Topic: Managing Disruption & Change
I.T sits in the middle as a cost center, profit center, growth center, and investment center. How you spend your time will be between the implementation dimensions (cost & profit) vs. innovation (investment and growth).
Back in the old days, I.T was considered a function of X. X being the CFO, COO, or CMO.
Now – every business is a digital business.
It doesn’t matter if you’re selling donuts or making some new whizz bang social app. But to remain competitive you have to constantly be comparing your competitive advantage (what are you strong at, what value add you have to you offer) vs. the competition – particularly disruptors. And thus all CxO’s have a stake in it.
More importantly, what is your core competency today isn’t necessarily what it needs to be tomorrow.
Companies that focus on viewing IT as cost centers (reducing I.T costs through automation, cloud, etc…) and profit centers (maximizing existing core offerings) create a Core Competency gap between what they’re doing now vs what they should be preparing for (aka innovating) in the future.
Classic poster children of companies that created this gap: Blockbuster, Blackberry, Nokia, Palm, etc… All companies that focused only on core competencies.
Where does value come from?
What you think is now obvious may not have been so obvious back then. When Netscape IPO’d with a billion dollar market cap with an open source/free product, it caused a total rethinking of: where does value come from?
Who would have thought Google with a simple search form page would become $250B mkt cap company?
Disruption is now easier than ever
It’s now easier than ever for a company to come in and completely disrupt the market place.
E.g. the TV industry works by vetting a single pilot on TV and measures the initial response from there. House of Cards wanted an entire season to develop the characters, etc… and NetFlix believed in it, and bet big…. and won. They put the entire first season available in one go (vs. what traditionally networks have done).
People could watch it all in one day, space it apart, etc… their philosophy: people want to watch when they want to watch it, and if at a reasonable price, will pay for it.
Kevin Spacey talking about how House of Cards disrupted the market place and how they used data to make an intelligent decision: https://www.youtube.com/watch?v=P0ukYf_xvgc
Give people what they want, when they want it, in the form that they want it in, at a reasonable price and they’ll most likely pay for it rather than steal it. – Kevin Spacey
It’s all about data
It wasn’t a blind bet for Netflix. They have a lot of data to know what their customers like, what their customers behaviors are, what devices they watch on, when they watch, etc… TV Networks have nowhere near this kind of telemetry.
So it’s all about data. Facebook isn’t about users, it’s about the volume of data created by those users and thus monetizing that data. In the day 1,000 person study would be considered a good sample count, and 10K would be landmark. Facebook did a divorce study based on tens of millions of users. They’re currently developing a network of drones to supply free internet, however they get to monitor everything that you do (aka more data).
The explosion of data
Cars are becoming IP enabled (Ford Sync, GM OnStar, Audi Apple), every GE component will send real time data, proximity marketing sensors that know where you are in a store, Google Glass, etc… is all leading to this explosion of big data.
Be a disruptor or defend against disruptive forces
The ability to be a disruptor, or defend against disruptive forces will rely on how well you can leverage and connect data.
When Google Glass first was announced, many people thought it was just a novelty idea.
JPL: When the technicians are working on an jet engine the spaces can be tight so to look at even an iPad is hard. But using Google Glass they can see the schematics overlaid with what they’re looking at.
KFC: Prototyping putting the food prep instructions on Google Glass so that training is easier and to reduce error.
The difficulty lies not so much in developing new ideas as in escaping from old ones.