The document discusses the need for companies to undergo a fundamental shift in strategy and business models to adapt to digital disruption. While many incumbents have unlocked value from digital technologies, digital disruption has only begun and will accelerate. New business models like platforms, ecosystems, and on-demand services are emerging. To thrive in this new environment, companies need to balance exploiting existing business with exploring new opportunities through activities like partnerships, data and software strategies, and retraining workforces. The skills required of workers are also changing rapidly as routine jobs decline and new types of non-routine work emerge.
4. If the rate of change on the
outside (of an organization)
exceeds the rate of change on
the inside, the end is near....
-Jack Welch
5. Digital is the main reason
just over half the Fortune 500 companies
have disappeared since the year 2000.
-Pierre Nanterme, CEO Accenture, 2016
Yet..Digital disruption
has only just begun.
6. Digital penetration has only just begun
http://www.mckinsey.com/business-functions/digital-mckinsey/our-insights/the-case-for-digital-reinvention#0
7. Digitalization pressures revenue and profit growth
http://www.mckinsey.com/business-functions/digital-mckinsey/our-insights/the-case-for-digital-reinvention#0
8. All our knowledge is about the past, but all
our strategic decisions are about the future.
What we don’t know
we don’t know
Outside our
comprehension
What we
know
What we know
we don’t know
Conway 2003
11. “We always overestimate the change
that will occur in the next two years
and underestimate the change that will
occur in the next ten.”
- Bill Gates, The Road Ahead, 1996
13. H.I.S. Co. has two Hen’na Hotels run entirely
by robots and plans to open 100 hotels.
Food deliveries
Check-in
Automated Tasks
Concierge
Porters
Cleaning
Lawnmowing
Room Service
Robot Trashcan
Robot fish
14. People
• “Net generation”
• 24x7 “mobile” workforce
• Knowledge via MOOCs
• Sharing not owning
• Sustainability
• Gigs and not jobs
Technology
• Broadband/wifi
• Smart phones
• Cloud
• Internet of Things
• Data/ML/NN
• Autonomous vehicles
• Smart Robotics
• VR/AR/Holography
• 3D printing/ALM
• Blockchains
Open Source IP
• Software
• Hardware
• Physibles
Convergence of…..
Finance
• Microlending/microfinance
• Crowdfunding/equity/P2P
• Cryptocurrencies
• Blockchains
• Mobile money and payments
• M2M and R2R payments
19. The New Multinationals
CGE Platform Database with Quid visualization, 2015
Over $3 trillion in firm market cap
Selected platform companies Emerging platform
clusters
2016 Parker & Van Alstyne, with Choudary – licensed under Creative
Commons Attribution-ShareAlike 4.0 International (CC BY-SA 4.0).
20. FIRM FOUNDED EMPLOYEES MKT CAP
BMW 1916 122,000 $56B
UBER 2009 7,000 $62B
MARRIOTT 1927 200,000 $32B
AIRBNB 2008 5,000 $21B
WALT DISNEY 1923 185,000 $172B
FACEBOOK 2004 15,000 $369B
WALMART 1962 2,300,000 $206B
ALIBABA 1999 36,000 $241B
Adapted from Parker & Van Alstyne, with Choudary, 2016, and updated January 2017
Something fundamental is changing
34. Community platform
Hierarchicalfirm
VS
E.g., Ford
~ Created by employees within
organizational boundaries
E.g., Local Motors
~ Created by community collaborators
regardless of affiliation
Teigland, Di Gangi, & Yetis 2012
The Flipped Firm: New model of value creation?
35. “Local Motors is the place for people to create
influential vehicles together.”
• 100xs lower capital cost
• 5xs faster production
37. Olli - 3D printed autonomous vehicle
with IBM Watson
https://www.3dprintingbusiness.directory/news/local-motors-prepares-serial-production-ollie-3d-printed-smart-vehicles/
From 25-30,000 parts to 50 parts
38. Point of Demand: Local and mobile factories
Integrating offline and online communities
Arizona
Maryland
Tennessee
Germany
39. No one owns everything,
Everyone owns something,
all resources reside in networks.
Adapted from Lévy 1997Image: Krebs
Access,
not
ownership
42. Omnichannel Business
-”Life events”
-Own customer relationship
-Multiproduct, multichannel
-Integrated value chain
e.g., ING, Schindler
Supplier
-Products/services
-Sell through another
-Low-cost producer
-Incremental innovation
e.g., Sony
Ecosystem Driver
-One stop destination
-Branded platform
-Great customer experience
-3rd party plug’n plays
-Matchmaker
e.g., Amazon, John Deere
Modular Producer
-Ecosystem plug’n play
-Niche plug’n play
-Adapt to ecosystems
-Continuous innovation
e.g., Paypal
MIT study: Four incumbent digital business models
Weill & Woerner 2015
Needs
Life Events
Demographics
Purchase history
Control over decisions on brand, price, quality, etc.
* 32% Higher growth
* 27% Higher profit margin
43.
44. Betting on “The winner takes all”
Immelt’s goal: “A top 10 software company” by 2020
• Predix: USD 1 bln investment
• Open-source model, e.g., Android
• 19,000 developers + 3rd party developers
• Software building blocks (e.g., blockchain)
46. Many new data platforms emerging yet the winner
will be the one that turns insight into customer
productivity and efficiency
47. Separate unit with
17,500 software
engineers and 160
data scientists
Connects over
300,000 devices,
e.g., wind turbines,
buildings, trains
Higher availability,
improved
performance and
security, and
decreased costs
Increased ability to
innovate products
and services
Connectivity
Innovation
Customer
Outcomes
Big data analytics
Source/Adaption: https://www.siemens.com/digitalisierung/public/pdf/Sinalytics-and-Digital-Services-Presentation.pdf
Know-how
Siemens’ Sinayltics platform
48. B2B digital leaders:
5Xs more revenue growth than their peers
B2B
B2B2C
Leadership
• Commit to digital at strategic level
• Create culture anchored on innovation and
execution
• Shake up organizational structure and metrics
to support digital aspirations
Digital operational excellence
• Create consistent online and offline
experiences
• Enable and empower sales force through
data
• Improve insight and decision making through
end-to-end connection of processeshttp://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/how-b2b-digital-leaders-drive-five-times-more-revenue-growth-than-
53. Decline in routine jobs, even after recovery
H. Siu (Univ of BC) & N. Jaimovich (Duke Univ), 2015
54. All jobs have been created within non-routine
Food service
Housekeeper
Programmers
Data scientist
Admin Assistant
Manufacturing
55. Jobs that did not exist in 2006
App developer
Social media manager
Uber driver
Driverless car engineer
Cloud computing specialist
Big data analyst/data scientist
Sustainability manager
YouTube content creators
Drone operators
Millennial generational expert
https://www.weforum.org/agenda/2016/06/10-jobs-that-didn-t-exist-10-years-ago/
59. “Flash organization” created with Foundry
staffing Upwork freelancers
Valentine et al., 2017, http://hci.stanford.edu/publications/2017/flashorgs/flash-orgs-chi-2017.pdf
71. Smart cities and microgrids
Brooklyn Microgrid aims to create a local, neighborhood-
powered grid that could operate in parallel to the main grid.
One of the appeals of a microgrid is its potential to provide
electricity to homes even if the main grid goes down. -NPR
82. Facilitating innovation at a makerspace at
Georgia Institute of Technology
https://smartech.gatech.edu/bitstream/handle/1853/53813/a_review_of_university_maker_spaces.pdf
85. If replace 1000
workers with
one more robot
Data from 1990 to 2007 in the USA
1) Employment to
population
ratio down by
0.18-0.34 PPt
2) Wages down
by 0.25-0.50%
D. Acemoglu (MIT) & P. Restrepo (Boston Univ), Robots and Jobs: Evidence from US
Labor Markets 2017, Natl Bureau of Economic Research Working Paper.
86. • Automation
• Globalization
• Rising
productivity of
select few
-Ryan Avent
Increasing social responsibility
An increasing
abundance of
labor
87. “We always overestimate the change that
will occur in the next two years and
underestimate the change that will occur
in the next ten.”
- Bill Gates, The Road Ahead, 1996
Scenario
Thinking