Today, we have some very important macro trends that we’re defining as 2.0 phases. Management, IT, enterprise, capital and economics are experiencing tectonic shifts in the way they are defined, measured, analyzed, discussed and acted upon. We see these trends forcing executives to rethink the strategies and tactics needed to properly address a whole new range of challenges. The very underlying philosophies, principles and practices of business as we know them are in transformation. People are questioning and scrutinizing assumptions, assertions, common wisdom and best practices for applicability, efficiency and efficacy in a brave new world.
I’ll share with you some quick thoughts on each below; but understand that this site serves as a continuing dialogue for each of these trends.
Probably the most significant technology development in the past decade has been the rise of smartphones and tablet computers, as well as the mobile computing environment these devices have enabled. Mobility is just one factor that has led organizations to think about new staffing models. With other efforts in online collaborative tools and communities, some very interesting things are taking place in the world of management. Technology will be seen as a key enabler for new management models to emerge. The great roles of 20th century management will shift in the 21st century — from planning and directing to preparing and mentoring; from staffing and controlling to engaging and framing; from hierarchical and authoritative sources of prerogative to broad relationships and crowd-sourced influence.
Within IT, we’re thinking about how we can change the perception of IT as a CapEx line item toward more of an OpEx spend, meaning the department is viewed as a way to drive revenue, and not just an albatross of a cost center. These decisions are demonstrated in different ways, for example, the move away from building out large data centers to finding vendors for cloud solutions, and instead of building home-grown software systems, companies are looking at external vendors to manage and/or host enterprise management systems like payroll and HR tools. Along with a shifting focus and priority from transactional record keeping and individual productivity, the whole IT paradigm is moving toward group enablement, collaboration, choreography and orchestration to enhance creativity, problem solving and innovation.
Enterprise 2.0 isn’t the name of the space vessel found in the reboot of the Star Trek movie franchise but rather the different ways we’re looking at how the organization is structured and behaves — how work flows and is organized and addressed. We’re seeing a change in the belief of how to run an enterprise effectively. In the past we thought efficiency was achieved through scale, and for the most part, like with Moore’s Law in the semiconductor industry, that is still true. However, the flexibility to meet new challenges, attack new markets and adjust to changing economic conditions is proving to be a luxury in this rapidly changing business environment.
It is also a reflection of the reality, often preached but seldom practiced, of sticking to what you know best. Do only those things that create value for your customers where you are best in class — or that you are required to do for legal or regulatory reasons — and then become a customer of someone else for everything else.
When we talk about Capitalism 2.0, we’re really saying the way ideas get funded has dramatically changed. We’re used to the traditional startup story: an incubator recruits a couple of people to come up with the next great product (or we picture a guy in a dorm room building computers), and the company raises funds based on arbitrary market projections and disruption models. Or within a large company, the R&D teams would produce a new product and then the corporate inertia would see that “cog” to market.
Today, we have Kickstarter and FundAnything that use consumer collaboration to bring new, interesting, and intriguing products and ideas to life. Instead of having funding gatekeepers making judgments on whether new ideas have merit, the crowd speaks and provides the funding necessary. I think we’ve taken for granted how this amazing, collaborative capitalism is changing the model for how companies raise and fund projects and products.
We are also seeing the evolution of the notion of value, which incorporates the costs of unintended consequences and “free” consumables, like time, air, water, quiet and their impacts on the future. We also see great value being placed beyond line items on the balance sheet, for example, things like happiness, corporate reputation, purpose, social contribution, innovation premiums, green premiums and others. This was best described in the HBR article on runway capitalism, which compares concepts like ROI and ROA to peacock feathers — i.e., mating selection criteria taken to an extreme that has put the species at risk.
One thing the last couple of years of market volatility have taught us is that “normal” doesn’t really exist anymore. With the energy, financial, healthcare and technology markets under continuous pressure, the historical way we’ve viewed winners and losers has changed. The only constant in life is change, and the same can be said when we talk about economics. Scale, efficiency, productivity — all good things — are driving more and more industries into death spirals of commoditization. With multiple technologies eliminating traditional economic frictions of time, space and the information differentials between buyer and seller, investor and investee, new ways of achieving differential advantage, and the resulting margins have to be sought out. The very nature of the value of a product or service itself is changing, becoming more reliant to context than actual features, functions, capabilities and even price. Availability and use have begun to trump ownership and control.
This strategic migration between two approaches — CapEx versus OpEx for IT and scale versus flexibility for enterprise — is ripe for exploration and discussion. Economics 2.0 is important because true innovation takes place where the two options intersect.
Which of these trends are having the greatest impact in your organization?