Excerpts of an article by Jim Love in ITBusiness.ca
October 7th, 2014
So the real question is, why are so many companies not taking the right steps – why are they resisting? Peter Sondergard’s, global head of research for Gartner, answer is simple. “The new digital businesses have lower margins.” Given that, today’s businesses have a difficult challenge. Do they take short term and potentially massive pain and bet on a larger market share with far lower margins. Or do they soldier on believing that somehow they will defy the odds?
There is a second and compelling reason why companies are hesitating to do what they know is inevitable. Digital businesses are different. A digital business may be agile, but to do that it will take risks. Digital businesses are not afraid of failure and risk taking. Yet the mainstay of the enterprise in so many companies from banking to retail to government to manufacturing to natural resources – all of these need “rock solid systems and processing.” When the consequence stoppage in production runs into the millions of dollars, it’s hard to accept failure.
Digital machinists versus digital humanists
Gartner sees this as a conflict between two mind-sets. The “digital machinists” represent the old enterprise with its need for uninterrupted operation and “rock solid” processes. The new thinking of the “digital humanists” runs counter to everything that the “digital machinists” think.
“Digital humanists” are driven by principles not processes. These principles, Sondergard outlined as:
- People – at the centre of all actions is a concern for human beings and a focus on the user/customer experience.
- Embracing the unpredictable – where machinists try to control deviations from the norm, humanists exploit these to learn and explore new ways of performing services.
- Respect for personal space – or in the words of another analyst, humanists don’t do things that are “creepy.”
The challenge of the bi-modal enterprise
Who is right? According to Sondergard, they both are. Companies need the rock solid business processes to exploit current business opportunities but they also need to embrace the humanist ideals to avoid disruption by agile competitors. They need to be bi-modal. A traditional enterprise may not be able to instantly transform into a start-up, but we can all incubate start-ups within our existing enterprises.
Leading companies get this and are embracing these moves to a new digital first approach on new businesses and services while they defend but gradually scale back their traditional business.
The digital transformation
As Sondergard pointed out, it’s not just businesses that are changing. Technology is changing us as well. There is a power shift happening as we move from physical to digital enterprises. Power is moving from corporation to customer. In enterprise technology, it is moving from structured IT departments and processes to business leaders. It is shifting from enterprise to employee. At every level, power is moving from its existing base to new distributed, decentralize but no longer “de-personalized” model.
As technological change accelerates, it accelerates the power shift to the new “digital humanists.”
The Internet of everything
If you had to look to find one current trend that would show the pace and extent of change, you need look no further than what has been termed the “Internet of everything.” Cisco Systems product marketing manager Beth Barach presented on this topic during the 2014 Gartner Symposium in Orlando.
For those who wondered what the difference was between the Internet of everything (IoE) and the Internet of things (IoT), Barach gave an elegantly simple answer. The Internet of everything is, as the name implies – everything. It is people, process, data and “things.” But the “things” are special. They are not just the devices, they are the sensors that supply the data. In turn, that data runs more and more of our day to day world – transit, homes, office buildings, infrastructures and even our cars – just to name a few areas.
These “things” operate our world and provide the data that controls that world. This is how we benefit from the Internet of everything. The “things’ give us the data and the data drives the rest.
A blessing and a threat
The dirty little secret is about these “things” is that that as they assume more and more control of our businesses and our day to day lives, they also present more and more of a risk. And as they grow in numbers the threat becomes even greater. The more of these devices that exist, the more likely it is that they will be compromised. On a recent TV show, a fictional plot showed a pacemaker being hacked. Gartner estimates in a few years this will be a reality.
Businesses know this too. Cisco’s Barach showed us that 73 per cent of companies expect IoT to cause security threats. Yet by the same data, only 13 per cent of companies feel they are addressing this challenge.
Is it a technical problem? No. It’s a mind-set problem. Like the “digital machinist” and the “digital human” there two distinct mind sets at work – the Information Technologist (IT) and the Operational Technologist (OT) The OT mindset actively pursues the benefits of a proliferation of devices and sensors. The IT mindset sees and tries to mitigate the risks and return the company to the certainty of “rock solid” processes. The OT mindset has no time for this.
The reality is that they are both right in their own respect. According to Cisco’s Barach both are critical to organization success. There is no technological miracle – few if any of these devices and sensors have any security built in. What is needed is a cooperative approach to solve this contradiction – how do you collaborate to build “rock solid” security and still have the agility and ability to harness learning and the “power of serendipity” which is such a part of the digital enterprise?
How to do it in real terms
As Gartner analyst Frank Buytendijk pointed out, this way of thinking is not new. Jim Collins, the guru of modern strategy has said that successful companies had to escape the tyranny of or and embrace the possibility of and. The only problem, Buytendijk pointed out is that Collins didn’t tell us how to do it.
Two presentations at the Gartner Symposium tackled this in real terms. The first session, led by Richard Hunter another senior Gartner analyst, looked at scenario planning as a way to do strategic planning in a time of uncertainty and ambiguity.
Traditional strategic planning requires that you determine and place a bet on a future state or environment. This works well if the future is predictable and stable, which we have discovered, it is not. Scenario planning invites us to embrace this uncertainty and imagine several futures. Each will have its own strategy to address it. Each will have a series of leading metrics to tell you in advance if that strategy needs to be employed. It’s a very flexible and for those who do it well – a very practical and reliable method of strategic planning and response. In fact, the only real way to “fail” at scenario planning is to be too timid. Failure in this is failure of imagination. Because as Hunter says, “if you are imagining a vastly different future, you’ve probably got it wrong.”
The future is wilder and more unpredictable than we think. One analyst gave an example using the film “Minority Report” with Tom Cruise. In the film, Cruise manipulates a 3D computer interface in mid-air. In 2002 that was astonishing. Today, the parts to make that interface, according this same analyst, would cost $70. If we fail to vividly imagine the future – if it doesn’t seem like we are really pushing the envelope, in this age of rapid change, we are likely to underestimate the degree of future change. The failure of scenario planning is the failure of our imagination.
The failure of analysis
Failure of our analytical minds to imagine the real scope and complexity of change is an issue. Frank Buytendijk showed that we “analyze too much and synthesize too little.”
The bottom line is this: analysis focuses on our differences. Synthesis focuses on what makes us the same. We need to stop thinking in terms of “either-or” and differences and to embrace the digital idea of “and” – of synthesis. In a time of change and of great ambiguity this is where the great ideas are born and nurtured.
Four terms that resonate:
- Bimodal thinking.