But a slavish reliance on instinct and experience is not as well suited to a data rich and deeply interconnected world. It gives a monochromatic view of opportunities, and allows organisations to be blown along by the winds of their own history. If you do this, your destiny will be chosen by the many accidents in your history, and managers will be nothing more than passengers on an unpiloted vessel.
The solution is simple to enunciate. It involves focussing much more strongly on the future. And, critically, it involves seeking to look further ahead, to compensate for the challenges that come from operating in a fast moving environment. Does this sound counter-intuitive? If you drive down a motorway, you must look further ahead if you are to avoid any obstacles on the road in good time. Staring at the bitumen thirty feet in front of you would be suicide. So too it has to be in business. Focussing on the short term, in the form of quarterly earnings reports and near term budgets, simply increases the risk of a corporate crash and increases the chance of your organisation facing its own Nokia moment. As a reminder, barely a decade ago, Nokia was the clear world leader in mobile phones, with a market value of around $100bn. Since then, Nokia’s market value has fallen by some 90%. Meanwhile, over the same period, Apple re-imagined its business thanks to the relentless and innovative vision of Steve Jobs. This included entering the mobile phone market and launching tablet computers, becoming one of the most highly valued companies in the world as a result with a market value of over $470bn. Whether it can continue to innovate and focus on the future, of course, remains to be seen.
Some may say that this is much harder to do in practice. With technological change and innovation continuing to accelerate, how on earth can you reliably predict developments five or ten years ahead? As almost any entrepreneurial scientist and innovator will tell you, you very frequently can. Apple’s revolutionary smart-phone was envisioned by technologists a decade or more in advance of its launch. Its timing was driven principally by the miniaturisation of computers (in size and power usage), improving battery technology and the refinement of touch screens. Indeed Nokia had experimented with a product that looked to all intents and purposes exactly like an iPhone some four years previously. As another example, we know today that 2020 will see the advent of the next big revolution in televisions, a format known as Super Hi Vision. This has four times the resolution of the latest 4K televisions, and was already used to broadcast parts of the London Olympics. In essence, this is IMAX for the living room - unsurprisingly it eats bandwidth, so you will need a fibre connection for it to work properly. The date of its launch is known now as the pathway from lab experiment to fully commercialised product is well known.
With this in mind, I had the pleasure of attending the 2013 TCS Innovation Forum in Silicon Valley. From machine to machine communications, virtual architectures, the internet of things and computer learning to mobility, social media, cloud, big data and Bayesian statistics, a heady cocktail of themes were discussed. These are already well-worn buzz-words, not just in large enterprises, but also in day to day media commentary about many subjects. The implications of these trends are, however, much more subtle and will have profound implications for many organisations.
At the deepest level, the fundamental building blocks for any enterprise won’t change. There will still be customers, employees, suppliers, processes and decision-making. But where and how and why interactions occur and decisions are made will evolve dramatically. Social media and online inter-connectivity will accelerate, to touch many more areas of people’s lives, as the sophistication of the relevant products and platforms improves. These interactions will happen everywhere, all the time, showing the importance of mobility. And data will be gathered on almost everything. In passing, I note that this highlights the importance of understanding that big data is nothing more than a buzzword for a large bucket of information. What really matters is big analytics – using Bayesian statistics and other advanced statistical techniques to extract information, meaning and insight.
As a result, the mindsets of Boards, managers and employees must become fundamentally more flexible. Every individual must find ways to embrace continuing change. This implies a need for a dramatic socialisation of business processes at all levels – whether the transaction layer, the collaborative layer or the intelligence layer. The practical implications of all of this are entertaining to speculate about – dramatic changes in business models, service robots and drones delivering pizza.
The forum provided a compelling window on the importance of managing your business through the front windscreen, and not the side windows or rear view mirror. Corporate decision-making must become much more flexible and creative in exploring the opportunities that arise and in driving rapid adaptation. It is telling that the most spectacular successes in creating corporate value over the last twenty years have been dreamed up by college graduates (and dropouts!) in the proverbial garages, powered by a combination of instant noodles, red bull and venture capital, and unconstrained by historic experience the successful business models of the past.