Digital Shock- Charting the Digital Rapids Ahead

It wont be long before you can order a self-driving Uber with a tap on a button. Have you considered the impact this will have on the Taxi service industry.

But how have these technological developments changed the conversation within your industry - your company? How do your customers really feel about these fast-developing digital advances? Excited? Anxious? Both? Ready to adapt? Have you considered if there is a 'Digital Disrupter' out there in your industry. Are you prepared for the 'Digital Shock' that according to Michael E. Porter will happen to every industry and service out there.

This blog is a teaser for a book with this same title, that I currently plan to publish, in 2017 as a charter and playbook to navigating this 'Digital Shock'.

Today is akin to 1908 for the auto industry, 1965 for the computer industry, and 1990 for the internet and emails. The one big difference is that this disruption applies to every industry, product and service. Industry like what is happening in the Auto industry and the digitization impact of Tesla, product like what happened to the camera film and what digital cameras did to film and finally service like what is happening to the local cab service providers and the effect of Uber and Lyft.

Every great transition has the next one on its heels. Digital transformation is no longer just a fad of the silicon-valley tech companies, it has already become a survival mode for companies that want to exist by the end of this decade. Michael E. Porter talks about the opportunities of Digitization in his papers on 'How smart connected products are Transforming Competition' .

Most travelers experience a cultural shock when they travel from one rigid culture to another. This shock works both ways i.e. when someone who has never stepped out of a village in a remote village in India steps into San Francisco silicon belt. The same happens when someone who has never stepped out of the SF bay area lands in that remote village in India. Whenever any traveler goes from one rigid culture to another then the transfer shock is proportionally greater, to the rigidity of each culture. Rigidity is represented by our initial mental drag, our unwillingness, to change due to new inputs.

Our current social networks are harmonizing rigid cultures and smoothening not only the rigid cultural boundaries, but also the communications and micro groups with similar interests. likes and dislikes. The world is already hyper connected, and it will continue to only get better.

'Digital Shock' is about a future arriving faster than we can accommodate or adjust, even if we are familiar with its fundamental concepts. It is about being able to read the writings on the wall, even while not having a strategic charter or a roadmap to navigate effectively in this new digital world.

Traditional Polls and audits are now a thing of the past. They can no longer predict anything as if we look at the recent past.

Just as an reference my blog on 'IoT-4-Retail' reviewed the impact digitization is having on the Retail segment. Just a few days back, i.e. June 16th, Amazon announced their intent to buy 'Whole Foods' for around $14 billion. The immediate impact was that shares of Sprout, Safeway and other fresh food retail outlets took a nose dive already anticipating the pricing impact Amazon will possibly have on organic, fresh food and home delivery services. Also, as predicted in the same blog we now see mama-dragon Amazon now gulp down yet another 'brick-&-mortar' mammoth like Whole Foods in a single bite. This is an example of the 'Digital Shock', and the ripple effect it can have at an enterprise level in one of the prime developed economies. This exact example will have every food retailer, and their total supply chain rethinking their future strategies at this very moment. Just like digital disruption happens in real-time they need to readjust, and realign, in real-time too.

So here are high level recommendations for every enterprise, company, product or service manager and individual out there:

1. Start a Digital Transformation mindset by next Monday: Whether you are an individual, a start-up, an enterprise or an established and successful giant like Whole Foods. Whether you are a city, a nation or national leader. If you have not already started then start thinking digital. Learn from what happened to the Automotive industry due to Tesla, the Retail industry by Amazon. These use these examples to build your own digital roadmap to the future. Don't wait too long, and don't feel too comfortable as the 'King-of-the-hill'. Plan to become the digital disrupter before you get disrupted.
2. Business First and Last: Plan, Design, Build, Test, Run with business stakeholders and end users as constant partners. Think 'Design Strategy' think visual applications that are user designed, think final-user first and last. The digital world will be dominated by the players who don't sell what they have to customers, but design what the customers need and then  supply it to them. Though it sounds logically simple this is a fundamental shift in Value Chain optimization.
3. Read Michael E. Porter's two papers in HBR: On November 2014 HBR printed the first of the Michael E. Porter and James E. Heppelmann articles ‘How Smart, Connected Products are Transforming Competition’. In the same month, Scott Feldman, from SAP, myself and our esteemed speakers presented this in our ‘HANA-4-IoT’ event at our SAP Palo Alto, CA offices. At this event, we talked about Digitization and this new opportunity for companies and industries that were already changing the very fabric of how business had been conducted so far. The two key words at that event were digitization and disruption.
4. Read the message on the wall: Just like the song 'Sounds of Silence' by Simon and Garfunkel the writings are now written clearly on the wall. The message is clear. 'Disrupt or Be Disrupted' coined by John Chambers of Cisco and now being extrapolated by Forbes. Digitization has by now got binary. It's either 'on' or 'off'. Either your will remain competitive or not. Either you will fit into the world already around us or you will not.
5. Informatics is the new center of the digital universe: Reports are numerical, rear-view representations for individual operational users. Analytics are more graphical, summarizations of users performances for management and executives. Informatics are the executive and final end user highly visual, real-time views of exactly what you need in your environmental context. The digital economy is being driven purely by data. However, data is only the coal while Informatics is the diamond that we need to deliver. Data is the raw oil, Information is the filtered gasoline that helps drive specific engines better. In the digital world data alone can become a huge hindrance unless we can extract, filter and contextualize business specific value from that data. Chambers stated that the digital era would replace the information era. However, at the heart of the Digital universe is Informatics which is 'real-time-contextual-information'. The goal is to give the customer only what they need for a persona based real-time decision, no more and no less. Think like an Uber app when you call a ride - precise information with the no-more-no-less simplicity. The digital era will produce a lot of data, in fact too much data. If every single pixel on this screen represents your available data then the a few pixels in the stop sign after this sentence represents data for  informatics. So the answers will not be in collecting lots of digital data dust but the diamonds we can extract from the dust. It will not be the digital crumbs we give away for free today but the destination they collectively enable some decision roadmaps to deliver.
6. Don't simply become statistics: In the same interview where the term 'Disrupt or be Disrupted' was coined, John Chambers also stated that as many as 40% of companies existing today will not exist in the next two decades. Reality check now indicates that this might happen sooner than later. It would not be wrong to assume that 40% of the companies will not exist in the next decade. Also, this could happen to some the most successful enterprises as they will become the ideal acquisitions for the many digital mama dragons that are starting to flex their digital power. These will be the lucky ones as they will have gained in the exit. 98% of the companies will simply be out-maneuvered, out-gunned, our-priced and out digitalized but new ideas. Take the example of traditional ERP HW and Hosting partners. Their greatest threat today is the cloud offerings from Amazon, Azure, Google and the ERP partners themselves. Each wanting to grab a larger share of the customer wallet. Don't become the 40% that did not think the digital world was any threat to their way of life, become the 1% that have become the digital disrupters.

The 'Digital Shock' wave has already started. A very few are already ahead of the curve and have started harvesting the digital nuggets going from being Unicorns to Dragons to Mama-Dragons. A few have commenced their digitization journey and fewer than 30% of these with a formal user driven design-strategy approach (According to Gartner), i.e. the ones that will actually succeed.  Some are already feeling the impact of the Digital-ripple effect. Others will feel the digital ripple effect earlier than others. Still others will invest into digitization as a competitive differentiator and plan to 'Become the disrupters' so they don't get disrupted. 

No matter how we look at tomorrow Digital IoT is here, to be followed by IoE and a very hyper-connected future where the connected with network and prosper and the disconnected will remain so.

Takeaway:

1. Reconsider your digitization charter and roadmap with an end-user centric structured program

2. For SAP customer 'Simplify Decisions and Rationalize Processes' before jumping into open waters.

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ABOUT HARI GULERIA I VP SAP HANA Business Solutions I PrideVel

Supporting Analytics & Digitization design and decision excellence through advisory & board work.

In our new digitized world of information and decisions Hari Guleria is a globally renowned executive leader in the SAP ERP analytics world, an author and a publisher of blogs and white papers. He is best known for permanently living in the future and partnering with actual end-users prior to designing any solutions that are consistently future compliant. Hari is an engaged, team oriented and actual-user benefit focused global solution leader and has been in startup phases across his many tenures and designated divisions, i.e. in IT, Analytics and building the next generation Digital Enterprise, a perfect fit both for mature global enterprise as well as start-up ideas and companies.

Hari is the author of ‘BI Valuenomics- The story of meeting business expectations in BI’ a book far more relevant today than it was in 2010 when it was published. He is currently working with Bill Inmon the father of Data Warehousing and TR Palle the Global Business Architect at Genentech/Roche to release a new book on ‘Analytics in the digital Era. And another book called ‘Digital Shock’ as a roadmap to digitization excellence

With over 10 years of executive level business experience followed by over 20 years of IT consulting leadership experience Hari has been a Business focused technical expert helping companies meet, and often exceed, their business user expectations. He continues to assist Fortune 1,000 companies crystalize and articulate their decision systems and remodel them for the disruptive digital economy, Hari applies his business, consulting experience, and structured scientific skills to provide consistent leadership in deploying vision, strategy and long term-planning that assure high performance information delivery while enhancing competitive decision enablement.

Prior to this Hari worked at three leading IT services companies, first as the Director for SAP HANA Solutions at HP Enterprise Services for the Americas, before that at HCL Axon as the Director for HANA Analytics for North America, and prior to that with SAP America in their Value Realization/Engineering group. In all assignments Hari provided business focused design solutions for IT projects as the right-hand advisor to the IT project owners like the CFO’s and the CIO’s. Hari worked closely with the ‘C’ suite, Program directors, Project Team leaders, External Partners and customer business leads with clear dual focuses. The first being business benefits and the second was optimized TCO deliverables, i.e. “Highest Quality at Lowest Cost”. Hari may be contacted at [email protected]