Are you ready to compete in a volatile world?

The Digital Tsunami

3 years ago, I watched the video of a talk by Yuri Van Geest, a co-author of the excellent book “Exponential Organizations” where, right in the beginning, he played a video showing the Tsunami of 2004 in Thailand. The video showed how tourists on the beach saw the Tsunami wave appearing far away in the horizon and building gradually into a large wall of foam – and didn’t react! They had no idea that it was a Tsunami and, of course, the devastating effects of a Tsunami.

This story illustrates well a paradigm shift that has been building for 20 years, called Digitization. It’s really important to understand that the growth of the Digitization wave is exponential. It started small in 2000 with Wikipedia, 2002 with My Space and 2003 with Facebook but then it built exponentially. With Covid, that exponential curve accelerated everything and today, you can no longer look at Digitization as the future. It’s very much the Present.

As such, if your organization hasn’t Digitized, you must look at the necessity of Digitizing with the utmost sense of urgency; approach it as a crisis; turn your survival instincts on high alert because that’s what you will be doing – survive. In 2021, you are already late and already in catch-up mode. It’s not something you can talk about, ponder, consider, evaluate and so on. You-have-no-time!

Volatility

There is one major characteristic of the reality of this paradigm shift: volatility.

Everything is changing very rapidly. New technologies are emerging into the mainstream every day. The world of Life Sciences, manufacturing, supply chains, Materials science, government, banking, money transmission, currencies, transportation, education, Services – everything is Digitizing and everything is changing – and very fast!

If you understand enough about the developments of the past 10 years and extrapolate to the end of this decade, you will see a hugely different world. And you will realize that, in your current state, you couldn’t compete in that world.

The big question you need to ask yourselves is: how much of the way you run your business is based on a stable reality; and how much of it is ‘friendly’ with massive, rapid change?

It’s easy to figure this out: do you have written operating procedures? How about procedures in your HR environment? Finance? Business Management? Do Executives look at company performance once a month? Are you investing in classical business systems – like ERP’s, Financial Consolidation, Customer Service, CRM’s and the like? Is your IT predominantly an “SAP-Windows” shop? Is your Org chart a hierarchical diagram with fixed positions and fixed departments? Are there job descriptions for everyone in that chart? Do you have approval cycles and approval hierarchies?

If your answer to most of these questions is “Yes”, then you’re organized for stability and you’re scrambling when volatility occurs.

Stability was the norm and volatility the exception until about the mid 1990’s. Today, there is only volatility – there is no stability.

Why are start-ups the most common disrupters? Because they are created by young people who were born in a world of volatility. Gen-Y’s and Gen-Z’s were born and grew up, respectively, in the post 9/11 world and the world of mass shootings; and in the world of Covid and social injustice. These young people – everybody in the workforce under the age of 40! – are not inclined to make plans; they live as if their lives could end any minute; their world has been rattled over and over; they see their future as a big mess of Climate crisis and instability. They don’t understand stability. To them, volatility is reality.

Business Systems

Within a business Enterprise, one of the things that needs to change quickly – if it hasn’t – is how organizations look at their systems.

Most people I know who are running classical companies – usually over the age of 50 – grew up throughout their careers accustomed to the notion that any operational problem can be resolved through an information system. So-called Business Systems have been the ‘province’ of automation in operational activity for over 50 years – so, it’s understandable.

There are two problems with Business Systems:

  1. They were created for the stable part of the world. Today, not more than 10% of operational activity is predictable. Thus, companies are investing large sums in information systems to only cover 10% of their real needs.
  2. Business Systems require precise prescription of what needs to be automated and they take a very long time to put in place – time which, today, you simply don’t have.

I know it’s difficult for most Executives to come to grips with this fact but, in this situation of survival you find yourselves in, sitting on the beach looking at a Tsunami about to swamp you, you don’t have time. You certainly don’t have time to waste in solving 10% of your operational needs.

Digital Platform

Fortunately, Digitization is also a period of massive innovation. It stands to reason, then, that a different class of technologies for the Enterprise has evolved to deal with volatility. This is not a new class of Business Systems. It’s a whole new technology field with a completely different relationship with the human being in the workplace.

Today, this new space of Enterprise technologies that’s ‘friendly’ with volatility, has a shape and it is made of 3 parts, working together:

  • Big Data Analytics
  • Machine Learning
  • Visualization

Fronting this backbone of a smart platform, there is a periphery of mobile applications providing an environment for people to operate in Cyberspace.

We’ll call this the Digital Business platform.

This new class of tools overcomes the handicaps of business systems:

  • Because it doesn’t required precise, prescribed requirements, it’s quick to deploy.
  • It ‘loves’ volatility.
  • It’s not built and then delivered. The building and optimization of applications exist within the operation. Using these applications and developing them – is the same activity, not two separate tasks.

It is here that you need to invest when it comes to “Systems”. If you’re not there and you’re catching up, this will be a major change. You need to think radically differently, if you want to have any kind of chance.

Skills

Firstly, you have to reposition your notion of what is “IT”. You can no longer think “users” and “IT”. That no longer works. Clearly, there is always a need for specialized services to support technology infrastructure – although, in many cases, that capability can be acquired from a Service Provider. But when it comes to implementing and supporting applications, you can no longer follow the old construct of users-requirements-IT-system-train-rollout. This is not only unnecessary, it’s too slow.

Secondly, you need to re-evaluate the skill sets in your organization. You need Data Scientists, Data Analysts and Machine Learning Engineers. Don’t spend anytime with SAP resources and PC/Windows resources. Shift your attention to the skills you don’t have and that are needed for a Digital Business platform.

You also need to develop the skill pool of people who understand the world of mobile apps and mobile technology. The UI world has shifted largely to mobile devices. Your entire organization could run on iPad’s linked to capabilities in the Cloud via the Internet. You don’t need PC’s, Windows, Local Area Networks, etc. – the typical infrastructure of the 20th century office.

This is what the start-ups disrupting your business are doing. That’s what you should do.

Conclusion

Paradigm shifts cause radical change. When you fall behind and find yourself in catch-up mode, you don’t have time to say “change takes time”. You need to move fast. Don’t waste time on the same things you invested in, 10 years ago. Even if you don’t know much about Digital Platforms, even if it’s way outside your zone of comfort, even if you feel the risk of this big unknown – you have no choice but to embrace that unknown and surround yourself with people who do know.

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