The IT monopoly is over, and managers must now be responsible for their technology decisions
Technology is woven so tightly into the fabric of business today that it’s risky to make a judgment call without a firm grasp of both the technology and business issues involved. Managers are struggling with the sudden rise of the empowered consumer, forcing them to experiment with new tools and new technologies as they race after consumers who are skipping across channels and between times. Managers are also smashing together supply chains to support pop-up stores or, along with digital product development processes, to speed the introduction of new products and services.
While these managers have a firm grasp of the business issues involved, technology (for many of them) is something that they’ve used, not something they’ve managed. There’s a difference between having experience using solutions, and in understanding the opportunities and risks inherent in the technology that underpins those solutions.
The success of all businesses now rests on their ability to astutely use technology to engage customers and nimbly craft solutions. Managers that can successfully straddle both business and technology are thriving. Those that can’t are struggling, and their firms are suffering with them.
CIOs, too, are struggling to define a role for themselves and their IT department in an age when everyone considers themselves to be an IT expert. However, there is a clear need that remains unfilled in many businesses. Someone, some group, needs work across the business and bring sense to the chaos.
While the IT department can no longer claim a monopoly on IT knowledge, it is still the group best positioned to work with the lines of business, across the organization, helping stakeholders to step back and see the broader context, and to ensure that the solutions the lines of business are using enable the firm to meet its compliance and reporting obligations.
Technology is not someone else’s problem
I’ve heard more than one CEO claim that “the reason I hired a CIO is so that I don’t have to worry about IT”. In their view technology was something to be dealt with by technologist, allowing the CEO (and the rest of the C-level) to get on with the challenge of running the business.
The most recent version of this seems to be the announcement of a newly hired Chief Digital Officer (CDO), someone who will come in and transform the business, tossing out all the old and crufty non-digital stuff and replacing it with shiny new digital stuff. McKinsey is so bullish on the idea of hiring a CDO that they published a recent report called “Bullish on digital” which concludes that firms need to “Find the right digital leaders. Leadership is the most decisive factor for a digital program’s success or failure”.
Setting aside the question of why the CIO or CTO isn’t leading the transformation, the rise of the CDO hides a bigger problem that executives need to address.
Hiring a CDO might be a symptom, rather than the cure
Technology is now a general business skill, and not a specialist skill like it was in the past. Going forward, all executives will need a solid understanding of technology, along with how it can be used to create opportunities, and its limitations. If not, then they should find a replacement who does.
We live in the age of the empowered consumer. Consumers have grabbed control of their relationship with merchants. Wielding their smartphone with both thumbs they can buy what they want, when and where they want, and obtain the best price. They can also use social media to peer into a firm’s operations, and they’ll take their business elsewhere if they find something objectionable.
Firms are scrambling to respond as they watch their traditional revenue streams leak into other channels. A key strategy is to take a holistic and customer-centric approach that enables the firm to follow consumers as they skip between places, times and trends. Doing this means investing in programs who’s benefits are not easily qualified. These programs are either enabled by, or rely heavily on, technology.
We don’t have “digital programs”: we have “programs”, since they all use digital technology. Similarly we don’t want “leaders” and separate “digital leaders”. We need “leaders” who understand both the business and the digital worlds, as the two are the same.
Amazon, for example, was born digital. Technology is not treated as something separate from business; interactive and social media are commingled with traditional media, and the merchandising team is responsible for wholesale, stores and web.
How we measure value has changed
Managers trying to paper over knowledge and experience gaps by hiring in the expertise will soon find that it’s not enough. The person accountable for a firm’s (or a department’s) performance will need to understand the trade-offs they’re making. Increasingly these trade-offs cannot be captured by return on investment (ROI) or net present value (NPV) calculations, as the key factors in the trade-off are intangibles. Tim Cook has even famously disparaged “bloody ROI” when he explained at a shareholders meeting that Apple does “a lot of things for reasons besides profit motive”.
Trying to make judgment a call without an intuitive understanding of the trade-off being made is fraught with danger. If the factors that will sway the decision are not easily quantifiable then it can be challenging (if not impossible) to separate the technical and business expertise.
Management need to straddle business and technology
Management, from line management on the shop floor up to the executive and the board, need to have both a firm understanding of the business the firm is in, and the technology that is woven into the fabric of the business. In the lower ranks the focus is on identifying opportunities and solutions that can drive up firm performance. Higher up, the executive through to the board will make the judgment calls on where to direct resources. They must also be capable of defending these judgment calls to the owners.
Hiring in technical expertise will allow a firm to modernize its infrastructure and operating model. It will not, however, solve the more significant challenge of constantly evolving the firm’s business model in response to the evolution of the technology environment around it. Companies that have made this cultural shift do not have, nor will they probably ever hire, a CDO. Nor will they see IT as something they hire a CIO to worry about. Younger firms, such as Amazon, achieved this by being born digital. Older firms, such as Burberry, have hired or developed digitally savvy executives.
IT is not the high priest of technology anymore
As I’ve pointed out before, the role of the IT department is not carved in stone. The growth of empower consumers has also given rise to the empowered manager, a manager who understands technology, knows what they want, and (thanks to Software as a Service) has the ability to source it without the help of the IT department.
IT is a general business skill, and not the specialist skill it was in the past.
However, business, your business, still needs someone to play the role of intellectual bumblebee. Someone who can buzz between stakeholders and cross pollinate ideas, and someone who can ensure that the parts operate as a coherent whole.
The IT department can no longer monopolize IT knowledge. Nor can it expect to monopolize IT management. (Shared services have a patchy track record at best.) The lines of business have grabbed control of the technology they use, which is as it should be. It’s the lines of business that have the problems which need solving and – as was pointed out earlier – solving these problems will require knowledge of both business and technology. They’re also choosing to use service providers that operate outside the four walls of the traditional IT department.
A new relationship between IT and business
The IT department, however, is the group best positioned to work with the lines of business, working across the organization, and make sense of the chaos.
Business stakeholders need help stepping back and seeing the bigger picture, and to understand the broader implications, of the technology choices that they are making. It’s great to improve consumer engagement and shift more product, but this needs to be done in an environment where solutions deployed by the the various lines of business work together, and not at cross purposes, and in a way that allows the firm to meet its compliance and reporting obligations.
While the IT department needs to stop acting like an IT monopoly, the flip side is that managers in the line of business need to also take responsibility for the technology decisions they make.
How far along the journey is your organisation? Is technology still something only the CIO worries about about? Has your organisation started to try and transform into a digital business? Or are you already there, and technology is a general business skill?
Creating a prosperous national future: networks and new industries
By Ross DawsonToday’s issue of AFR Boss magazine includes highlights of the discussion at the recent first BOSS True Leaders’ Legacy Dinner, where 14 of us had an excellent dinner and debated “how Australia could seize the opportunities of the knowledge economy”.
It was a fantastic and sometimes heated discussion, most enjoyable. The highlights of the conversation are published in the online magazine.
At the outset I said (quotes were severely edited for length):
As I’ve noted before, entrepreneurial migration is highly valuable in forming global networks.
Australia has come a long, long way in the last 6-8 years in becoming a nation with a true network mentality. This is essential given our geographical isolation. However I am becoming concerned that our progress is not keeping pace with the rest of the world.
Later in the conversation I was quoted:
Crowdfunding is just one of range of new capital market structures that are allocating funds to where they can have the most value. National regulation is critical in enabling or disabling these innovative approaches.
The nature of politics is that legacy industries have the funds, clout, and connections to make governments pay attention, while newer industries don’t have the impact or access. Yet they are where our future lie. It is critical that attention – and in some cases resources – are spent on the networked, knowledge-based economy that will bring our future prosperity.
The future of travel: vertical train stations to help the growth of high-speed trains
By Ross DawsonToday I was interviewed on the Channel 7 Daily Edition about the future of travel. Click on the image below to see a video of the segment.
One of the topics we discussed was a proposed concept of a Hyper-Speed Vertical Train Hub, an interesting idea which allows high speed trains to shift to a vertical configuration as they arrive at a station.
Instead of long carriages the train consists of smaller pods that can stay in upright position as the train shifts to be aligned with the walls of a building, where the passengers can alight.
The primary advantage is that the train station can have a very small footprint, which will be increasingly important when space is at a premium in densely populated urban centers.
High-speed trains are proving to be a vital foundation to China’s infrastructure, providing an example that other countries are increasingly interested in following.
The vertical train hubs concept is not that likely to be implemented, but it is a novel and intriguing approach that just might facilitate the adoption of high-speed trains in major centers.
Image source: Evolo
Crowdtesting Success: Why Crowdsourcing User Testing Continues to Grow and Provide Value
By Steve BynghallCrowdtesting is a successful area of the crowsourcing landscape that provides great value.
Crowdtesting involves a distributed crowd carrying out user testing for software development and IT projects, usually across a hosted platform. It has grown into an accepted model in mainstream business, used by both large enterprises and smaller companies. It’s still a fast-growing area with the market leader uTest one of crowdsourcing’s undisputed success stories.
The advantages of crowdtesting
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IT Is a General Business Skill, Not a Specialist Skill
By Peter Evans GreenwoodThe IT monopoly is over, and managers must now be responsible for their technology decisions
Technology is woven so tightly into the fabric of business today that it’s risky to make a judgment call without a firm grasp of both the technology and business issues involved. Managers are struggling with the sudden rise of the empowered consumer, forcing them to experiment with new tools and new technologies as they race after consumers who are skipping across channels and between times. Managers are also smashing together supply chains to support pop-up stores or, along with digital product development processes, to speed the introduction of new products and services.
While these managers have a firm grasp of the business issues involved, technology (for many of them) is something that they’ve used, not something they’ve managed. There’s a difference between having experience using solutions, and in understanding the opportunities and risks inherent in the technology that underpins those solutions.
The success of all businesses now rests on their ability to astutely use technology to engage customers and nimbly craft solutions. Managers that can successfully straddle both business and technology are thriving. Those that can’t are struggling, and their firms are suffering with them.
CIOs, too, are struggling to define a role for themselves and their IT department in an age when everyone considers themselves to be an IT expert. However, there is a clear need that remains unfilled in many businesses. Someone, some group, needs work across the business and bring sense to the chaos.
While the IT department can no longer claim a monopoly on IT knowledge, it is still the group best positioned to work with the lines of business, across the organization, helping stakeholders to step back and see the broader context, and to ensure that the solutions the lines of business are using enable the firm to meet its compliance and reporting obligations.
Technology is not someone else’s problem
I’ve heard more than one CEO claim that “the reason I hired a CIO is so that I don’t have to worry about IT”. In their view technology was something to be dealt with by technologist, allowing the CEO (and the rest of the C-level) to get on with the challenge of running the business.
The most recent version of this seems to be the announcement of a newly hired Chief Digital Officer (CDO), someone who will come in and transform the business, tossing out all the old and crufty non-digital stuff and replacing it with shiny new digital stuff. McKinsey is so bullish on the idea of hiring a CDO that they published a recent report called “Bullish on digital” which concludes that firms need to “Find the right digital leaders. Leadership is the most decisive factor for a digital program’s success or failure”.
Setting aside the question of why the CIO or CTO isn’t leading the transformation, the rise of the CDO hides a bigger problem that executives need to address.
Hiring a CDO might be a symptom, rather than the cure
Technology is now a general business skill, and not a specialist skill like it was in the past. Going forward, all executives will need a solid understanding of technology, along with how it can be used to create opportunities, and its limitations. If not, then they should find a replacement who does.
We live in the age of the empowered consumer. Consumers have grabbed control of their relationship with merchants. Wielding their smartphone with both thumbs they can buy what they want, when and where they want, and obtain the best price. They can also use social media to peer into a firm’s operations, and they’ll take their business elsewhere if they find something objectionable.
Firms are scrambling to respond as they watch their traditional revenue streams leak into other channels. A key strategy is to take a holistic and customer-centric approach that enables the firm to follow consumers as they skip between places, times and trends. Doing this means investing in programs who’s benefits are not easily qualified. These programs are either enabled by, or rely heavily on, technology.
We don’t have “digital programs”: we have “programs”, since they all use digital technology. Similarly we don’t want “leaders” and separate “digital leaders”. We need “leaders” who understand both the business and the digital worlds, as the two are the same.
Amazon, for example, was born digital. Technology is not treated as something separate from business; interactive and social media are commingled with traditional media, and the merchandising team is responsible for wholesale, stores and web.
How we measure value has changed
Managers trying to paper over knowledge and experience gaps by hiring in the expertise will soon find that it’s not enough. The person accountable for a firm’s (or a department’s) performance will need to understand the trade-offs they’re making. Increasingly these trade-offs cannot be captured by return on investment (ROI) or net present value (NPV) calculations, as the key factors in the trade-off are intangibles. Tim Cook has even famously disparaged “bloody ROI” when he explained at a shareholders meeting that Apple does “a lot of things for reasons besides profit motive”.
Trying to make judgment a call without an intuitive understanding of the trade-off being made is fraught with danger. If the factors that will sway the decision are not easily quantifiable then it can be challenging (if not impossible) to separate the technical and business expertise.
Management need to straddle business and technology
Management, from line management on the shop floor up to the executive and the board, need to have both a firm understanding of the business the firm is in, and the technology that is woven into the fabric of the business. In the lower ranks the focus is on identifying opportunities and solutions that can drive up firm performance. Higher up, the executive through to the board will make the judgment calls on where to direct resources. They must also be capable of defending these judgment calls to the owners.
Hiring in technical expertise will allow a firm to modernize its infrastructure and operating model. It will not, however, solve the more significant challenge of constantly evolving the firm’s business model in response to the evolution of the technology environment around it. Companies that have made this cultural shift do not have, nor will they probably ever hire, a CDO. Nor will they see IT as something they hire a CIO to worry about. Younger firms, such as Amazon, achieved this by being born digital. Older firms, such as Burberry, have hired or developed digitally savvy executives.
IT is not the high priest of technology anymore
As I’ve pointed out before, the role of the IT department is not carved in stone. The growth of empower consumers has also given rise to the empowered manager, a manager who understands technology, knows what they want, and (thanks to Software as a Service) has the ability to source it without the help of the IT department.
IT is a general business skill, and not the specialist skill it was in the past.
However, business, your business, still needs someone to play the role of intellectual bumblebee. Someone who can buzz between stakeholders and cross pollinate ideas, and someone who can ensure that the parts operate as a coherent whole.
The IT department can no longer monopolize IT knowledge. Nor can it expect to monopolize IT management. (Shared services have a patchy track record at best.) The lines of business have grabbed control of the technology they use, which is as it should be. It’s the lines of business that have the problems which need solving and – as was pointed out earlier – solving these problems will require knowledge of both business and technology. They’re also choosing to use service providers that operate outside the four walls of the traditional IT department.
A new relationship between IT and business
The IT department, however, is the group best positioned to work with the lines of business, working across the organization, and make sense of the chaos.
Business stakeholders need help stepping back and seeing the bigger picture, and to understand the broader implications, of the technology choices that they are making. It’s great to improve consumer engagement and shift more product, but this needs to be done in an environment where solutions deployed by the the various lines of business work together, and not at cross purposes, and in a way that allows the firm to meet its compliance and reporting obligations.
While the IT department needs to stop acting like an IT monopoly, the flip side is that managers in the line of business need to also take responsibility for the technology decisions they make.
How far along the journey is your organisation? Is technology still something only the CIO worries about about? Has your organisation started to try and transform into a digital business? Or are you already there, and technology is a general business skill?
Presentacion: Creando un Futuro Excepcional para su Negocio
By Ross DawsonA couple of weeks ago I gave the keynote at sCRM-CEM y Redes Sociales conference in Bogota, Colombia, on the topic of Creando un Futuro Excepcional para su Negocio (Creating an Exceptional Future for your Organization).
Below are my slides translated into Spanish. I used these slides and presented in English with simultaneous translation. I was very pleased to get to Colombia and Peru on this trip as it helped me to begin to revive my rather rusty Spanish, but I’m still quite a way from being able to do a presentation in Spanish. I will work at it, and hopefully get more opportunities to get back to Latin America before long.
Many thanks to Rafael Rodriguez for the excellent translation and all his help for the conference!
More Spanish content coming soon…
Scratch: The enormous value of children’s programming languages
By Ross DawsonI have been aware for some years of the various programming languages available for children. This evening I decided to have a go with Scratch with my daughters, as Leda is now almost eight, the bottom of the suggested age range for the language.
I was blown away. Scratch has an extremely wide range of capabilities, ranging from very simple animations through to complex conditional loops, all done through extremely easy rearrangement of colored blocks.
Any child would be immediately drawn into what they can do, and simply by playing, learn the principles of programming. Scratch’s originator MIT’s Mitch Resnick tells the story in this TED talk below.
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The role of the futurist as a leader
By Ross DawsonWhen I was in Amsterdam recently for client engagements I also gave a keynote to the Dutch Future Society about the role of the futurist.
It was a fascinating evening. Given the audience of futurists and those well engaged with the future, my presentation went further out than usual, and the ensuing conversation went beyond that, to issues including the nature of humanity, the ethics of the future, and more.
After the event I was interviewed by Stephan Verveen. The interview, embedded below, covers quite a few of the points raised during the evening.
Freija van Duijne, President of the Dutch Future Society, also wrote a nice post The role of a futurist, keynote by Ross Dawson which summarized my presentation. She noted:
The role of a futurist as a leader
A futurist’s aim is to encourage leadership on all levels. That is, helping people to think in a rich and structured way about tomorrow in order to act to day. Futurists are involved in sense making, giving people the ability to deal with information. Everyone is overwhelmed by the infinity of signals. Futurists help people to open their minds and think of things that they did not think before.
A vital point here is that the role of the futurist is not to provide outsourced thinking about the future.
The role of the futurist is to help everyone to become their own futurist, to think more broadly, to be open to different ideas, to stimulate and provoke into taking useful action.
We are at a critical juncture in human history, when actions we take – or do not take – today will shape our collective future to an extraordinary degree. The future is not predetermined. By understanding the nature of change we can act to create a better future.
Futurists, in grappling with these issues more than most, have a responsibility to help others to think forward and understand the potential impact of their actions.
In fact, in that all of us need to be our own futurists, we all have a responsibility not just to think about the future and how we will act. We also need to help others to think forward and in turn to act better today.
The case for the death of cash by the hand of digital currencies
By Ross DawsonRecently I gave the opening keynote at the ATM and Branch Automation Seminar run by Payments Consulting Network.
In my keynote I spoke about the broader trends in technology, society, and business, and then looked at some of the uncertainties impacting ATMs and branches. Clearly one of the most important is the future of cash.
I noted that while I’m happy to predict the timing of the death of newspapers, I’m not prepared to make firm forecasts on the death of cash. The uncertainties are simply too big.
There are many payment mechanisms that are replacing cash, notably mobile wallets and contactless cards, and in many developed countries there is clear evidence that these are beginning to reduce demand for cash.
However this does not mean cash will die.
It is a useful futurist exercise to ask specifically why cash might be resilient and still be used for a long time to come. The more important reasons for people continuing to use cash include:
– Black market. Cash is the preferred means of payment for illegal activities. €1 million in €1,000 notes weighs just over 1kg. Beyond organized crime, the informal economy is often significant, with for example estimates of the share of Italy’s economy that is undeclared ranging as high as 50%.
– Personal anonymity. Many individuals engage in transactions that they don’t want their spouses, for instance, to be aware of, or simply don’t like what they do being tracked by banks, credit agencies, or anyone else.
– Concern about financial system. During the 2008-2009 global financial crisis cash issuance went up substantially, driven by fears that banks were not secure places to hold assets. It is interesting to note that in many countries the amount of cash issued continues to rise, while retail cash transactions start to decrease, suggesting an increasing role of cash as a store of value. As much as 60% of the cash float in Switzerland is in CHF1,000 notes, which are rarely used for purchases.
– Immediacy. Recipients of cash can use the funds immediately, leading to discounts for cash payment. Payment processing is getting faster, often to next-day, and in many countries there is a push for real-time payment processing, however the timeframe and scope for that is not clear.
– Habit. Many people are used to cash and like it.
These are indeed solid reasons for many people to like cash. This would seem to provide ample reason for cash to continue to exist indefinitely.
HOWEVER… it turns out that digital currencies such as Bitcoin have the potential to address almost all of these issues.
Bitcoin provides anonymous, immediate transactions. It is transacted entirely outside financial institutions.
Its existence and value is independent of governments that issue fiat currencies. As trust in governments’ financial situations erode, this suggests that people will seek to move away existing currencies.
The last few years’ experience suggest that Bitcoin is a solid, well-tested platform. If we start to get critical mass in acceptance of Bitcoin and well-designed mobile and web Bitcoin wallets it is absolutely possible for it to be a significant rival to cash for peer-to-peer payments.
On the point of habit, it is worth noting that people wanting something doesn’t mean that it will be available. Just as demand for printed newspapers doesn’t mean that there is an economic model for printing them, cash will only have value if people or shops still want to accept it.
Just as check processing systems are likely to be shut down as check usage drops to sufficiently low levels, if cash usage erodes enough, many retailers may not want to accept it and it may not be worth continuing to support as a payment mechanism.
There are however three major challenges for Bitcoin completely replacing cash.
– Volatility. If Bitcoin gathers greater acceptance, given there is a finite number of possible Bitcoins, there will undoubtedly be price overshooting as people join the system, and subsequent price adjustment. As a result, it is highly unlikely that Bitcoin prices will stablize for the foreseeable future. Since one of the major uses of cash is as a store of value outside of the financial system, Bitcoin will not meet those needs well.
– Ease of use. Buying, storing, and transacting Bitcoin can be complex and unwieldy. For broad-based uptake of Bitcoin extremely easy-to-use interfaces to the currency would be required.
– Government regulation. The Canadian tax office recently released a fact sheet on Bitcoin; other government agencies are beginning to grapple with the many implications of Bitcoin’s rapidly rising usage. It is possible that some governments will seek to effectively ban Bitcoin, or regulate it to a degree that makes it unattractive to many people. It can still be valuable to those who seek anonymity, however it could never be a de-facto currency if it is not within regulated use.
This is of course a very simple analysis, and there are many other issues to consider. However there remains a real case that cash could in fact die – or have very low levels of usage – before long. The very important reasons listed above for cash to continue could all be massively eroded by digital currencies.
In short, digital currencies such as Bitcoin MAY be enormously disruptive to cash and payments. The thought experiment is very useful, though uncertainties still abound.
Payments are at the heart of business and society, and it matters enormously if they fundamentally change. There are many other dimensions to the changing payments space, and I will be closely following its evolution.
How technology is enabling the humanity of organizations
By Ross DawsonAfter my recent opening keynote at the SAP Australia User Group Summit on Leadership in Enterprise Technology, I did a video interview for Inside SAP magazine, shown below.
The full transcript of the interview is available on our new publication CIO of the Future.
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Will fashion lead the next wave of technology? 8 insights into the future of fashion
By Ross DawsonWill the next big technology company come out of the fashion world?
I’ve had a very interesting evening at the latest Sydney event of Decoded Fashion, a global network of events on the future of fashion.
Here are a few of the many interesting insights and ideas that came up during the evening, either directly from the speakers or evoked by what they said.
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