The future success of most businesses today will depend upon how their leaders respond to what has become the single most important question for business continuity in a rapidly changing world: Can you envision a future that is very different from the past? Some of the world’s most successful enterprises joined the ranks of the mighty who fell because they couldn’t envision a future without the business models that made them household names. The Encyclopedia Britannica could not envision a future without hard copy sales, nor Blockbuster contemplate video rentals without late fees, nor Kodak see a world without film. Because they couldn’t adapt their business models to new technologies, each of these former market leaders suddenly disappeared or became a shadow of what they once were. If you are a corporate leader and you want your business to both survive and thrive in times of great change, you need to appreciate that the single most important core competency of a business is the ability to envision a future that could be very different from the past.
As you begin the work of considering the future possibilities for sustaining market leadership, it may be helpful to keep in mind what we at Salt Flats regard as the 7 Truths of Business in a Rapidly Changing World:
1. Big Data drives business decisions. Big Data is much more than an exponential increase in the amount of data that digital technologies make available. Big Data is an innovative architectural approach to information processing that moves beyond linear programming to holistic learning by integrating structured data, such as numbers and codes, with unstructured data, such as text, audio, and video. Big Data is transforming both the breadth and the depth of information for better decision making, especially when it comes to understanding what’s most important to customers. For example, by integrating data from customer purchase histories and from their social media postings, companies can delight customers by suggesting new products to consider that they may have not thought of on their own—a win-win for both the customer and the company.
2. Digital Disruption is omnipresent and industry agnostic. Digital Disruption is the change that happens when new digital technologies transform the basic platforms for product delivery, which enable the creation of innovative business models and rapidly render existing models obsolete. That’s what happened to Kodak when the smart phone provided a new platform for taking and storing photos and social media sites created new ways for people to exchange photos. If Digital Disruption can happen to Kodak—one of the great icons of the business community—it can happen to any company in any industry.
3. Disruptive Competition comes from outside your industry. This may be the most disturbing truth for business leaders because it escalates uncertainty. In the world before digital disruption, the competition was the other companies in your industry, which meant you knew whom to keep your eyes on. In today’s rapidly changing world, change can come from unusual suspects. In the end, it wasn’t Fuji that turned out to be Kodak’s competitive downfall, it was a computer company that created a very innovative telephone.
4. Startups continue to think differently about your industry. Perhaps the most important reason why you need to be able to envision a future that is very different from the past is because there are legions of Startup entrepreneurs who are exploring new ways to do your business, and although more than 90 percent of Startups fail, it only takes one success to render your business model obsolete. That’s why corporate leaders shouldn’t view Startups as a collection of individual companies, each of whom has a high probability of failure, but rather as a single collective business entity that has an almost 100 percent chance of success. If you don’t envision a different future, some Startup will. Change is not an option—it’s the new normal.
5. Artificial Intelligence massively impacts every industry. Artificial intelligence (AI) is the replication of human intelligence by machines. These processes include information recall, pattern recognition, sensemaking, and even creativity. Today AI has the ability to defeat the world’s best chess masters, outwit the two greatest Jeopary! champions, write poetry, and compose original classical music compositions on par with the great composers. Like humans, AI has the capacity to learn, but it does so at far faster speeds. Over the next decade AI will transform the way every industry works, especially those industries where intelligence is the essential element, such as healthcare, law, finance, and education.
6. The Internet of Things connects things that have never been connected before. In the next decade, we will experience the rapid emergence of the Internet of Things(IoT), which will be far more transformative than the first-generation Internet because it will allow every human being and every thing to communicate with each other by connecting the sensors in every machine, business, residence, vehicle—and, yes, every person—within a single comprehensive operating system. This infrastructure will rapidly take shape as the number of sensors grows at exponential speed. In 2007, there were 10 million sensors, by 2013 we achieved 3.5 billion sensors, and by 2030, it is projected that 100 trillion sensors will connect to the IoT. The IoT will be a prime driver for why the future of every business will be very different from its past. The potential for new business models will be endless.
7. Corporations must partner with or acquire startups to keep pace. The simple and uncomfortable truth is that corporations are not designed to meet the challenges of digital disruption. They are designed for cultivating incremental change and leveraging the historical strengths of the company. When your future is highly likely to be very different from your past, the quickest path for keeping pace is to leverage the innovative thinking and acting of startups as your strategy for rapid adaptation to disruptive change.
The great management guru Peter Drucker once wisely observed, “The best way to predict the future is to create it.” These 7 Truths are a good place to start.