This is this first week of Wimbledon and Rafael Nadal is on form. #2 in the world singles rankings and fresh from his win at the Roland Garros French Open on clay, this time his target is winning the famous London trophy, on grass. Yesterday I heard a BBC commentator marvel at the amount of top spin he was placing on the ball during key rallies. I suspect I know one reason why he’s so particularly good at that. There’s a tiny little clue buried in a tweet he sent just before the tournament…

You have too look hard inside the picture to find it…

It’s right down there, on the racquet handle – the word “Play”.

Play is the name of Babolat’s embedded digital sensor and analytics system and service. Since around 2013, Nadal has had the opportunity to access incredibly detailed match play data about his game. It doesn’t just tell him how long he was on court or how many times he hit the ball. It discriminates shot types and power. It measures serve speed and top spin. It tells him how close he was to hitting the racquet sweet-spot and how often. All of this data comes from an embedded digital sensor package in the handle that is so small and weighs so little, there is no difference in balance or feel between this racquet and the same model without it.

Nadal’s equipment sponsor  is a relatively small, French, specialty tennis equipment maker. They invented this system circa 2012 and they have been developing their data services for customers ever since. You can own a racquet just like this for about three hundred US dollars if you take your tennis seriously. Every time you play, the data is transferred by Bluetooth connection to your phone or tablet so you can see all your stats – and then on up to Babolat’s cloud based analysis, history and player comparison services. It’s a revolution in the multi-billion dollar game of tennis and what players and their coaches can know about their style, ability, consistency and progress.

How did that happen? How did Babolat take digital to the core of their products? Our book starts with that story and includes many other cases. It explains what digital business really means and what it takes to make that kind of revolutionary change to an industry, to your company and within yourself as a leader.

With five stars after 26 reviews on Amazon.com, if you have not already done so, we hope you will consider making it part of your summer reading.

(Chinese Mandarin edition coming soon from PHEI)

Last week the very first regular commercial drone delivery service commenced. It’s likely you have heard of many such experiments around the world over the last few years, but this was the first service to start running every day, as a real business operation.  Ponder for a moment – where in the world did you expect to see that happen?

In the end it wasn’t Palo Alto, Seattle, London, Tokyo, Shanghai, Mumbai, Amsterdam or Sydney. The service started in Reykjavík in Iceland, a tiny nation of fewer than 350,000 people. That’s not an accident or an anomaly; it’s by design. If they play the game intelligently, some of the very smallest countries can take advantage of their size to be world leading petri dishes for new industry fomentation. This is not a new observation. For example in 2003, when I visited Zagreb in Croatia for the first time – they had mobile phone text based payment for car parking. That was about 5 years ahead of major European capitals such as Paris and London.

The President of Iceland Olafur Ragnar Grimsson explained this phenomenon to me when I had the privilege to interview him in 2011 (Gartner Report: G00212784)

“So here is a society that, although small, is sufficiently advanced and sufficiently complicated to be a kind of miniature of an advanced society anywhere in the world. What works in information technology inside Iceland is going to work in China, the United States and elsewhere. You can almost look at it as a small laboratory. You can connect social groups, economic groups and communities, which would be extraordinarily cumbersome and time-consuming in bigger societies”.

The key is in that last sentence. He was talking about something we call the ‘compound uncertainty’ that must be navigated when we want to test and introduce a real breakthrough digital business idea. Digital progress isn’t just about Moore’s law and technology. It also hinges on progress in both regulation and in culture. It’s not easy for a company to obtain the societal licence to experiment when an idea is so new it defies convention or simple explanation.

Do you think your company is the pioneer in its industry? Our last CEO survey suggests that over 30% of CEOs like to believe that. But to be a pioneer in the digital business age, you need to be the one that drives breakthrough ideas through the “triple tipping point”. That’s the moment when the technology is just about ready in cost-performance terms, the regulator will permit or not impede your idea and the wider market is culturally ready to accept or at least tolerate the concept. Drone delivery is a great example of that. You need a government and airspace regulator who are willing to collaborate on defining new operating space and safe experimenting rules. You need a population that can have the conversation and come to a conclusion about whether it’s OK with the impacts of these new machines flying overhead – whether those are real or imagined.

Next time you have a truly breakthrough digital business idea in front of you, and you are wondering whether it’s yet safe to risk the money, brand capital and personal reputations on an experimental foray into an unknown future, take second look at your map of the world. What is the very smallest country you operate in, where you have reasonable business and government contacts and networks? Maybe that’s the best place to make it work.

You can find out more about how to lead digital business in your company from our book. “Digital to the Core” has 5 stars after 27 reviews on Amazon.com

During his address to the American nation on April 30th 1973, President Richard Nixon provided his now famous line “there can be no Whitewash at the White House”. The analogy of using white paint to cover up a mess was not new, but ever since – journalists and copywriters have been in love with it. In the marketing of technology a derivative use has become common. About a decade ago, people started to become concerned that the total electricity consumption of computers might contribute to greenhouse gas emissions and climate change. So some technology vendors placed more emphasis on the power efficiency design of equipment. The trend was popularized as “green IT”.

However, as soon as there’s a theme that moves market opinion and buying decisions, others want to climb aboard. Some marketers started to liberally apply vague green words and half claims to their brochures for equipment that had hardly changed. Commentators and analysts quickly coined a term for that rather disingenuous behavior: “greenwashing”.  This derivative of whitewashing made sense – because a color was involved. Building from this the “x-washing” term template became generally useful for labeling situations where marketers were jumping on a trend bandwagon and adding it to their messages without sufficient justification. This has become a familiar repeat behavior in technology marketing. Every time a big new technology trend arrives, we see some companies tempted to just add the words before they have very much product delivery to back them up.

Here’s the problem this sets up for CEOs. Once a few tech market actors start to play the washing game, if it works in influencing inexpert buyers, others follow. Quickly the hyperbole builds up as competitors try to outdo each other. Within the operating and IT departments of companies that buy technology to use in their businesses – professionals feel the need to get the new trend onto their resumes. So they start to have an interest in repeating the vendor marketers’ plausible but unfounded claims. Before you know it, a CEO is faced with a situation where almost everyone around the executive table is convinced by their people that the new thing is a must-do and the technology needed is a must-buy. The remaining skeptics remain silent – deferring to the majority  group-think. Sometimes even CIOs get swept up in the hype tide. So the CEO must be the backstop.

Here are three particular categories of tech washing that CEOs should be wary of at the moment.

• AI (artificial intelligence)
• Blockchain
• IoT (internet of things)

Each of these technologies is very high power and will have deep, valuable effects on all industries….  eventually. In a limited set of specific situations they are already having an impact. Unfortunately the collective efforts of marketers have amounted to a premature over-claiming for these technologies. They are complex technologies with all kinds of weak points and situational application issues yet to be sorted out.

So what should a CEO do at one of those meetings when it seems everyone in the room is agreed and excited about diving into a major public project with a tech provider – who is gushing with enthusiasm about one of these revolutionary techs? Force the tires to be kicked. Here are three simple questions to ask:

• Explain to me, step by step, how the technology will contribute business value – in a way I can convincingly repeat to our investors.
• Tell to me why is it not possible to implement this business idea with more mature and proven technologies.
• Name a company I might know, that has seen material commercial benefit from this kind of breakthrough… so that I can contact the CEO and get his take.

If the idea is good and the new technology application is viable, it should be quite easy to get answers to these questions. They won’t slow down a great project. They might stop a bad one.

Something I’ve noticed in a few interactions this year, has been too much planning for digital business innovation. We meet with some technology and business executives who have been strategizing and planning how to set up a digital business innovation center or capability for months and months.. sometimes a year, or even two years.

endless tunnel CC 2.0 kimdokhac via Flickr

It’s smart to read, research, plan, prepare, get people aligned, think…  it’s all good. But beyond a certain point you just have to act. In some cases the executive thinking and planning seems to become semi-perpetual and that’s a very bad thing for three important reasons.

1. When industry disruption is closing in, every day that you delay is a gift to your future competition.
2.  Once a Moore’s law pace of innovation applies to your products and services – every day that you delay adds to the exponentially widening gap between your current customer value proposition and what has become technically possible.
3. The more top down planning your executives do, the more they reinforce the old pattern of corporate IT thought. Digital business is mostly about entrepreneurial risk and market experimentation – not just pre-determined design and waterfall project implementation.

It’s interesting that when executives finally commit to action, create their digital innovation center, see the first projects and start to really experience a more creative and exploratory mode of advancement – they get hooked. Insight builds on insight very quickly and enthusiasm grows. Of course the first version of their innovation ‘machine’ isn’t right. They have the wrong skills, a narrow focus, the poor location etc. Fix and improve. The pace of evolution usually snowballs (though sometimes it stalls – if so.. start again).

CEOs who have sat through a few discussions and presentations about what the company is planning to do to embrace digital, should bring that phase to an end quickly. Beyond a certain point you can’t learn without doing in digital business.

Economists across the world are both puzzled and concerned about an apparent dip in long term productivity growth. Their worries are giving rise to frequent business news editorials about the issue. It matters because the long term advancing wealth and prosperity of nations can only be based on improved productivity. If we can make and provide more output value, using the same amount of inputs, by superior methods and ingenuity, we gain.

Image: CC frankieleon flickr.com/photos/armydre2008/3471119299
[ Listen above or continue reading below, the same content]

The issue of declining productivity growth has become so perplexing that some economists are re-examining the measurement system itself. They wonder if significant amounts of economic value are simply not being captured. Perhaps the “stuff” we create today in Facebook pages or customer experiences is so ephemeral that it eludes conventional measurement and valuation. However I’m not sure they have to tear up the counting rule book to find the causes.

Here are some ideas as to why we might be seeing a lack of productivity growth in business, based on observations of business behavior, particularly in the context of technology investment. Technology is a form of capital we most often associate with productivity growth, so it’s worth reviewing.

1. CEOs have not focused hard on productivity in recent times.
Our most recent CEO survey placed productivity and efficiency in 11th place, in a category list of CEOs top priorities. I know that might sound surprising to some, but what they are really looking for is growth. If they think there are easier short term ways to get top line or bottom line growth without investing in productivity, they may take those simpler paths. Financial engineering with low interest rates and global tax optimization, taking the same operating model to emerging markets, or taking chunks out of other players margins via disintermediation are all examples of ways to make financial results progress, without really investing in underlying productivity. Also, in the years since the banking crisis and great recession, many businesses could grow by just soaking up cheap labor. High unemployment rates made human workers low cost and flexible. Globalization made remote, low cost labour increasingly accessible.  None of that is an incentive to invest in complex, expensive new machines.

2. The new technology pathways to productivity are confused.
In the late 20th century we all became very adept at using the lens of business process management to convert ever more powerful computing into higher business efficiency. Techniques such as BPM and Lean Six Sigma became well codified, teachable and repeatable methods. But the new crop of Internet and digital technologies often eludes that simple conversion method. How do we convert “social” or “mobile” or “cloud” into productivity? On a craft basis, a relatively few gifted leaders and business architects may be able to do so intuitively. But we lack abstracted general theories and codified methods to fuel repeatable productivity engineering practice on a mass basis. Digital era technologies are capable of creating momentous improvements in productivity but we don’t yet have a BPM equivalent for social, or a lean equivalent for Data Science. Simply put – management science methodology is lagging behind technology advance.

3. We lack measures for intangible value creation and intermediate work product.
Imagine a marketing creative team slaving over a fizzy drink re-branding exercise and then executing it via social media. Customers are delighted. They believe in the product more and their consumption experience is enhanced. What kind of additional value was created and how was it measured? Was it just more SG&A overhead? Or did we deliver more customer value output? So much of our modern advanced economy operates in these more abstract value areas. And what about all the email that flowed between the people involved in the re-branding? It would be nice if we could simply say more email processed means more value outcome, but everyone knows its not that simple. It’s sad but true that today’s CEOs can’t be sure if email, our oldest and most mature collaboration technology, is a net contributor or a net inhibitor of productivity in their organisations.

Until IT professionals come up with structured repeatable methods for taking the new digital era technologies and converting investment in them into productivity – CEOs will tend to drag their heels. They will often prefer to leave cash on balance sheets or even give it back to shareholders rather than invest it internally in what seem to be high cost, high risk, vague outcome, craft projects. However the new management technologies, experiments, proofs and methods we need, can only be evolved creatively inside real world companies like yours by people like you. There is no secret Silicon Valley lab that will solve it all for us.

As GE CEO Jeff Immelt said to 6000 CIOs at our Symposium last year:

“… I urge everybody … to look at yourself in the mirror and ask … “What role have we played to make productivity really take off and continue the way it should?” Clearly, the tools in the 1990s worked … but we need to find the next big driver.”

I believe we are on the cusp of a new period of productivity focus. Recent political shifts, lower unemployment and a switch of direction for interest rates will compel business leaders to take a fresh look at the problem.

However, much of the new technology enabled productivity will come to us in a different form this time. Instead of using information technology to improve the way we make traditional products and services, we will use digital technology to fundamentally remaster our products, services and business models. We won’t just be trying to figure out how to make the old things more efficiently; we will design new kinds of things altogether. Autonomous vehicles, e-cigarettes and voice interaction intelligent assistants are examples. Taking digital to the core of of our companies and what they make, could be a source of radical productivity improvement.

Digital to the core is the name of our book that explores some of these and other themes. It is available now in all formats: print, e-book and audio-book.

As we have said many times over the last few years: every industry will be digitally remastered. That means its products and services will become significantly digital. The digital proportion of what customers buy from you will rise, not just how those customers were attracted to you (digital marketing) or how they transact (e-commerce). This applies to physical products like cars as much as to information products like news. Of the top buying features you choose your next car on, half might be digital (HUD, stay-in lane, media integration, wireless connectivity, self parking etc).  Think about that for a moment – more of what you really care about is made of data and code; less is made of glass, rubber and metal. This remastery of products and services is what digital business is really about. It is why we talk about taking digital to the core. However it can be hard for people to believe this is really happening without examples – especially when we assert that every industry will be impacted – in due course.

Often, I find the best way to bring this strategic reasoning to life, is to show videos that illustrate the trend at work. This can make the discussion more tangible and it helps to spark creative discussions.  Here are ten good examples. They are links to short public videos you can access without a paywall. I have placed them in no particular order. I hope you find them as inspiring and thought provoking as I do.

How do you digitally remaster coffee?
Paulig Muki

How do you digitally remaster office furniture?
(and a provocative example of the boundary blurring force)
Nissan Intelligent parking chair

How do you digitally remaster tennis?
CNN Babolat

How do you digitally remaster baby formula?
Gerber BabyNes

How do you digitally remaster trash collection?
Bigbelly Bin

How do you digitally remaster physical retail?
Amazon Go

How do you digitally remaster industrial machines?
GE Predix

How do you digitally remaster sports clothing?
Polo Tech Shirt

How do you digitally remaster haute couture?
CuteCircuit

How do you digitally remaster farming?
Parrott Drone Precision Agriculture

“What do you think is the single most important factor for digital business success?”. I was asked that question recently. It was half way up a mountain, at an executive retreat in a beautiful meeting room with large leather armchairs, windows looking out at snowy peaks and a roaring log fire. Initially my mind started to go into what Daniel Khaneman calls “system 2” mode – slower, more deliberative, and more logical thought. I started assembling a list of possibilities and thinking how to order them – strategies, starting positions, funding, culture, industry structure, competencies, value chain positions … Then the “system 2” voice in  my head popped up – the fast, instinctive, emotional, reflexive response.  I was on my feet in front of a room and already running over time so I decided to trust that voice.

“The CEO” I answered. “Whether he or she gets it and is determined to drive it”.

[ Listen above or keep reading below – same content]

On the flight home I had time to think about the interaction. Did I give the right answer or an expedient one?  After some proper “system 2” thought I concluded the same thing. Both modes concurred. It really does come down to the CEO.  I can’t think of an example where a company is succeeding at strategic digital business change but the chief executive is disengaged. In nearly all the cases of substantial progress that we cite in our research conversations with clients – the CEO is a visible and obvious protagonist leading from the front. In those where the CEO is not so overtly visible from the outside, they just have a quieter personal style but are no less involved.

Recent examples of individual CEOs I’m thinking about would include, Mark Fields at Ford, Jeff Immelt at GE, Howard Schultz at Starbucks, Maurice Levy at Publicis, Eric Babolat at Babolat, Susan Cameron at RJ Reynolds,Francisco González Rodríguez at BBVA,  James Dyson at Dyson, Mark Wilson at Aviva and others. I can also think of other situations where senior staff and executives keep trying but are ultimately  frustrated by the lack of digital progress they can make. In those cases they will often open up after a while and say privately “the trouble is our CEO doesn’t really get it.”

It should not surprise us that the CEO is the critical factor. Real digital business change is deep, strategic, all encompassing and difficult. Resources must be redeployed, new ventures created, markets opened and exited, investor expectations changed. This is so important that handing it over to someone else just isn’t realistic. Some CEOs will try to delegate the issue away from their desk towards a chief digital officer – but that alone won’t work.  The creation of a CDO role can be very powerful but the CEO still has to actively, support, shape, protect and direct that power. A CDO cannot substitute for an un-involved CEO – unless the kind of digital change being pursued is really only surface level.  As Bill Ruh, CDO at GE said in an S+B interview recently: “I have the title of chief digital officer, but the real chief digital officer is CEO Jeff Immelt.” 

Recently I read a business news article about a techquisition. A large traditional model company bought a smaller online-only company that had invaded its sector. They paid a high price. The writer suggested this could represent a ‘leapfrog’ digital strategy for the acquiring company. To my eye it was not that – not at all. It was a late catch-up move by a management team that had allowed a web based e-commerce company to grow fast, under its feet, for several years, gradually stealing its lunch. The acquired startup was founded more than a decade after web based e-commerce became a big thing in business and had grown in plain sight of its eventual acquirer.

[ Listen above or continue reading below – the same post ]

It’s 2017, not 2007. You can’t win the future of your industry by playing late catch-up e-business. Re-badging that strategy with a D, doesn’t change what it is, or fool anyone. Digital business is a different evolutionary stage beyond e-business. As I explained in a recent post – it should offer your company the opportunity to take control of the game and truly leapfrog to the next big industry disrupting idea. But what would that idea be?

Finding it is often highly creative and non-trivial work but there are questions that CEOs and Boards can ask themselves and others to help uncover the big new opportunity spaces.

1. How could digital technologies be used to reinvent the products and services of  “our” industry?
2. Who will win the biggest share of platform control over those digital, connected products and services?
3. What value can be generated from the data created and captured in all that activity?

First – as we have said – every industry will be digitally remastered.  Entrepreneurs will re-examine fundamental customer needs, finding gaps and weaknesses in all of today’s offerings. They will then use the creative, functional power of digital technologies to invent far superior products. It has happened to media, music and books. Now it is happening to payment, cigarettes and cars. In the end there will be no exceptions. All products and services can be transformed – sometimes with previously unimaginable new value features and customer utility.  I recently posted some example thought provoking videos. If your company and your existing industry does not take up the opportunity to radically reinvent products by applying digital capabilities to them – someone else will. Digital creates what we call “boundary blurring” effects. It melts away previous barriers to entry and allows invaders to easily slide into adjacency opportunities that were previously impregnable.

Second – as products become digitally re-imagined and redesigned, they inevitably become connected. They rely on access to cloud based services. Your new Nespresso coffee maker connects to your smartphone app and that phone app connects to the cloud to access services such as capsule reordering. Your car gets over-the-air self-driving software updates. Your travel luggage is wirelessly tracked. As this happens customers are expected to register and sign-up. But as we all know, people don’t want hundreds of individual system sign-ons and relationships for little points of daily utility. They want one place where their stuff happens – at least around big themes like money, health or construction. So after a while, we prefer to move to aggregators who bring together lots of digital services in one place. Big, integrating platforms emerge and it’s clear by looking at early examples such as ride hailing, professional networking and photo sharing – that in many domains we end up with one, two or three big platforms controlling most of the activity in an industry. Often these controlling platforms win by working directly for end users – who are not only consumers but also workers – such as accountants or tractor drivers. In this way the big controlling digital platform phenomenon applies equally in B2B. Intermediaries are squeezed and dis-empowered by this. They have to work harder to justify their existence in a value chain, or take a smaller payment as their part of the total service offer is eroded.

Third, connected products and services operating on a moment by moment basis can digitally record activities in immense detail, in the cloud, in perpetuity. Over time we create a vast resource pool of activity data. Not just commercial data about how and when a product was created and sold – but usage activity throughout its life-cycle in the hands of its customer or user. All of the activity of all of the products gives us statistically meaningful analysis possibilities that could not have been dreamed of before. By analyzing the data we can discover – and play back to customers, valuable insights into how they can improve their work and their lives. Increasingly, learning algorithms can help to do this more effectively than an army of humans alone ever could.

The only limitations to finding your own high-value creative answers to the three questions are the limits of your imaginations.  A leadership team doesn’t just have to think outside the box, it sometimes has to dare to wander off-planet. The data from the digital services additions to the reinvented products you make, might be valuable to others way outside your industry. Your business model might even give up selling products directly, instead giving them away “free” – in order to monetize the insights they can help you create from the data that they generate.

All of this creates opportunity for you to seize the future and set the next new rules of competition in your industry before someone else does. Yes, it is challenging, argumentative and disconcerting original entrepreneurial work. The alternative is to toil harder and harder to maintain position with the existing product offer, while watching customers start to ebb and then flood away. Then in a few years find yourself emptying the corporate coffers or borrowing beyond your means to grit your teeth and buy a capricious upstart business, for an eye watering market premium, as the last roll of the dice.

Much of this analysis is based on our book Digital to the Core. It is available in all the formats, from all the usual outlets.

Reading the tech news today, I learned that it is the 10th anniversary of the launch of the first Apple iPhone. That decade really did fly past quickly didn’t it?  I remember the decade before that as well –  as we got better and better at mobile devices.. Palm Pilot, Nokia 7110, iPaq, Blackberry.  Nowadays whether Android of Apple – mobility is highly capable, fast, powerful and ubiquitous. When I strolled across London’s Blackfriars bridge during rush hour this morning, so many people were staring down at their phones, I had to concentrate to avoid a collision.

Now that this technology is so mature and a big part of everyone’s life these days, here are the three questions I think CEOs should ask about their own companies.

1. Are our customer apps really good?
2. What have we done to exploit the amazing sensor data these devices can collect?
3. Have we reinvented our processes to take full advantage of mobility – or just shoved the old process down a new pipe?

The sad truth is that you can still find many apps from big brand name corporations that are either mediocre, bad or unusable. What excuse can there be? The technology is mature. User interface design has become a well practiced art. If you think your company is customer-centric, then how can it be ignoring that publicly visible 2 star app store feedback rating?

A modern Smartphone from Samsung, Apple, Huawei or elsewhere will have over a dozen sensors. It can collect high resolution camera images and detailed data about light level, sound, acceleration, temperature, humidity, orientation, compass bearing, finger print and more. What has your company done to exploit that amazing data in the way it serves customers and the way it manages the efficiency of daily operations? Think about it this way – you paid for all those phones your staff are carrying and the apps your customers are using. All those machines are collecting amazing new kinds of information every minute and if you haven’t taken advantage – then that data is just your opportunity pouring down the drain.

In our CEO survey this year we found that “ease” is a rising keyword on the minds of senior business executives when they think about digital business. And no wonder – just look at how easy Uber has made it to get a ride or Tinder has made it to find a date. But those companies didn’t just take the old way of doing things and put them on a phone. They took what a smartphone can uniquely do and redesigned a whole new process to take best advantage. Uber’s process relies heavily on location sensor data and maps. Tinder’s relies heavily on swiping a touch screen and being able to take a selfie.

Mobile is a mature technology. By now, your company’s apps should be… as Steve Jobs would say.. insanely great!

This is this first week of Wimbledon and Rafael Nadal is on form. #2 in the world singles rankings and fresh from his win at the Roland Garros French Open on clay, this time his target is winning the famous London trophy, on grass. Yesterday I heard a BBC commentator marvel at the amount of top spin he was placing on the ball during key rallies. I suspect I know one reason why he’s so particularly good at that. There’s a tiny little clue buried in a tweet he sent just before the tournament…

You have too look hard inside the picture to find it…

It’s right down there, on the racquet handle – the word “Play”.

Play is the name of Babolat’s embedded digital sensor and analytics system and service. Since around 2013, Nadal has had the opportunity to access incredibly detailed match play data about his game. It doesn’t just tell him how long he was on court or how many times he hit the ball. It discriminates shot types and power. It measures serve speed and top spin. It tells him how close he was to hitting the racquet sweet-spot and how often. All of this data comes from an embedded digital sensor package in the handle that is so small and weighs so little, there is no difference in balance or feel between this racquet and the same model without it.

Nadal’s equipment sponsor  is a relatively small, French, specialty tennis equipment maker. They invented this system circa 2012 and they have been developing their data services for customers ever since. You can own a racquet just like this for about three hundred US dollars if you take your tennis seriously. Every time you play, the data is transferred by Bluetooth connection to your phone or tablet so you can see all your stats – and then on up to Babolat’s cloud based analysis, history and player comparison services. It’s a revolution in the multi-billion dollar game of tennis and what players and their coaches can know about their style, ability, consistency and progress.

How did that happen? How did Babolat take digital to the core of their products? Our book starts with that story and includes many other cases. It explains what digital business really means and what it takes to make that kind of revolutionary change to an industry, to your company and within yourself as a leader.

With five stars after 26 reviews on Amazon.com, if you have not already done so, we hope you will consider making it part of your summer reading.

(Chinese Mandarin edition coming soon from PHEI)

Last week the very first regular commercial drone delivery service commenced. It’s likely you have heard of many such experiments around the world over the last few years, but this was the first service to start running every day, as a real business operation.  Ponder for a moment – where in the world did you expect to see that happen?

In the end it wasn’t Palo Alto, Seattle, London, Tokyo, Shanghai, Mumbai, Amsterdam or Sydney. The service started in Reykjavík in Iceland, a tiny nation of fewer than 350,000 people. That’s not an accident or an anomaly; it’s by design. If they play the game intelligently, some of the very smallest countries can take advantage of their size to be world leading petri dishes for new industry fomentation. This is not a new observation. For example in 2003, when I visited Zagreb in Croatia for the first time – they had mobile phone text based payment for car parking. That was about 5 years ahead of major European capitals such as Paris and London.

The President of Iceland Olafur Ragnar Grimsson explained this phenomenon to me when I had the privilege to interview him in 2011 (Gartner Report: G00212784)

“So here is a society that, although small, is sufficiently advanced and sufficiently complicated to be a kind of miniature of an advanced society anywhere in the world. What works in information technology inside Iceland is going to work in China, the United States and elsewhere. You can almost look at it as a small laboratory. You can connect social groups, economic groups and communities, which would be extraordinarily cumbersome and time-consuming in bigger societies”.

The key is in that last sentence. He was talking about something we call the ‘compound uncertainty’ that must be navigated when we want to test and introduce a real breakthrough digital business idea. Digital progress isn’t just about Moore’s law and technology. It also hinges on progress in both regulation and in culture. It’s not easy for a company to obtain the societal licence to experiment when an idea is so new it defies convention or simple explanation.

Do you think your company is the pioneer in its industry? Our last CEO survey suggests that over 30% of CEOs like to believe that. But to be a pioneer in the digital business age, you need to be the one that drives breakthrough ideas through the “triple tipping point”. That’s the moment when the technology is just about ready in cost-performance terms, the regulator will permit or not impede your idea and the wider market is culturally ready to accept or at least tolerate the concept. Drone delivery is a great example of that. You need a government and airspace regulator who are willing to collaborate on defining new operating space and safe experimenting rules. You need a population that can have the conversation and come to a conclusion about whether it’s OK with the impacts of these new machines flying overhead – whether those are real or imagined.

Next time you have a truly breakthrough digital business idea in front of you, and you are wondering whether it’s yet safe to risk the money, brand capital and personal reputations on an experimental foray into an unknown future, take second look at your map of the world. What is the very smallest country you operate in, where you have reasonable business and government contacts and networks? Maybe that’s the best place to make it work.

You can find out more about how to lead digital business in your company from our book. “Digital to the Core” has 5 stars after 27 reviews on Amazon.com

During his address to the American nation on April 30th 1973, President Richard Nixon provided his now famous line “there can be no Whitewash at the White House”. The analogy of using white paint to cover up a mess was not new, but ever since – journalists and copywriters have been in love with it. In the marketing of technology a derivative use has become common. About a decade ago, people started to become concerned that the total electricity consumption of computers might contribute to greenhouse gas emissions and climate change. So some technology vendors placed more emphasis on the power efficiency design of equipment. The trend was popularized as “green IT”.

However, as soon as there’s a theme that moves market opinion and buying decisions, others want to climb aboard. Some marketers started to liberally apply vague green words and half claims to their brochures for equipment that had hardly changed. Commentators and analysts quickly coined a term for that rather disingenuous behavior: “greenwashing”.  This derivative of whitewashing made sense – because a color was involved. Building from this the “x-washing” term template became generally useful for labeling situations where marketers were jumping on a trend bandwagon and adding it to their messages without sufficient justification. This has become a familiar repeat behavior in technology marketing. Every time a big new technology trend arrives, we see some companies tempted to just add the words before they have very much product delivery to back them up.

Here’s the problem this sets up for CEOs. Once a few tech market actors start to play the washing game, if it works in influencing inexpert buyers, others follow. Quickly the hyperbole builds up as competitors try to outdo each other. Within the operating and IT departments of companies that buy technology to use in their businesses – professionals feel the need to get the new trend onto their resumes. So they start to have an interest in repeating the vendor marketers’ plausible but unfounded claims. Before you know it, a CEO is faced with a situation where almost everyone around the executive table is convinced by their people that the new thing is a must-do and the technology needed is a must-buy. The remaining skeptics remain silent – deferring to the majority  group-think. Sometimes even CIOs get swept up in the hype tide. So the CEO must be the backstop.

Here are three particular categories of tech washing that CEOs should be wary of at the moment.

• AI (artificial intelligence)
• Blockchain
• IoT (internet of things)

Each of these technologies is very high power and will have deep, valuable effects on all industries….  eventually. In a limited set of specific situations they are already having an impact. Unfortunately the collective efforts of marketers have amounted to a premature over-claiming for these technologies. They are complex technologies with all kinds of weak points and situational application issues yet to be sorted out.

So what should a CEO do at one of those meetings when it seems everyone in the room is agreed and excited about diving into a major public project with a tech provider – who is gushing with enthusiasm about one of these revolutionary techs? Force the tires to be kicked. Here are three simple questions to ask:

• Explain to me, step by step, how the technology will contribute business value – in a way I can convincingly repeat to our investors.
• Tell to me why is it not possible to implement this business idea with more mature and proven technologies.
• Name a company I might know, that has seen material commercial benefit from this kind of breakthrough… so that I can contact the CEO and get his take.

If the idea is good and the new technology application is viable, it should be quite easy to get answers to these questions. They won’t slow down a great project. They might stop a bad one.

Something I’ve noticed in a few interactions this year, has been too much planning for digital business innovation. We meet with some technology and business executives who have been strategizing and planning how to set up a digital business innovation center or capability for months and months.. sometimes a year, or even two years.

endless tunnel CC 2.0 kimdokhac via Flickr

It’s smart to read, research, plan, prepare, get people aligned, think…  it’s all good. But beyond a certain point you just have to act. In some cases the executive thinking and planning seems to become semi-perpetual and that’s a very bad thing for three important reasons.

1. When industry disruption is closing in, every day that you delay is a gift to your future competition.
2.  Once a Moore’s law pace of innovation applies to your products and services – every day that you delay adds to the exponentially widening gap between your current customer value proposition and what has become technically possible.
3. The more top down planning your executives do, the more they reinforce the old pattern of corporate IT thought. Digital business is mostly about entrepreneurial risk and market experimentation – not just pre-determined design and waterfall project implementation.

It’s interesting that when executives finally commit to action, create their digital innovation center, see the first projects and start to really experience a more creative and exploratory mode of advancement – they get hooked. Insight builds on insight very quickly and enthusiasm grows. Of course the first version of their innovation ‘machine’ isn’t right. They have the wrong skills, a narrow focus, the poor location etc. Fix and improve. The pace of evolution usually snowballs (though sometimes it stalls – if so.. start again).

CEOs who have sat through a few discussions and presentations about what the company is planning to do to embrace digital, should bring that phase to an end quickly. Beyond a certain point you can’t learn without doing in digital business.

Before we get into this important issue I have to declare a disinterest. I’m not a cloud analyst at Gartner. I don’t cover the vendors or their offerings. I can’t tell you which one is best under different circumstances. I have many colleagues who can help you with those decisions. What I do know is this – deciding which cloud(s) your company will become reliant on is a strategy question that cannot be left to technical thinkers alone.

“There’s no such thing as cloud – only someone else’s datacentre” – Randy Mott

The CIO of GM restated this provocative position at the Renaissance CIO award event, held at Berkeley, that I had the privilege to speak at last week. Mott was there to accept the Fisher Hopper prize for lifetime achievement in the CIO role. You might not agree with his view of cloud, but the voice of someone who has previously been CIO of HP and of Walmart should not be ignored. GM and Mott took a big bet in 2012, to build and operate their own cloud, to connect all those increasingly autonomous vehicles, store the colossal amounts of data generated and analyse it.

GM is continuing down its path of internal build and independence. Of course, with its vast scale and engineering centric culture, this is an option it can choose to take. But not all companies of similar clout concur. At the same event I met a technology leader from General Electric who confirmed something that is already public knowledge, about their approach. A few years back when Jeffrey Immelt invited Bill Ruh to build a strong central data and analytics capability for the firm, he also started building GE’s own datacenters. Now, however GE has changed tack.  It’s increasing its reliance on cloud computing from major external providers.

So what’s the issue?  Most companies cannot build their own cloud infrastructure. They have no choice but to rely on someone else’s. That’s fine if the provider sticks only to the role of B2B technology service provider. It’s a bit more challenging if the provider also operates in business areas that compete with you – or it might choose to do so in future. Think about how your business model might change as a result of your digital business strategy. Today your revenue might not depend so much on pay-per-sip cloud based API services. However in the not too distant future it could become very reliant on AI based pattern recognition in the data generated by your products, services and operating activities.

“Co-opetition” and “Frenemies” are terms that the tech sector has coined to describe the two-way tension of being dependent on another powerful player for supply while also competing against them for the same customers. It’s certainly doable – for example Apple relies on Samsung and Netflix is hosted on Amazon’s cloud services – but it’s something you have to manage actively and carefully. It’s a culture and competency of its own that your management team will need to master. They have to develop it thoughtfully and deliberately.

The concern I have is that some firms may be drifting into complex future digital frenemy situations without sufficient forethought about the implications, at the board of director’s level. Mott’s pithy aphorism could be a useful wakeup call. So what can a CEO do about this?  Very few are in a position to build their own world class cloud datacenters but they can reduce the strategic dependency risks. Consider asking the following questions of your CIO:

• Which parts of our digital services will be our source of differentiating competitive advantage?
• To what extent can we isolate those elements from depending on external cloud providers?
• Which cloud providers might become our competitors in future?
• Would it harm the quality of our offerings if we avoid those and use others instead?
• What would be the additional “insurance” cost to architect our systems so they give us the option to switch between providers in future, if we had to?

It was nineteen-eighty-something. “Information technology, is a societal, epochal technology” said my university lecturer, quoting a translated Japanese author (that made the insight seem even more wise and visionary). Like … wow man.

Decades later I find it helpful to reconsider the 60 to 80 year journey that historians call the ‘information age’. It’s not ivory tower thinking, it can be very enlightening for business and IT executives as they grapple with questions like “what the heck is digital really and when did it become a ‘thing’?” or “why are we being disrupted?” or “was that Nicholas Carr stuff  they taught on my MBA wrong then?”.

Developing a presentation for a recent CIO lifetime achievement award event caused me to ask “where are we now?”. After all, the actual job title CIO was invented in the 1980s.  So I drew a chart – a story map really – of the great information age from a corporate IT leader point of view. It’s super simplified of course and just one perspective. However I  think it could be orienting for those who are leading digital transformation programs in large old enterprises that have the corporate cultural memory of a herd of elephants and the inertia to match.

Carlota Perez says great technological ages are like football – a game of two halves. Well, no she doesn’t really say that.. but that is one of the important perspectives I take from her outstanding work as an eminent economic historian. In the first half of a great age we use the new technological power to augment and accelerate the world that we already know and operate. That’s what we did with IT right up to the millennium really. We used it to improve processes and manage costs in a business. However the second half plays out differently.  Once we really understand the new power, and it’s supply becomes ubiquitous – then we redefine and rebuild all of society based on what it can do. That’s what’s happening now. We are still quite early in that second half period when we reinvent everything – from products (autonomous cars) to social behaviors (swipe right), war (notPetya) and democracy (@realDonaldTrump).

Inside corporations the switch-over is still causing all sorts of confusion and complications. The powerful masters of first half management techniques are now semi-retired to the boardrooms. It takes a lot for them to admit to themselves that the game really has changed since they were actively managing – and so must the way companies invest in technology related innovation. I think the worst of the transition pain is past us though. We got through the mistrust period when Nicholas Carr wrote that IT didn’t matter and companies everywhere threw their tech guys over to the outsourcers. Now we are are in a technology reputation recovery and reorientation phase. It is cool to be a tech guy, or woman, again. If you have a good resume then every Fortune 500 company wants to recruit you away from Google or IBM to work directly for them instead – as those great 2015/16 GE TV recruitment ads demonstrated. That’s because CEOs are all agreeing now – digital business is vital to competitive advantage. Constructing your unique, differentiated, special, company cloud based digital business platform is vital to secure the future.

The current phase is centered mostly on adding products (things) to the internet and the secondary consequences of all the additional data that gives us to see how the world works and manage it better. At Gartner we see all the new business value arising at the blurred boundary between the physical and virtual worlds. That could manifest itself in your everyday life as a physical retail store with no need to checkout, or a customized running shoe that is printed on demand, or a vape. It’s a world of invention based on data as an advancing asset class – as my colleague Doug Laney explains in his new book Infonomics.  And already its forcing us to discuss the next and probably the last horizon of the information age – the true AI era.

We are NOT there yet. AI hype is premature and out of control. Most corporations have no idea what to do with it and no way to practically execute it. As the New York Times pointed out recently – there are probably only 10K deep AI experts in the whole world today.  But in time, this very raw technology will improve and mature to the point where we can do some more complete industry reinventions with it.

Are you wondering why my chart ends at 2045?  Well that’s approximately when, according to Ray Kurzweil, the singularity will turn up. As futurists* love to point out – nobody can predict what happens after the moment of magical transcendence when the machines become smarter than us. But I have two bets for you. First – I’ll wager the new AI overlords will still struggle with the confusion, politics and complications of large company transformation programs! Second, I reckon the job title chief information officer will probably still be around.

* no – I am not a futurist, he is.

Here’s something that I sometimes hear CEOs and other business leaders say –  and seemingly without much forethought.

“Of course, the technology is the easy bit..”

It’s one of those trite phrases that gets picked up and repeated in everyday corporate life, as if they were statements of obvious truth and wisdom, upon which we all agree. Perhaps there was a time, over a decade ago, when this one seemed to make some kind of sense. Today I think it is dangerously counterproductive.

There are five key reasons why this is an unhelpful thing to say.

First – it’s a sweeping generalization. At a strategic level there may be some technologies that are relatively well known, well practiced and easy to apply. There are many that are not. By waving a big hand across all technology, the CEO risks showing ignorance of the realities of the digital age, through which he or she must navigate the firm.  What do you mean by technology? Is it the user experience design? the data science? the algorithm creation? the IoT cloud connected system architecture? the cyber-security? the neural network based AI?….

Second – it’s elusively comparative.  If the the technology is the easy bit… then what exactly is the “the hard” bit?  Is it the … legal? the sales? the marketing? the strategy?  the HR?  the finance?   We can all respect the complexities of other aspects of a business operating model – but it’s not obvious why the technology part is inherently easier.

Third – its a self-fulfilling delusion. If as a CEO, you are finding that the technology is the easy bit, that’s very likely because your company isn’t stretching itself into newer and more innovative technology territory.  In today’s world, creative application of digital and information technology to differentiate customer value propositions – products, services and brands – is vital in competing for markets.

Fourth  – its demeaning to talent. In the years ahead, you want the best techies you can get, working on your products, services and business models. Sounding off  that “the technology is the easy bit” may win a wry smile from some of your battle scarred commercial general managers – but there’s a price. Talented technical people will not be attracted towards corporate leaders who trivialize what they do.

Finally – use of this unhelpful phrase may end up causing a CEOs own leadership capability and judgement to be questioned by investors – particularly as the digital giants invade more industries. For example if a retail CEO says it – then then how can we explain Jeff Bezos’s success at stealing market share in retail? Either Bezos is the better retail commercial thinker… if “the technology is the easy bit”…  or the traditional retailer isn’t able execute “the easy bit”. Neither of those conclusions is a good one.

Leaders have followers. Whatever the CEO says out loud, his or her senior leaders are likely to parrot to their management teams. That’s how a seemingly unimportant technology-dismissive remark, can generate cultural reinforcement that becomes organizationally paralyzing.

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https://www.flickr.com/photos/pestoverde/26666393696/

Recently I was asked this rather smart question by the CEO of a financial services company. He knows they must embark on a digital transformation journey. Given what we have learned from the experience of others, should he lead the effort with culture change or technology change?

The reflexive answer that I expect you want to give is: “both”, in parallel. But many corporate transformations fail or struggle because leaders are overly ambitious. Organisations have a natural level of capacity for change. If you try to revolutionize a relatively sleepy, steady-state old company too quickly – it’s like putting a rocket engine on a bicycle… there will be a lot of noise and smoke for a short while … and no useful end result. Often then, it would be better to play a longer game. Build up the change, over a longer period of time – and get somewhere useful. His company – like many – is not going to be disrupted out of existence in two years. However it might be in ten years.

Disciplined CEOs know that strategic change management is often better done sequentially. Do one part properly, then when it’s rock solid – move to the next part.  Nearly all digital transformations of incumbent companies start from a position of a weak and corroded legacy IT base and a culture that just isn’t digitally-savvy.  So if we are forced to choose – which should go first, investing in the technology base or investing in the culture change?

If we invest in the technology base first, then the people in the company will start to be surrounded with the tools they need to make digital progress. As they learn to experiment with those tools, they could then ease into the needed culture change via bottom up learning.

If we invest in a big culture change program first, then people hungry to apply their new thinking and methods of doing business –  will start to demand digital capability investment and upgrading of the technology base.

My own belief is that it would be better to start with the culture. There is a risk that the new energy and excitement will be wasted if the technology investment follows on too slowly. However, if business people have a clear understanding they will start demanding the right kinds of tech. The alternative is the old “if we build it they will come” approach. Build a new technology platform and some agile development capability and surely business people will start to exploit it?  Sadly, too often – they just don’t. The new tech sits around – expensive and under exploited.  Leading with the tech also rather presumes that a visionary IT leader knows what to build upfront.  What if s/he decides the key to the future is a social media marketing analytics platform… but in the end, when the company culture changes so does its digital business strategy – and the needed critical capability becomes IoT?

What kinds of culture change should CEOs consider, that would then drive towards the technology capability and digital business progress s/he wants to create?  There are many options – here are a few examples.

Genuine customer / user centricity  –  a real focus on unmet customer needs. This will uncover the true (and often shocking) extent of customer demand for digitally enabled customer value propositions.

Data centric decision making. Where better data evidence and forecast model support, wins big decisions and everyday decisions – not just ‘expert’ judgement. This will cause talent to demand and drive for superior data from better digital capabilities.

Empowerment and ownership. Throttling micromanagement and reducing complex performance measurement systems that cause unintended, perverse, introspective, risk averse behaviors. This will unleash more natural digital innovation- bottom up.

Mission belief. So many mature organisations have become unwieldy, acquisition accreted, semi-conglomerates that have lost sight of any real sense of value purpose (other than to make money). Where there is a true mission, the organisation will tend to strive more to exploit any new means of making progress towards it – including of course, digital innovation.

So I say, if it needs to be a sequence and a choice  – then lead with culture change. Cause the creative energy and friction that will then lead to the right kind of technology upgrade and digital capability demand.

What’s your view?

I recently published a Gartner research note of suggested technology related ‘resolutions’ for chief executives (paywall). It’s a list of pointers to things they can consider doing, to help improve their company’s digital business progress. 2019 looks like it might be a turning point year that offers an opportunity for the organisation to pause for breath and refocus its transformation efforts.

Toward the end of 2018, many signals suggested that a decade of economic growth was slowing down. China’s growth rate decreased. Germany, Italy, Japan, Switzerland and Sweden experienced contraction quarters. Global stock markets declined dramatically and the U.S. government bond yield curve inverted. This shift of fortunes had been anticipated by many economists and business leaders. After all – economies are always cyclical.

Also, in 2018, unabated enthusiasm for technology-related business themes started to wane. The growth in stock prices of digital giant corporations abated. Governments raised major structural questions regarding internet-based business taxation, digital giants’ market power, societal responsibility and privacy policy. A cryptocurrency bubble rapidly deflated.

In 2019, it’s possible we will see twin dips in business confidence and technology belief that combine and reinforce. I can’t say it will happen – but I think most people reading this will acknowledge that it might. If that scenario does actually unfold, corporate risk attitudes toward all things “digital” might then change. CEOs should take stock. But they should not simply walk away from technology-related innovation and progress themes in their business strategies. Instead they should try to think differently than the herd and act strategically to exploit any pause in tech confidence and momentum.

CEOs should remember the Hype Cycle and not fall into the trap of disinvesting during any period of digital business disillusionment. Instead – focus resources on quiet, steady progress to get to the slope of enlightenment. It will be a good time to cull some of the superficial digital agendas that may have arisen when all things digital were fashionable playthings of some middle management careerists.  It might also be smart to use some of the international trade challenges many are facing, to deepen digital change. For example moving facilities between countries is a green-field opportunity. Why replicate the old way of doing things in the new location? Force the new operation to be reborn digital.

If we did head into economic recession territory, this time it might arrive more slowly and predictably than 2009. That might offer an opportunity to thoughtfully reengineer the cost base of the company – rather than just go into cutting mode. Chasing digitally enabled growth has become the default pursuit for many. Refocusing your people on a major endeavour of digital productivity reengineering could be a better alternative for a while. As one CEO said to us recently – if you have been in business long enough, you know there’s a season for these things right?

Whatever happens one thing is for sure – most companies will need to continue developing their digital talent base. A confident and able tech-savvy culture is needed across many parts of the business – not just in IT. To that end many CEOs really need to work on their personal role as a corporate brand ambassador and talent magnet. How can you create the mission, display the zeal, induce belief and craft the workplace appeal to get the best people to come towards you?

We think that the CEO should also ask the CIO and chief HR officer (CHRO) to pair up and work together, to lead a significant program to scale up the digital workforce. But that won’t be enough if the Board of Directors doesn’t set out and support a strong digital element of the business strategy. We think many boards just don’t have enough tech-savvy in the room for the task at hand, so 2019 might be the right time to consider adding a topflight CIO or CTO as a nonexecutive director (paywall).  That’s a subject for a future post.

Just a quick reminder – what follows is one senior analyst sharing some thoughts. It is not a Gartner position. Blogs are un-reviewed personal writings, not published research.

In my job as a Gartner analyst I do a lot of international travel. Then I come home to the United Kingdom of Great Britain and her dominions… or as I sometimes jest with colleagues and clients – “the disunited kingdom of great brexit and her dumb opinions”.  It causes some people to bristle a little, though I say it to lighten the mood. That right to express an opinion and cause debate, leads to the first of three thoughts on this complex subject.

Brexit is democracy in action – we should be grateful for that.
For me, the episode in its entirety demonstrates a complex democratic system doing what it should and that is a luxury many people in this world do not experience. The idea of leaving the EU was an aspiration that many people held for a long time. However the UK parliament was controlled by three political parties that did not agree with it. The situation seemed locked down – with no choice at the ballot box. But a new single issue party formed, campaigned and took just enough vote share away from one of the three main parties to cause it to blink. A referendum was offered to the people and they made a choice. In a way, the system found an emergency relief valve that allowed for expression of an important view that was not previously being represented.

The national conversation ever since has been fractious and heated. It’s not pleasant. However it is a conversation. The deeply held differences of belief have not resulted in other forms of expression. Large extremist parties have not arisen in recent times and there have not been riots.

My personal guess: it’s going to end up a bit more like 2000 than 2008
Just like Y2K (link here for the younger reader ), there has been an enormous amount of discussion, scenario generation and business preparation for a couple of years. Every decision maker at every level in every organisation is aware of it, has heard the ‘sky falling’ worst case scenarios and has done at least some preparation. The politicians, policy makers, and press will take us all to the brink. I’m sure there will be all-night live news programs with cameras at port facilities on March 29^th, just like when one of my analyst colleagues sat in a TV studio on the evening of December 31^st 1999 to cover the ‘millennium bug’. Perhaps the real problems that arise will be worse than Y2K. But I’m an optimist. I hope and expect that smart managers across the economies of the UK and Europe will have mitigated most of it.

Contrast that with the financial crisis of 2008. Institutions, politicians and mangers were unrehearsed, unprepared and flying by the seat of their pants. Books, TV documentaries and interviews about what went on behind the scenes are hair raising. We came perilously close – perhaps only a few hours away from – a complete meltdown of big parts of the global banking system and no cash in the ATMs. Social order could have broken down quickly. Yet we did survive that episode and it is in the ‘recent’ memory of older leaders and managers everywhere. They know what bad looks like and how to cope.

Business and IT leaders are not panicked.
I’m looking at incoming data from our latest global CEO survey. I’ll be presenting some of it at four of our CIO Forum events in March (London, Phoenix, Amsterdam and Hollywood Fl.), then publishing full reports in early April.  In the responses, when we asked about top five strategic priorities for 2019, Brexit barely got a mention. Even most of the UK respondents didn’t raise it – though it did feature a little more in answer to another question about ‘top new challenges’. Overall though, I get the impression that it really isn’t the biggest issue for most senior executives in 2019. As one mid-sized company CEO from the building industry told me this week, he’s far more concerned about the effects of payment delays, balance sheet debt, solvency and possible company collapses in the overheated UK construction sector.

I’m not for one minute suggesting Brexit is going to be a walk in the park – far from it. It does risk disruptions particularly to those industries with complex cross border just-in-time supply chains. And yet, we coped with the year 2000 fuel tanker drivers’ protests, and the 2010 Iceland volcanic ash cloud.  I’m thinking we have faced possibly more sudden and severe problems already this century, from Y2K, though 9-11 and the Gulf War, to the banking crisis and deep recession. For brits, it’s time to remember the stiff upper lip, keep calm and carry on. This too, shall pass.

(Image: by Gideon via flickr, CC 2.0 )

Might the term “IT” become lost in the sands of time?

Nearly one fifth of the 21st century is behind us already – gosh time flies. Generation Z, those who were born in the 2000s, are now entering the workforce as adults. I wonder what the term “IT” means to them? If they learn by listening to office conversation, they would be forgiven for thinking it’s something companies used to do but is now becoming redundant – like slide rules or typing pools. Today, everything is “digital”.
We hear about digital efficiency, digital workplace, and digital optimization. ERP is now part of a digital platform. Digital has become everything to everyone everywhere – or so it would sometimes seem. There’s nothing inherently wrong with that but if we allow it, we must also accept that digital no longer has any differential meaning.

I think the term ‘digital’ (in business and general management use) can trace its roots back to the very late 1990s and the dawn of what was then called “new media”. When the web and email arrived they offered new communications channels to customers that conventional marketing agencies didn’t initially appreciate or support. But marketing is a dynamic industry and very quickly a new kind of agency arrived – to specialize in the exotic online channel technologies. After a few years, by the early 2000’s – these channels were no longer ‘new’ media. The marketers quickly refined their naming convention. The new kind of marketing was “digital marketing”. Then, as the new vanguard bestrode boardrooms, 21st century Don Draper style – they simplified it to just ‘digital’. As a result, business general managers and CEOs started to think of ‘digital’ as the market facing use of technology to win customers – through web ads and email campaigns and latterly e-commerce and mobile apps. Digital equaled customer facing.

So far, so good. By about 2010 or so – digital meant market facing technology, and “IT” meant back office and the internal efficiency use of technology. But from there on a problem started to arise. Digital was more exciting. Winning customers is perhaps more compelling than re-engineering SG&A costs – to the majority of entrepreneurial minds. The keyword “Digital” got the attention, the power and the budget. For a while – maybe up to about 2015, I think most CIOs accepted the situation, shrugged their shoulders and carried on. But as time went on the under-invested legacy systems creaked more and more. The systems of record couldn’t cope with the changes the market facing interactive channels were bringing. There was only one thing to be done – reclaim the ‘D’ word and start applying it to all the back office work too.

A few older CIOs had a bit of a cultural appropriation score to settle. How had marketers stolen a word from computing (literal meaning: binary encoding of a signal) and then used it as a political tool to undermine IT? The nerve! So then we got into a phase of corporate digital-washing. Digital got applied everywhere and to everything because it sounds good. Like ‘natural’, ‘green’ or ‘vintage’ – adding ‘digital’ made almost any technology related project or investment sound more valuable and progressive.

But if ‘digital’ can now be applied to anything and everything, then it has no effective use for helping CEOs to discriminate between different categories of investment. Perhaps the only thing they can be confident of, is that nobody at their executive table seems keen to talk about IT anymore. Under the hood – their companies are still running and utterly dependant on PCs, relational databases, IP networks, messaging middleware, process models, Unix derivatives and dozens more fundamental technologies that we were happy to call IT a decade ago. But it’s all digital now.

So – is it R.I.P. IT? Maybe future dictionaries will note it as an ancient term – first mentioned circa 1975, fell out of use circa 2020. I wonder what term will one day make ‘digital’ redundant? Autonomous perhaps? But I’m currently processing our new CEO survey data and I can tell you business leader’s unprompted use of the word ‘digital’, which has been steadily rising since 2012, went up again in 2019. It appears ‘digital’ still has rising currency.

Our 2019 CEO survey reports will be published to clients in April.  Ahead of that I will be previewing some of the results to attendees at our four CIO Forum events in March..  why not join us?

• Gartner CIO Forum London – March 4 to 6 2019
• Gartner CIO Forum Phoenix – March 10 to 12 2019
• Gartner CIO Forum Amsterdam – March 18 to 20 2019
• Gartner CIO Forum Hollywood Fl. – March 31 to April 2 2019

Image:  CC https://commons.wikimedia.org/wiki/File:2013_keyboard_in_sand_12879020093.jpg