing function and all these sorts of things and they spent very little time on these sort of more strategic things of how technology might change their business and industry and in just the last couple of years we have seen that change to a significant degree but still a good ways to go but a lot of boards now are at least making an effort to have people in there who have a more first-hand feel for digital issues than they would have done a few years ago, but still it is a real problem in a lot of senior boards that we work with and see.
We don’t see any industry where information technology is not a hugely important issue. In fact we did a survey just a few months ago and only two percent of the business leaders said that IT was not an important issue for their firm so technology effects customer relationships, product designs, competitive issues, pricing issues, service issues, so it effects everything that companies need to care about and so you are no longer in this position where executives can say well technology is not my thing, that is for somebody else to do and IT doesn’t matter, I don’t need to know about that. Those sorts of things that you used to hear quite often, you really don’t hear very much at all anymore because people realise that stuff is not a good thing to say.
20yr LEF veteran – Forum helps us understand the threat of disruptive tech
I've been working, I've been coming to Leading Edge Forum for many years, before when I was doing POTs. I'm very familiar with this organisation and probably I've come to it for the last 20 years, 15 years. It's a very, it's very thought-leader organisation, and it's good to see that now that many of the good ideas that Leading Edge Forum is coming up with actually being incorporated and put into practice by CSC.
I came today because the agenda was really focused on technology disruption, and technology disruption is something that many of us are very concerned about. Especially in an industry like education which is behind in adapting technology, but that's starting to change. And as it changes we have to be sure that we remain competitive. The advent into massive online courses open online courses, the MOOCs, there's a lot of things happening now with the common core assessments as they come into the high school, and K-12 environment, and that's going to bring a lot of technology in the classroom, we're already seeing the role, of education, get a big foothold in education, and as these platforms develop in education , and data starts being gathered, and for the first time we actually started getting big data sets in education, there's going to be a lot of education, and it may change the whole way education is done in this country.
We don't want to be left behind we want to be in front of that change. And I'm concerned that, if we are aware of these technology shifts and understand how to map our future, which is one of those things we heard about today, we won't be ready to adopt our strategy, it'll just be outdated.
BP: Digital technology does not come in nice little silos
I work for BP so we are a very large oil and gas company we operate on a global scale, our market cap is probably 150 billion, we probably operate more retail stations than McDonalds has outlets.
I work in a group called Chief Technology office. Our mission - it’s not a big group, it is less than 20 people – is to bring emerging visual technologies into BP and we do that by nurturing a vast eco system of contacts as we call it of thinkers on the outside world as well as networking within BP to try and make a match between ideas that are emerging in the outside world and our needs within BP and the challenge is to put those two together and start some projects.
I think we have been doing a lot of deep thoughtful thinking about how one innovates and then how one insures that one adopts that scale.
I think the other thing that we have, very progressively I think, is understand that technology does not come in nice little silos and especially digital technology – digital technology stretches across all of our core tech technologies petroleum company and there is this merging or fussing of what is digital and what is not so we are finding that one needs to be kind of a polymath when looking at these things, you need initial and a mind frame but you also need a kind of scientific mind frame, an engineering mind frame, a social technologies mind frame and they are all kind of put together so people that are broad thinkers can be a very quick learner and assimilate lots of different points of view for a given technology in a probable area are more successful.
I can’t tell sometimes what is digital and what is a core technology and what is not and it just goes to show how impactful and pervasive digital technologies are and people that can operate them in a broad swathe of areas. So we are finding ourselves doing more and more work with upstream and downstream technology or alternative technology groups as well as with IT and all very focused on business applications
Internet evolution – ecommerce to web2.0 to co-creation
Co-creation actually is about creating value together based on human experiences and I mentioned I have been studying this for the last 15 years because when the internet first came on the scene it was all about ecommerce and then we talked web 2.0 as people understood it is more than just a delivery from the firm to consumers, it really fundamentally alters how individuals interact with each other. So when the interaction stuff happened I think people started recognising that this is something much more fundamental in terms of how it is going to transform the way we interact with each other and interact with all around us and that is really the starting point for thinking about co-creation.
HR 2.0 is about finding out the new way of how disruption in technology companies and how HR are actually coping with that. Through the research that we're doing so far, that we've discovered that actually HR are going through this massive disruption themselves. Whereas before it was very much about legal business and finding employees for the company, they've over the years have realised the legal and the business side of things has been too predominant over them, so the recruitment function for a lot of HR companies right now has become dysfunctional. So it's causing this kind of dysfunctional relationships with line managers and actually were attracting talent themselves. Then to add to the complexity of all that we have social media and all the other technology, which is kind of taken it away from HR process. HR 2.0 is about identifying the problems and not having a, So what? It's about here's some solutions to that as well and we've got some cool case studies of what we've been working on to do that for everybody.
Oh, it's absolutely there, in fact it's a, really a part of everything that we're transforming to, from a CSC perspective. You know, we are a glass cottage industry, we have a lot of IT outsourcing, that we actually do. We have a lot of tradition application management. All of these applications are coming forward now asking for new mobile edges, restful APIs, new integration strategies, better protection strategies and to be able to do it on cloud and other platforms, these disruptions that are out there are all being driven by consumers who are actually demanding these technologies and these new integrations and new agile way of doing work. And so for us, if you look at our technology transformation that we're operating within the company, all of the new offers that we're going to be delivering are going to be really focused on that third platform, that social, mobile, analytics, cyber cloud capability, smack, to really help our customers take that leap forward and really turn their intranet into an internet.
New breed of Outside-In Business Relationship Managers critical to IT’s future
Typically the business will have discussions about some initiative and those discussions typically do not involve IT. They will have discussions with sales, with product management, with marketing, with every function except IT.
After they have decided what they want to do then they call up IT and they bring them in and they say ok we want to have the following system by next week and so IT is treated as a vendor, the business doesn’t see them as a partner and so they bring them in only after the important conversations have occurred.
Now moving to the issue of business relationship management most of our clients have developed the business relationship management or BRM function as a way of attempting to establish better relationships with the business and those BRM’s have typically seen themselves as the sales force for central IT.
They are the ones that would go out and try to understand the businesses requirements and then go back and get a system built to meet those requirements and so that has been the model and it is still the case that the BRM activity very often involves this kind of dialogue and the acid test of a successful BRM is whether he or she is at the table for the early meetings of any business change and so the thrust of our training programme is to create the skills, particularly the soft skills, in BRM’s that permit that to occur.
Without strong relationship skills the BRM’s don’t get to the table and they remain suppliers, they remain providers in the model that I presented earlier, so they are in the lowest level of value.
Now with the shift to Outside-In, with more services coming from the cloud then the BRM needs to be representing not only enterprise IT but also representing alternatives that might come from the cloud directly and so the BRM has to have a wider set of alternatives available and has to be able to advise the business on broader provisioning opportunities that might be there, that is a more demanding mandate than simply selling your enterprise IT solution because in the past enterprise IT had a monopoly on IT basically and the strengthened the BRM in their discussions, now enterprise IT has lost that monopoly and the BRM has to compete against other services so in effect the Outside-In BRM is a more demanding role that the traditional BRM.
Predicting change in a Time of War and an Age of Wonder
It turns out that once you start mapping out environments you can determine common or sort of economic patterns. So how efficiency enables innovation and how we have inertia and how inertia kills organisations and how the economy goes through cycles, through a stage of peace, war and wonder. And there is an awful lot which is predictable about change. It’s not this completely random sort of thing that we are led to believe. A lot in terms of how things evolve with is actually predictable. Now the interesting change is when it comes to prediction you can often actually say what is going to happen but not necessarily when or you can say when something is going to happen. But not necessarily what and mapping just like looking at a chess board gives you a way of narrowing down on the scope of those change. So we are going through a particular part of the economic cycle at the moment which is caused through commoditization of a range of activities. So we are seeing disruption of pre-existing industries but as a result you also get explosion of new things being created. So you get this time of war in terms of past industries being destroyed and this time of wonder in terms of new things are rapidly being created. Nothing new with that we have gone through seven of those economic cycles in the last 300 years. It doesn’t matter where it is the age of electricity or the mechanical age they are all the same. But the advantage of mapping is you can start to manipulate that to your favour. It enables you to spot what is likely to occur and so that’s what the project is about how we apply those techniques to identify what is going to occur.
Big data isn't really just analytics alone, and I don't think taken alone, it's really the agent of change that's made Google and Facebook and the other companies that we celebrate for their use of data their success. There's no use in having an amazing insight about your customers if it's going to take you three months to react to it, because by then, it may have been a great insight, but it's a three month old insight. So it's not only the ability to sense your environment, it's the ability to be able to move fast as well. So an agile infrastructure that's based on things like cloud, open source, constant integration, the whole philosophy of managing software released as it's in testing, enables you as an organisation to move faster in those areas where you need to move fast. This isn't to say that you should throw out everything. Clearly as an organisation you have some stable activities and you have some development activities. One of the big opportunities with the big data technologies is that you can use data and development in the creation of new value, rather than having to use the systems that previously existed which were constrained and optimised to stable back office processes.
The scary thing about what’s happening in Silicon Valley
I think one of the most pressing and scary things about data and what business needs to understand is that, fundamentally, it's probably easier to teach business skills to 'quants'. Right, it's easier to teach business to data people, than it is to teach data to business people. And this is why we're seeing a Silicon Valley, we have this great data and computation machine being applied to successive industry verticals, as they understand the power of what they've got. So business needs to do its best to deepen the technology. Not in the sense of knowing the nuts and bolts, but knowing its characteristics of scaling, of cost base, of its capabilities, of the power of the platform.
I think, you know, when the chief source of what people perceive as disruption is really the effects of progressive digitisation. When something becomes digital, it immediately becomes tractable by software, which means, you know, orders of magnitude lower cost, orders of magnitude faster speed. And so many of these things we think of as disruption are artefacts of digitisation. So understanding what happens when a field of endeavour is digitised and taking those principles from one field and applying them to another is going to be a key skill.
I think you are seeing the emergence and decline of industries at a pace that used to be 50 year pace, and now it's become compressed to, I don't know, a decade? Right. New businesses rise and fall. Blackberry. Apple. So the rate of disruption, and I think the potential of disruption. The rate of disruption is high, and everyone's vulnerable to the disruption, so the question becomes, how do we cope with the disruption, how do we as individuals, and how do we as organisations and enterprises cope with this very disruptive environment? I think a lot of, you know, traditional organisations, particularly government tend to retrench. So we have some customers that are stuck in a paper way of doing business. And when you come to them and say, you know, we could take your entire operation and get you digital within a year, they just, they don't know what to do with that, and they kind of push you away because that's so disruptive for who they are. It goes to the essence of who they are, and their being, that there is resistance, but I think, in a sense with these kind of waves of change, resistance is kind of futile, you either adopt and ride the wave, or you're going to get caught up and tumble in the wave.
Silicon Valley’s journey from High Tech Capital to Disruption Capital
My focus is at 650 Labs is to look at disruptive innovation and specifically how Silicon Valley is making a major shift from what we historically think of as the high tech capitol of the world to now the industry disruption capital of the world. Eco systems are forming there and they are disrupted entire industries.
So the old model is that Silicon Valley sold everybody a so called technology stack and now it is building businesses that compete with the very industries that once it was just a technology provider to, so the old model – kind of think of it as an arms merchant, Larry Elison sold everyone in the world the technology stack and he bought a lot of nice sail boats, the new model we think of more as a mercenary and a mercenary is very different than an arms merchant. What a mercenary does is he builds a professional army, gives them the best equipment and tools, they are well funded and they put them on the battle field and they say take land, take market share – very simple example is iTunes. When iTunes was created Steve Jobs didn’t go to EMI music and say would you like to license my music database that would have been the old model, the new model is he put it on the battle field and it is a 20 billion dollar business for Apple now in digital goods.
Consumerisation and mobile are disruptive trends even in defence
There are a couple disruptions that you can look at from what we would think of as an external factor – what our customer use – you look at the soldier these days we do a lot of soldier systems, they are using iPods, iPhones, Androids, all of that has crept its way into our customer base so the solutions we sell externally have to incorporate that and then internally also the consumerisation that trend has been very disruptive. Probably the most disruptive thing that has been a positive has been the mobile aspects of how we can do our work because the next generation of people coming to Raytheon have certain expectations around social networking and how you do the work and the mobile is a large part of that experience.
Consumer trends, well the consumer trends that are impacting ETS at the moment of course are the bring your own device. Not just for the company, but for education as a whole. I mean, if you go on campus, you will see every kid has a computing device. That's starting to happen in K-12 as well. All the way down to kindergarten. So as kids have devices, and they're bringing them to school, we need to take advantage of that. Because the schools can't afford to give everyone a device, so the schools are recognising this, and the schools are embracing the bring your own phenomenon because they need to get to college and into the hands of students so they can change the way they run their schools. So they can bring advanced learning, get rid of the big heavy backpack, bring new textbooks that are always up to date. Do assessment on the fly in real time. You know, we could change education with the introduction of technology just as retail chains with the introduction of the supply chain, just as all other industries have seen massive changes. Education has lagged behind, but I think that's about to change.
New consumer will expect natural interfaces for everyday interactions
I think what we are going to see is technology becoming more and more integrated with our lives and becoming more and more natural part of our everyday interactions. We are not even going to think about computers as computers anymore, they are just going to be part of our environment, our homes, our offices are going to be smart and realise who is in the room, who is talking to each other, who is talking to the intelligent agent that runs the conference room and just let us interact with computers like we interact with each other. They are going to become more smarter and more intelligent.
I think big corporations and enterprises need to keep an eye on these types of technologies because this really what people are going to expect. The upcoming generation of workers and consumers and other businesses are going to expect more natural interaction, easier ways to interact with computers and if you are still doing what we had been doing 30 years ago then you are going to be left behind so you really need to keep an eye on these types of technologies to see what is possible and what is going to be happening.
So I think this is an extraordinarily interesting time for CIO’s. CIO’s I do believe understand this. CIO’s have a remarkable opportunity in front of them to really work with a business to understand this and I think the clever CIO’s will get this right in the coming years and really have a seat at the table they have probably never had before.
Part of it is understanding the dynamics of the technology itself but from our view that is only part of the equation – actually they have got to understand the business model innovation, they have got to understand the myriad of combinations that people are applying towards their core business and that is a little trickier because I think they read the business press and they will see a start-up or they will see a large Silicon Valley company doing something but they actually lack some context around where they are really headed. If I went back to the Google example, here they have the Android franchise, next to that they run some of the world’s largest data centres, next to that they have extraordinary mapping capability, next to that they have now bought into several robotics companies – I think eight at last count they have bought in the last year and they have autonomous cars. If I string all this together I think they have – and the last thing they have is drones – now if I string all that together I think if I was in the package delivery business, if I was a FedEx or UPS I would say well wait a minute, does Google have a set of capabilities that can make my business very, they can upend my business effectively? Google isn’t a search company. Think of Google as the world’s largest computer science department. What they are doing is they are applying algorithms on industries, they are data scientists and they are trying to figure out where they can extract value that the incumbents haven’t extracted.
IT execs need to operate as peers and consultants within the business
Well in the past senior IT people were responsible for delivering services that had been contracted by the business and those services were provided to the business, so that is the provider model if you will now in the future the enterprise IT group will no longer be providing all the services, they will be coming mainly from the cloud, mainly from outside and so IT has to earn its value as an advisor really, as a consultant to the business about new technology, about new ideas, about new ways of doing business and so the senior leadership of IT has to become much more a consultant to the business and much less a supplier to the business and that involves moving from the provider model which has been the thrust until now to either a promoter model or you promote technology to the business or a partner model where you partner with the business on business change and value related to technology and finally the most advanced leaders will attempt to be peers. That is they will wish to sit as peers of the business at the strategy table and discuss threats and opportunities associated with new technologies that may be coming over the horizon but haven’t quite arrived yet so that is the general orientation of IT therefore moves from an orientation of production and delivery to an orientation much more about advice, much more about consulting, much more about thinking out the future and so that whole shift in perspective represents a gigantic culture change for most enterprise IT organisations.
I think all of our CIO clients embrace the fact that technology is becoming essential and strategic to their firm and want to play an enormous role in that area, the difference is that some of our clients are successful in moving beyond the huge back office and efficiency requirements that they have always had and finding the resources and band width to embrace these emerging needs and others have not. Others are so preoccupied with all the things they have to do – all of which are still important – that they tend to be falling behind and the rest of the firms might be moving faster than IT can keep up with so the opportunity is enormous but some are definitely capitalising on it better than others.
There is an enormous challenge to essentially revitalise the enterprise IT skill set in our clients today that many of our clients have a lot of people with traditional skills in programming and networks and data centres and servers and maintenance and support and help desk and all of these areas that are in a relative state of decline and they need much more skills in social media, mobility, analytics, cloud acquiring services rather than building them and that is an enormous shift for the IT professional community and definitely one of the areas we try and help our clients manage.
Business can wield an IT weapon with extraordinary destructive power
There was an article a couple of years ago in the Wall Street Journal by Marc Andreessen and Marc is the founder of Netscape and he is a very famous venture capitalist now. He wrote an article called 'Why software is eating the world.' I travel very frequently abroad, I spend more of my time abroad than in silicon valley these days and that article wasn’t widely read, it wasn’t widely understood outside of Silicon Valley. I think there is a big shift, 20 years ago business – excuse me – 20 years ago the argument was IT doesn’t understand the business and I actually believe that has flipped now – that in 2014 the business doesn’t understand IT.
I am talking about both the IT function but I am talking about IT as a core building block for extraordinary destructive capability inside of an industry. Other research shows that 30 to 40% of retail bank is up for grabs because of its digitisation. We see, for instance in the UK, we saw a property developer raise 4 million Stirling on a crowdfunding platform – 4 million Stirling on a crowd funding platform. Now if you went into a UK bank, you went into a Barclays or a Lloyds and you had a spreadsheet of all their small business loans, what percent of those loans are under 4 million Stirling? That essentially is all up for grabs now on an alternative none recumbent platform. It is not Lloyds worrying about Barclays, its Lloyds worrying about non entrants that are coming into their market from below that they would discount – they are not my competitor.
Business leaders need to change focus to strategic plays
Well I mean there is many different areas and when I go back to some aspects of mapping I am afraid. The first thing mapping teaches you is to focus on user needs and for example if I was producing a business which made a cup of tea. So you are the user and your need is refreshment and here is my cup of tea. Well that cup of tea has certain needs, it needs tea and it needs hot water and it needs a mug. Hot water has certain needs, it needs cold water and it needs a kettle and a kettle has certain needs, it needs power. So you can actually create a chain of needs and basically as we go down the chain of needs it’s you know your need is for a cup of tea and I need to have the capability to make the cup of tea. Which means I need to meet these other needs.
Focusing on user needs is really, really important because meeting others needs is the core basis of the way you create value. Of course there is ways of manipulating this and creating artificial needs, persuading people they need something they don’t want and slowing down commoditization through various actions. Regulations and so forth but that requires an understanding of the landscape and it requires high levels of strategic playing. So I suppose one of the one or two things for me at the moment which stand out. Because everybody can talk about things like culture, organisational structure etc. But two things which really stand out as a problem areas is the ability to focus on user needs and the level of strategic play with an organisation. So I think organisations are particularly well actually to be honest organisations can be poor at the whole gambit. But those particular two are the first bases I would start with.
Kodak vs Instagram shows every industry is vulnerable
So we hear from some of the executives, boards of directors, that their industry's different, that it can never be vulnerable to digitisation. That's what the folks at Kodak undoubtedly thought, in fact they developed some of the first digital photography equipment it turns out. But they decided that it just wasn't that important, and they didn't want to cannibalise their existing business. Well they went bankrupt the same year that Instagram was sold for a billion dollars. Instagram, a company with a dozen employees. I don't think there's any industry that's not vulnerable, including my own industry, education, we've been aligered along with healthcare, but over the next ten years, I think that those industries are going to be the next ones to have to change.
National Grid: LEF gives us a forward industry perspective
The National Grid is an energy utility business dealing mostly in the transmission and distribution of gas and electricity, both in the UK and the Eastern Seaboard of the US.
We have about 27,000 employees across the US and UK split roughly 50/50. We make about £3 billion profit per annum, and the IT spend per annum is about 1 billion over a 5 year period.
I think the Leading Edge Forum's interesting because unlike many of the other research agencies it gives a much more forward looking perspective on trends that are really going to impact industry.
Very much what we see through other research agencies is very much in the here and now, and it's very product-centric and therefore very much lagging and therefore it doesn’t really inform us of the issues that we're going to need to grapple with in a timely way that allows us to then be able then respond.
From an organisational perspective, I've been working incredibly closely with the LEF. The LEF actually works as part of my office as the CTO, and actually provides us the three to five to ten year horizon helping CSC to really understand what's in the hearts and minds of our leading customers. To help us to better address their needs. So what I'm really hearing out there is that there are a lot of customers who are taking a second thought about how, where do they derive value, how if they're in IT, how do they actually begin to put a business lens on their value to help them really understand, how do they bring innovation out of IT into the business for new and differentiating capabilities. The knock-on effect of that is actually making sure that CSC is really actually learning these value propositions, both from our customers and from the LEF, so we can better respond to the customers' demands.
Raytheon: IT needs to get embedded with the consumer world
The consumer world has had a large impact. It used to be that defence led everything and now it is kind of the other way around. When we go in and we are talking to our customers about very complex lanyard systems they expect us in there with the most current consumer technology, iPads, showing demos on iPads and things like that so we have had to really ramp up and accelerate adoption of consumer technologies much more quickly than we had to 10 or 15 years ago.
From an IT perspective, the IT organisation has had to work more closely with our customers and engage with our customers a lot more on really understanding the needs and desires and not just that the IT wants to do the upgrade of the next thing but really getting more deeply embedded with our customers and understanding their needs from a technology perspective and how we can understand their needs and enable them to deliver the solution to our customers cheaper and faster.
Aimia: Iterating digital change with real consumers
I mean this is all the stuff that you hear talked about, but a lot of the changes that we're making is, you try to do small pilots focused in with clients or members because what you can do is, you know often what Google does or what other companies do as they look at the small subset and they can test things out. So we're doing a lot more smaller testing and seeing what the results are towards that and then iterating through the changes.
National Grid: IT positioning to consume new technology
So what we're doing is really on two fronts. A large part of what we're investing in in IT is dealing with the legacy and integrating the legacy that we've had through many years of acquiring other utility businesses. So one side we're having to get that under control and consolidate it but the way we’re doing that, through our operating model is to run a much more sort of services driven organisation that allows us then to integrate increasingly things like cloud services, software as a service. So we're having at the same time to reposition the IT business to be able to allow ourselves to consume, effectively new technology.
Developing countries with low wage structures now in the digitisation bulls-eye
It's not just boards of directors but I also hear people in some developing countries also think that they won't be as vulnerable to digitisation as what they see in the developed countries. China, the Philippines, Vietnam, India, they look at their low wages as a way of capturing manufacturing and other industries. Call centres and other types of activities, but the reality is, those countries in many ways are even more in the bullseye of this automation tsunami than our advanced countries.
Take manufacturing for instance, as you take robots and allow them to do more and more routine basic tasks, they substitute very well for low-wage labour that's doing routine basic tasks. Low wages are not barrier to automation, in fact, countries that depend on a low wage strategy will ultimately be even more vulnerable than some of the advanced countries.
I just finished writing an article in Foreign Affairs about some of this stuff. This phenomenon I'm talking about, that that China and other countries could be affected quite dramatically. I mean on that point, we guess which location, guess which location Apple chose for its new macro production? It wasn't China, India or Taiwan, it was Austin, Texas. And that's not because Texas has low wages, it's because modern manufacturing doesn't really depend on a lot of labour, so labour costs aren't a big factor. As labour comes out of manufacturing, more of it is going to migrate to either where the highly skilled designers are, or they're close to the markets where they need to deliver the products.
I think there's a real question whether or not the politicians or government are going to understand the scope of the problems that we're facing, let alone come up with the right sets of solutions. Our political system, most of the political systems in advanced countries, they start with democracy and that means that the governments are ultimately responsive to the people. In the United States, there are angry people in the Tea Party, and Occupy Wall Street, that see that the median worker isn't getting a growing share. Now, some of them point to corruption in Washington, or evil-doers on Wall Street. We don't think that those kinds of villains are really the main drivers of these changes. We look at some deeper forces in technology. Once we recognise those, I think that we could have a political class take the kinds of action in terms of education, entrepreneurship, tax policy, that could lead to shared prosperity. But I think that there's no guarantee that we will achieve that, it's going to require some real concerted effort, starting with the diagnosis, and ultimately leading to some better prescriptions.
Erik is fantastic, he's actually a member of CSC's board and a partner of mine in helping CSC transform, so you know, I think Erik is a brilliant guy. I think there is a massive amount of value, that is latent value, that we haven't yet unlocked, and the value of the informaton that we have is largely untouched. I think his you know, coming prosperity is absolutely right on. There is a role for everyone in this new economy. The real question is whether or not we have the skills to actually play those roles and I, and we did talk this time about the key need to actually open up education and to really be very very open to new strategies, new jobs, new styles, and by doing that bring a larger portion of the workforce away from manual labour or repetitive work to more creative work helping us to experiment and invent and move forward in the landscape.
When you first mention the word platform for at least those people who are student of technology, they think of technology, but really I think of a platform more of an assemblage of things of people, of processes, we were talking about that, of artefacts and interfaces. It is really purposefully bringing those four together in a particular context, in a particular environment in which the interactions take place to actually facilitate effective engagement so it is really how you design that assemblage for effective engagement that is kind of the heart of it. Now the idea is that it has to be designed in a way in which the outcomes create value for everybody so when you design it you have to focus on the way that interaction takes place, the way experience emerges from those interactions and the outcomes that result. It is a very continuous process, every platform should be seen as something live, it is not fixed at one point in time, so you need to design platforms from the perspective to actually make them more and more effective over time.
Nike Plus just one good example of effective co-creation plaftorm
One of the examples I use in the book is that of Nike, that is a good example from the products it is offering perspective, they have created this thing called Nike Plus, it is a classic example and it is a platform that is actually embedded in the activities of the yellow side of runners in that particular instance. So today of course you can have apps to keep track of your running and so forth but this platform actually facilitates the whole community of runners and going back to our discussion in terms of them creating new types of experiences, getting connected to their own running experience and also sharing that experience along with the community, so that is one example.
There are also other examples in terms of entities like local motors creating a platform to actually design cars together with a community of engineers all the way from the whole design to the delivery of the car and then actually using that platform in other ways to actually create new products and services for other enterprises and you also have examples of enterprises bringing the yellow into the blues kitchen so to speak in terms of actually designing products and services together with consumers and other entities and then on the purely inside part, across functions creating platforms to engage and break those silos inside the organisation across functions and I think while people have traditionally tried to do a lot of that, for those platforms, again going back to its not just the platform, it is only as good as the experience it creates.
So it is very important to not only focus on those experiences but actually bring the actual lived experiences off the platform into the design of the platform together with the people, so it is very important to design those environments which goes way beyond just getting feedback and actually designing components of the platform together with a subset of those individuals to make the platform better over time.
In all the examples the companies that have done that, you see that whether it is the platform's inside cross functions, cross employees or it is supplier facing or customer facing wherever it might be, that the platform becomes very effective in the sense that value is actualised from the perspective of the yellow so it is designing it to intensify the value creation process and actually create real outcomes of value as experienced by the individuals. I think that is the shift rather than some notion of value that we might have and you get feedback and we try to make some changes so co-creation is very real.
Double deep is a term that we created to give people a sense of the employee and executive of the future and what we mean by that is that you can look at almost any profession or role in a firm – marketing, sales, engineering, finance, manufacturing, whatever – you have all the traditional skills that come with that role, but to be a valued employee today, to be the most employable employee it is very, very helpful and increasingly essential to be able to blend that existing role with technologies impact in that role and to know what you are supposed to do and what the relevant technologies are to do that well in today’s world and those people that have those double deep skills are the ones that we see at most demand in the market place and in contrast the people who don’t do that – who are traditionally single deep; a marketing person who doesn’t understand digital marketing or search engine optimisation or internet ad servers – those people are often the most likely to find difficult to find work.
Of course. Rocket Fuel are an advertising technology platform, so they're involved in doing digital advertising. My project with them was to find 60 talent for them to come and join their company. So the HR director made us the talent director function, so we were able to find - in the process of finding - 60 people. Now normally they will be just like focussing on tech and that'll be it, but in this particular case, it as was lawyers, it was accounts payable, it was sales managers, it was account managers, including media analysts and tech people.
So the fantastic way of working for this was, we were then able to create referral networks for them, so then we attracted loads of different people from their own internal teams and friends to come and join them. We actually reduced the recruitment agency bill by 70%, so they made savings of around $300,000, which was quite amazing. We were able to create new networks by promoting the brand using social media campaigns, Twitter and also building real business relationships with people like Holt Business School for instance. And we were able to contract more people for them as well.
More importantly as the talent director, you're able to go out and promote the company, so when Jobvite, which I mentioned earlier about having that content management, they were getting about 10 CV's a week, within a period of 6 weeks, that went up to over 50, and that's how powerful this could be for people.
Three pieces of career advice from Erik Brynjolfsson
So I would give three pieces of advice to somebody who's starting their career. The first one is to appreciate the importance of education, there's still a large gap, in fact a growing gap between those with more education and those with less education, in particular, look at learning those kinds of skills that machines can't do particularly well. And those involve creativity and interpersonal skills and that dexterity that I talked about previously.
The second piece of advice is not just to get educated, but to have a plan for continuous learning, because compared to the past, it's not going to be enough to simply go to university and then spend the next 40 years harvesting that investment. There's a real need for continuous learning, and continuous education, simply because machines continue to evolve faster than they did before. So we're always going to have to be learning, and thinking of new things. The world would be much more volatile going forward.
And the third piece of advice, and this is probably something you hear in high school and college graduations all the time, is to follow your passion. Let me give you an economist's argument for that. The world for the future is increasingly a winner take all world where the very best in each area are the ones who dominate, and simply being average or even above average isn't worth very much. Maybe it's worth nothing. And that means you have to be passionate about whatever it is you're pursuing. And I think it's hard to do that, hard to be the very best at something in the world, unless it's something that you really care about.
Increasingly technology delivered from the Outside-In
IT has traditionally been a central function of the organisation and the enterprise IT group was responsible for delivering services, IT services to the organisation and those services were produced internally in various data centres and distributed over networks and so forth, all of this was run by the central IT organisation and they had a large infrastructure and a large fixed cost.
What has happened is that the whole need for a multifunctional organisation – a business organisation – has declined because we now see that many functions that used to be produced or supported internally within groups – things like payroll, HR, even finance transactions etc. – these things can now be purchased over the web at lower cost and higher quality than performing them internally so what is happening is that companies have begun to unbundle and they are putting more and more subsidiary activities out on the web and retaining only those activities internally which are the source of their value edit. So that is what you see happening. Companies are becoming more focused, more networked because they are bringing in more services from outside and those services are delivered not through some central IT organisation in general but over the web so a lot of these companies now are heavily dependent on the internet and so when we talk about Outside-In we are talking about that phenomenon where more and more things are being delivered outside in to the company from third parties providers – very often specialised providers – who exist on the internet.
Raytheon is, we are about a 25 billion dollar global business and we are in aerospace and defence, we do a lot of other kind of civilian agency type stuff such as aircraft control, landing systems in airports and there are some other civilian agency type solutions that we do but we do a lot of defence – it is kind of what we are known for, patriot missiles, missile
Well I was coming to LEF forums I worked there in the DC area, I come every time you guys have this. I still get the invites. I really like these forums, the Outside-In has been something that you guys have been talking about for a few years and it really caught my attention a few years back when it first came up in one of your reports and so when I saw that you were focusing on it for this session I really wanted to come down and hear a little bit more.
Outside-In is not controllable. You must harness it
We think the Outside-In movement is very real, that when we look at firms today we see more and more things being pushed outside of the firm. The core technology infrastructure whether it is employees bringing their own devices or cloud computing or software service, all that infrastructure taking place on the internet, but increasingly also many things on the value side. You see the growth of open source communities, you see people embracing the customer experience, you see the user generated content and reviews and ratings, you see all of these things that are taking place on the web and really are not controllable by the firm and it is those companies that can harness those Outside-In, those external activities that we think will be in best position for the future.
Well, we've been having our executive forum, the US event based in Washington DC. The purpose of the whole event is to try and give our customers a sense of what we mean by outside in, and how the world at large is changing, primarily through information technology. So how is that going to change our customers, the way their firms are organised, and more importantly, the skills they are going to need to really be valuable and more importantly, be, grow the firm in future, so some really big issues around the people, some really big big issues around the skills and some really big issues around the organisational design.
Feedback's been great, I mean, the feedback's been very much one of I'm really empowered in the sense that I can see the future, I can see you know, what I'm meant to be doing to make this happen in my organisation, and I think what's really noticeable now is that we're seeing it less of being of a question of well I'm in this silo, and I'm in that silo, and more is, you know this is everyone's responsibility. Technology is pervasive, and therefore to do great things with technology, create new products, new services, you know, it's everyone's responsibility. And why not? Why shouldn't it be the responsibility of the CIO and his or her leadership team as much as it's the responsibility of someone from marketing, or someone from HR. And that's a real takeaway overhead at the conference today.
Well what happens in disruption is first of all the solutions that are available to the business become much richer and the solutions are very often just coming directly from the cloud to the business. The business people are much more facile with technology than they used to be, the result is that they can find solutions that were never there before and so if enterprise IT has a habit of saying no to whatever request then the business will find someone else who will say yes and the result will be that the BRM will lose control so the disruption is essentially the fact that know there are competing alternatives on the table that were never there before and so IT and enterprise IT has to consider those and has to understand that they don’t have monopoly any longer and they can’t just say no. So the shift is that the BRM has to find a way to say yes otherwise they will be left out and as we often say they will be standing on the platform while the business gets on the train and leaves without them.
The effect that we see and that our clients observe in their BRM’s after the training is that the BRM’s show more confidence, they are able to discuss business issues with more confidence, they are able to handle unstructured situations, they are able to have opinions about the business and not just technology. The general impact of our training is that the satisfaction of the business partners with their BRM’s go way up typically they are much happier with the BRM after the training and the training is effectively an exercise where we put the BRM’s through a compressed series of difficult role plays, case studies etc. where they have a chance to practise their relationship skills. These things are not learned in school, they have to be learned on the job, they have to be learned under fire if you will.
BRM is about creating an experience for your Business Partners
The BRM needs above all to have what are generically called soft skills and what these really are the skills to get in relationship with the business partner and to create trust between the business partner and the BRM. That trust of course depends on a history of delivery, on being able to deliver and then actually executing on that delivery, it means that the BRM is trusted by the business to get things done so that is sort of fundamental.
Table stakes for this is that you have to have a history and a reputation for delivery because without that nothing else happens but provided that that exists then the BRM is still not successful because what they have to be is capable of empathising with the business partner not simply as a title or as a role in an organisational chart but as a human being.
They have to be able to relate to that partner so that when the partner gets asked for a meeting the answer will be yes, I will be happy to meet with John or Mary because I always enjoy those meetings. If however their reaction is oh I don’t want to meet with John or Mary because that is like going to the dentist and I only do it when I have to – that is a very different reaction and what we understand about BRM is that the role is about creating experience in the head of the partner.
The role is performing on stage, the BRM is about performance it is about putting on an experience for the customer or for the business partner in this case and so the BRM has to be able to do that. If all they can do is talk about technology and systems and ask dumb questions like 'what are your requirements?' then they are never going to be in a relationship, they will always be seen as a vendor, as a lower form of life and so the skills are these relationship skills and there is a whole bunch of individual things that you have to do around behaviour, around note taking and meetings, how do you handle interviews for instance, how do you avoid interviewing across a desk, how do you establish yourself as a partner in the relationship instead of a vendor and there is a lot of destructive behaviours that IT people have that make it very difficult for them to show up as partners so our training course is all about these soft skills.
How do I learn to show up as a peer or partner of the business partner and not simply as a vendor? And that is all about interpersonal skills. It also involves understanding the business, understanding how we make money, carefully preparing the meetings so that you go in with full knowledge of what is going on so there aren’t surprises that will upset the partner etc, etc. That is the BRM role, it is a very demanding role and the Outside-In trend or development makes it more demanding because it means that now the BRM has also got to deal with solutions that don’t come through enterprise IT but come from outside.
How LEF’s Mapping helped ETS create a disruptive strategy
Simon Wardley has been, come out to ETS and has been very helpful in helping us map. We used his concept of strategic mapping to help us understand what parts of our existing applications and platforms we should move towards commodity status, and work with the lowest cost providers, and others that we really focused on maintain as core, and then those ones that could be disruptive, the ones that we really need to think differently about, that could potentially become an eco-system of themselves, and that we could build around a platform. So it's a great exercise to go through, I really think others should give it a try, we've learned a lot from it and we now have a great map that shows all of our applications and where they fit.
It is very simple I can come in and show and spend a day with you ding a workshop, teaching you how to map and then I walk away. The key thing about mapping an environment is the only people who can map an environment are actually those who are playing the game within the business. So it’s not a consultancy gig where you say can you come and map my environment for you etc. You have to unfortunately do it yourself, it is like playing a game of chess, I can show you the techniques but you have to draw the board and you have to play the game. But that’s what I do I come and do a workshop. The first day workshop is the about how to map it and the second one is more about the generic strategic game play. And of course you then have to apply that to your own industry. Mapping does not take away thought unfortunately you still have to think about how to play the game. But at least it shows you the board.
So mapping I suppose, the best way of describing in terms of impact, is imagine you're playing a game of chess and you've never before looked at the board, mapping shows you what the board looks like. So it rapidly improves your ability to play the game.
I have done this within government for things like high speed rail, Home Office, the police, immigration border control, and we've done it within pharmaceutical companies, media companies, so all sorts of different industries. There's a couple of immediate impacts, first it gets everybody to focus on the user need. You often get projects, big specifications, very difficult to understand what the user need is, maps provide a visual way of seeing that.
Secondly, it teaches you about how to apply multiple methodologies, so rather than being six sigma outsource, or agile insource, you learn to break down large projects and use multiple methods. That can lead to enormous cost savings and risk reductions. The elephant part of that is actually risk reduction itself, and by mapping out the environment we've had huge - these are billion dollar projects - where they discover that the contract arrangement is not ideal.
The other thing mapping is great for is communication, mostly business IT alignment issues people talk about are usually artefacts of how we all organise and poor ways of communication. Mapping is a way of everybody being able to see what is going on in the landscape and we've found it has really simplified communication in large organisations.
So beyond saving costs, applying the right methods, focusing on user needs, improving communication, risk management, it's also fantastic for strategic planning, situational awareness, so there's a whole host of other techniques of learning. Learning about how the economy is changing, learning about how you can improve your environment based upon competitors actions, which come into play as well.
The comments we get back are generally fantastic. I say generally, I have never had any negative comments.
One prominent leader in data won't surprise you, it's Wal-mart. You know, they've been ahead in the analytics game for a long time, partially because they could afford to be, and buy the big iron. And you know, the vast investments in various areas of BI and analytics, but they're also a global corporation with a large number of divisions. And they got into using big data technology early on, specifically Hadoop. And the things they've really realised with this technology is the ability to pour all their data into a data lake, and provide that data back out to departments that actually need it, in a timely fashion. In their previous set up where they had siloed analytic bases, it might take three weeks for some, for a business unit owner to get the data that they want, because they have to send it off and retrieve it from a particular database. It would also cost a lot. Because if you couple the database analysis technology with the actual storage, it gets very expensive. The big data technologies have allowed them to decouple the storage from the analytical tools, and then only provide the data that's needed for analysis at any one point of time, and globally index the analytics data that they have.
The digitalisation trend is very relevant. When you think more and more about loyalty, loyalty can sometimes be in any place at any time. So sometimes it's on the go and sometimes it's sitting on your couch at home. So being able to cater to people across the different channels, and sometimes although you might be very digital, you don’t want to be digital when you're at home, you want to have letters. So you could be a different persona, in different parts of the world, and our clients and our members often want things served to them in the way that they most want at that point in time.
Secondly, there's a trend for people to have all the data, so to do everything they can with the data. That's not necessarily what we want to do, we want to slim things down. So we talk a lot about small data versus big data. Is what you really want to do is get to something that's really personal and relevant for people, which actually means reducing the amount of communications but increasing the relevance to them. So I think there's a predisposition to increase the amount of communication and try to make it relevant but not really hitting the mark. So I think that's what our clients are most asking for and what we're most trying to look at.
Sensorware gathers valuable customer data for FedEx
Another great, good example, somewhat different really from the Walmart analytics example is FedEx and how they use big data. I think it's quite well known that routing all their packages is a huge, big data problem, but one of the aspects of their business that interests me is a product they have called SensorWare. Now, SensorWare is a sensor platform that you can ship in your package, if it's high value such as medical supplies that you really care about, and they'll monitor temperature, humidity, has the package been opened, GPS location, altitude and so on. So this is a big data product, and they've been able to provide this because of their existing investment in a platform that they can then bolt in to and use that. But the really interesting thing about this is that as they instrument their customers' deliveries, they don't restrict to just FedEx shipments, anybody on any air carrier, or on their own fleet, so they're also mapping out the usage patterns of their customers, learning what the customers want, what the customers value, and further identifying opportunities for growth.
Beware. The future’s here, it’s just not evenly distributed yet
One of my favourite quotes is from a science fiction author that the future's already here, it's just not evenly distributed yet. And one of the tricks that Andy and I used in writing our book, The Second Machine Age, was to go and look at some of the places where the technology is having some of the biggest impacts. And naturally you see them in some of the high tech companies in Silicon Valley, around the Boston area, other leading companies all over the world. But it's not just high tech that's being affected. Ultimately, every industry is having digital technologies at its core. You see that in finance, in banking. You see it in manufacturing, you see it in retailing, you see it in media, in music of course, and each of those industries, as they before more digitised, they have more of these winner-take-all economics, they have more of this bounty, of being able to replicate new processes or ideas very very cheaply. Ultimately, they look more and more like the high tech companies that we've been focusing on.What we're seeing is that not only are individual workers being disrupted, but companies and industries are being disrupted as well. One of the phenomena that we looked at was what we call the rise of micro multi-nationals, the fact that a small group of people, by leveraging digital infrastructure including the cloud, advanced software, big data, can have an impact on millions of people, all over the world. Think of Instagram, or WhatsApp, these are companies with a dozen or a few dozen employees that affected millions of people, hundreds of millions of people with the products they developed. They ultimately were sold for billions of dollars, that was something you wouldn't have seen ten, fifteen years ago. Kodak employed 145,000 people at its peak, a big chunk of the city of Rochester were their suppliers, and other people helping out, with the basic functions of Kodak. So we've seen a sea-change in terms of the ability of a small group of people to leverage technology to disrupt entire industries. And I think a lot of the big companies are realising that they are vulnerable to that kind of disruption because of the power that technology puts in the hands of very small groups of people.
We're at the dawn of a second machine age, which is augmenting our brains, our mental capacity. We think that the effects of the second machine age will be at least as big as those of the industrial revolution.
The steam engine was an amazing breakthrough. We did some research, we found that it doubled in power about every 70 years. Four times as much efficiency in 140 years. We all know that Moore's Law is a lot faster than that, computer power doubles about every 18 to 24 months, and digitisation is becoming much more pervasive.
In the past decade we've seen some just remarkable breakthroughs, from self-driving cars, to telephones you can talk to and they'll carry out your instructions, basic instructions, we have machines that will write news stories and sports stories, diagnose cancer, and in some cases, better than human doctors. It's just been amazing. But these are not the crowning achievements of the second machine age. These are just the warm-up acts. These are just the early stages of an even bigger revolution that we have ahead of us.
So we hear from some of the executives, boards of directors, that their industry's different, that it can never be vulnerable to digitisation, that's what the folks at Kodak undoubtedly thought, in fact they developed some of the first digital photography equipment it turns out. But they decided that it just wasn't that important, and they didn't want to cannibalise their existing business. Well they went bankrupt the same year that Instagram was sold for a billion dollars. Instagram, a company with a dozen employees.
I don't think there's any industry that's not vulnerable.
I have got to say that one of the biggest disruptions I think right now, we have a process called game changer process where we look for technologies, group technologies that really are just emerging and are having an effect which could apply and effect for the company and one of those is an imaging technology. So we are looking at a variety of imaging technologies all the way from hyperspectral or multispectral for remote scanning. Satellite systems are becoming much more adept to that. We are also using and I think multispectral and hyperspectral for being able to spot gas in various areas but there are a variety of imaging techniques, be they thermal or hyperspectral, multispectral or satellites or mounting them on UAV’s looking at it very broadly but this kind of sensing is becoming quite impactful. That is one area that we are looking at and I think another leading area that came up a lot in the conference today which I was happy to see was robotics. We used to have a joke that whenever we were running out of ideas about what new areas to look into and really press, somebody would always say ‘well there is always robotics’ and it never was really time and I think we are poised now where there could be some great impacts on remote operations and autonomous operations, those kind of things. The other thing I see, I am kind of running on here a little bit but, digitisation of the enterprise, sometimes we use the word automation which is not a good word for it, but I think the digitisation of everything is really upon us and we have grasped that in our grappling with our ‘how do we order our priorities to try to do that?’ I think that operations from one end to the other frankly. So that is very ambitious undertaking for us right now in the whole digitisation frame.
Well ETS is starting to see quite a few disruptions in the education market. We're starting to see the proliferation of technologies, the bring-your-own devices into the classrooms. We're starting to see that technologies such as voice translation could eliminate the need for English language testing, in the future. We're seeing disruptions to the way big data could be used as a way to do assessment. If you could gather enough data on a person's behaviour, if they left behind a digital ocean of information, you could mine that information and you could understand their skills, their weaknesses, their strengths, and you could help them to know where they fit in the optimised world. So in the past, we used large scale assessment to do that because the data was lacking, but now, with everyone leaving behind a digital trail that could dramatically change the way assessment is done in the future. Where we really want to get to is to create assessments that help people learn, at the moment they're learning. So that they're getting constant feedback, like you do in a video game, as you play the game it's constantly telling you how well you're doing, and if you do better, you get rewarded, and you move on to a more difficult level. The scaffolding of that experience. That applies to education. ETS in fact work with electronic arts in the glass lab, to create a new game for Sim City, called The Pollution Challenge, which has embedded assessment, students don't even know it. It's the concept of stealth assessment, we hide the assessment in the experience, and we give constant feedback, were gathering all the data that's also used for the teachers to also know how well the students are doing. At the same time, we help the student to continue to advance.
Silicon Valley ecosystems are disrupting entire industries
silicon valley is making a major shift from what we historically think of as the high tec capitol of the world to now the industry disruption capital of the world. Eco systems are forming there and they are disrupted entire industries.
20 years ago the argument was IT doesn’t understand the business and I actually believe that has flipped now – that in 2014 the business doesn’t understand IT.
So the old model is that silicon valley sold everybody a so called technology stack and now it is building businesses that compete with the very industries that once it was just a technology provider to, so the old model – kind of think of it as an arms merchant, Larry Elison sold everyone in the world the technology stack and he bought a lot of nice sail boats, the new model we think of more as a mercenary and a mercenary is very different than an arms merchant. What a mercenary does is he builds a professional army, gives them the best equipment and tools, they are well funded and they put them on the battle field and they say take land, take market share – very simple example is iTunes. When iTunes was created Steve Jobs didn’t go to EMI music and say would you like to license my music database that would have been the old model, the new model is he put it on the battle field and it is a 20 billion dollar business for Apple now in digital goods.
I am talking about both the IT function but I am talking about IT as a core building block for extraordinary destructive capability inside of an industry. Other research shows that 30 to 40% of retail bank is up for grabs because of its digitisation. We see, for instance in the UK, we saw a property developer raise 4 million Stirling on a crowdfunding platform – 4 million Stirling on a crowdfunding platform. Now if you went into a UK bank, you went into a Barclays or a Lloyds and you had a spreadsheet of all their small business loans, what percent of those loans are under 4 million Stirling? That essentially is all up for grabs now on an alternative none recumbent platform. It is not Lloyds worrying about Barclays, its Lloyds worrying about non entrants that are coming into their market from below that they would discount – they are not my competitor.
CEO’s need to action disruptive innovation on a fail fast basis
If the message is resonating and a company, starting with the chief executive, wants to figure this out, the very first thing that they do is probably recognise the challenge. Recognise that this is happening. Look at the combination of business model innovation and software that is upending industry, disrupting industry, that is the first step. The second is to figure out ways in your organisation to truly do what I call disruptive innovation and it is an overused word but how do you come up with businesses that are growing faster than your industry growth rate? Everyone talks about innovation, pull a hundred annual reports of public cap companies and they are all going to say innovation or innovative in the first couple of pages, right, it is this socially desirable word that has lost all meaning in the business lexicon, but if you stand back from that – Rita McGrath at NYU by the way, data that she did said that only 8% of companies can grow at 5% per annum for 5 years in a row. 92% of large cap companies around the world aren’t growing yet they all say they are innovative in their annual reports. If a company really wants to figure out disruption what it has to get its head around is first acknowledge the problem and secondly serially launch new initiatives in new ways, not in old ways – these large companies typically do it in a pretty old fashioned way – but launch new businesses in very rapid ways and so called fail fast. Large companies talk about pilots, and pilots are a very dated idea. Pilots don’t accelerate learning, they actually are built to take risk out. But pilots in large companies can take a very long time and I understand some of the rationale and some of the reasoning but when I watch the disruptors they don’t ever talk about pilots, they talk about experiments and the point of experiments is to fail fast and learn from that failure to accelerate your learning, and you can make the argument that the only way of succeeding in business now is to be able to adapt and move fast. Adaptation is the only form of sustainable competitive advantage anymore and what we see companies doing is they are very, very good at learning, they are very, very good at running experiments and extracting learning from that as fast as they can and then move forward and this is something traditional companies have to learn.
I will go back to the one of the issues with prediction is you can often say what but not when and then you can often say when but not what. And mapping does help you narrow down the scope but it turns out that you actually don’t have to be able to predict the future in order to manage it. There is a whole bunch of techniques the use eco-systems for example or ways of well. I’ll very simply explain, if you take an activity which is a product say commoditise it to a utility. So that’s your core service and it’s your platform and you get everybody else to build on top of it. Everybody else is now innovating for you they are taking all the high risk sort of creating the new stuff. Well you can leverage that ecosystem as things evolved to identify that process of evolution and therefore commoditise those acts. So for example if you are Amazon - you produce EC2, everybody does big data - you come out with elastic map reduce, and now everybody is building on that. And what that means is that your rate of innovation or apparent innovation, your rate of customer focus and your rate of efficiency all now grow with the size of the ecosystem. And so you don’t actually have to be able to predict the future you just have to get everybody to build the future on your platform and exploit it. So that’s one of the things that’s coming out of the report. There are certain things that you can predict and often you can only predict what not when or when not what. But it’s not actually necessary to precisely predict the future in order to manage it. There is a whole bunch of tricks that you can exploit.
In every industry in the world technology, the power of technology and this new generation of young people who use the technology in such different ways are gonna come into these industries and blow these industries apart.
I really do believe that we're only just at the beginning of realising what this digital age will mean for us, and that's everything from the automotive industry to the pharmaceuticals from supply chains and logistics, to manufacturing to financial services and everything else in between.
And so industries need at look at where technology is going to take them in the next few years.
The central point of co-creation is really having a platform through which people can engage, which is purposely designed to actually harness that creativity and also the collective intelligence of people. The basic idea in co-creation is what I call win war - win war, which essentially means that as people interact with each other and create mutually valuable outcomes it actually sets off new ways by which value can emerge, it’s a very generative process. If it is designed right, and so it actually has the potential in my view, at least of really expanding what I call wealth, welfare and wellbeing in new ways, which is kind of the largest form of co-creation when you are looking at interactions between private, public and social enterprise and individuals in enterprise economy and society. So that is kind of like the big idea of co-creation but you can apply co-creation thinking at a very individual level in terms of how you and I have experiences in a given environment. Theoretically there is no limit in the sense that it all depends on the platform of engagement and how much it can scale. The real key principles of co-creation really focus on how to actually design the platform in order for that engagement to be really effective so theoretically there is no limit but practically it has to be structured in some way in the sense that it is not about the whole crowd participating for example all at once, not necessarily. A lot of it has to do with creating those environments that I talked about before in a very purposeful way depending on what the context is.
Differentiation via pursuit of Disruptive Tech Strategies
Disruption is very important to our customers. Most of our customers are sitting on what we call an innovation quotient, which is really looking at how much money they're saving keeping the lights on, versus how much money they're actually investing in doing things that create value for their customers. And allow them to differentiate themselves in the industry. And as a result, we have a very interesting proposition to be given our existing our existing physical plant that we own in customers and our relationships. We know them, maybe even better than they know themselves. We manage their systems, we manage their applications and operations. What we pick up the opportunity to do is to help them to understand which of those applications that are in their plant are actually strategic, which ones are less strategic, and how we actually begin to take the ones that truly are strategic, modernise them to new platforms and new cost models that allow us to actually free up working capital to allow us to then invest forward in these very disruptive applications, that allow us to go after the third platform technologies. Things like social, mobile, analytics, and certainly doing everything on cloud.
If you’re stuck in the past you’re going to lose, you only win by going into the future. I’ve been writing about social media, I’ve been a blogger for a long time. Shell Israel and I wrote about eight years ago called ‘Naked Conversations’ which was all about how social software and blogging was gonna change the corporation, and it absolutely has. Now Sales Force calls themselves the social enterprise and has social tools built into their customer relationship management systems.
Since that book you know how many billion dollar companies have popped up? Twitter, Facebook, LinkedIn and Cora, well, Cora’s not a billion dollar one but Four Square and Cora and a whole bunch of other ones that are popping up that just use social.
And this new book is about five things, so social is one of them, but location data, because our world is getting mapped and it’s getting sharper and sharper in the databases, we’re getting a lot more data every day about the world we’re walking through and being part of. Add-ons, sensors, my Nest thermostat now has a sensor, when I walk by the thermostat it understands I’m there, right.
And my Google Glass has, I don’t know, five sensors on it and my mobile phone has seven sensors on it and my Oakley ski goggle has four sensors, and on and on. And wearable computers are going to really change what’s possible with mobile, ‘cause like this Google Glass is the first consumer electronics gadget that knows where I’m aimed, it’s firing the sensors right now as I’m moving around. And where my eyes are looking, and it’s listening to me, you know, and it’s talking to me once in a while.
So that changes, if you wrap those five things together and add in big data and machine learning, you can make a new kind of software, you can make an operating system that is contextual, that knows whether you’re walking, running, skiing, driving, shopping, in a meeting, in an interview, right, in a sales presentation, you know.
And the world should serve you differently if you’re in different contexts, you know. Right now I’m in an interview so don’t talk to me about shopping, you know, but if we walk out and start walking around and going to different stores then I’ll say ‘hey, help me shop better’, right, and go into a shopping mode and start serving me better.
During our consumerisation work we have spent a lot of time looking at the relationship between the enterprise and its employees. We have been particularly concerned about the fact that these employees now are much smarter about technology, they own much of the kit, and in fact they have access to a rich source of service on the web. But when you at an employee and turn them sideways you realise every employee is also a customer. In fact what companies now have to contend with is, now the customers now more about technology, own much of the kit and have access to resources. That is a different kettle of fish because if it’s only about employees and bring your own device, then it’s really an issue of something that IT has to worry about. With occasional anxiety from the board. But its customers, and customers are a concern to everyone form the CEO down and up. So we see a big change in that customers are now being affected by this and that’s why we are embarking on our project with Professor Venkat Ramaswamy around co-creation, were we see people actually working together to create the experience of employees and of customers rather than the company simply producing a product and then the customer having only one choice, which is to buy or not buy. So going forward we see companies having to work with many other third parties to actually make things work for the customer, and that’s going to be called co-creation, and that’s going to be a big change.
Strategic plays now more important than strategy execution
So when we talk about economic change there’s actually a standard process for how organisations evolve. So when we look at the commoditization of a pre-existing act, say electricity or compute you often get new practices emerge and then those new organisations form around those new practices and they dominant. So the electricity age we got forwardism, the mechanical age we got the American system, internet age we got Web 2.0. Cloud we’re getting basically a new generation of companies. Now we often have these sorts of debates about whether strategy matters. I mean Jamie Dimon once said that you know execution is the key to a strategy success. Well it turns out that this next generation of organisations appearing with Cloud have slightly different ways of playing at the strategic game. They have very high levels of what you would call situational awareness. And I did a piece of work a couple of years back. Back in 2011 which mapped the phenotype, the characteristics of these next generation companies. And then in 2012 we looked at the level of strategic play against that action in this case it was the use of open to manipulate markets. And what we found was strategic play was critical, more important than execution. So players are a particular group of companies who tend to have extremely high levels of strategic play and they tend to act on it. So they do things like use open as a way of manipulating markets and those companies have had massive market growth over the last 7 years. Now there is another group of companies called chancers which tend to have low levels of strategic play and don’t tend to act very effectively. For example don’t use open as a way of manipulating markets and they have tended to show very negative market cap or stagnation over the last 7 years. So players are a particular type of new form of organisation which have very high levels of strategic play and that turns out to be critical for completion.
Nest: Outside-In approach delivers where utility industry failed
When you look at Silicon Valley today they have a strategy to empower the consumer and the internet of things in just about every industry and therefore we don’t see a single sector that is really immune from these changes.Take a good example in the utility industry. For decades they have talked about smart metering systems and trying to build a smart grid, and the companies couldn’t do that on their own, but now you see something comes along; The ‘Nest’ thermostat - A simple device made by a company that is designed for the internet, that a consumer can operate for themselves and all of a sudden that little device becomes the end point to make that stuff happen and it has to be done, something at an industry level that no one firm could make that happen because they were thinking what they would do in a traditional sort of metered approach. So that is a very good example of just a small change. I can give you a couple more if you want, it is probably useful. If you look at health care today, the whole generation of consumerised testing – so you can take your own pulse or blood pressure, there is a company that we work with called Theranose which is trying to basically change the cost of traditional blood tests from hundreds of dollars and many tests to a single test for ten dollars that will check all of those things, that can be done at a Walmart or a Boots and so all of Silicone Valley right now is trying to essentially empower the edge, the outside of the marketplace with new capabilities that then feed back into the firm. There is virtually no industry that we have seen that doesn’t have a very real Outside In story.
Disruptive innovation puts static businesses at risk. It is important to make changes in the workplace to survive, as Dean Van Leeuwen discusses.
Disruptive innovation can be great if businesses adapt.
We’re living in a golden era of change.
Amazing technological innovations that are happening at the moment.
We actually believe that the period that we are living during is going to have as big an impact as the industrial revolution. And you can look back every sort of 150, 200 years there’s inflection points where everything seems to change.
The size of forces just come rushing in and they converge and they change and they transform the world dramatically. And we believe that we’re living during one of those times.
I believe that historians will name the period that we are living in at the moment.
And like that has important implications for business leaders. Because if that prediction is true, even if it’s just half true, then that means that you can’t go back to your workplaces and take last year’s strategy and add 10%.
continue doing the same things over and over again.
It means that you can’t go back and just do the same things that you’ve done over and over again just because they’ve worked in… in the past.
And the surest way to fail in a world that is changing like this is just to continue doing the same things over and over again.
Connected Economy TV will continue to discuss disruptive innovation in future TV Shows.
Connected marketing relies on well developed personal brands to share company content. Our latest video from Bob Barker explores the issue:
Connected marketing comes from individuals
A lot of companies out there have been using traditional marketing mechanisms.
They’ve been using digital marketing, and what we see is that more and more marketing has got to rely on the individuals in the company to help get the messages out because it’s those individuals that are often the sales people and it’s the individuals who themselves have got networks.
So what we do a lot of is helping people to understand what their personal brand is all about and to make sure, for example, on LinkedIn that they’ve got a decent profile because Google’s going to find you on LinkedIn if somebody’s looking for you quicker than any other platform, so you need to look the part.
You need to be dressed well, and so on and so forth. And then there’s the whole thing about network maintenance, or understanding and managing your network.
So we’ve all built up contacts on our Outlook or whatever it is, and we’re beginning to build up more and more contact on LinkedIn as it becomes more the de facto business platform for business people connecting.
So we have to put time in and understand how we build and nurture our networks using something like that.
And then the other thing is that now we’ve got a brand and we understand our network, we’ve then got all this content that the company’s produced that might be relevant to what we’re talking about but nobody’s sharing it.
So a lot of companies are building all this content and people aren’t sharing it, like these videos.
We see in large companies, when you look at the shares, nothing’s going on, and so we help companies to understand.
We help the individuals in those companies to understand it’s their responsibility to help get this content out there because on the internet when people are researching companies and they’re looking for what people, you know, what companies are all about, they’re doing a lot of their research without the company knowing.
So unless that company’s got content out there and people are interfacing and being out there, and having their brand out there, they’re not going to be visible when companies are looking for who they want to do business with and who they might trust.
In this TV show Julie Meyers looks at the business economy as a digital ecosystem.
Digital ecosystem: Start ups, Corporates and Valuation
Well, I do think that in the way that we used to refer to verticals we’re going to be referring to ecosystems in the future. So, we used to refer to maybe healthcare as a vertical and now I think of digital health as an ecosystem.
I think it just means that these are multi-dimensional markets and that you can’t think of it in the same way.
And you have to look at how the digital enablers or start-ups are interacting with the corporates and the process whereby you value any business and the transactions that will get done, whether the funding’s or the acquisitions is going to take on that network shape.
We won’t just look at it and we won’t, I think, attribute so much value to the Goliaths’. I think there will be,you know, in that, those five phases of company growth, the companies that get acquired early for big amounts, like Skype in September 05, why does a company that’s in phase two going into phase three get acquired for 2.5 billion?
It’s because the strategic value to the acquirer was so high. Why does a company like Beat That Quote which had £250,000 of EBITDA get acquired by Google for 37.7 million?
It’s because the strategic value is disproportionately high compared to where they are in those five phases of company growth.
So, I just think there’s a set of structures which have become fairly normalised at this point whereby we will analyse what’s going on in the market.
And I think that we’ll have to assess – we won’t look at markets in the same way, we have new tools to look at that. And those kind of David and Goliath model five phases of company growth, ecosystem economics, I think these are the ways.
I mean, we’ve been looking at this for a very long time and we’re quite convinced now that our set of glasses kind of works. It doesn’t mean that we won’t, you know, explore and develop and understand better and make some mistakes, etc.
We had the epiphanies, we looked for the exceptions, we found the patterns and we really do think we have the correct set of glasses.
Digital ecosystem is yet another way of looking at our world today. Hear more perspectives, ideas and analysis on Connected Economy TV.
The connected digital economy is a global revolution
Connected digital economy set to revolutionise business
In the industrial age, as before that in the agrarian age, in the age of farming the people who either owned the land or owned the factories or worked on the land or worked in the factories, they were the people who were in charge. Those were your assets, physical ability. What we’ve done over the last 100 years is replaced peoples' physical needs in terms of what we need from them physically with machines, you know, the combined harvester and the container and the robots in factories.
And then for the last 50 years we have plowed our resources, as human beings we’ve become clever by being clever. We have moved into the information age where your mental ability is what sets you apart from other people.
Now, somebody who was gifted at birth, not by my choice, but was gifted with a reasonable intelligence and a nice IQ and a middle class family that could get me through university, that’s been brilliant.
I’ve been able to use my brain to make money, but unfortunately right now computers are about to do to me what robots and machines did to my farm working, factory working uncles and grandparents
They’re about to make me redundant because they can think faster than I can. They can think more than I can. They don’t need to take a break to eat or sleep or all the other things I like to do.
The question is what’s next?
You see if we’ve used machines to replace our bodies, our physical strength and now we’re using machines to replace our minds, there’s only one step left and that’s our emotions, the soul if you like, inside of us. And that’s why I believe we’re heading into a connection economy, because computers can’t do that, not yet. I’m not saying they never will, but probably not in my lifetime.
That ability connect with other people, that ability to engage, to have relationships, that ability to be in another person’s life, not just sending information, engage with the data point but actually engage with a person, that’s vital.
Connected Economy TV will continue to explore the connected digital economy revolution, with new shows added daily.
Business innovation skills can be brought in from outside an organisation. David Moschella discusses changing the structure of a business to incorporate external capabilities:
Business innovation skills are everywhere.
We talk a lot in our work about this shift from an inside out to more of an outside in organisation.
And what we mean by that is really quite simple.
That traditionally firms were very focused on their own internal resources, internal capabilities and skills and had their own internal value chain of how they did things.
But today there’s so much capabilities outside in the marketplace of cloud services, the knowledge of employees, partners, the emerging eco systems, that firms need to in many cases look first to the outside world to find resources, capabilities, transient issues, and secondary to their own organisations.
And that’s a big shift particularly for enterprise IT people who have grown up in a world of internal systems, internal procedures, internal processes and internal controls.
Connected Economy TV will continue to follow ideas about business innovation skills and we will have more videos from David Moschella.
Machine Intelligence and its impact on our economy is the focus of Andrew McAfee's new book The Second Machine Age, which he discusses in this video.
Machine Intelligence - Book Preview
So our next book, ‘The Second Machine Age’, is coming out in January 2014, it’s written with Erik Brynjolfsson and what we’re trying to do is lay out the case for why we should be profoundly optimistic, but not utopian about our next chapter of economic history, which is a chapter driven by astonishing progress in digital technologies.
So we’re talking about this world where already we’ve got computers that can be the world’s best quiz show players, cars that drive themselves, printers that print out mechanical parts, these are not the crowning achievements of the digital age, these are the warm up acts and what’s coming is literally going to stagger our imaginations.
So what I mean by optimistic but not utopian is that we’re creating a world of ridiculous bounty of abundance, a world where there is going to be more wealth with less work, this is the dream of humanity, we are creating it now. But not utopian means that we need to be mindful of some challenges that are going to come up in this world that we’re creating.
As we see it the challenges, the most important ones to keep our eyes on, have to do with the ability of people to earn a living in a world where digital technologies and digital labour can do so much. So we need to be mindful of the challenges, but primarily we should be looking forward to the world that technology is helping us create, it’s going to be a different and a better world than what we have now.
The Connected Economy channel has more expert insight from Andrew McAfee and will continue to delve into discussions about machine intelligence.
Innovative technology has overcome the limits of our muscles and now it is overcoming the limits of our minds. In this TV show Andrew McAfee graphs the revolutions through human history.
Innovative technology is a "huge deal for humanity"
Well if you take a geek approach to human history you start to graph it, because geeks love numbers, they love quantifying things.
So a geeky approach to human history would be one where you start graphing over a time things like how many people there are, total population, or some metric about how advanced our civilisations are. Now it turns out people have come up with those, so you can graph those numbers as well.
Those two curves look exactly the same, either the population curve or the social development curve, what’s really weird about them is that they are totally flat throughout almost all of human history and then at one point in time they bend almost 90 degrees and they go from basically horizontal to basically vertical and that point in time was the industrial revolution.
So in other words all the other revolutions that we’ve had, revolutions and philosophy in religion and how we approach the world, the opening up of the world via trade, lots of things have happened over the course of history.
If you take this kind of geeky approach to graphing the course of humanity you come to the conclusion none of those things have mattered very much and what did matter was overcoming the limitations of our muscles, of muscle power, via the industrial revolution.
What we’re doing now with the computer revolution is overcoming the limitations of our individual minds or our brains, to at least the same extent as we overcame the limitations of our muscles with the industrial revolution.
So the simple question is, how could this not be a huge, huge deal for humanity?
Connected Economy TV has further expert discussion about innovative technology - Look out for more from Andrew McAfee
Economic transition from the industrial revolution to a connection economy is the topic of this business TV Show with Keith Coats.
Economic transition though technology
Ralph Jenson talks about various economies through which we’ve transitioned, it’s a very general, very broad framework but it’s really good to help us understand our current context, ‘cause leadership is always context-specific. So, very quickly, he talks about the hunter-gatherer era, it was an economy in which there was competitive advantage that was forged through a sense of focus.
The interesting thing in the story is that technology is the disruption, so technology changes the rules of the game. In this particular case the technology that did that, the plough, the ability to harness animals, so we moved into the agrarian society. From there we moved into the industrial era. So each of these are economies in which we look at what created a competitive advantage.
The industrial era is interesting because competitive advantage in this particular set of circumstances was created through business efficiencies, that’s where the science of management was birthed. Frederick Taylor and others – if you can’t measure it, you can’t manage it. If it isn’t broken, don’t fix it. So the legacy of that era remains today.
I still meet companies and leaders who think that their competitive advantage will be forged through greater business efficiency. Business efficiency is a hygiene factor now. So, we moved from then to what was called the information-based economy, where it was how we utilised data and from there we moved into the connection economy.
Connected Economy TV is very interested in theories about economic transition and we are adding more videos daily.
About 100 years ago if you wanted to be quite successful in the world it would have been very clever for you to be quite physically fit. Because in the industrial age, as before that in the agrarian age, in the age of farming the people who either owned the land or owned the factories or worked on the land or worked in the factories, they were the people who were in charge. Those were your assets, physical ability. What we’ve done over the last 100 years is replaced peoples’ physical, the physical needs in terms of what we need from them physically with machines, you know, the combined harvester and the container and the robots in factories. And then for the last 50 years we have ploughed our resources, as human beings we’ve become clever by being clever. We have moved into the information age where your mental ability is what sets you apart from other people. Now, somebody who was gifted at birth, not by my choice, but was gifted with a reasonable intelligence and a nice IQ and a middle class family that could get me through university, that’s been brilliant. Because I’ve been able to use my brain to make money, but unfortunately right now computers are about to do to me what robots and machines did to my farm working, factory working uncles and grandparents. They’re about to make me redundant because they can think faster than I can. They can think more than I can. They don’t need to take a break to eat or sleep or all the other things I like to do.