Consider the following headlines: “Embracing Disruptive Technologies,” “Artificial Intelligence Seen as Security Boon,” “Trying to Cope With Changing Technology,” and “The Need for Agility.” You could be forgiven for assuming they were written this year. In fact they were published over 16 years ago, at the high watermark of the internet frenzy.
It’s interesting that these articles have strong echoes of the present – 2017 headlines and consulting pitches have a strong 2000s vibe – and that once again pundits are discussing how new technologies can transform businesses, and how firms should be sufficiently agile to exploit all this new disruption.
Two Things that Make it Different
However, although headline writers may look to yesteryear for inspiration, two characteristics mean the current digital revolution is emphatically not a rerun of the “e-revolution.”
Digital capabilities are far more pervasive: As technology costs decrease, companies use digital capabilities for almost any activity, changing how companies generate value. In an environment where a microchip costs about a penny and computing power doubles every 18 months, every step, every input, and every output of every “value chain” – the process that describes how a company makes money – will be reshaped by digital capabilities, continuously enhanced by expanding computer power. In contrast, the impact of the internet began far more narrowly: centred on business, employee, and customer connections.
Disruptors from the early 2000s, such as AOL, Amazon, Egg Bank, Quadrem, and RealNetworks changed how businesses connected (communicated, transacted, payed, and transferred data), and drove industry incumbents (in telecoms, banking, retail, etc) to transform accordingly. Quadrem, specifically, connected mining companies’ ERP systems to their suppliers’ to streamline procurement processes and decrease costs.
However, new technologies are not simply changing mining procurement process but transforming how mining is actually done. Mining companies now use supercomputers that create 3-D seismic maps to accelerate exploration and drone technologies to accelerate extraction.
Digital capabilities amplify one another: The e-revolution was driven by one key innovation – the modern internet – which enabled new services such as email, internet telephony, internet television, online music, digital newspapers, and video streaming services. In contrast, the current phase of business disruption is driven by many different technologies including artificial intelligence (AI), genetics, nanotechnology, biotechnology, and robotics. Each new technology generates disruption on its own and amplifies the impact of the other technologies.
This is often referred to as “convergence,” an umbrella term for the integration of two or more different technologies in one device. Advances in AI and nanotechnology for example, give rise to the design of nanosystems, which have enabled the creation of supramolecular materials that disintegrate at a predetermined time. A world where mobile devices disappear when they are no longer needed could well be on the horizon.
The amplification qualities of these new technologies give companies that are willing to make use of them, far more potential sources of revenue. This is why “digital companies,” whose business models are built on the creation or harnessing of new digital capabilities, are among the most valuable and fastest growing firms in the world. A clear example of the rapid growth of digital companies is the quick growth of the “unicorn club:” less than two years ago, when this term was first coined, there were 39 of them. Today, there are 147
Managers should be clear that this set of changes really is reshaping the business landscape, and sometimes in profound ways. Senior executive teams at incumbent firms in all industries should be able to articulate their own digital strategy and know that their company is putting the right technology in the right hands to make company-wide digitalization a success.
That way their company won’t end up being little more than a collection of historic headlines 20 years from now.