Most enterprises, afraid of losing ground to competitors, are moving at such a rapid pace that they often miss signs that portend disruption. But companies can head off this innovator’s dilemma by capitalizing on emerging trends and anticipating where their respective industries are heading.
Futurist and author Daniel Burrus proposed this notion two years ago in his book, The Anticipatory Organization: Turn Disruption and Change into Opportunity and Advantage. His thesis: Change is linear, exponential and predictable.
“Every disruption that has ever happened was there to see,” Burrus said during a keynote speech at the 2017 CIO 100 Symposium, citing disruptions by Amazon.com to retail, Uber to transportation and Airbnb to hospitality.
Ninety percent of 1,070 CIOs polled by Gartner for its 2019 CIO Agenda survey experienced a “turn,” such as an organizational disruption, acquisition, cost pressure, regulatory intervention, funding shortfall or shift in consumer demands. But only 25 percent of enterprises may come out ahead of the turn, which can impede the organization’s ability to hire the right talent and to fund and launch new business initiatives at speed.
Ninety-three percent of 1,000 companies surveyed said their biggest problem had been predictable — they just weren’t looking, Burrus says. The key is anticipating turns and acting on them, ideally before rivals do.
Hard trends vs. soft trends
Not all trends are created equally. A hard trend is a projection based on measurable, tangible, and predictable facts, events, or objects. It’s a future fact that cannot be changed. A soft trend, on the other hand, is a projection based on statistics that have the appearance of being tangible, fully predictable facts. Think of it as a future maybe.
Hard trends include the fact that employee demographics will skew younger as Baby Boomers retire and cede the workforce to millennials and Generation Z. Rather than eye younger employees with distrust, CIOs should “cherry pick” some and loop them in to senior-level meetings. That will empower and inspire the next generation of IT leaders to help drive the company forward. Soft trends include the assumption that retail sales will increase over the next year and that it will become increasingly difficult to attract talent. Soft trends applied to hard trends can trigger change and CIOs should look to do so where possible.
Trends on their own don’t offer much to go on, but trends paired with “opportunity can burst into actionable life,” Burrus says. To wit, consider this hard trend: Health-care costs are perennially rising. Though many argue this is a hard trend, Burrus says it’s a soft trend that can be changed, potentially by implementing blockchain, cloud and other technologies to reduce the costs of logistics involved in purchasing drugs and other components in the health-care supply chain.
By understanding the differences between hard and soft trends CIOs can more accurately understand and predict future disruptions — and identify and solve problems before they happen.
“If you use hard trends and soft trends to separate future facts from future assumptions, you can see the disruptions coming,” Burrus says, adding that the Pentagon is among the clients using this hard trend vs. soft trend approach for its leadership training program.
Disruption is there — if you look for it
Tuning the opportunity antenna to the anticipatory channel is not an easy task for IT leaders. CIOs, many of whom are juggling roles that require them to be transformational, functional and strategic, are busy responding to threats and challenges to their businesses. And when CIOs do spy opportunity, getting the C-suite and board to buy into what they’re selling is a tough task.
“You have to see disruption before it takes place, see problems before they occur and turn the rapid pace of technological change into an advantage because it provides a window into the future,” Burrus says.
Burrus offers recommendations to help CIOs get executive buy-in and fend off disruption.
The two-pronged approach to innovation. CIOs should take a two-prong tack to innovation: everyday and exponential. In everyday innovation, CIOs empower their staff and analyze predictable problems and conduct a “pre-mortem” in which individuals ask whether something is going to work. Then they decide whether it makes sense to proceed.
With exponential innovation, CIOs try to “take a giant leap forward,” which may be risky but can help them avoid being disrupted.
For example, FedEx could disrupt the logistics industry by abandoning shipping fees and leveraging the data it collects from package tracking sensors, Burrus said at the CIO 100 Symposium. “You have to get enough people to use FedEx shipping to get enough data to make it worth more than charging them to ship. How do you do that? If all shipping is completely and totally free they will make a lot more money.” Similarly, he suggested that a drug company could charge based on patient results instead of the medications it sells. “If you charge for results instead, what happens? You create an ecosystem that’s committed,” Burrus said. “It’s a game-changer.”
Push back when the cost of “no” is greater than the cost of “yes.” As a CIO, securing a yes from a CFO programmed to save money is hard work. You’ve seen this movie before: You identify an opportunity and appeal to the business for money to capitalize. But you admit to your CFO that the outcome is uncertain, so you fail to get the budget to proceed. That’s when you identify and articulate the impact of not implementing X, Y or Z to your company’s brand equity and loss of customers.
“If you see the disruptions about to hit, and the opportunity they represent, take an exponential innovation leap because the risk of not doing it enables you to be the disrupted rather than the disruptor,” Burrus says. “Go in with hard trends and help them to know the price of no is far more than the price of the yes.”
Disruption is a good thing. When CIOs talk about disruption, they do so from a place of caution or, worse, fear. Flip that script to create good changes — and become the disruptor. Burrus pointed to Amazon.com CEO Jeff Bezos as an example of a leader who views disruption as a positive, adding that CIOs can make every process, product or service better. “We see disruption as a negative, but it’s about creating positive disruptions that need to happen,” Burrus says. “The reality is that everything can be better.”
Agile is only one side of the coin. Companies are adopting emerging technologies such as cloud, mobile, artificial intelligence and machine learning, as well as agile and DevOps principles to becomes more nimble and shrink development cycles. But guess what? So are their rivals. Agile methodology is great, but the ability to anticipate is the competitive differentiator.
“Agility is an ideal strategy for unpredictable change,” Burrus says. “Anticipatory is the way to turn change into opportunity because you can see it coming. Act on change before it happens and solve problems before you have them. If it can be done it will be done and if you don’t do it someone else will.”
CIO and CTOs: Same acronyms, different functions. The chief information officer role is evolving. CIOs previously tasked with managing information systems must become chief innovation officers building tech platforms that enable value chains and business outcomes. CTOs, formerly cultivators of tech development and operations, are now chief transformation officers leveraging technology to drive change in business processes, Burrus says. Working together, the CTO and CIO can drive transformation and innovation both internally and in terms of product and service development, he adds.
“Your position as the CIO or IT leader has never been more important or more vital,” Burrus says. “How you view the future shapes how you act in the present and how you act in the present shapes your future.”