Competing in the Age of Disruption

This future series continues with a look at a new book by Geoffrey Moore titled Zone to Win: Organizing to Compete in an Age of Disruption. In my last post on Emerging Models, I looked at a model based on business type. The model explored by Mr. Moore is based on zones, and came to life in his work with and Microsoft. With Salesforce, the model supported a focus on disruption (offense), and with Microsoft, it supported a posture against disruption (defense). The four zones as identified by the author are depicted in the visual below:

Four Zones Quadrant

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Emerging Models for the Future

This future series continues with a look at a Deloitte report titled “The hero’s journey through the landscape of the future”. The report focuses on the organizational journey required to re-position for viability in the future landscape. As the landscape simultaneously fragments and consolidates, the authors see these forces and others changing the nature of relationships among businesses. A very good framework for this re-positioning is presented, along with great descriptions of the big shifts that are driving the need. The report sets the stage by identifying the main drivers of this future business landscape:

  • Pressures on companies
  • Pressures on individuals
  • Eroding barriers: Lowered barriers to entry, commercialization, and learning
  • Fragmentation: Staying niche, nimble, and small is the new goal for many
  • Concentration: Emerging scale-and-scope operators will fuel and benefit fragmentation
  • The need for mobilizers to connect and mobilize the ecosystem

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A Report on Creative Disruption

A recent report by Bank of America Merrill Lynch sheds more light on our future focus. The authors see cyclical and secular trends transforming the world at a rapid and meaningful pace. They find a common denominator in the form of three Ecosystems of Creative Disruption, and see them reducing barriers to entry for new businesses. These ecosystems allow companies to improve productivity and time-to-market while allowing broader customer reach. In a big shift, the ecosystems redefine competitive advantage by leveling the playing field between large and small companies.  Success is therefore dictated by imagination and ability to maximize the ecosystem. The three ecosystems are:

The Internet-of-Things (IoT) is expected to be a $7 trillion industry by 2020, as the explosion in connected devices is laying the foundation for IoT disruption. As a result, the authors estimate that connected devices will double in the next three years to reach 20 billion by 2018.

M2M Applications

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World Economic Forum – Deep Shift

A must read on six mega-trends, their tipping points and societal impacts. I recommend this for anyone with interest in where the world is heading, and/or tasked with future thinking in the context of strategy. I commend the World Economic Forum for their efforts here, as education is likely to spur action. The six mega-trends are:

  1. People and the internet
  2. Computing, communications and storage everywhere
  3. The Internet of Things
  4. Artificial intelligence (AI) and big data
  5. The sharing economy and distributed trust
  6. The digitization of matter

Here is a tipping point timeline from the report:

Tipping Points Timeline

Many leaders are struggling with the sheer number of future scenarios and some indication of when the tipping point may arrive. This material provides critical input into the scenario and response analysis process. Enjoy the read.

IDC Predicts a DX Economy

IDC today announced its worldwide information technology (IT) industry predictions for 2016 and beyond. The predictions were published in a new IDC FutureScape report. As we embrace the notion of Future Thinking

This forward looking guidance is critical. Here is a snippet from the report:

“The disruptive impact of digital transformation is about to be felt in every industry as enterprises ‘flip the switch’ and massively scale up their DX initiatives to secure a leadership role in the DX economy,” said Frank Gens, Senior Vice President and Chief Analyst at IDC. “In the next two years, two-thirds of Global 2000 CEOs will put DX at the center of their growth and profitability strategies. By the end of this decade, IDC predicts that the percentage of enterprises with advanced DX strategies and implementations will more than double.”

IDC predicts that the scale-up of digital business strategies will drive more than half of enterprise IT spending within the next 24 months, rising to 60% by 2020. Mastery of 3rd Platform technologies will be table stakes for successfully executing DX business initiatives and “Cloud First” will become the new mantra for enterprise IT. Virtually none of the other 3rd Platform technologies or major DX initiatives is possible in scaled-up implementations without the Cloud as the foundation. By 2020, IDC predicts that enterprise spending on cloud services, the hardware and software to support cloud services, and the services for implementing and managing cloud services will exceed $500 billion, more than three times what it is today.

Source: FutureScape

Additional predictions were provided:

  1. By the End of 2017, Two-Thirds of the CEOs of the G2000 Will Have Digital Transformation at the Center of Their Corporate Strategy
  2. By 2017, 60% Companies with a DX Strategy Will Deem It Too Critical for Any One Functional Area and Create an Independent Corporate Executive Position to Oversee the Implementation
  3. By 2018, 80% of B2C Companies Will Have Created Immersive, Authentic Omni-Experiences for Customers, Partners, and Employees; 60% of B2B-Centric Companies Will Have Done the Same
  4. The Top New Investment Areas Through 2017 Will Be Contextual Understanding and Automated Next Best Action Capabilities
  5. In 2016, 65% of Large Enterprises Will Have Committed to Become Information-Based Companies, Shifting the Organizational Focus to Relationships, People, and Intangible Capital
  6. By 2018, 75% of the G2000 Will Have Deployed Full, Information-Based, and Economic Models or “Digital Twins” of Their Products/Services, Supply Network, Sales Channels, and Operations
  7. By 2020, 60% of the G2000 Will Have Doubled Their Productivity by Digitally Transforming Many Processes from Human-Based to Software-Based Delivery
  8. In 2016, the Level of Connectivity Related to Products, Assets, and Processes Will Increase 50% for All Industry Value Chains
  9. The Sharing Economy Will Give Rise to the Networked Free Agent and Skill-Based Marketplaces, Resulting in More than 10% of Work Being Sourced in this Fashion in Mature Economies by 2019
  10. By 2018, at Least 20% of All Workers Will Use Automated Assistance Technologies to Make Decisions and Get Work Done

No Ordinary Disruption

In my last future of business series post, I focused on a recent book titled No Ordinary disruption. That post explored the author’s belief that our intuitions must be reset. In that same book, the authors explore what they call “trend breaks”, or shifts away from the trends of the recent past. This post will look at these breaks and their impact on 21st century organizations – and it starts with value. In the rapidly growing world of ecosystems, the way value is created and captured is changing. But, more fundamentally, even our traditional views of value are being challenged. The authors use GDP as a way to underscore this point. They estimate that digital capital is now the source of roughly one-third of total global GDP growth, with value delivered via intangible assets like Google’s search algorithm or Amazon’s recommendation engine. Even our long standing view of capital itself is shifting, as human creative capital becomes a critical source of value.

Additionally, future value increasingly accrues to consumers. In a recent article titled Why Every Aspect of Your Business is about to Change, the author talks about the destruction of value for incumbents and the creation of value for consumers in the form of consumer surplus. They use a powerful example to make their point: Skype brought in $2 billion in 2013, but McKinsey calculates that at the same time, they transferred $37 billion away from telecom firms to consumers via free or low-cost calls. Even the innovative new company only gets a fraction of the value created (Skype: $2 Billion, Consumers $37 Billion). So back to value and GDP: consumer surplus is not accounted for in the way we measure GDP. This creates two challenges: First, do we need to change the way we measure value? Second, how do companies monetize the newly created consumer surplus?

So what does this mean for the future of business? Let’s start with something right from the aforementioned book: On the first day of classes at Ivy League colleges, it was common for the dean to warn students: “Look to the left, look to the right. One of you won’t be here next year.” That seems very appropriate when looking through the lens of company viability. This real phenomenon unfolds over the next decade, driven in part by several trend breaks as identified by the authors:

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Your business is about to change – Fortune

Source: Why every aspect of your business is about to change – Fortune

Great piece. This is very timely given the future of business series that I am currently focused on. The major themes:

  1. Asset heavy to asset-light
  2. Employees are the business – but you likely need less of them
  3. Winners win big, the rest fight very hard
  4. Corporate life expectancy shrinks
  5. The continued move towards a frictionless economy
  6. Speed equals survival
  7. Low capital companies out performing heavy capital competitors
  8. Growth before profits
  9. The 21st Century Corporation
  10. Competition gets tougher

Enjoy the read!

A version of this Fortune article appears in the November 1, 2015 issue of Fortune with the headline “Every aspect of your business is about to change.”