Digital Business Transformation

How Established Companies Sustain Competitive Advantage From Now to Next

Nigel Vaz

• Publisher: Wiley
• Year: 2021
• ISBN:
  9781119758686
• Edition: 1
• Topic: Business
• Subtopic: Leadership
• Index: Business

Fuel your business' transition into the digital age with this insightful and comprehensive resource

Digital Business Transformation: How Established Companies Sustain Competitive Advantage offers readers a framework for digital business transformation. Written by Nigel Vaz, the acclaimed CEO of Publicis Sapient, a global digital business transformation company, Digital Business Transformation delivers practical advice and approachable strategies to help businesses realize their digital potential.

Digital Business Transformation provides readers with examples of the challenges faced by global organizations and the strategies they used to overcome them. The book also includes discussions of:

• How to decide whether to defend, differentiate, or disrupt your organization to meet digital challenges
• How to deconstruct decision-making throughout all levels of your organization
• How to combine strategy, product, experience, engineering, and data to produce digital results

Perfect for anyone in a leadership position in a modern organization, particularly those who find themselves responsible for transformation-related decisions, Digital Business Transformation delivers a message that begs to be heard by everyone who hopes to help their organization meet the challenges of a changing world.

SECTION 1
NOW

CHAPTER 1
The Death of Business as Usual

It's All Change

Change is not what it used to be. The business leaders of today, and those of tomorrow, will find it much harder than their predecessors to face down challenges and respond to change. This is not due to any personal limitations on their part. It's quite the opposite.

John D. Rockefeller, Andrew Carnegie, and Henry Ford all had it easy compared with the reader of this book. For them, business challenges came sequentially. They were experiencing linear change, which, while significant, was of an entirely different magnitude than the effect of all the change happening at once: human behavior, emerging technology, and the availability of funds and investment to create entirely different business models. For them, change did not accelerate away more quickly than it was humanly possible to chase, comprehend, and to adapt.

In the early years of the twentieth century, when Rockefeller, Carnegie, and Ford were building their business empires and amassing their fortunes, the term “CEO” was an abbreviation for “Chief Electricity Officer” rather than “Chief Executive Officer” as it is today. This reflected the fact that electricity was a business‐critical technology that warranted its own leadership function within the organization. It was a linear change, with a specific solution. As will likely be the case with the “Chief Digital Officer” of today, the role of Chief Electricity Officer was transitory and disappeared as soon as it became apparent that their specialty, in fact, sat at the heart of and powered the entire organization.

Not all established businesses are successful at riding the wave of change. We all know the stories of Blockbuster, Kodak, Nokia, and a host of other legacy businesses and we won't be revisiting those cases in this book. Even those businesses didn't fail absolutely and, for the most part, did not entirely disappear – it is even possible to visit the last remaining Blockbuster store in operation the next time you're passing through Bend, Oregon.

What those companies did allow to happen to them was to be outmaneuvered by digitally native entrants to their markets and to lose their once dominant position in those markets. Nokia didn't “fail” in the mobile phone market. Having started life as a paper mill in 1865, it made successful leaps through electricity, rubber, cable, and communications to later own more than 50% of global market share of smartphones. When it needed to leap again, Nokia stalled and stumbled. It wasn't able to build a platform business or to surround itself with an expansive ecosystem of apps, content, information, and entertainment. Its digital moat had dried up and it was unable to resist the incursions of new competitors. It was a manufacturing company in, to paraphrase the entrepreneur, investor, and engineer Marc Andreessen, a world being eaten by software. It was outmaneuvered, principally by Apple.

Truth, Knowledge, Vision

The American Museum of Natural History is an extraordinary building in many ways. The largest natural history museum in the world, it houses one of the most important records of life on earth. For anyone seeking answers to the bigger questions, such as the significance or not of human evolution in space and time, then they are surely to be found hidden among the 33 million‐odd specimens spread across the museum's two million square feet. The museum acted as a magnet does to the insatiable curiosity of a boy growing up in Manhattan – a constant and irresistible attraction.

My son, as many boys do, from an early age had a relentless fascination with dinosaurs. From home on the Upper East Side of New York City, the quickest route to the museum is a run‐walk across Central Park and a few quick bounds up the steps and in through the Central Park West entrance, otherwise known as the Theodore Roosevelt Memorial Hall. Ignore for now, as he invariably did, the words “Truth, Knowledge, Vision” that are thoughtfully inscribed above the Roman‐style entrance pillars. Inside, after all, there are dinosaurs to be seen.

The centerpiece of the Theodore Roosevelt Rotunda is the life‐size cast of a female Barosaurus rearing up on her hind legs to defend her young against the incoming attack of a fearsome Allosaurus. It has to be one of the most spectacular dinosaur exhibits anywhere in the world. It is storytelling using protagonists brought to life from the late Jurassic period, 150 million or so years ago. It is also huge. Owing to its tripod‐rearing position, the Barosaurus (AMNH 6341) is, at 50 feet, the world's tallest freestanding dinosaur exhibit. As your gaze tracks up the vertebrae to the skull, you may wonder whether it is taller than those beautiful red marble Corinthian columns that anchor the room. It is, by a couple of feet. Having been temporarily distracted by the majestic architecture, you may even wonder whether you could set another Barosaurus on top of this one and still fit it within the soaring octagonal coffered, barrel‐vaulted ceiling. You could, but only just.

It is truly an awe‐inspiring display, in one of the most graceful architectural settings. Or, as the museum Trustees better described it, “a conception of the grandeur and dignity … which elevates the emotions and impresses the soul as but few of the monuments to man have ever done.” It is unfortunate then, that, in the scenario we're soon to depict, we must flood the space in order to illustrate a point.¹

Before we do that, though, let's leave the Sauropod behind and leap forward to just 1.9 million years ago and to the emergence of Homo erectus. For most of those 1.9 million years, our primary form of locomotion has been bipedal or walking upright. Figure 1.1 shows that in a time line of land‐based transportation, for all but 0.3% of that time line walking has been our sole means of getting from one place to the next. Only at around 5,500 years ago did we begin to ride on the backs of animals, which was fairly quickly followed by the invention and use of the wheel. Man and beast, cart and coach, then seemingly plodded along quite happily until the seventeenth and eighteenth centuries.²

FIGURE 1.1 History of land‐based transportation

Of all the activity and invention that brought about and defined the Industrial Revolution, we've selected just two inventions to drop into our time line. The first is Thomas Newcomen's “atmospheric steam engine” of 1711, not the first steam engine but arguably the most important as it both enabled the profitable extraction of coal from flooded mines and, many iterations later, powered pretty much everything including the transportation of people. The second is Carl Benz's Motorwagen, which, in 1885, became the first car to realistically be powered by the internal combustion engine. Returning to our land‐based transportation time line, these two developments, respectively, would occupy 0.016% and 0.007% of its length.

Tesla was founded in 2003, and Uber in 2009. These represent the most significant recent disruptions to our understanding of land‐based transportation. They were not the first in their fields, but became dominant players: despite the existence of other electric cars, Tesla's made popular impact while Uber's significance was to deliver ride‐sharing on a global scale.

Tesla has disrupted the notion that the combustion engine will power the future. More importantly, Tesla thinks of and markets the car as a platform, so that people can now effectively download their car. Uber has come along and posed the questions “Isn't the purpose of cars to transport things and people connected?” and “Why do we even need cars to be owned? Why can't we actually just share them?” And so this automotive, or mobility, industry that itself represents no more than a sliver on the time line of human locomotion, has witnessed two of its biggest consumer disruptions in just the past 18 years. And what percentage of the transportation time line does 18 years occupy? Just 0.0009%.

The point of this industry‐specific example is that the speed, scale, and significance of the change taking place all around us is real, not imagined. That's without factoring in driverless cars and passenger drones, the impact of which may be at least as profound. Whether you're operating in the mobility industry or not hardly matters. What we are witnessing is a rate of change unlike anything experienced before. This is forcing every single industry to reevaluate itself.

The transformation of business and industries is not a new phenomenon. Those stovepipe‐hatted engineers and inventors of the Industrial Revolution were harnessing and evolving the technologies of their age at a pace that must have appeared wondrous to the people of the time. The reason that digital is so significant for our age is that it signifies the coming together of rapid change in consumer behavior, technology, business models, and a growing awareness of the impact that business and technology has on societies and our environment. Together, these four forces are driving disruptive change.

You may be familiar with Ray Kurzweil's “Law of Accelerating Returns”, often cited because few have better made the case that technological evolution is exponential and not linear. In it, he argues that the current paradigm shift rate (rate of technical progress) doubles roughly every decade, so the rate of acceleration is growing exponentially. As such, the technological progress we will make in the twenty‐first century alone is a thousand times greater than was the case in the twentieth century. Delivered in linear form, that is without the doubling of paradigm shift rates, the technological progress we will witness in this century, would have taken around 20,000 years.

Standing on the sidelines with your Internet‐enabled mobile phone, this accelerating rate of change can be a tricky thing to grasp. You haven't quite come to grips with that phone's full functionality yet, but you'll catch up, right?³

So, how do we begin to comprehend what exponential growth looks like compared with linear? Kurzweil uses grains of rice on the squares of a chess board. We, however, will return to the Theodore Roosevelt Rotunda at the American Museum of Natural History which, since we were there last, has sprung a leak.

The highly polished marble floor of this grand, John Russell Pope ‐designed room measures 67 feet wide by 120 feet long. Its curved ceiling, as we have learned, stretches to a maximum height of 100 feet. The first droplet of water to hit the floor, then, barely registers within the hall's capacious 698,000 cubic feet. Even though the drops of water keep coming, in linear fashion, at a rate of one per second, there is no cause for alarm. It will take another 26,006 years for a full puddle to form at the feet of our Barosaurus and another 4,074 centuries for the water to close over her head. In 752,589 years the hall will be completely flooded.

Now, grab a metaphorical towel or, better still, some scuba gear and let's see what happens if the rate of water droplets entering the room increases exponentially – one drop, two drops, four drops … Even if she could calculate X(t)= x₀ x (1 + r)^t,, it's unlikely that the mathematical solution would matter as much to our Barosaurus as the solution that has rapidly been filling the room and which has now closed over her head … after just 38 minutes. In less than a minute, the hall will be filled to bursting point. Here's the thing though – just 10 minutes earlier the water had been no more than about a four‐inch‐deep puddle on the floor.

The Barosaurus has an excuse for remaining immobile throughout both scenarios, being, as she is, a life‐size cast skeleton. What about you? A sentient and smart human being? From the facts th...