Get To Where The Puck Is Going

Anyone who has talked to me recently has probably endured an enthusiastic pitch about where I think Digital Transformation is headed, and I'm more excited about that than ever. However, in my day job, I spend a lot of time talking to IT folks about what they need and what they are trying to do, and those two conversations are disturbingly divergent.

Wayne Gretzky famously said "I skate to where the puck is going to be, not where it has been." I have the luxury (which I recognize as such, and for which I am very thankful), of working for a company that pays me to learn new technologies, identify trends, and talk to interesting people. In my opinion, the puck that all businesses are chasing has changed directions, and only a few have picked up on it. Worse, because IT folks are so overworked, many haven't had a spare moment to look up from their immediate project trying to deliver what the business has already been hounding them for.

So let's talk about where the "puck" of profits and consumers is headed - right at most businesses' foreheads, and it's going to put a lot of companies on their backside. Lest you think this is unfounded hyperbole, see this article, although I could include a much longer list. Here's why:

Since time immemorial, anyone wanting to make a reliable profit has had to do four things:

1.  Get timely access to information.
2.  Figure out what is wanted by the consumer.
3.  Make it known that "I have that thing."
4.  Engage and transact before someone else beats them to it.

Merchants and customers on the busy Bosphorus Strait, not far from where my brother lives today. I'll bet the guy standing really wishes he knew how much the lady would really be willing to pay for a ride across at this moment, and the boy behind the oars wonders if he can get her attention to say his boat is a Kuru cheaper.

While the how of that process has changed over the centuries (I picture caravans of camels, town criers, tall ships, stevedores with hooks, ads in old-timey newspapers), the tasks themselves remain unchanged. For the past decade, we have thought in terms of customer surveys, market research, TV/ print/billboard ads, and either bricks and mortar retail, or e-commerce. 

It's easy to read case studies or look back on some shift in history, and smugly assume "we would have seen it coming. Surely today we are too sophisticated to fall for that." It's gratifying to think of ourselves as the inevitable conclusion of a long chain of suckers, culminating in our much more advanced and educated society. Whereas in fact, our grandchildren will be smugly scratching their sensor and screen filled helmets, wondering how we missed it, during our brief and somewhat quaint moment in time.

There is a massive shift that has been underway for a few years, but  is now reaching critical mass.  Emerging influences that had been nascent or faddish are becoming mainstream, and growing numbers of previously-blissful companies are receiving rude awakenings. Why? Because the basis of competition in their industries is changing, and along lines that are unfamiliar and oblique to their understanding of the market, internal culture, and existing business processes.

1.  Organizations are creating smart, new products that carry on the conversation after the purchase, and produce streams of real-time data that can be harnesses to improve awareness of what's happening, and the timeliness of automated responses.

2.  Big Data is changing the granularity at which companies can understand who potential customers are, where they are, what they want, who they are talking to, and what it would take to make them change their buying habits.

3.  Digital Marketing is allowing savvy companies to engage customers in new, focused ways that are more "pull" than "push." Rather than pushing one generic message out across the airwaves hoping it might hit a few receptive eyes, and frustrating everyone else, companies can now engage their ideal demographic in a much more targeted way as those people "pull" and consume content and services that are valuable to them.

4.  These mobile sensor and communication packages we still quaintly call "phones" are disrupting both supply-side and demand-side economics by pairing up buyers and sellers in novel ways, allowing more specialized and niche offerings to be profitable where they never would have previously been feasible. Not only is this bringing new entrants into markets who never would have been profitable before, but it is also defining new business models that are upending established assumptions. Anywhere there are perishable goods (hotel rooms, rental cars, tour experiences, consumables, electronics, software), buyers and sellers can now find each other directly, while circumventing established middle-men. Most of all, these devices are vacuuming up the data that we gladly feed them, because these apps offer just enough functionality to make us willing to carry them, interact with them, and invite them into every corner of our lives.

The reason the combination of these trends is so disruptive isn't because the technologies are new, but because they alter how the math of the very business models themselves are calculated. New market entrants can find new customers, for new and existing products, in new ways that were never feasible before. Some companies get it - but others are dismissing this as faddish, something unique to Millennials, or as inapplicable because they "aren't software companies." Without naming names, I can only say that from recent personal experience, I am flabbergasted by the near-sighted dismissal of mobile applications by companies in an industry that is being stood on its head by mobile applications! Everyone knows what Netflix did to Blockbuster, and what Uber and Lyft would have already done to taxis if not for legacy regulations, and what Tesla will inevitably do to car dealerships. But most companies are only reflecting on this long enough to conclude that they aren't in these markets, and therefore aren't susceptible. Rest assured, though, - someone, somewhere, right now, is considering ways to exploit the apex of these three developments to alter the basis of competition in your industry. 

What makes the combination of these trends so powerful is that they represent not just a new set of things companies need to have as table stakes (like a mobile app)  - but a vehicle for codifying and turbo-charging the "emergent strategy." (Seriously, go read that link).  Smart and fast companies are exploiting it using the Lean Startup Methodology, not just for software companies, but for all industries. If you read only one book this year, it should be The Lean Startup by Eric Ries.

I would make the virtuous cycle that Mr. Ries outlines (yes, I am in awe of the man), more generic and applicable to non-software companies by altering it very slightly:

Eric Ries lays out a compelling argument that this is the only way to run a software startup. I'm going to go out on a limb and postulate that operating with this mindset, and focusing on speeding through the cycle as efficiently and often as possible is the only way incumbents avoid being "Blockbustered." I am confident in saying that because all companies are becoming software companies. Marc Andreesen said it first here, and after much scoffing, people are realizing he was right.

Not only that - but the smartest companies are acknowledging that they don't have time to organically grow their own technology expertise in the C-suite, and are looking for help both from their own in-house technology folks, and outside the company.  Again - don't believe me - go read it for yourself. Even technology companies like Facebook occasionally bring in outside help.   The companies that these authors call "Digital Masters" have positioned themselves to run away from their competition. They have built a competitive advantage in this new era of emergent strategy by building the capability to speed quickly through the steps of the Lean Startup Methodology. The authors point to strong leadership endorsement from the top, and investments in developing digital expertise as the main factors.

I would be just one more voice of doom and gloom if I stopped here. But please believe me when I say that this challenge is very surmountable. The gap can be closed. Regular companies can develop competency in this area relatively quickly, if they are willing to do some soul-searching and invest. Much of what the "big boys" at Google, Facebook, and Netflix have spent a decade or more developing in terms of technology is available off the shelf with enterprise support, today. Getting started on this virtuous cycle is both easier and more affordable than you would believe, and with the tools and technologies you have today. I recently helped start a team at EMC called "Pathfinders," focused on how to help companies navigate their way through this market transition, which is why our logo resembles a compass rose. It's a team of six very talented people, and me. ;)

I call on a lot of technology organizations, but am rarely encountering any topic that matters to the business. Compounding this problem is a bunch of vendors running around claiming their all-flash array or other widget "transforms business." If you work in IT, trust me when I say that we hear business leaders begging for their IT teams to help with this coming transition, and would rather buy pre-built infrastructure than have their people wasting time on local optimization instead of focusing on overall IT throughput. I'll be delivering a talk at Interface 2014 in Seattle next month, on how IT folks can get out ahead of whats coming, and skate to where the puck is going to be by developing the necessary skills and mindset now. We're going to follow that up with a workshop over dinner where we can dig into the steps, initiatives, and projects needed to get started, and how to go sell it to the CFO.

The HBR article above closed by saying "The distinctions between industries will become less pronounced than the differences between market leaders and laggards within the same categories." Your company wants and needs you to step up and help them be a market leader. In my infinite spare time, I'll be writing subsequent posts detailing how to start acquiring the skills and mindset necessary to be ready to catch the puck. However, if you'd like to talk about how you can help lead at your company, hit me up on LinkedIn, or Twitter. I'm a free resource, and am overjoyed at the privilege of doing this job!