Author: Marizanne Knoesen
The world is changing rapidly and those who investigate potential future scenarios can prepare themselves for the oncoming waves of change. INNOVO recently came across an excellent report that informs its business and the business of its members. The report, a 2012 Economist Intelligence Unit white paper discusses a key theme of our age: "The Future of Technology Disruption in Business".
The report looked at the potential ways in which technology will change organisations by 2020. The main findings of the report are summarised below.
From the outset, one has to understand and grasp the following:
Contrary to the perceptions of many, technology in itself is rarely the source of a major new business disruption. Rather, it is companies combining changing technology and new business models to outperform rivals. Although a revolutionary technology may emerge, it is more likely that disruption will be caused by a technology that is already in existence and that is applied in new ways.
Technologies by themselves will not bring about improvements in models or operations; for this, the business processes being powered by technology must also undergo change.
New technologies and processes will only be as effective as the people who use them. Failure to appreciate the cultural obstacles to technology-led change will remain a recipe for falling behind.
Furthermore, it is important to note the three megatrends that shape the opinions of the survey respondents. Corporate leaders surveyed expect the accelerating shift in economic power from West to East to have the biggest impact on business in the future. Secondly, survey respondents cite financial market instability and recession as another big influencing factor and technological progress comes in at third place.
The report consequently discusses five areas of business and technology disruption developments that we can expect to see by 2020.
1: Technology and business models in 2020
Technology disruption will continue and will increase in speed, but worryingly, nearly 4/10 survey respondents fear that their organisations will not keep up with developments and will lose their competitive edge. 1/10 respondents fear that their organisation will cease to exist. 6/10 business leaders agree that their main vertical market will bear little resemblance in 2020 to how it looks today. Media and entertainment, banking and telecommunications top the list of industries thought most likely to converge with another in the next decade.
Technologies that are thought to disrupt businesses the most by 2020 include: cheap smartphones for all, business oriented social networks, data mining for behavioural insight, cloud computing, holographic 3D video conferencing, augmented reality interfaces, computing devices with visual, tactile and voice interfaces and artificial intelligence.
Big Data will also explode and so will the accompanying analytic capabilities that business will need to make sense of it all. For example, The European Commission estimates that government data alone could add some €40bn (US$55bn) a year to the European economy by stimulating the growth of new information services.
A challenge here is the need to comply with the growing number of regulations and requirements regarding people’s digital privacy and security. Just over half (52%) of executives express the view that compliance requirements could become so extensive that some firms would give up on implementing certain new technologies.
Finally, businesses should plan and prepare for an abundance of computing power, storage and bandwidth, at an ever-decreasing cost, available via the cloud model.
2: Rethinking the organisation
By 2020, mid-size companies will be less common. Most firms will either seek to grow into “mega-sized multinationals” and take advantage of the scale that affords them, or else shift towards “micro-sized hyper-specialists”, as Lynda Gratton, a professor of management practice at London Business School (LBS), puts it.
IBM’s Matthias Kaiserswerth explains it as follows. He believes that better collaboration tools will make many firms smaller, by making it more efficient to deal with specialist external partners for various non-core functions. “The rationale for a large firm is that the internal transaction costs are lower than the external ones,” he believes. “But the Internet has made external transaction costs lower, so the enterprise can become much smaller. The nature of work will be such that a lot of the work currently done inside the walls [of the business] can be done outside the walls. People will link up for a project, and then disband again. Open collaboration is the new business model,” says Mr Kaiserswerth.
Executives should also expect to see a general flattening of hierarchies within business and the replacement of hierarchies with meritocracies.
Several challenges will arise as well. Organisations could find it more difficult to codify and share knowledge in a more virtual work environment. Compliance measures in different countries will also be hard to manage. A global virtual business can be hugely efficient, but it is also exposed to the risk of blackouts, data loss, network failures and hackers. Very few secrets and mistakes will be able to remain hidden, as the availability and ubiquity of technology and social media will force organisations to be more transparent than ever before.
3: Jobs in 2020
Job growth may be increasingly decoupled from economic growth owing to automation. At the very least, it is becoming clearer that the productivity gains from technology are allowing firms to create more output from less input, as some experts argue. Automation can free people up to do more intellectual work and less menial work, but traditional jobs will still be lost in the process. However, completely new jobs ones which we cannot imagine today will be created as well.
The pool of workers is already starting to undergo a transformation. Technology is enabling a rise of micro-entrepreneurs and freelance and virtual workers, which supports Mr Kaiserswerth’s view mentioned above.
4: The workplace of tomorrow
As transactions are automated and collaboration becomes more virtual, the purpose of physical stores and offices will change. Many will work from home and offices will be used for networking, the exchange of ideas and meeting purposes.Increasingly immersive video-based communication, social media and other tools will all become far more pervasive in business. These will change how teams and organisations are structured, not least by decreasing transaction costs both inside organisations and externally. These will also change the way that many people work.
5: The personalisation decade
Many firms will use technology to allow customers to develop their own product or service, a trend known as “co-creation”, in fact, by 2020, customers are expected to overtake in-house research and development (R&D) as the primary source of new product and service ideas. Respondents also believe that customers will by then be nearly as important a source of ideas for business process improvement as their own employees. Tom Standage, digital editor of The Economist, calls this the “reversal of polarity”, where the innovation and pace of change is being dictated by the consumer sector.
These are mere indicators of what we might see in 2020, as ultimately, we just cannot be sure of the types of disruptions that will exist in the future. After all, technology is disruptive precisely because its effects are so difficult to predict.