THE RATE OF CHANGE
What are the most important changes in your business?
The rate of change as defined by Moore’s law has now taken over all facets of life. It is being driven by a variety of factors such as technology, commoditisation, social media and globalisation.
Let’s explore each of these separately…
Technological advancements are seen in areas like cloud-based and big data analytics, artificial intelligence (AI) and the Internet of Things (IoT), where everything is software and AI-dependent. So there are no more stand-alone 13products and services with even the car informing you when it’s time to change a tyre.
Commoditisation is where everything is a commodity. For example, a luxury car is a commodity you can own for a few years at an affordable price. And the window for premium services is very low until it is offered at a lower price.
Social media has transformed a large portion of the world into one community – or more precisely, into a collection of tribes with diverse biases and beliefs that often live in their make-believe reality. In fact, Facebook is now the largest ‘nation’ in the world, following India and China.
Globalisation offers the possibility for companies like Amazon and Uber to easily establish themselves in new countries and scale up at a much more rapid rate than established players in such spaces.
For the first time, the rate of change has overtaken the ability of the majority of people to adapt – the accompanying graph is adapted from Thomas L. Friedman’s Thank You For Being Late (original graph from the CEO of Google X Research Eric Teller).
So there’s a backlash from a majority of people who cannot accept that lifelong accelerated learning is the price for financial security. This backlash is visible in the desire to protect themselves from change. A recent example of this was the election of Donald Trump as President of the United States – to ‘Make America Great Again.’
But ironically, such people use the same forces of change – like social media – to propagate these views. Every small trend is magnified; and the more bizarre it is, the more it is likely to spread. So we’re returning to the medieval age of burning witches on the basis of rumour.
With techno know-how spearheading innovation, what use is patent protection that lasts two decades when technology will change fundamentally in four years? Global companies like ExxonMobil, AT&T and Pfizer had decades to fine-tune governance structures to manage their stakeholders.
Comparatively, Facebook – the third-largest ‘country’ in the world – has had very little time to build structures to deal with global or local issues. And so it is vulnerable to manipulation by fringe groups like ISIS.
This leaves many important questions unanswered. What does this mean for our businesses? How will they move from product to service and solutions? How will our existing workforce cope with changes in the industry? What different expectations will we have from talent in the future? Why will they join us? And how will we retain them?
In other words, how do we create a high-trust, high-performance culture in a world that is very different from the one that taught us everything we know?