The pace of change in the business world is unprecedented and accelerating. Recent examples include western consumer packaged goods firms suddenly left with huge amounts of merchandise on store shelves in China this spring, which has seen a very rapid and huge switch to online shopping via mobile device by their prospects. (China has already overtaken the U.S. as the world’s biggest ecommerce market in 2013 and processed $453 billion in sales online last year which was still just 11 percent of all retail sales).
Retiring Cisco CEO John Chambers says ‘what separates winners from the losers is speed and the willingness to reinvent themselves’. Klaus Schwab, Founder and executive chairman World Economic Forum, agrees, as he said, “In the new world it is not the big fish which eats the small fish, it is the fast fish which eats the slow fish.” A quote I have used a lot this year.
At last week’s ‘Cisco Live’ event Chambers said “Forty percent of businesses in this room, unfortunately, will not exist in a meaningful way in 10 years…70 percent will “attempt” to go digital but only 30 percent would succeed.” It is entirely possible that Cisco may be one of those firms forced out of business with the rapid evolution (and current over hyping) of the Open Compute Project and also Google’s Cloud Compute Engine breathing down their neck.
The $23 billion Ethernet switch market that Cisco dominates is arguably up for grabs as the Open Compute Project debuts “two new data center switch designs— the industry’s first open design of a 100 Gigabit Ethernet (GbE) switch to enable continued capacity growth of Web-scale infrastructures, and a cost optimized 40GbE switch design for deployment of current open infrastructures based on 10GbE and 40GbE” via Facebook (who are pivotal to OCP’s development) and Accton Technology Corporation.
“Silicon Valley is coming.There are hundreds of startups with a lot of brains and money working on various alternatives to traditional banking. The ones you read about most are in the lending business, whereby the firms can lend to individuals and small businesses very quickly (my bold) and – these entities believe – effectively by using big data to enhance credit underwriting. They are very good at reducing the “pain points” in that they can make loans in minutes, which might take banks weeks. We are going to work hard to make our services as seamless and competitive as theirs. And we also are completely comfortable with partnering where it makes sense.”
He also wrote about the speed and agility of new competitors in the digital payments area and the need to compete at speed and scale there.
Older stagnant business models fall prey to new faster moving entities because they can seduce away customers with speed, greater simplicity and efficiency…and frequently cost savings. The way in which the Chinese retail market has rapidly shifted due to the rapid move by buyers to purchasing via smartphone instead of in stores is a classic example of old ‘retail is detail’ thinking not seeing the wood for the trees.
Despite consumer package goods industry marketing people focusing on ‘omnichannel’ (multiple sales channels) approaches, the bigger shifts are frequently not detected until to late by those who are supposed to be looking at overall strategy.
I was keeping an eye on the NBA finals on the computer as I was writing this piece via an Xfinity/Fox live stream. When the TV broadcast was paused for advertising all I saw was a screen saying ‘your event is in a commercial break.’ I haven’t watched television for five years, but evidently ESPN and Xfinity haven’t figured out how to sell advertising to their rapidly growing multichannel audiences. (I had the LeMans 24 hours race on in the background earlier in the weekend — same dead space in the commercial breaks, fantastic multi-camera and in-car coverage). I generally avoid the last mile, overblown world of digital marketing, but this is a good example of the type of missed opportunity where other contenders can jump in and become the epicenter of the viewers experience, leaving former incumbents as has beens.
As Reinhold Jakobi, Nestlé China’s food and beverage managing director said, “If you go online, everyone gets the same screen space…” and all that careful retail detail planning is no longer relevant, the same is arguably true of the $43 billion (U.S.) ad industry and their efforts to drive demand, and stay ahead of where prospects are likely to be. TV eyeballs are typically depreciating fast.
For all the tech vendor and tech entrepreneur hype about digital transformation and how their tools will ‘disrupt’ and transcend the bigger question I come up against a lot is whether most tools are fit for purpose to get businesses to where they need to be.
The old patchwork quilts of enterprise technologies are creaking under the strain at the acceleration happening in the modern digitized world, and the vast armies of people who have historically built and supported enterprise systems are in much less demand than the past. An analogy is steam engine experts in the electrification era.
Many of the old IT strategies and paradigms designed in the past to support initiatives are often now more of a boat anchor liability than retrofittable, and the latest versions of old technology platforms may be too fundamentally old fashioned to achieve the flexibility and velocity needed for modern business conditions where prospects and customers are arguably more empowered by search and big data than vendors are.
Avoiding ‘ready, fire aim’ IT planning is vitally important as companies look to reinvent their technology underpinnings to be relevant for future opportunities and challenges. I’m itching to share examples from strategy sessions I’ve been involved in, but NDA agreements, competitive intelligence and strategic secrecy means that all most people hear about digital transformation are marketing pitches from tech vendors and their sponsored analyst ecosphere.
If you’ve read this far I’d advise you to think carefully about the quality and use of your intelligence around moving forward to find profitable ways to succeed during this sea change in the way we do business.
With extensive senior management practical experience, Oliver consults with companies on international digital transformation strategy. Oliver previously ran HP's Global Digital Enterprise Transformation team, managed the Sony PlayStation 'WorldWide Studios' collaboration and workflow environment and has worked with the American Management Association, Sun, Docent/SumTotal Systems, Harvard Business School and McKinsey & Company on major initiatives around knowledge transfer and change management. Oliver has dual US/UK citizenship, speaks at various conferences and on the occasional webinar. He is based in San Francisco. His personal site is www.olivermarks.com.
The opinions expressed in this blog are those of Oliver Marks and do not necessarily represent those of IDG Communications, Inc., its parent, subsidiary or affiliated companies.