We’re about four decades into the personal computer era, two into the age of the web and one into the time of smartphones. The next decade will bring in 100x more computing power at our disposal. Companies have begun following the path to “constructive destruction” in this digital era. And would have to further understand the implications of these developments that can make the difference between thriving, merely surviving and perishing.
As executives, we will have to navigate successfully, amongst these technically disruptive times, to enable an ecosystem of transformation and growth. As technology enables us to access accumulative knowledge of our humanity, we need to ask ourselves – what would we do with this technology? In the book “Machine, Platform and Crowd”, Andrew Mcafee and Eric Brynjolfsson describe the rebalancing that companies must do to create and capture value. Let’s explore these factors that are enabling companies to shape successful digital strategies for the future.
Are we still relying on intuition to decide?
There are studies that suggest that humans are inferior in decision making than their machine counterparts. The idea of biases penetrate in the case of humans that either affects the decision or the heuristics. Machines are better off with judgement but are prone to inaccurate or unethical algorithms if fed with biased data or a completely new stimulus. Also machines lack human-like common sense but intelligence transfer to machines, through machine-deep-reinforcement learning, has gained momentum with more specialized hardware, data and algorithms. Although multiple businesses have leveraged this to virtualize processes and incorporate digital tools into conventional setups – for example Amazon’s “suggested items” algorithm, the fact is that computers don’t exactly understand human conditions and hence their independent decisions add little value in the real world. Hence companies will have to consider resynchronization of human and computer based acumen to set up a data-driven decision making culture in order to use technology to their advantage.
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Are we aware of the powers of a digital marketplace?
The internet has redefined how traditional goods and services are available to a user. For instance, a ride across the town or news about your local vicinity is up for grabs through a digital platform connecting a buyer and a seller. As these platforms become widespread with time, companies are looking deeper into these digital dynamics that continue to reshape and drive firms. Firstly, platforms demonstrate direct and indirect network effects that not only affect the demand and supply economics but also promote the concept of compliments, which enables platforms to exercise control beyond a company’s sphere of influence. Secondly, platforms are spreading into physical goods and services through online-to-offline models, also known as phygital or O2O models, which permits it to control user experience, regulate a company’s inventory and collect intrinsic data to optimize matchmaking. Lastly, platforms practice combinatorial innovation which allow them to become marketplaces, awarding them with ecosystem building opportunities. This makes it imminent for companies to revisit their value propositions in order to either collaborate or/and innovate independently as powerful platforms of the future will have the ability to make or break brands.
Are we using customer networks to our advantage?
Managers often focus on “customer feedback” while planning a new product. This is because getting the market’s feedback about an offering not yet launched is possible in the digital era. Companies preparing themselves for the future are using the same analogy to plan their organizational strategies with the help of a global network of participants enabled by the digital ecosystem. These networks have become increasingly relevant as they use technologies to solve problems and build pertinent products – without much interference from the organizations. Examples include manufacturing capabilities like 3D printing and crypto currencies such as bitcoin. Such decentralized applications have been gaining massive popularity as they enable users and companies to work alongside each other at lower costs. But they are likely to collapse as the control shifts from individual contributors to polarized communities, affecting the basic appeal of such initiatives. Companies, hence, would have to look for smart ways to work along with customer networks to discover better problem solving strategies for shared interests.
There has not been a better time to produce a good or service that can leverage the global digital infrastructure and reach billions of customers to create and share prosperity. The task of combining tech with human skill can lead to a more sustainable and productive business ecosystem that thrives on purpose rather than fear. Companies, hence, will have the opportunity to shape how the society will use and benefit from technology & its applications.