Automation. Artificial intelligence. The internet of things. Blockchain. 5G. The list of new technologies that could transform — or already are transforming — your business feels endless. And with these technologies, a new corporate narrative is emerging among leaders.
It’s a story of digital reinvention, says IBM senior vice president Mark Foster, this week’s guest. Corporate leaders have, thus far, taken what Foster calls an “outside-in” approach to transformation, as they’ve tried to leverage the power of the internet and other connected technologies to engage with customers in new ways. This may be a perfectly fine start. But it’s important to recognize that it is, indeed, only a start.
There is a huge opportunity for leaders to seize new technologies to fundamentally redefine strategic and competitive advantage. At the same time, Foster cautions, leaders could just as likely become “swamped by the chaos of a thousand shiny objects” as each part of the organization tries to imagine what it could do with emerging technologies.
The goal is to find coherence in the digital chaos. And that, ironically, requires taking on an even more ambitious transformation mandate. Foster says the path forward for companies is not only to allow intelligent technologies to change your business from the outside in, but to leverage the data you have inside the company to transform it from the inside out.
This 360-degree approach to transformation means reinventing outward-facing strategy and inward-facing operations more or less simultaneously. As daunting as that sounds, companies with a clear vision and a sharp focus on the human elements of transformation can pull it off.
We’ll get you started on the “how” of it all in this week’s episode, as Foster focuses on these three big points about digital reinvention:
- Identify the value you intend to create and grow.
- In order to create that value, combine the power of new technologies with our own human capabilities and adapt together.
- Nothing works without accurate, well-curated, and unbiased data.
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Mark Foster: There’s no point having an incredibly powerful technology capability if actually there’s no empathy, no humanity, in the way it’s presented to the people who are going to engage with it.
I like to use the analogy of a Formula One racing car team, who race one weekend [and] gather a huge amount of data. They go back to their base. They take the car apart. They put it back together again. They look at all the data, and they go out and they race the next weekend with a higher level of performance than the weekend before.
It’s definitely a world of opportunity — but it’ll be a world of opportunity for those that are equipped to take advantage of it. And the more that we can get ahead of that curve and help people to ready themselves for this picture, the better.
Paul Michelman: I’m Paul Michelman, and this is MIT Sloan Management Review’s Three Big Points. In each episode, we take on one topic that leaders need to be on top of right now and leave you with three key takeaways for you and your organization.
Automation. Artificial intelligence. The internet of things. Blockchain. 5G. The list of new technologies that could transform — already are transforming — your business feels endless. And with these technologies, a new corporate narrative is emerging amongst leaders.
Mark Foster: There’s been a story of digital reinvention — what I would call outside-in reinvention — as they’ve tried to leverage the power of the net and other connected technologies to allow them to engage with customers in a different way.
Paul Michelman: That’s Mark Foster, senior vice president for IBM Services and IBM Global Business Services. He says there are both opportunities and challenges that come with the dramatically changing environment we are encountering — where individual technologies themselves have transformative potential and are also combining to have exponential impacts.
Mark Foster: It’s an opportunity to leverage these new technologies to really change the way you organize your business, to really redefine your strategic advantage and your competitive advantage. But it is also an opportunity to be swamped by the chaos of a thousand shiny objects as each team tries to imagine what it could do with the technologies.
Paul Michelman: The challenge, Foster argues, is to find coherence in this digital chaos. He says there’s a way to not only let these technologies change your business from the outside in, but to leverage the data you have inside the company to transform from the inside out.
Foster works frequently with CEOs to understand what kind of big bets they are placing in their companies. And he says that a number of leaders are betting on using digital to create market-making platforms. And the most ambitious don’t stop there.
Mark Foster: These CEOs are really rethinking what their companies are going to be famous for. But some are imagining that they could actually play a different role in their industry. They could actually play a part as a platform upon which other players in their industry could leverage some of these capabilities. And others indeed think they could spread the impact of these platforms across different industry sectors.
Paul Michelman: One example: a fertilizer company in northern Europe called Yara …
Mark Foster: … who have an aspiration to be the European farming and agronomic data providers … and how they’re shifting their focus from an organization that ships fertilizer every few weeks to farmers to one that’s pervasively now embedded in the life, the lifestyle, and the work of a farming community, engaging with them on everything from the weather — and there are now 280,000 farmers who are looking at Yara weather every day — through to financial services products, through to different components they can provide around the supply chains they serve, etc. And [they also have] some very interesting ideas about how they can promote sustainable food supply through that.
Paul Michelman: And Foster has even seen incumbents, even the ones often perceived as the worst lumbering giants, going this route.
Mark Foster: If you are able to leverage that data, and you are able to use these technologies to reinvent the way you do things, actually there’s no reason why you can’t parlay your scale, your channel, your brand power to do a lot more. I think we do see a confidence, frankly, in the CEOs [whose] destiny is much more in their hands rather than being reactive and responsive to a series of disruptive players coming from outside.
Paul Michelman: Foster calls this kind of company a cognitive enterprise of the future. It’s defined by a few things.
Mark Foster: First of all, this really clear focus on the market-making platforms — to be really clear about what it is that you want to be famous for, and to redirect your efforts [and] your investments around the transformation of those platforms. The second area is going to be the workflows — the intelligent workflows, as we call it — that are going to be used to bring the technology to life, to leverage the data, and to transform the efficiency and the effectiveness of the workflows and the process that we have in our business. And then, the final component we talk about is the ability to bring enterprise experience and humanity to all of this.
Paul Michelman: One of the key enablers here is the ability to understand what people — customers and employees alike — want and expect.
Mark Foster: The thing to recognize more and more is that people are expecting an experience like we use for buying something over the web to be the way our jobs are being done. So as someone designing a workflow, you need to be really thinking about the fact that it’s intuitive and that it really understands how people are going to interact with that process.
Paul Michelman: Foster talks about intelligent workflows. Well, that’s all about changing the game on critical business processes with smart technology.
Mark Foster: So it could be claims processing for an insurance company. It could be merchandising for a retailer. It could be your core payments workflow for a bank. Whatever it may be, you use technology to completely change the way that workflow operates. We are now able to take a process we’ve been doing for years that maybe has taken many, many large numbers of people, or whole teams of people, engaging in mundane activities, and by applying artificial intelligence at scale, automation at scale, using IoT sensors — all these things have the potential to be a real differentiator for a workflow.
Paul Michelman: And you heard him right a few minutes back — in this conversation about technology, humanity is vital.
Mark Foster: There’s no point having an incredibly powerful technology capability if actually there’s no empathy, no humanity, in the way it’s presented to the people who are going to engage with it. And so to some extent, we really are thinking about now what that means for the humanity of our workflows as we think about bringing them to life.
Paul Michelman: The path toward the cognitive enterprise is not just about bringing together new technologies and combining them to scale their impact. It also means identifying and developing the skills in our people to make these transformations happen — and that’s a lot easier said than done.
Mark Foster: The life cycle of a skill is going to go down. As people interact with these technologies going forward, we’re going to have to make sure that the people are learning as fast, if not faster.
Paul Michelman: Just like the technology itself, we are all going to have to keep adapting and keep getting smarter, as individuals and as organizations.
Mark Foster: I like to use the analogy of a Formula One racing car team, who race one weekend [and] gather a huge amount of data. They go back to their base. They take the car apart. They put it back together again. They look at all the data, and they go out and they race the next weekend with a higher level of performance than the weekend before. That’s the way our organizations have to think about the speed of skills building, re-skilling, bringing new people on board, to make sure that we’re moving as fast as the technology is transforming the workflows in our organization. That’s a big challenge.
Paul Michelman: Technology is important. Employees are important. Thinking about customers is important. But perhaps, given the profound changes our organizations face, leadership may be most important of all.
Mark Foster: As a leader, you need to be much more than simply tech savvy. You need to actually have enough of a grasp of the content of this technology and its ability to transform your organization to be able to be a positive exponent for the transformation you’re driving through that technology. And that means being able to be confident about why the impact is going to be positive, how it drives to the business intent you’re shaping, and being able to drive that top-down through your organization. But alongside that kind of clarity of vision and North Star comes an ability and a desire to let go — to let that vision go out into your organization.
Paul Michelman: When all of these ingredients come together in the right way, the idea of the cognitive company moves from a distant aspiration to a very real strategy.
Mark Foster: There’s going to be a whole new series of winners and losers in this world, based upon those that are able to truly seize the power of these technologies and those that are not. I think if we paint that picture further forward, though, we can also paint a picture of the role that these organizations are playing in society. There’s going to be an opportunity for an even closer relationship and even better experiences for all those who engage with businesses and work in businesses, which I think is going to be a really important opportunity for the future. I think we are also going to have to make sure that we are proactive around what this means, though, for the education system, the skills agenda, and everything else that we believe is important to make sure that people are as ready as possible for this world that we’re painting, because it’s definitely a world of opportunity — but it’ll be a world of opportunity for those that are equipped to take advantage of it. And the more we can get ahead of that curve and help people to ready themselves for this picture, the better.
Paul Michelman: That’s Mark Foster, senior vice president, IBM Services and IBM Global Business Services. And with that — time to wrap up our three big points.
Number one: Identify the value you intend to create and grow.
Mark Foster: We need to make sure that we’re really focusing on where the biggest value pools are in our workflows and ensuring that we use the combined impact of these different technologies to go after that value.
Paul Michelman: Number two: Our ability to create that value lies in combining the power of new technologies with our own human capabilities and to adapt together.
Mark Foster: The second big point is to focus on the fact that this is going to be about a combined impact of the technology and the people who are leveraging that technology. And we need to make sure that both sides are mutually adaptive to that world that’s evolving in front of them, around the process they’re trying to optimize.
Paul Michelman: And number three: Nothing works without accurate, well-curated, and unbiased data.
Mark Foster: Finally, I want to talk about the importance of the data — the importance of curating the data to make sure that we really understand [that] there’s no bias in the data, we understand its accuracy, [and] we understand, therefore, as it starts to drive more and more automated decision-making through our organization and through our processes, that we’re confident with the outcomes that are going to come from that.
Paul Michelman: That’s this week’s Three Big Points. You can find us on Apple Podcasts, Google Podcasts, Stitcher, Spotify, and wherever fine podcasts are streamed. We will be deeply in your debt if you’d take a moment to rate our program or post a review on Apple Podcasts or wherever you get your podcasts.
Three Big Points is produced by Mary Dooe. Music by Matt Reed. Marketing and audience development by Desiree Barry. Our coordinating producer is Mackenzie Wise.