Peter Drucker once famously said that a business has only two functions: marketing and innovation. What he meant was that successful businesses create great products and sell them effectively. Everything else is secondary.
Yet today, both marketing and innovation are driven by digital technology. It’s tough to think of a product without a digital component and marketing has become so digitally focused that CMO’s will soon be spending more on technology than CTO’s.
In effect, every business today is a digital business and technology, no longer confined to the IT department, is everybody’s job. Sadly, few enterprises have adapted effectively and most corporate digital initiatives fail. The problem isn’t a lack of investment or even a lack of commitment, but an unwillingness to adapt core business practices to the digital world.
Has digital technology really made us better off? While there are lots of impressive gadgets, the impact on our actual well-being has been surprisingly mild. In fact, by many measures, we’ve become worse off since personal computing took hold.
Productivity growth since 1980 has been significantly lower than the post-war period of 1947-1980. GDP growth and income inequality show similar trends. In many ways, it seems like we had it better in the old economy of unionized manufacturing.
Yet there is some hope. If you take a closer look, you’ll find that almost all of the gains have come from sectors that use IT extensively. So the real problem is not that digital technology doesn’t increase productivity, but that its impact hasn’t spread far enough. As the world of bits begins to invade the world of atoms, that will change in a big way.
Success used to be simple. You got a good education, found a job with a solid firm, worked hard and saved. Then you raised your kids to to the same. If you did the right things, you weren’t guaranteed riches, but a decent life was nearly a sure thing.
That’s no longer true. Technology is replacing human labor like never before. In 1979, General Motors employed over 800,000 people. Yet today, just a small fraction of that number works at places like Google, Microsoft and Facebook, even though they earn far more.
And it’s not just large corporations that are being affected. Machines are replacing humans in fields a varied as medicine, law and even creative fields. Digital technology also allows superstars to be everywhere at once, displacing those who are merely competent. These trends are putting an enormous strain on our society. Here are 6 things we can do about it.
Tradition embraces stability. Time honored principles get that way because they have strong track records of success. The tried and true, extrapolated into the future, often looks like a sure thing, while deviating from historical norms can look downright foolish.
Yet the funny thing about the future is that there’s no guarantee that it will look like the past. Contexts change and when they do, old rules no longer apply. Following them blindly does not honor the past, but diminishes it by confusing fealty with wisdom.
Since 1960, the average lifespan of a company on the S&P 500 has fallen from more than 60 years to less than 20. The power of technology will increase as much in the next 18 months as it has in the last 30 years. Clearly, technology cycles have begun to outpace planning cycles. We need to learn to manage not for stability, but for disruption.
Nate Silver doesn’t look very threatening. With his spindly frame and eyeglasses, he looks more like the prototypical 98 pound weakling than an emergent media juggernaut, but he’s got a lot of people running scared nonetheless.
Whereas other pundits earn their living through a special blend of insights and access to inside sources, Silver has neither. In fact, he bases his analysis on data that, in most cases, everyone else has access to yet he’s somehow able to prove experts wrong.
And that’s exactly what makes Silver so scary, not for what he does, but what he represents—the primacy of data and analysis over personal experience. If Silver, a relative neophyte with no substantial experience on the political beat or in the halls of power can outperform respected pundits, then what does that say about the rest of us?
The future isn’t what we thought it would be. We don’t walk around in silver suits, travel to colonies on Mars or drive in flying cars. Instead, we dress casual, take selfies and communicate in 140 characters.
Yet in many ways, we’re much better off than we imagined. Rather than a Mad Max dystopia of war, famine and disease we are safer, richer and healthier than we’ve ever been. As I’ve argued before, in a very real sense 140 characters are better than a flying car.
That’s the funny thing about the future. It’s never as fantastic as we hope nor as horrible as we fear. The one thing that’s for sure is that times will change and we will have to adapt. While there is no way of knowing exactly how that change will play out, we can identify trends, make common sense judgments about where they lead and prepare for them.
The Obama administration had been preparing for years to launch its signature policy, the Affordable Care Act, otherwise known as Obamacare. With everything riding in the balance, the whole effort very nearly failed—because of a website.
Well, not a website exactly, but a dizzying array of servers, protocols and regulations. The technology behind the website needed to manage all of it in order to provide service to the public. On launch day, it fell flat.
That was embarrassing, but the problem goes far beyond health care. Virtually everything the government does these days, from drivers’ licenses to voter registration to retirement benefits, requires a robust technological platform that must overcome challenges specific to the public sector. Now, a team of technologists thinks they may have a solution.
Around the turn 20th century, Frederick Winslow Taylor introduced the practice of scientific management. He studied various tasks with a stopwatch, devised more efficient ways of getting them done and developed standards to improve productivity.
In Taylor’s world, there was truly a “right way” and a “wrong way” of doing things and managers were there to supervise. They ensured that rules were being followed, standards for work were being met and discipline was being enforced.
The rise of the knowledge economy brought a different kind of management. Instead of supervising, managers had to excel at choosing the right kind of work to be done and motivating employees. Now, as the information economy takes hold and creates pervasive change, managers will have to evolve once again. Those who don’t adapt, will not survive.
In the late 1960’s, minimills like Nucor started using a new process that could produce low grades of steel more efficiently than the big integrated steel makers. These, however, were the lowest margin products in the industry and didn’t seem much of a threat to the big guys.
In The Innovator’s Dilemma, Clayton Christensen describes what happened next. As minimill technology improved, it began producing higher grades of steel. The integrated mills migrated upward until, by the late 1980′s, they had forfeited much of their market.
We’ve seen the same dynamic play out time and time again across a variety of industries. Digital cameras, cloud based software, rental cars, education and a host of others. Yet now we’re starting to see it take hold in the high-brow market for professional services. It’s still in its early stages, but history—as well as economics—doesn’t favor the incumbents.
As the crisis in Ukraine continues to play out in Crimea—and possibly spread to Eastern Ukraine as well—it is not only conventional measures of power we should be paying attention to, but linkages.
It is, of course, Russia’s connections to a large segment of the Crimean population that Putin used as a pretext for his invasion. It was also fear of connections (ethnic Ukrainians to the mainland, Crimean Tatars to Turkey), which led him to shut down television stations and other channels of communication.
And it is through deepening and severing connections that the West intends to combat Putin’s aggression—by uniting with Western and Eastern European allies to apply sanctions that will deny Russia the economic and cultural ties it now relies on. Strategy is no longer a game of chess, because power no longer depends on nodes, but on networks.