The Challenge of Digital Business Disruption
23 February 2016
The transformative paradigms that we had prefigured in the Social Business Manifesto [OpenKnowledge annexed to HBR of June 2012] not only actually emerged and spread, but are currently experiencing an acceleration in many exponential and disruptive ways. Organizations and markets are living an unprecedented era of digital and organizational disruption, accelerated by the pressure of models and cultures of collaborative networks that we had glimpsed and anticipated (from the sharing economy to the internet of things, from the exponential organizations to the use of social big data). A “collaborative disruption” – as we have defined it (between people and people, between people and things, between things and things) – is now reshaping, in depth, how to co-create value, build organizations and relationships and, consequently, how we do business in the Twenty-First Century. We are facing a pace of acceleration – as we said – that needs to be addressed with new advanced operational and conceptual perspectives.
It is a TechnOntological Disruption
From our point of view, the current discourses related to the technological disruption that organizations and business are facing only scratch the surface. In the majority of cases, we are dealing with ideas and frameworks generated by an engineering point of view, moved by a propulsion based on operational paradigms and outdated patterns coming from a pre-disruption era. Reports and theories that are circulating and supporting executives and managers to plan, lead and innovate their business practices are risking, therefore, to remain inexorably myopic in front of the deep impact of the exponential disruption of which we are seeing only the first signs. In order to fully benefit from emerging technologies and models it is however necessary, in our opinion, to dig deeper into the “ontological” eversion – as we defined it – that is strongly impacting the nature and purpose of the organizations as well as business models and practices. We believe that this can only be done by attending the frontiers of the most advanced digital thinking (often unknown to most people) and adopting terms and concepts that will mark a deviation from an outdated dictionary that is no longer allowing to understand and, therefore, to grasp reality and our not-to-distant future.
Techn-Ontologies and Value Innovation
It is time to look into the mentioned technological disruption from a perspective that takes into account its impact on the traditional ontological categories of “space”, “time” and “subject”. To mark this perspective, we began to refer to them using the neologism “techn-ontologies”. In fact, the trivial discussions related to the technological disruption are merely enumerating environments, platforms and applications; they are trying to add to the existing technological park only another marketing and communication “channel”, the latest “app” of customer engagement or the new “platform” for enterprise collaboration or open innovation. In doing so, they are completely losing sight, in our opinion, of the ontological attack that new technologies are leading to the concept and practice of “digital space” (space filled by code), “digital time” (temporality interwined with digitality) and the new dynamics of emerging “digital subject” (computational agents in markets and organizations). The real innovation of business and organizational structures, as we shall see, is rising from those organizations that, better than others, have understood how to generate value from the techn-ontological disruption that we are experiencing. Only by taking full awareness of this profound disruption, companies and organizations will be able to redesign businesses and markets according to the vectors of “experience design”, “service design” and “value design”. Let us explain these points (Fig. – Business Innovation Vectors).
On the relation between space and code
Many still consider the relationship between space and digital as a destructive one (arguing that it eliminates space, distance, physicality, corporeal): this represents an outdated perspective. In recent years, digital geographers and urban informatics planners have totally rethought the relationship between space and software (embedded code inside environments). The relationship between space and code is, instead, of a generative kind. We can refer to this new vision as to “transduction” of space that is being operated by the computational technologies, cloud and mobility: the software code embedded in space or carried by customers receives and reconfigures the environment in which it is located. One one hand, space itself (but also the physicality, the corporeal, the geographical position and the movement) is, in fact, the input for calculation processes (eg, physiological states or body positions can initiate an informational flow by tracking customer movements). Furthermore, the space can be dramatically reshaped by the presence of software code (for example, if a customer passes by a store that sends a contextual coupon on my smartphone, this will change customer behavior in the physical store). Digital technologies, networks, sensors and clouds, are able to create a spatial environment that is infinitely adaptable and constantly evolving (together with new services and business opportunities). Speaking just of “omnichannel” or “hybrid spaces” is simplistic and ineffective if we fail to understand this very generative relationship between space and digitality.
As the time meets digital
Even our traditional concept of time is strongly questioned by the informational and emerging digital architectures: it is not, however, as is usually believed, about time flowing in the network or being crushed on the present time. The most advanced digital philosophers speak, instead, of “operationality of digital time”, that creates constantly new regimes of time enabling the possibility to manipulate temporal opportunities. Digital time has essential characters: it is sub-perceptual, distributed, embedded and anticipated. We are talking about the possibility to build services based on temporality that is distributed and embedded in the objects and environments, or based on temporality that is sub-perceived by the humans (but nonetheless capable of acting on the operational present of the consumer). As an example, the in-memory technologies are overcoming traditional time limits for data processing (the CPU accesses data directly without intermediate layers) and are able to create new services exploiting digital temporality that can act at microsecond level. This results in the power to anticipate the behavior of consumers and calculate (in fractions of a second) purchase habits, contextual conditions and preferences projections. This case gives a concrete example of the operationality of digital temporal regimes. To talk just about “real-time” of the consumers is trivial and limiting in a time when we can develop services based on the “real-time” of machines that are able to process information and services to the millisecond level.
The subject (human but not only) on the network
The third vector of technological disruption is the emergence of subjectivity (agents or actors in organizations and marketplaces) that are algorithmic in their nature and dynamic. The engineers of algorithms design these new agents/actors that emerge both from the codification of human subjects in the network (consumer interactions, employees and suppliers mediated by the platform and internal social applications or external towards to the markets) and the introduction of artificial algorithms that have the decision making capacity and autonomous or self-directed ability to act in the markets (at the crossroads between human behavior and human agents, networks and algorithms). The “quantified self” testifies this progressive network coding of subjectivity as well as the emerging collaborative communities through enterprise social collaboration platforms (“quantified organization”). New coded agents are also the algorithms used for peer-recommendation or those used for social media to create social score and social rankings. All these are examples of artificial identities that act inside the platforms and markets. In this perspective, “collaborative intelligence” and “artificial intelligence” are working together to build and strengthen new organizational forms (such as exponential organizations), new markets (the sharing economy, the api economy), new models of value generation (data services), new forms of leadership and management (social leadership, self-management, trusted reputation).
Digital disruption beyond big data
This approach also allows us to highlight the weaknesses of the current big data definition that simplifies with volume, velocity and variety (the 3 Vs) the key elements of the data revolution. From our point of view, however, big data are nothing more than more visible results of the attack of technology in the categories of space, time and subject. In this perspective, the data revolution is the by-product of a sensorized and exponentially space, of a pervasively embedded and anticipated time and of a constantly codified and quantified subject. These technologies, starting from the redesign of space, time and subject, are producing profound transformative trends that inevitably impact on organizational structures, business models and value generation as well as on experiential, relational and service marketing strategies. Furthermore, we try, in synthesis, to highlight four related topics (not the only ones) that are strictly correlated. For each topic, we provocatively introduce a new term to underline the technological, the organizational and cultural disruption occurring.
This new word is derived from the fusion of platform and firm, indicating a new metaphor (different from the classical biological or mechanical metaphor) to envision new organizational dynamics and models. We introduce the metaphor of “platform”, a concept derived from the digital world. In fact, the platform concept is used more and more as a lens to interpret digital disruption. Even management theory has began to look at organizations as platforms. Digital companies are platforms (Facebook, Ebay, Google, Uber, Airbnb), but also Nike, for example, is restructuring itself as an interaction platform to co-create value with customers, benefiting from rapid scalability, network effect and ecosystem interaction (not only with customers but also including community of developers, solution accelerators, etc). Even physical spaces (for example the Apple stores) are being designed as platforms for social learning, engagement and care. In a platform-oriented perspective, the mantra to be “customer-centric” is not enough. The view of an organization as a platform implies that it’s possible to enable and mobilize different actors (human and non-humans, individuals and the collective) in order to obtain benefits and advantages such as: accelerate opportunity creation and growth, reduction of operative risk, optimize capital investment and resources, rapidly scale learning and unlearning processes.
Markething binds marketing practices with the disruption of the diffusion of the Internet of Things. As previously mentioned, technologies are able to transform objects, devices and environments in sensorized platforms that are connected to the cloud. Although it is not clear what will be the dominant scenario (digital screen spaces, prosthetic accessories, humanoids or intelligent objects), we are progressively moving, in a marketing and communication perspective, from a media-object to a media-environment marketing strategy. Due to this, we must radically change our current business models. A few advantages include: micro-personalization, rapid updates, constant connection, intimacy growth with customers, subscription based business models, ability to open product-platform to other brands and marketers, building ecosystems of product-platforms (enabled by cloud and fog computing). In the collaborative internet of things and social machines, service-dominant logic is becoming increasingly crucial and unavoidable (as well as experiential and relational practices). The future of marketing is automatization (for example programmatic marketing), participation and co-creation (from the sharing economy to open innovation), augmented storytelling practices (mixing analytics for business intelligence and customized experiences).
This term stresses the relevance of data and algorithms giving “rhythm” to our lives through smarter and automated sense-making and decision-making processes. We can provocatively state that “data is our ultimate world interface”. This means that our relation with reality (as customers, employees, citizens), historically founded on experience, common sense, intuition, senses or even qualitative search, will be increasingly mediated by the production and sharing of data and algorithms. These data will drive and perform our actions in the real world (think at digital maps for city orientation, personal healthcare devices, mobile workforce dashboards, etc) or, as for corporate social network, for enterprise collaboration. For this reason, we will develop, in the future, not just human-computer interfaces (HCI), but also human-data interfaces (HDI) that will help us in our consumer and professional life.
By the term Leadershift we mean the cultural disruption imposed by digital technologies not only on the business innovation side, but also on the organization leadership styles and practices side. Due to the technological disruption, companies are demonstrating new characteristics: they are antifragile, agile, smarter, more connected and extended, based on communities and open ecosystems. These new organizations require new leadership models and styles. We can call this new model a bossless organization, in which managerial functions are eliminated or reduced as are witnessing a growing number of companies (digital natives but not only). In Google, there are leadership practices to prevent micro-management, while many companies encourage self-management practices (balancing accountability and freedom) to support the adoption of a social leadership culture. In fact, digital technologies enable decentralized and automated decision-making processes. These organizations – we should say- are driven by algorithms and data using business intelligence to anticipate and predict customer and employee behaviour in real-time.
At the end of this article it should be clearer what we have introduced at the beginning. Managers and executives that consider technological disruptive only at the technological level risk to not fully understand the radical shift we are experiencing. This shift is not entirely clear, so far, but we must get ready to face this transformative tension towards a new economy reality.