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From Processes to Products – The Next Digitization Wave

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September 5, 2014
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How could you bring a chainsaw into the digital world, such as e-cigarettes have done with (or to) the traditional tobacco industry? It’s the nicotine that people want, not the tiny burn holes on clothes or over-flowing ashtrays. It’s the tree people want to cut down or firewood readied, not the deafening noise or spattering chain oil. Maybe a microprocessor-controlled, lithium battery-powered laser that adjusts to the wood density, wetness and tree diameter? Think Jedi laser sword.

Gartner Inc. assures us that ubiquitous digitization will happen. “Every industry will be digitally remastered. Total digital reinvention seen so far in industries like music and photography will happen to all.”(1) If true, then it’s only a matter of time before everything is a giver and taker of data on the Internet of Things (IoT) … from cars to beach balls to dentist drills.

In a recently published report, “CEOs and CIOs Must Assume That Every Industry Will Be Digitally Remastered” Gartner Analyst Mark Raskino convincingly builds his case. He cautions boards of directors, strategists, CEOs and CIOs saying, “Digital business is not limited to information goods like music and books. It will blur boundaries so every sector’s products are in play, from tobacco to tennis racquets. CEOs and CIOs must convince their boards that digital disruption is a given, and act accordingly.”(2)

Most every company today has IT technology coming out its ears … front office, back office, production lines, warehouse systems, Internet marketing and sales, customer relationship, document management, you name it. Practically every function and operation is touched by technology, everything except the product or service it sells, which is walled in by technology. The company knows its product. It knows its competitors and their products. It has long-range lifecycle strategies for that product. It’s fully invested and it understands what customers want and expect from its product (or so it thinks).

The digital disruption may originate from within the industry and the companies that populate it. It’s more likely to come from an unknown, a start-up or an adjacent industry player. Or from a company in a completely unrelated industry, as happened in the music and book publishing industries.  Talk about industry disruption, everything from spin-off products, to new distribution models, to licensing law, to retail and more!

It’s a mistake, however, to assume that it’s because books and music are essentially information products to begin with and not necessarily “physical” is the reason why the disruption naturally occurred. Take 3-D printing, for example. In the 1970s the promise off paper-based disposable fashion never panned out. With 3-D printing, you may never again be able to say, “I have nothing to wear.”

For example, the Russian parliament banned all underwear made of synthetic lace earlier this summer, preventing the production and sale of the undergarments in the country. Russian designer Viktoria Anoka got around the ban by hiring a Moscow company, 3DPrintus, to 3D print a pair of lace panties for the company Lascana, which presented them at the St. Petersburg technology fair, “Geek Picnic 2014.”

The consensus was that the panties were not ready for Main Street-wear just yet – too uncomfortable – but it’s only a matter of time. Using more advanced 3D printers, small businesses, entrepreneurs and students will be able to create products that are heat resistant, chemical resistant, waterproof and clear with three different choices in more durable materials.

The Gartner report reminds us of seminal thinking on the part of Nicholas Negroponte. In his 1995 best-selling and highly influential book “Being Digital,” the creator of the MIT Media Lab drew the distinction between bits and atoms, the digital versus the physical.  It has been important to the way business strategists think about the impact of technology ever since.

It’s this line of thinking that CIOs must bring to the table. Analyst Raskino asserts that thinking digital disruption must be the default business strategy assumption. “Boards of Directors: Make digital disruption the default assumption. The burden of proof must be switched to those who say it cannot or will not happen.”(4)

It’s a radical notion that flies in the face of traditional business thinking, entrenched leadership, existing methodologies and institutionalized processes. In the long-run, however, it is also the approach that will win out. His advice to CIO is this:

“Educate management about digital advances, repositioning yourselves to transform the scope and purpose of IT in a business. In the longer term, the CIO position needs to grow to take more account of digital product and service innovation. For now, many CIOs are not themselves quite ready, and even if they are, those around them are not. So, the best way to close the gaps is by education. Consider taking executives on thought-provoking “field trips” — for example, the annual consumer electronics show (CES). Or, commission a local business school to provide short, tailored MBA-style education modules for executives. Drip-feed knowledge into the group by regularly inviting speakers to senior management meetings — for example, book authors or technology company executives.”(5)

Today’s CIOs are subject to a tsunami of change, expected to become active contributors to business success and revenue generation as models of information technology management evolve rapidly under their feet. Being an evangelist for bits versus atoms may be more than the business leadership are expecting from their CIOs and met with head-scratching or staunch resistance. However, if the notion of everything digital is in our futures, as it seemingly is, then this could be an unprecedented opportunity to change one’s stars.

(1)(2)(3)(4)(5) Gartner, Inc., “CEOs and CIOs Must Assume That Every Industry Will Be Digitally Remastered,” Mark Raskino, 20 August 2014.

 

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