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Kindle Notes & Highlights
by
Mark Raskino
Read between
March 30 - May 2, 2019
This is digital to the core— radical new technology flowing into a company and penetrating right to the core of its product— the racquet— and to the player and the game. The
Every business, no matter how old, has the opportunity and the ability to digitally remaster its products and services.
We realized that executives from businesses outside the tech industry need to better comprehend the profound digital disruption now taking place— with more changes on the horizon— and understand how to take action. Often, they are unsure of where to start or how to stay oriented as change builds upon change.
This book is concerned with how enterprises will apply that understanding of digital for advancement and advantage in an endeavor we call digital business: digital business is the creation of new business designs by blurring the digital and physical worlds.11
As we will see in chapter 2, the effect of this next level of digital change will be profound for businesses that have so far applied the Internet to every part of their business, except their products. Some of the changes really will feel like science fiction. The pace and direction of change will feel inherently unpredictable, and the biggest problem managers will face is making of sense of it all.
If you went to bed last night as an industrial company, you are going to wake up in the morning as a software and analytics company.
It’s about transitions and pivots and change; these things never happen in a moment or a day or a month but they sneak up on you and they happen suddenly and there are three changes that we are investing in that are important for our future. The first one’s the merger of physics and analytics…. The second big transition is that every customer in the industrial world now knows how to measure and value outcomes…. And the last thing is that it’s not just about GE, it’s about the extended enterprise.
As Ruh, vice president of GE Global Software, put it, “On one side they realized that there was great opportunity and on the other side they had a healthy paranoia that ‘if we don’t do this, we’ve got to be careful that we don’t get transformed by others who do.’”
The key is really analytics on the data, the ability to get deep inside those assets and the processes that surround them and allow people to get more productivity and efficiency out of their assets.”22
When data from the third entity— things— gets involved, digital business must contend with the physical world and all its complications: hot and cold, loud and quiet, micro and macro, longstanding and temporary, moving and static, wet and dry. The real world adds a lot of complexity. Here, the number of permutations and combinations of businesses, people, and things becomes very large. Gartner predicts that by 2020 twenty-five billion things will be connected to the Internet24 and estimates that there are at least 130 million enterprises. There are already three billion people online
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This fundamental factor leads to an unavoidable truth— the future is becoming just too complex to predict using traditional approaches. You cannot know what you will need to know. You can’t calculate and plan sufficient scenarios. Yet you must do something because the digital business world will be a turbulent and unforgiving place where winner-take-all outcomes will be common and the disrupters themselves will be disrupted.
Digital business will cause deeper business change than Internet technology created in the past. You will need to take digital right to the core of everything you know and rely on. As a result, you will need to remaster your industry and your enterprise, but to do those things you will also need to remaster yourself— your l...
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Technology will revolutionize the things people and businesses use in everyday life so much that the very foundation of your industry is likely to be undermined. For this reason, there is no point trying to understand and lead digital change in isolation from within your organization’s four walls. There
Social: inside out
Without a hard look at the radical changes taking place in the outside world first, your attempts at digital change will be incremental and weak.
Figure 1.4 Digital to the Core Framework
Social: digital to the core
We believe that you can clarify the uncertainty surrounding digital by focusing on three irrefutable and highly disruptive macro forces.
The task, then, is to commit to leading at three different levels: industry, enterprise, and self. Failure to attend to all three forces will lead you to be tossed in the waves of industry disruption and quite possibly be swept away. Failure to lead at all three levels will cause your leadership to be weak and temporary.
Assess the three key forces at work to exploit them to your advantage. The force of resolution revolution, enables you to see the world in higher fidelity and then to understand and control that world with greater precision. The force of compound uncertainty makes it hard, though not impossible, to know when the technology, culture, and regulation will align to create your moment to pounce. Inaction is risky, because the force of boundary blurring enables powerful new, unusual competitors to enter your industry and redefine it.
The world is changing. People interact in new ways. They gather and share information differently and consume products and services in more ways than we have ever seen before.
Mark Fields uses digital and the resolution revolution to remaster Ford, taking it from a carmaker to a company focused on mobility. “We’re driving to be both a product and a mobility company,” Fields declared at CES, “and ultimately change the way the world moves.”
Henry Ford created a car that every person could drive. Mark Fields plans to create a car that every person can ride.3
“Almost every industrial product, certainly all the industrial products that we manufacture today, have sensors on them and have the ability to take real-time continuous data streams as they’re being used,”
But there is one last area that has often remained dark and untouched— the product or service itself.
Over the past twenty years of IT advancement, most businesses have changed everything but the product.
Social: product
However, most industries will embed computing, software functionality, communication, and data services into the products they make and sell. When that happens, capabilities in those areas, specialized to each industry domain, will become a part of the differentiating core competency. In that sense, every company will need to become a technology company— at least in part.
We recognize that this idea may be challenging, and perhaps you cannot yet see why your company might need to become more tech centric. Failure to understand this need could represent a dangerous blind spot.
For financial payments and services companies, these digitally enhanced products might one day become semi-autonomous agents, authorized to buy things on their owner’s behalf.
Product:autonomous
Investment fund managers who find government economic data too infrequent or questionable and financial reporting data inadequate will have many other places to hunt. Aggregated data about electricity consumption, driving activity, truck routes, human weight fluctuations, and many other sources could inform them about how economies and industries are really performing.
Product:differentiated data
In their original work, Hamel and Prahalad cited as an example of a core competency engine design at Honda, which used the competency to build motorcycles, lawnmowers, and boat engines.
Methods of marketing and selling changed, but core products did not; thus, true core competencies remained substantially the same.
What will an engine maker do in a world of digitally controlled electric cars? What will an insurer do in a world where open-data-informed AI systems can outsmart underwriters? What will a food manufacturer do in a world where nutrition-tracking RFID tags are ingestible and packaging can interact with the Internet? What will a bank do in a world of crypto currencies and peer-to-peer social lending?
Your industry will be changed by the following digital progress: Connected sensors and the data they generate will allow you to see and inspect your world in finer detail and higher fidelity; this is the revolution in resolution. Your ability to remotely update or manipulate individual things and elements in your world, with great exactitude, is also improving; this is precision response and control.
Disruptive innovation is open to those who sense and better predict the change rate and can exploit it to innovate their products and services.
The first line of progress is to exploit the opportunity of increased data resolution— to see what’s happening in your world in more detail than ever before. The second is to exploit the opportunity to exert more precision response and digital control over the things happening moment to moment in your world.
Digital disruption will impact all industries, including yours. Remove all complacency, particularly if you are in a stable, old, physical product sector unaccustomed to digital change. Require your team and your peers to justify their beliefs if they think it cannot or will not happen in your sector.
Plan for instability as Moore’s law enters your previously slow-moving industry. Transitioning to an era of nonlinear innovation will be a challenge to many stable management systems and cultures. The period of instability will be sustained. This is not a one-time move. Companies will trump and re-trump each other.
Three progress dimensions of digital disruption— technology, culture, and regulation— intertwine. Each advances with a different cadence, and the morphing triple tipping point effect that arises creates a daunting compounded uncertainty for many. However, digital leaders know how to exploit opportunity in the face of uncertainty. They keep a sharp eye on the key tipping points. They nudge each one in their favor by constantly probing the edges of the digital frontier. Then, when the time is very nearly right, they move boldly to exploit new industry market space opportunities.
Judging the market and knowing when a key tipping point is approaching is an important skill for a digital business leader. Launching prematurely and trying to run ahead of technology penetration and acceptance can be painful, expensive, and brand tarnishing.
To win, you have to be a bit better than the competition. It will be important to identify and work on all three tipping points that are key to industry competitiveness. In technology, take care not to underestimate or get caught out by the nonlinear pace of change. In culture, evaluate social acceptability and keep testing its boundaries without crossing the “creepy line.” With regulation, innovate because of it or in spite of it, treating it as a potential source of opportunity, not just an obstacle. The best digital leaders work to nudge one or more of the three tipping points in their
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Balance new value propositions with the “creepy line.” Technology can test and challenge our cultural and social boundaries. Often, we yield because the new opportunities it brings are worth the change. But the rate of cultural change is not evenly spread across countries, communities, and social groups.
The trash bins were enabled to listen for the unique MAC address codes that every passing laptop, tablet, and smartphone offers up when hunting for Wi-Fi access.23 Using this data to estimate the number of unique passersby who saw the ads on the bins would let advertisers measure the impressions and value the service. But it also could make people feel spied upon in a public place. The local governing authority, called the City of London Corporation, decided it was a privacy-invading step too far, and it required the company to stop such tracking.
Culture can be hard to judge, but you can measure it by testing ideas in focus groups or via social media.
So trailblazing companies were able to make the market for e-cigs while the regulators deliberated.
Google is an obvious example of a company that is always testing the edges of what’s feasible and permissible.
Oakley, part of the Luxottica group of companies, has advanced its digital business by finding one space in the triple tipping point envelope that is just a bit more open to an early move. Its probing of the digital frontier was successful.
Identify and work on all three tipping points key to industry competitiveness. Actively track specific technological, social, and regulatory tipping points that have the potential to impact your competitive situation. Focusing on just the technology change and failing to address social and regulatory aspects will lead to dangerous blind spots.
Leaders from traditional industries should not underestimate how fast the art of what is technically possible can tip, nor its disruptive power. Sometimes the change just ahead of you feels like science fiction.
Traditional players that have enjoyed dominance for decades can find others suddenly seizing these new routes. The walls that once defended one industry from another crumble and become blurred and ill defined. Defending your old core won’t do; instead, go after the new opportunities and build your part of the new platform before someone else uses it to control your business.
autonomous driving enhance safety but it will also free up time for drivers. Being
Ghosn was pointing to the possibility of a fuzzy future in the 2020s, when the car industry might need to make more of its money from digital services provided to vehicles and less from making and selling the vehicles themselves. It is not entirely clear who will have the greatest control over the movies or business services streaming in and out of the self-driving cars. But Nissan, Volkswagen, and Ford didn’t kick off that self-driving future— Google did. At every turn, it now seems that anyone can enter any industry, using digital as a vector.
