Digital Is a Mindset

whistler DIGITAL IS A MINDSET whistler Digital is a Mindset ISSUE #3 Phil Akilade whistler Contents Introduction 7 ‘Digital’ and the digital revolution: 8 Is it really so different? 8 What’s behind the numbers? 10 How well are people adapting? 12 Moore’s Law and the Big Six Technologies 14 The combined impact of Moore’s Law and the Big Six Technologies 15 Sensors 16 Big Data 19 Software 20 Networking 23 Mobile 24 Cloud technology 26 Digital technology capability defined 28 Why the productivity stagnation? 30 4 Exponential Organisations (ExOs) 32 What is an ‘Exponential Organisation’? 32 What is a Massive Transformational Purpose (MTP)? 34 How are ExO’s structured and how do they think? 35 External attributes 36 Internal attributes 38 Digital strategy execution – How do ExOs do it? 42 What’s preventing leaders from taking full advantage of the digital opportunity? 44 Why is ‘digital’ a mindset and not just a technology challenge? 46 Digital leadership action plan 48 Conclusion 52 References 54 5 whistler whistler 6 Introduction Humans today have access to more technology and are ‘The World is Flat’ author Thomas Friedman, in his more connected than ever before. Isn’t it ironic, then, 2016 book ‘Thank You for Being Late’ points to that Western economies are struggling through one of the exponential rate of change digital technology is the longest periods of productivity growth stagnation driving. He contrasts the breath-taking pace of digital this century? with the more linear ability of people, businesses and government policy to keep up and adapt to change. Every workforce is being impacted by the transforming effects of digital, globalisation and the relentless march In this paper, we argue that one reason why productivity of automated robots. Over 50 years ago, Moore’s Law may have failed to keep up is that business leaders often detailed how computing power doubles every 18 to 24 mistakenly view ‘digital’ as a technology challenge months.1 Since then, virtually everyone living on the rather than one of mindset and cultural change. planet today has been personally impacted by the rapid rate of technological change. NKD believes that to overcome this productivity plateau we need to help leaders change the way they It is so commonplace to hear businesses and individuals think about the digital opportunity. talk about being swamped and overwhelmed by the pace of change today that it no longer raises anything 1 G. E. Moore, ‘Cramming more components onto integrated circuits’ in Electronics, more than a shrug. However, it’s now clear that the Vol. 38 No. 8 (April 1965) workplace, the workforce and the nature of work has been revolutionised by one almighty digital explosion. 7 whistler 'Digital'and the Digital Revolution Is it really so different? How many times have we heard – ‘this time it’s different’? Well, this time it is, because some really strange things have been happening in the world of business. 8 Airbnb, the world’s largest renter of accommodation, has more rooms than all of the biggest hotel groups combined. Airbnb is valued at $31 billion, is twice the value of the Hilton group founded in 1919, runs on just 1% of its employees, has been in existence for under ten years – the company doesn’t even own a single room. Uber, the world’s largest taxi company, is less than seven years old, valued at approximately $70 billion, and doesn’t own a single car. Alibaba, the world’s most valuable retailer, has no inventory. Facebook, the world’s most popular media owner until very recently, was founded on user-created content rather than its own. 9 whistler What’s behind the numbers? Many of the reasons go back 50 years to the predictions of Gordon Moore in 1965. Moore made a wild stab at predicting that computing power would double every 18 months and come down in cost at the same time.2 Turns out, he got it just about right, and ever since then computing power has been doing just that. To put this into context, imagine if a VW Beetle from 1971 had improved as much as Intel’s first microchip – it would today be able to travel at 300,000 miles per hour, with fuel consumption of 2 million miles per gallon, and the car would cost 4 pence in today’s money.3 2 G. E. Moore, ‘Cramming more components onto integrated circuits’ in Electronics, Vol. 38 No. 8 (April 1965) 3 Fortune, ‘Intel Celebrates Moore’s Law…with Gordon Moore’ (May 2015), accessed 18 April 2018 10 006 17 To illustrate what’s been happening to computers themselves, in 1997 the world’s first ‘supercomputer’, called Red, was the size of a tennis court, it used as much electricity as 800 houses and cost $55million dollars. In 2006, Sony launched a supercomputer equivalent to Red which they called the PS3 (PlayStation 3), and it sat under the televisions of millions of people around the world.4 When something doubles in value consistently over time, we call it exponential growth, and it ends up delivering some incredible results: double the number one and keep doubling the result – after 30 doubles you get to above one billion. Most of the ‘exponential’ companies described here have benefited hugely from the results of Moore’s Law, and of course, it’s still happening. 4 See: J. Lanchester for London Review of Books, ‘The Robots are Coming’ (March 2015), accessed 18 April 2018 11 How well are people adapting? whistler Craig Mundie, a supercomputer designer and former is when the whole environment is being altered so Chief of Strategy and Research at Microsoft, defines quickly that everyone starts to feel they can’t keep up.”5 this moment well: To put this concept into a more visual context, Friedman “When the rate of change eventually exceeds the quotes a conversation with Eric Teller, the CEO of ability to adapt you get ‘dislocation.’ ‘Disruption’ is what Google’s Alphabet X division, which produces the happens when someone does something clever that Google self-drive car. Teller says: makes you or your company look obsolete. ‘Dislocation’ " The accelerations in Moore’s law and in the flow of ideas are together causing an increase in the pace of change that is challenging the ability of human beings to adapt." 6 Eric Teller Google’s Alphabet X division CEO We are here Human Adaptability Rate of change Technology Time ‘The Astro Teller’s Graph’ from T. Friedman, ‘Thank You For Being Late’ (2016) 12 At first, the speed of technological change is very us cultural angst… it’s also preventing us from fully gradual, but as innovation and scientific discovery build benefiting from all of the new technology that is coming one upon the other over time, the line swoops up higher, along every day."7 representing a faster rate of accelerating change. Teller explains that, 1,000 years ago, it might take 100 years Furthermore, our leaders are just as affected by the for anything dramatic to change, but as time went on dislocation of having to adapt to, and absorb, the new technologies were being introduced and becoming changes as everyone else. In fact, since most senior mainstream in a few, short years. leaders on the boards of FTSE 250 companies are more likely to be baby boomers, the pace of technological Teller then plots the straight linear line representing change has threatened to leave them far behind! ‘Human Adaptability’ to change. He explains that our adaptability began at a higher level than technological 5 C. Mundie in T. Friedman, ‘Thank You For Being Late: An Optimist’s Guide to Thriving change. However, he argues that the pace of in the Age of Accelerations’ (Penguin, 2016) technological and scientific change has outstripped our 6 E. Teller in T. Friedman, ‘Thank You For Being Late: An Optimist’s Guide to Thriving in capacity to absorb those changes. the Age of Accelerations’ (Penguin, 2016) 7 E. Teller in T. Friedman, ‘Thank You For Being Late: An Optimist’s Guide to Thriving in the Age of Accelerations’ (Penguin, 2016) Teller further argues that the gap between the black square and the ‘Human Adaptability’ line is “causing 13 Moore’s Law and whistler the Big Six Technologies The combined impact of Moore’s Law and the Big Six Technologies Unknown to many of us, over the last ten years, digital capability has been increasing at an exponential rate due to the combined impact of Moore’s Law and the development of approximately six key technologies since 2007: Sensors Big data Software Networking Mobile Cloud technology These technologies have been converging and interdependently supporting the growth of each other, and they have been driven by the innovation, leadership, collaboration, learning, teamwork and entrepreneurship of digital visionaries. It wasn’t too long ago that scientists and the general public would have laughed at the prospect of robots taking over skilled human jobs. Driverless cars, algorithms, unmanned drones and various other technologies have destroyed that belief. So, what has changed over the last ten years that makes this world of robots so much more real? 15 whistler Sensors Humans have five highly developed senses that help time and acted upon. Developments in materials science them to notice changes in the environment. Likewise and nanotechnology have developed sensors that are digital technology has rapidly developed the capability now so small, low-cost and resistant to heat and cold to notice and track changes in a very similar way. Anyone that they can be applied to almost any situation. Sensors who has used a Fitbit or Apple Watch has experienced can now even be painted onto engines, buildings and the feedback from the sensors in these devices.

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