Economic Growth

Why getting ahead in the digital age could mean starting again

A man types on a computer keyboard in Warsaw in this February 28, 2013 illustration file picture. One of the largest ever cyber attacks is slowing global internet services after an organisation blocking "spam" content became a target, with some experts saying the disruption could get worse.        To match INTERNET-ATTACK/      REUTERS/Kacper Pempel/Files (POLAND - Tags: BUSINESS SCIENCE TECHNOLOGY) - RTXXZVX

Now technology and changes in behavior move so fast they create powerful advantages to the last mover. Image: REUTERS/Kacper Pempel

Tom Goodwin
Head of Futures and Insight, Publicis Groupe
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Technological Transformation

One of the unspoken problems America faces is that it developed too early. It’s urban environment constructed on the assumption of near endless cheap gasoline, malls provide for ultimate retail environment in the unconnected world, airports for the travel priorities of a pre 9/11 world. America has emphatically embraced innovation early but often to it’s detriment, financial systems before mobile wallets, cellphone infrastructure for a pre 3G world, copper telephony systems, the list goes on. The security lines that we now expect weaving through narrow airport corridors, the total insanity of chip and sign, the dial up speeds of the middle of the Continent, all physical manifestations of the messiness of fast change.

The wonderful William Gibson quote that “the future is already here, just not evenly distributed” reflects the degree that technology powers transformational leapfrogging. Shanghai’s 270mph Maglev train, Bucharest’s parking via mobile operator, Estonia’s blistering internet speeds, the Philippines' early adoption of 4G, all testaments to what happens when you enter the market late and have no legacy to replace. It’s no wonder that Ecuador may be the first nation based on a digital currency, they’ve less to change. WeChat pay makes total sense in a nation where building banks would be exorbitant. Often the innovations are “hacks” not despite, but because of preexisting constraints. They bend regulatory conditions because governments are either dealing with bigger issues or don't have lobbyists fighting change.

The power of starting late and new is incredible. If you wanted to start a newspaper today, you’d not build the New York times and a vertically integrated supply chain, you’d not copy Buzzfeed and make a website and sell native content, you’d give 1000 interesting people an iPhone and plug into Facebook’s distribution engine and get Facebook to sell ads against your content. No sales teams, no upfront presentations, no boats at Cannes.

If you wanted to set up a car rental company now, you’d not buy land and cars near airports, you’d get owners to download an app, create a mechanism for building trust between strangers, negotiate with insurance companies and plug into WeChat or Whatsapp and leverage their API to connect those who need cars and those who have them.

More than anything else, businesses are becoming thinner and more modular. You can outsource recruiting and payroll and health insurance, you can use payment companies to deal with the pain of transactions, plug a logistics company to do the back end hassle. Increasingly companies are thin interfaces, they are brands, they are just ways to lure people into a system they trust.

Now technology and changes in behavior move so fast they create powerful advantages to the last mover. Seamless can be the largest food delivery company owning no restaurants, Uber the largest taxi company, while owning no vehicles, Alibaba the largest retailer but no stock. Alipay a huge finance company with no deposits. Facebook a media company with no content production.

These are different times. Success can be as simple as the best customer interface, brand awareness and huge server farms. But when new UI’s can be invented, storage gets cheaper, how can you stay on top?

We are now at peak app. It’s no longer a land grab of virgin territory, it’s a time where new apps most likely require the deletion of an incumbent. This is the age of Digital Darwinism, where technology and society evolve faster than any organization can adapt, the best advantage you can leverage is being build for the newly possible. Is this why Apple is likely the last company to introduce NFC and sat back to learn from others’ wearables failures?

We need to look at the notion of evolutionary funnels and paradigm shifts. Most improvements are incremental and they operate within an design funnel. The first Sony Walkman was bulky, expensive, had poor battery life and looked awful. Ten years of slow, steady linear improvements were made, it steadily evolved to become thinner, longer lasting, cheaper and with better sound quality, then, just as the optimum product was made, we saw a lurch away from this to a CD player. A paradigm shift in design, a whole new system of parameters and design objectives to iterate towards. RedBox was a great innovation within the paradigm of DVD renting, but was undermined entirely by VOD. Coin was a admirable attempt to innovate within credit cards, just as NFC payments will render it useless. Seat back TV’s and complex IFE entertainment system seem like a wonderful way to improve flights, until tablets came along.

You have to be last to the market but first in a new paradigm.

It’s be said today that companies are either startups or legacies, the new entrants have built fresh for the modern world, they are build for the modern age, with mobile first design, with CRM databases that are constructed on the latest software, they are agile nimble teams connected by the latest group management software. In companies legacy companies are slow, bulky, disconnected, their systems don’t talk to each other, bookings are lost, they are arranged around their own departments not customers, software is held together by patches and workaround.

What if starting afresh, a new business model, a new go to market proposition was the best way to get ahead.

With this in mind, perhaps succession management in companies should no longer be about grooming a replacement CEO but creating new companies to take over the role of the parent company for the future.

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