Keys to surviving and thriving in the age of digital transformation
This excerpt is adapted from Digital Transformation: Survive and Thrive in an Era of Mass Extinction by Thomas M. Siebel and is printed with permission from RosettaBooks.
The evidence suggests that we are in the midst of an evolutionary punctuation: We are witnessing a mass extinction in the corporate world in the early decades of the 21st century. Since 2000, 52 percent of the Fortune 500 companies have either been acquired, merged, or have declared bankruptcy. It is estimated that 70 percent of the companies in existence today will shutter their operations in the next 10 years. In the wake of these extinctions, we are seeing a mass speciation of innovative corporate entities with entirely new DNA like Lyft, Google, Zelle, Square, Airbnb, Amazon, Twilio, Shopify, Zappos, and Axios.
Merely following the trends of change is not enough. Just like organisms facing the Great Oxidation Event, organizations need to reinvent the way they interact with the changing world. They must recognize when an existing model has run its course, and evolve. They must create new, innovative processes that take advantage of the most abundant and available resources. They must prepare for future upheavals by developing systems with interchangeable parts: produce faster, scale faster, work faster. They must build something that will establish a clear existential advantage in order to survive into the new stasis and prosper.
Mass extinction and subsequent speciation don’t just happen without reason. In the business world, I believe the causal factor is “digital transformation.” Industries facing the wave of digital transformation are predicted to follow similar diversify-or-die trends as life during the Great Oxidation Event. While digitally transformed companies drive their industries to rise above the ocean, the rest are caught in the race to either learn to breathe again or go extinct.
…[T]he core of digital transformation is the confluence of four profoundly disruptive technologies—cloud computing, big data, the internet of things (IoT), and artificial intelligence (AI).
Enabled by cloud computing, a new generation of AI is being applied in an increasing number of use cases with stunning results. And we see IoT everywhere—connecting devices in value chains across industry and infrastructure and generating terabytes of data every day.
Yet few organizations today have the know-how to manage, let alone extract value from, so much data. Big data now pervade every aspect of business, leisure, and society. Businesses now face their own Oxygen Revolution: the Big Data Revolution. Like oxygen, big data are an important resource with the power to both suffocate and drive revolution. During the Great Oxidation Event, species began to create new channels of information flow, use resources more efficiently, and mediate connections previously unheard of, transforming oxygen from a lethal molecule into the source of life. Big data and AI, along with cloud computing and IoT, promise to transform the technoscape to a similar degree.
The history of life shows that established species whose survival depends on tried-and-true, perfectly functioning processes have no room for error, no room for innovation. Species that can only utilize a finite set of resources risk losing those resources as the world changes around them. Likewise, those who try to use new resources without the knowledge, instruments, or determination to process them will also fail. Companies that survive this punctuation will be truly digitally transformed. They will completely reinvent the way society, technology, and industry relate to one another. The resulting diversity of innovation is likely to be just as extraordinary as aerobic respiration, the Cambrian Explosion, and the human race.
It is nearly impossible to know what these innovations will look like at the end of an evolutionary punctuation like digital transformation. It is the dogged process of rapid innovation, constant learning through experience, and reiteration along the way that will make the difference between thriving existence and ultimate extinction. Companies that figure out how to breathe big data—how to harness the power of this new resource and extract its value by leveraging the cloud, AI, and IoT—will be the next to climb out of the data lake and master the new digital land.