In 2011, entrepreneur, co-founder of Netscape and venture capitalist Marc Andreessen famously proclaimed that “software is eating the world”. A bold statement and 5 years later you have no doubt seen the forces of digital disruption play out across our economy.
Much has been talked and written about digital transformation and disruption. To some it means moving rapidly away from bricks and mortar, for others it means dramatically changing marketing practices or leveraging mega-trends like cloud and mobile. In just about all cases it means adapting to changing needs – what people want in a fast paced competitive landscape.
Over the last few years, the opportunities for technology have changed with dramatic speed. It has now been over 60 years since the computer was born, 40 years since the microprocessor and 20 years since the internet.
So what does this digital transformation really mean?
Digital isn’t merely a thing. It’s not technology per se, and not simply a move to doing business online. It’s a new way of doing things. Digital has the ability to unlock value and create amazing insights. Think automation, analytics, reporting and building innovative interfaces to gather data across web, mobile and emerging channels like artificial intelligence (AI).
But just for a moment, let’s pause and consider just one part of this ‘digital revolution’ – big data. Anything that has ‘big’ in the title must be good, just think of the Australian love of all things big: the Big Banana and the even bigger Ned Kelly. But the data revolution is so much better than that. Data will unlock the value of our business, give us a better understanding of what we do and how we do it and more importantly, tell us about who we do it with.
The first challenge is, as Robert McNamara said in The Fog of War Lesson 7, “Get the Data”. And when I say the data, I mean everything; what people do, where they click, where they are, the data at each step in the process, the whole lot. Leave no stone unturned and don’t try to screen or rate data at the pass. For now, assume all data is equal.
Second, wait. But you say, things are moving so fast that you wake up in a cold sweat checking the news to make sure you’re not getting left behind. But you need to wait because time series data is really cool. It lets you look back and more importantly forward. The power to predict the future has always been valued, but to predict it with some certainty takes time and more importantly – data over time.
Third, keep an open mind. It’s easier said than done. We all pride ourselves on the ability to forecast a position but trust me, if you keep an open mind the possibilities are endless and often unexpected. A good example is the trusty chainsaws and mattresses story. If you don’t know what I mean, read here.
Data networks will underpin the valuations of the businesses of the future. Whether you are in manufacturing, services, finance, retail or logistics. The canonical data network is the likes of eBay. Sellers sell because there are lots of buyers. Buyers buy because there are lots of sellers. The transaction is commerce. More generally though, the value of a data network is valued as a function of the value of a ‘read’ and the more ‘writes’ there is, the more valuable a read is. To make this clearer take, for example, the credit assessment scenario. The greater the amount of data that we weave into the assessment, the more valuable the accuracy of the resulting assessment and in turn one’s ability to manage credit risk.
Part of me is super excited about what’s to come – the ability to create and chart the course for business models of the future based more soundly on the data from the past.
Frankly however there is some apprehension and cause to reflect, because the digital revolution brings to light the question of power and influence. Does too much information lead to too little privacy or the ability to manipulate the ‘truth’? Constructed well it represents tremendous opportunity and advantage for companies but if not, there’s trust at stake.
Which brings me to the final challenge, culture. Digital disruption opens the door to cultural transformation, changing the way we relate to each other, even the way we think. What is familiar in old systems and the way we do business is often turned upside down. It is not always easy, but it is definitely worth it.
At the end of the day though I’m all in. And always will be.
Ant Stevens has just been appointed KPMG Australia’s Chief Digital Officer.