The Next Big Thing
Posts about next generation technologies and their effect on business.

Scarcity, abundance and innovation

 

empty.pngRecently, someone pointed out a video from McKinsey that is talking about how Technological advances can not only improve resource productivity dramatically but also spark the next industrial revolution. I had to laugh a bit since this concept is something that we’ve talked about since the very first blog post (almost 10 years ago) and for our strategy work years before. The abundance of IT can drive innovation in almost any industry.

 

Understanding the interaction between scarcity and abundance is an important part of any enterprise strategy effort. If an innovation can’t be understood from its effects, it probably can’t be used for that particular organization. Just being new, interesting or exciting isn’t enough. Adoption can’t be assumed but needs to be built in the mind of those who should adopt (and adapt).

 

In some situations like the service space that has been traditionally built on access to people and process, the ability to remove people through automation can shake the foundation of how an organization approaches the market. The same could be said about the concept of middle management. Once you shift your view to the default perspective of “Prove that we need them” rather than “We’ve always done it that way”, real chance can happen.

 

I am on my way home from a couple of weeks on the road. Hopefully, I’ll have some time to sit back and think about some of the things that I’ve seen recently and follow my own advice.

 

Strategy, Execution and IT

strategic thinking.pngRecently, I was looking at a video about business strategy and execution from the Strategy+Business blog. It talked about the five major questions a business strategy needs to answer:

  1. What businesses should we be in?

  2. How will we add value to that business?

  3. What is our target customer?

  4. What’s the value proposition for those customers?

  5. What are the capabilities we need to be distinctive for those customers?

It also discussed how easy it can be to confuse what it takes to execute a strategy with the strategy itself (e.g., a plan).

 

The video made me think about the role of IT today and how it may be perceived. Do we look at our various investments from the perspective of answering these kinds of questions or do we just look to cut costs. That difference in behavior is one of the greatest differences between an IT organization that is crucial to the business and one that is just an enabler of the business.

 

Many times I’ve mentioned the need for portfolio management within the applications of an enterprise and the fact that it may be as important what you turn off as what you turn on. In a recent discussion with an analyst about Enterprise Architecture they really downplayed the role of the current situation analysis and listening to this video just reinforced how much this value added assessment of the current portfolio can be, since by turning off those systems you free up resources to actually be strategic.

 

The business should be able to relate to a decision based on this strategic perspective, since that’s likely how they think about what they deliver to the market.

 

When planning for the future it can often require an active decision to totally break from the past approach and try a new one. This can be very risky, but there are also risks hanging on to changes that are long overdue – because we’ve always done it that way.

 

A bit more on strategy and change

 

questionsandanswers.jpgI got a note that my previous post on strategy and change was a bit too terse. I made assumptions that people understood my references. Since that post was an excerpt from one slide of a longer presentation, I may not have given enough context to understand the bullets. I’ll take another crack at providing context (through links). Hopefully between the two posts, I can answer the questions and get the points across.

 

  • Many of the factors that enable change are predictable – in the presentation I talk about how there are laws like Moore’s law (and a number of others) that can be used to predict what the future will be like. People can think about their corporate goals, investment plans and other drivers as well as the timeframe for investment… and extrapolate out the types of technology that should be available and what it might mean. This may shift how the change can be implemented.

  • Scarcity affects value – Too often organizations behave like what is valued for its scarcity will still be true in the future, or that what constrains us from generating value a certain way will still be constraining going forward. Most of the IT systems currently in production were based on a scarcity model – the assumptions their design was based on may no longer be true. Data is not going to be scarce in the future, but the business context described by the data may still be. The attention of the employees most certainly will be scarce. If we need to consume more (of what’s abundant) to generate even more value from what's scarce – that is not a bad thing.

  • The rate of change and transformation is increasing – There are many different forces pushing businesses to change and adapt. These will be enabled by IT and essentially add fuel to the fire. We need to stop thinking of change as a periodic disruption of the status quo and instead see it as a river of change. It may go slower or faster, but it doesn’t stop. We need to be flexible and adapt and generate energy from it, not try to hold it back. We need to automate action as well as improve interaction.

  • The increasing digitization not a replacement for today’s processes and systems – Systems of record (e.g., ERP) are still going to be important. They record the transactions that keep a business running. We can surround them with better interfaces and automation, but don’t think that everything can be replaced with whole new concepts. They may be on new platforms… but we still need to keep records.

  • Social influence is beyond the control of any individual ecosystem – This was focused on newer methods to take advantage of social -- techniques like gamification or crowdsourcing that tap into the power of others need to be part of our toolkit.

I try to keep these posts short, but fortunately there is always an opportunity for another one.

 

Strategy and change

strategic questions.pngSince the first of the year I’ve been giving a presentation on embracing technical trends for organizations – what strategists need to think about. At the end of the material, I include the take away points:

  • Many of the factors that enable change are predictable - plan to take advantage of predictable change

  • Scarcity affects value – Every organization can determine how what is abundant can maximize the value of what is scarce
  • The rate of change and transformation is increasing. We need to prepare our organizations to assimilate and take advantage of change - there is no end state, we play through anticipated changes
  • The increasing digitization of society, commerce, personal and professional lives is not a replacement for today’s processes and systems, but adds capabilities – the future is additive

  • Social influence is beyond the control of any individual ecosystem but will impact all organizations - make it work for you

What other areas do strategists need to comprehend or embrace?

Boards and technology - is there a mismatch of expectation or understanding

board of directors.pngI recently came across this post by McKinsey titled: Elevating technology on the boardroom agenda. It reminded me of the articles written in the 1990s during the .com era. This surprised me because I thought we were beyond this kind of discussion. My view is that most business issues have a technical component – I thought that perspective was common knowledge.

 

A new style of business is possible enabled by technology. I assumed that most business leaders today have grown up with computers – after all the start of the .com era was 20 years ago. It appears that McKinsey doesn’t think we’ve progressed that far.

 

One of the statements made in the article was “boards should discuss forward-looking views of technology’s impact on their companies’ industries. Less than 30 percent reported that their boards had these discussions “. It could be the people who completed the survey wanted the board talking about forward looking bits and bytes for it to be classified as ‘technology’. I certainly hope the board would delegate that level of detail to others.

 

One of the items in the article illustrates that almost 50% characterize the board does not spend enough of their attention on IT topics. I would rather see them avoid IT details and ensure the company’s on-going strategy and success. There is only so much attention to go around.

 

One item in the survey I do agree with is that boards need to understand the future view of how technologies will affect their industry. Using that knowledge to their advantage is definitely part of the board’s role as representatives of the stock holders. Periodic exposure to technology futures and implications for their industry is a worthwhile investment of their time.

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About the Author(s)
  • Steve Simske is an HP Fellow and Director in the Printing and Content Delivery Lab in Hewlett-Packard Labs, and is the Director and Chief Technologist for the HP Labs Security Printing and Imaging program.
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