Internet of Things
Dot Com to Dot Profit co-authored with Peter Keen – and can be summarised as follows: • Success makes you deaf. Large companies are structurally unable to truly understand what customers want because they measure market share, not new customer purchases. So, the more extensive the installed base they have of their tech, the more they think there is no problem. Aſter all, when you have a 70% market share, it can take a decade for that to fall to 50%, even if 100% of new purchases are not for your solution and customers are screaming at you to make a change.
• Most people cannot understand an exponential trend even when it is staring them in the face. We all know technology follows Moore’s law, where computing power doubles every 18 months, but people still don’t realise how powerful it is. For example, if you walk 16 linear one-metre steps, you will end up 16 metres away from where you started. Everybody understands this, but walk 16 exponential steps (1, 2, 4, 8, 16 etc) and you end up 65.5 kilometres away! If this is your competitor’s improvements on price, performance, or product size reduction, and they start just a few years before you, then you can never catch up. You’re chasing a ball bouncing down the stairs, where the ball always wins.
• All technology starts off as proprietary until user demand for interoperability causes a standard to emerge. Aſter this, the inflection points of adoption kick in. Why? Because the venture capital industry is only interested in funding exciting start-ups with a unique product – very few seed stage business plans are written around interoperability. It’s just not compelling enough for the venture model. So, we end up with multiple proprietary solutions – think MNO SIMs – until the most significant users say enough is enough, and a standard emerges. It has happened numerous times in my career in IT – think proprietary computing to open systems, proprietary soſtware to open source, proprietary networking to the IP standard and proprietary applications to cloud-based apps. It is happening now in IoT and, although you may not realise it, there is almost certainly some eager founders in an incubator planning, right now, how it will happen to your business.
The disruption incubator So, the past is the best indicator of the future, but as CEO are you prepared to bet the company on an uncertain outcome? Is this how the Board and your shareholders see your role? Or is steady as she goes a safer strategy for you and them? Frankly the answer, is that you must do both. Keep the business moving in the same direction while at the same time experimenting with disruptive change. Over the last 20 years I’ve seen three models for how to do this: • Bring in a change management consultancy and pay them to create the plan.
• Split off a separate company and charter it with the change management plan.
• Form an internal incubator with full empowerment from the CEO and staffed with in-house radicals determined to change the company that they work for.
www.pcr-online.biz June 2023 | 33 In my roles at HP and Cisco the CEOs, Carly Fiorina and John
Chambers opted for the last option. Tey both felt that the first option created a great plan quickly, but they would still need help getting the organisation to accept and embrace it. And option two is tempting, think spin out, spin in – but indeed, the point must be that everybody changes not just a select few. So, in both cases they formed a disruption incubator – HP for the
internet and Cisco for the cloud. It wasn’t easy but it was ultimately successful as change grew from within and was ultimately embraced. But beware – if you are tapped on the shoulder to lead an internal disruption incubator, then you need thick skin. Nobody wants to change, and you are potentially threatening their job – a fully committed CEO and the realisation that success will mean your group has a short shelf life. In both examples, teams lasted around 18 months before the rest of the wider organisation miraculously declared that they knew it was the right strategy right from the start. Hence, they asked ‘why did we need this separate team?’. In conclusion, as every physical product becomes digital,
information about how it is being used becomes more valuable than the product itself. Tis opens a massive opportunity for disruption that will be bigger than the Internet and smartphones, based on eight billion consumers interacting with their PCs or phones primarily around search. Te birth of the Internet sparked an exciting new wave of
innovative industries and global players, but my view is that it is nothing compared to the disruption that IoT is unleashing. Now we are creating data real-time from consumers interaction with everything – every product they come across, everything they touch, and – with the Metaverse – everything they see. As the great philosopher Mike Tyson said, ‘everybody has a strategy until they get a punch in the mouth’. Will you be able to withstand the IoT punch and then punch back? However, as the saying goes, you risk everything if you don’t risk anything.
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