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Will your business survive the digital revolution?

There's a big risk in failing to recognize and respond to the magnitude of technological change ahead.

Over the last few years we’ve watched in giddy disbelief as a web-based social network launched from a dorm room at Harvard University unexpectedly found its way to be an enabler of a Middle East uprising. We’ve seen how new types of media have propelled people and events into the spotlight and even helped elect a U.S. president. We’ve looked in awe as mobile devices connected to a ubiquitous network have brought global commerce to the most remote parts of the developing world. We’ve seen 100-year-old businesses vanish as cocky upstarts replace their once unshaken dominance. We’ve delighted as citizens have been empowered by a new ease in which to leverage recently liberated stores of data held by governments.

With just these few observations it’s clear to all of us that technology is no longer just in support of our lives and organizations; it’s taking a commanding and empowering position. And it’s vital that we all fully understand just how profound these changes truly are (and will be). The very survival of your organization likely depends on it.

Are we at the start or the end of this technology revolution?

We observe these incredible events unfold and this may lead us to believe we’ve reached a new pinnacle of technological innovation. Many of us might believe that we’re peaking in our capacity to make amazing things happen. To them I say: we’ve barely even started.

From economics to democracy, from health to entertainment, from retail to education, and everything else in-between, something remarkable is happening.

In my view the events described here are just the beginning of a seismic shift in our human experience. Indeed, these innovations are not reserved for a single nation or continent. This technology-based revolution is the first to quickly reach and impact every corner of the planet.

Every generation believes it lives through remarkable and changing times. And that is probably true. But the large transformations, most recently like those of both the agricultural and industrial revolutions, don’t happen that often. These changes are a railroad switch that shifts the course of human destiny. Some have coined our era as the information revolution. But the emergence of the information age has merely been the precursor and a glimmer of things to come.

The true revolution is the convergence of many things. Revolutions require more than just a few elements to be in place. Historically they have required a unique alignment of qualities such as economic and political conditions, readiness for change, demographics and a catalyst.

We see much of that today. Of course, today the catalyst is the Internet. It’s also the ease in which so many of us can now produce digital innovation (creating new value through electronic, non-analog means). It’s also about the availability of low-cost, ubiquitous global communication networks with an abundance of devices connected. It’s close to zero-cost cloud-based storage. With low cost storage comes the easy retention of massive volumes of data and when it’s coupled with the fact there are so many opportunities to collect that data; new uses and value can be derived from it.

There is a new world order that is unique to our time that is also enabling this change. Not least the emergence of prosperity in many part of the world and the breathtaking rise of the BRIC nations and others. This prosperity is creating a new class of educated, global participants. This means more competition and it means more innovation. It’s all these things and more converging to produce a significant technology-based social and business disruption.

As this technology revolution unfolds, does your business have a survival plan?

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The evidence is clear

The signals are in both the destruction of existing paradigms and in the creation of completely new ones. We’re watching entire industries disappear or be reinvented through digital transformation: newspapers, books, movies, music, travel agents, photography, telecommunication companies, healthcare, fund-raising, stock-trading, retail, real estate, and on and on.

Digital innovation has few geographic boundaries, so the disruptor can emerge from almost any place on earth.

Completely new models are emerging: location-based services, mobile apps, gamification, payment systems and new forms of payment, cloud computing, big data analysis and visualization, recommendation engines, near-field communications, real-time knowledge, tablets and other new form factors, augmented reality, gesture-based computing, personal medicine, large scale global social networks, microblogging and more. Many of these did not exist five years ago and many more will exist in the next five years. In fact, the next major disruptor is probably already underway. This kind of change is equally exciting and terrifying for organizations.

Why it is different this time

When the Walkman became the Discman, the music industry flourished. But when the digital MP3 player was introduced, the music industry was fundamentally and forever reinvented. Digital transformations are not subtle or calm. They are equal measure painful, chaotic, and exciting.

When mobile phones were introduced they enabled people to untether themselves from a fixed wire and talk almost anywhere. That was useful and convenient. But when smartphones freely enable the coordination of people and events that facilitates the overthrow of a corrupt government, this is not business as usual. That’s a fundamental shift in how humans communicate and coordinate their activities.

It will be a rough ride

Sure it won’t all be rosy and bad people will do bad things using more of this technology. But that’s certainly not news. The vulnerabilities will grow but so will our ability to fight attacks. Opportunities in security will remain in high demand.

There will also be booms, bubbles, and busts. That’s a normal part of the economic lifecycle. In fact, outside of the obvious pain it causes, a bust can be a valuable response to irrationality in the market. We will see many of these cycles through this transformation, but I believe we will net out with a continued exponential growth in digital innovation.

The big stuff is yet to come

When you observe how digitization causes significant economic restructuring and the emergence of completely new forms of business, and you factor in an entirely new level of social connectedness, it’s hard not to conclude that big things are ahead.

It’s also easy to be unfazed by the digital change underway, particularly if you’re working deep within it. In addition, it’s equally easy to become fatigued and even cynical about further change. But stop, elevate yourself above the chaos and noise, and the digital transformation is a palpable societal disruption.

At the heart of this blog is not a regurgitation of change that many of us already recognize and embrace; moreover, it’s about urging each one of us not to underestimate this transformational shift. It’s also neutral on the subject — but recognizes — the social and economic negatives that may result. Big shifts like these do evoke, for example, strong feelings of nationalism (somewhat ironically). But I’ll steer away from this subject for now.

Failure to anticipate, prepare and respond sufficiently is a significant organizational risk. In other words, delivering your product or service to the market of yesterday and today without constantly exploring reinvention for the market of tomorrow may be certain business suicide. And while that’s largely always been true, it’s seldom been so necessary and urgent.

Once we recognize the magnitude of change that digital innovation is causing and may bring in the months and years ahead, it will help us to think bigger and to think in ways that may previously have seemed absurd.

As inventors and facilitators of the future we would do ourselves a great injustice to underestimate the change.

The digital revolution: my own personal experiences

Let’s just take a quick look at my world for a moment. In many areas of my life it’s fascinating comparing how I did things in 2001 vs. how I do them now in 2011. By the way, it’s worth noting that while I immerse myself in technology and innovation through my work, I’m not particularly unique in the way I use technology outside of work.

So let’s take a look at some of the changes over the course of 10 years: I no longer wear a watch. No need, I get time from my smartphone. I got rid of my landline phone. My phone is my smartphone. I never go to a bank. Done online. I don’t know anyone’s phone number by heart. I select a name and my phone dials the number. Outside of a radius of a few miles, I don’t know how to get anywhere anymore without my GPS. I never use a map. I barely mail a letter. My use for stamps is diminishing. I seldom print anything. Everything that can be reserved, I do online. I don’t watch scheduled TV. I watch shows off my digital video recorder or computer when I want (in HD, no less). I use my smartphone for less and less voice calls. I text. I read, take classes, post photos, write, research, play, watch movies, listen to music, comparison shop, order insurance, complain and more all online.

I’m pretty sure your experiences are fairly similar.

Perhaps it is a little bit of an exaggeration, but I mostly only emailed and consumed static content online in 2001.

Almost every one of these areas represents an industry. And as a result of these enabled behavioral changes over the course of a mere 10 years, within these industries many organizations have been created and destroyed.

If this kind of transformation can happen in the past 10 years, with everything we know about how things are trending, what might our lives look like in 10 years from now? While not necessarily a novel question, I’m simply suggesting each of us are being forced to think bigger and more innovatively than ever before about the realities and possibilities of the future.

So what should organizations do?

I’m confident most enlightened organizations have some form of a strategy in place. That’s good news. For those that don’t or are hesitant, it’s time to act. In either case, the following are just a few fundamentals worth considering:

  • Recognize the magnitude of the digital revolution in acceptance and in action.
  • Invest in understanding how your organization can anticipate and respond quickly to change.
  • Monitor and interpret trends and new technology entrants.
  • Audit your vulnerabilities and score progress and risk on a regular basis.
  • Prepare by taking greater risks.
  • Innovate as standard practice (this doesn’t just happen, you need a strategy).
  • Make bold changes in order to continue to succeed when disruption is a certainty.

Technology used to be the domain of a few. Now it’s the fabric woven into how we all live, work, and play. Today it has the power to create and destroy value in an unprecedented manner. That’s a big deal for every organization.

It’s likely a very big deal for you, too.

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  • Kathu Sierra

    Minor comment… when you said this:
    ” I use my smartphone for less and less voice calls. I text. I read, take classes, post photos, write, research, play, watch movies, listen to music, comparison shop, order insurance, complain and more all online.” (which I think describes most of us)

    It’s clear that this means (today) you are doing all of this sitting in front of a screen. Whether in lean-forward or sit-back, it still means… sitting. The deadly side-effect of bringing everything to our screens is that we have far less reason to move in physical space than ever before, and if the studies are valid, choosing to work-out once a day offers almost no protection.

    If sitting in a chair all day is shortening our life span, than those of us who produce apps might want to allocate time, energy, resources, talent, etc. to the campaign against sitting. We need, desperately, to innovate ways to get people to return to a more physical lifestyle, and since it is nearly impossible to work at a screen AND be moving around, it will not be easy. We need a lot more than standing and treadmill desks… we need to change the culture of sitting-to-work, or we will look back at our glorious tech revolution and realize we were, literally, destroying our physical bodies in the process.

  • http://mediamyopia.wordpress.com Ton Veldhuis

    Dear Jonathan,

    Very good post. Thanks! I completely agree, except for a few minor details.

    But it is about the fundamental shifts in just one of the shock waves that are interacting these days. There are others as well. To start with: the crisis in our financial and thus economic systems (or should we define it as the birth of New Capitalism). The power shift from the West to the East, the demographics crises, the end of fossile fuels, the rise of what one could call the Green Economy.

    The biggest question these days I have is how all of these major shock waves interact, how they influence each other. Take just one example. What will be the effect of a new collapse in the international financial world on the acceptance of new technology? What is the effect of all the unrest and anxieties on the ability to change and innovate?

    I don’t have the answers, but it sure is a Big Question. Maybe outside the direct scop of this blog, but interesting enough to share. I hope.

  • http://radar.oreilly.com/reichental/ Jonathan Reichental

    Hi Kathu: Thanks for your comments. I really think the health issue is an important one. While technology is enabling, it may also be disabling. Definitely a space to further explore.

  • http://radar.oreilly.com/reichental/ Jonathan Reichental

    Hi Ton:

    You are absolutely right! These major shock waves play a key role in the overall shift we are experiencing. You might enjoy this video: http://oreil.ly/jawUT8 where I explore some of these macro trends too.

  • http://www.thefourthrevolution.org Jeremie Averous

    Jonathan, I more than fully agree with you. So much that I just wrote a book about it – the Fourth Revolution (after speaking, writing = agricultural revolution, and broadcasting = industrial revolution). What you basically describe is a shift from the broadcasting age where you were just a recipient of information, to a Collaborative Age.

    Of course organizations need to shift completely their mindset from the efficiency mindset of the Industrial Age Corporation and Bureaucracy to the Opne, Fluid organization of the Collaborative Age. And most dinosaur organizations won’t, just because their executives don’t want to loose control!
    For organizations, opening up and co-creating with their stakeholders, distributing value to them, is a must today. Communicating internally through unstructured social networks is also necessary. And have a fluid organization, built around temporary projects.

    The next decades will be decades of suffering for those organizations that won’t adapt – and great opportunities for those that will.

    Welcome to the Fourth Revolution!

  • http://radar.oreilly.com/reichental/ Jonathan Reichental

    Hi Jeremie: I look forward to reading your book. Thanks for letting me know about it.

  • http://harounkola.com Haroun Kola

    Great article, I’m in one of the BRIC countries, and getting into the field that you first worlders have enjoyed up to now, means its exciting time as we come online enmass

  • Ian Graham-Parker

    Great Read! And very valid points. My belief is that the revolution started the day that Samuel Morse and co tapped out the first communication over telegraph. That was the beginning of long distance and serial communication. It would be fascinating to see a graph showing education standards and innovation rates since 1845.

    On another note, as IT Manager of a medium sized software/development company in South Africa, it is still terrifying to see how little money is being spent on basic infrastructure by the public and private sectors. Everyone is spouting the need to embracing this revolution, but few are prepared to take the leap. The belief is that the risk (financial and operational) is simply too great.

  • Joel

    It’s like our friend Ray Kurzweil tries to explain, Jonathan, and we who MIGHT understand the impact must also understand that, according to Ray, there is a fundamental flaw in our brain that does not allow us to fully comprehend exponential growth.

    Your article is excellent and extremely relevant, but in my mind, I think the past 10 years will now be compressed with the same amount of progress happening in the next 2-4 years instead of the 10 years all that took.

    10 years from now is EXTREMELY hard to imagine, nevermind plan for. I think the most important point is that we must remain adaptable, open and agile such that we can effectively handle the future as it speeds toward us – ever more quickly.

    Keep writing, Doctor; such that I might keep reading.