Ecosystemism

There are several other driving forces in conjunction with the Force 5 Tornado technologies that are disrupting conventional business models to create this new era. Recall how the Force 5 Tornado convergence works in terms of the data model shown in Chapter 2. It is a picture of business ecosystem synergy where value is delivered as customer experience at a series of touch points along the customer decision journey, such as the travel life cycle model. It is delivered in real time, based on customers' personalized digital relationships, anywhere and anytime.

The Internet of Things (IoT) is a game changer for the upcoming decade when parlayed with big data analytics creating a “silicon crystal ball” that will form the core of decision process reengineering (DPR). Digital businesses, with innovation as a goal and collaboration as a culture, will outperform competitors. The virtual enterprises formed in the business ecosystem will be stronger and more agile as a result of ecosystem-wide DPR initiatives that optimize the customer decision journey. This enables a sustainable competitive advantage for all partner businesses and their collaborative enterprises, as well as the ecosystem as a whole. By the year 2020 Ecosystemism as a cultural imperative will grow. This integrated c-commerce strategy will have gained traction by creating examples of the business agility that market leaders will deploy as a mainstream business model.

Consumerization of Information Technology

Gartner foresees the consumerization of information technology (IT) as having a major impact across various aspects of the corporate IT world. Large enterprises will have to rethink the way they procure and manage IT equipment and services. Provision of computing devices, applications, and services with businesses was controlled by a central department in the very recent past, but with consumerization today, employees are becoming increasing self-sufficient in meeting their IT needs. Products have become easier to use, and cloud-based software-as-a-service (SaaS) offerings are addressing an ever-widening range of business needs in areas such as videoconferencing, digital imaging, business collaboration, sales force support, systems backup, back-office operations, financial, payroll, human resources (HR), supply chain, business analytics applications, and many more.

Businesses have to be flexible in bring your own device (BYOD) strategies, where individual employees can choose and often own the computers and/or smart devices (phones and tablets) they use at work. The Apple iPhone and iPad and other smart devices were designed for individual consumers, but their appeal and usage in the workplace has gone far beyond what was imagined. These devices have created a revolution, and we will see many innovative usages and applications in the near future.

Businesses have increasingly adopted consumerized services such as search, mapping, and social media. The capabilities of firms such as Google, Facebook, and Twitter are now essential components of many firms' marketing strategies. One of the more serious negative implications of consumerization is that security controls have been slower to be adopted in the consumer space, and as a result one of the implications of consumerization is an increased risk to the information assets accessed through less trustworthy consumerized devices. However, this shortcoming may soon be remedied by the chip manufacturers with technologies such as Intel's Trusted Execution Technology and the ARM (Advanced RISC Machines) TrustZone; these technologies are being designed to increase the trustworthiness of both enterprise and consumer devices. However, much of this has simply been a precursor to the major wave that is starting to take hold across all aspects of information technology as several key factors come together:

• Users are more technologically savvy and have very different expectations of technology.
• The Internet and social media have empowered and emboldened users.
• The rise of powerful, affordable mobile devices changes the equation for users.
• Users have become innovators.
• Through the democratization of technology, users of all types and any status within organizations can now have similar technology available to them.

The Internet of Things

The Internet of Things (IoT) refers to uniquely identifiable objects and their virtual representations in an Internet-like structure. In our business environment, more objects are becoming embedded with sensors and gaining the ability to communicate. The resulting information networks promise to create new business models, improve business processes, and reduce costs and risks.

According to McKinsey & Company, in most organizations, information management has a more or less consistent life cycle. Proprietary information is lodged in databases and analyzed in reports, and then rises up the management chain. Information also originates externally, gathered from public sources, harvested from the Internet, or purchased from information suppliers. But the predictable pathways of information are changing. The physical world itself is becoming a type of information system. In the IoT, sensors and actuators embedded in physical objects—from roadways to pacemakers—are linked through wired and wireless networks, often using the same Internet protocol (IP) that connects the Internet. These networks churn out huge volumes of data that flow to computers for analysis. When objects can both sense the environment and communicate, they become tools for understanding complexity and responding to it swiftly. What is revolutionary in all this is that these physical information systems are now beginning to be deployed, and some of them even work largely without human intervention.

Pill-shaped micro cameras already traverse the human digestive tract and send back thousands of images to pinpoint sources of illness. Precision farming equipment with wireless links to data collected from remote satellites and ground sensors can take into account crop conditions and adjust the way each individual part of a field is farmed—for instance, by spreading extra fertilizer on areas that need more nutrients. Billboards in Japan peer back at passersby, assessing how they fit consumer profiles, and instantly change displayed messages based on those assessments. Manufacturing processes studded with a multitude of sensors can be controlled more precisely, raising efficiency. And when operating environments are monitored continuously for hazards or when objects can take corrective action to avoid damage, risks and costs diminish. Companies that take advantage of these capabilities stand to gain against competitors that don't.

The widespread adoption of the Internet of Things will take time, but the time line is advancing thanks to improvements in underlying technologies. Advances in wireless networking technology and the greater standardization of communications protocols make it possible to collect data from these sensors almost anywhere at any time. Ever-smaller silicon chips for this purpose are gaining new capabilities, while costs, following the pattern of Moore's law, are falling. Massive increases in storage and computing power, some of it available via cloud computing, make number crunching possible at a very large scale and at declining cost.

The Internet of Things has great promise, yet business, policy, and technical challenges must be tackled before these systems are widely embraced. Early adopters will need to prove that the new sensor-driven business models create superior value. Industry groups and government regulators should study rules on data privacy and data security, particularly for uses that touch on sensitive consumer information. Legal liability frameworks for the bad decisions of automated systems will have to be established by governments, companies, and risk analysts, in consort with insurers. On the technology side, the cost of sensors and actuators must fall to levels that will spark widespread use. Networking technologies and the standards that support them must evolve to the point where data can flow freely among sensors, computers, and actuators. Software to aggregate and analyze data, as well as graphic display techniques, must improve to the point where huge volumes of data can be absorbed by human decision makers or synthesized to guide automated systems more appropriately.

Within companies, big changes in information patterns will have implications for organizational structures, as well as for the way decisions are made, operations are managed, and processes are conceived. Product development, for example, will need to reflect far greater possibilities for capturing and analyzing information.

Companies can begin taking steps now to position themselves for these changes by using the new technologies to optimize business processes in which traditional approaches have not brought satisfactory returns. Energy consumption efficiency and process optimization are good early targets. Experiments with the emerging technologies should be conducted in development labs and in small-scale pilot trials, and established companies can seek partnerships with innovative technology suppliers creating Internet of Things capabilities for target industries.

The explosion of mobile devices and rapid growth in the Internet of Things is driving transformation of the network infrastructure to meet increasing demand for more connectivity and real-time data. Intel is enabling this transformation by delivering standardized hardware and software that apply open standards and high-volume economics to help reduce costs, while accelerating the delivery of new services, capabilities, and revenue models for service providers.

Industrial Internet

The world is on the threshold of a new era of innovation and change with the rise of the industrial Internet. It is taking place through the convergence of the global industrial system with the power of advanced computing, analytics, low-cost sensing, and new levels of connectivity permitted by the Internet. The deeper meshing of the digital world with the world of machines holds the potential to bring about profound transformation to global industry, and in turn to many aspects of daily life, including the way many of us do our jobs. These innovations promise to bring greater speed and efficiency to industries as diverse as aviation, rail transportation, power generation, oil and gas development, and health care delivery. It holds the promise of stronger economic growth, better and more jobs, and rising living standards, whether in the United States or in China, in a megacity in Africa, or in a rural area in Kazakhstan.

With better health outcomes at lower cost, substantial savings in fuel and energy, and better-performing and longer-lived physical assets, the industrial Internet will deliver new efficiency gains, accelerating productivity growth the way that the industrial revolution and the Internet revolution did. And increased productivity means faster improvement in income and living standards. In the United States, if the industrial Internet could boost annual productivity growth by 1 to 1.5 percentage points, bringing it back to its Internet revolution peaks, then over the next 20 years through the power of compounding it could raise average incomes by an impressive 25 to 40 percent of today's level over and above the current trend. And as innovation spreads globally, if the rest of the world could secure half of the U.S. productivity gains, the industrial Internet could add to global gross domestic product (GDP) a sizable $10 trillion to $15 trillion—the size of today's U.S. economy—over the same horizon. In today's challenging economic environment, securing even part of these productivity gains could bring great benefits at both the individual level and economy-wide.

Internet of Everything: Cisco

Today, the Internet of Everything (IoE)—the ongoing explosion in networked connectivity among people, process, data, and things—is Cisco's IoT vision for transforming manufacturing in startling ways, just as it is changing so many other industries.

IoE delivers seamless, intelligent connections to every corner of the manufacturing value chain, optimizing the flow of products, information, and payments in real time.

IoE is driving connections beyond just data. The convergence of connecting people, things, data, and processes is transforming organizations, industries, and our lives. The growth of mobility and cloud computing is further driving innovation and an increase in the number and kinds of connections.

The broad-based adoption of information technology (IT)—and, in particular, the advent of cloud-based capabilities—has leveled the playing field for firms around the world. Market incumbents are increasingly pressured by disruptive innovators and nontraditional rivals bent on attacking revenue franchises and gaining market share through the innovative application of technology.

In nearly all industries, an accelerating innovation curve, in which market discontinuities arising from video, social, mobile, and cloud-based capabilities unlock new competitive dynamics, is reshaping the business landscape. In this environment, barriers to market entry are falling, customers are demanding new ways of interacting, and margins are compressing. In a world characterized by technology-driven parity and fleeting competitive advantages, many business leaders are asking, “Where will the next wave of value come from for our company?”

In February 2013, Cisco Systems released a study (www.cisco.com/web/about/ac79/docs/innov/IoE_Economy.pdf) predicting that $14.4 trillion of value (net profit) will be at stake globally over the next decade, driven by connecting the unconnected—people-to-people (P2P), machine-to-people (M2P), and machine-to-machine (M2M)—via the Internet of Everything (IoE).

Cisco defines the Internet of Everything as the networked connection of people, processes, data, and things. The benefit of IoE is derived from the compound impact of connecting people, processes, data, and things, and from the value this increased connectedness creates as everything comes online. In this respect, IoE provides a clear answer to the question of future sources of value.

The $14.4 trillion in IoE value at stake—the potential bottom-line value that can be created, or that will migrate among private-sector companies and industries based on their ability to harness IoE over the next decade—is being driven by five key areas:

1. Asset utilization ($2.5 trillion). IoE reduces selling, general, and administrative (SG&A) expenses and cost of goods sold (COGS) by improving business process execution and capital efficiency.
2. Employee productivity ($2.5 trillion). IoE creates labor efficiencies that result in fewer or more productive person-hours.
3. Supply chain and logistics ($2.7 trillion). IoE eliminates waste and improves process efficiencies.
4. Customer experience ($3.7 trillion). IoE increases customer lifetime value and grows market share by adding more customers.
5. Innovation, including reducing time to market ($3.0 trillion). IoE increases the return on R&D investments, reduces time to market, and creates additional revenue streams from new business models and opportunities.

Saving Costs in Home Utilities

Utilities run big, expensive, and complicated systems to generate power. Each grid now includes sophisticated sensors that monitor voltage, current, frequency, and other important operating characteristics. Efficiency now means paying careful attention to all of the data streaming off the sensors. Utilities are now leveraging big data/Hadoop clusters to analyze generation (supply) and consumption (demand) data via smart meters. The rollout of smart meters as part of the smart grid adoption by utilities everywhere has resulted in a deluge of data flowing at unprecedented levels and predictive analytics to help reduce costs at all levels. We foresee greater innovation in this area, with utilities smart meters using powerful predictive consumer behavior analysis and based on a big data model captured by these devices.

Bionics: Wearable Contact Lenses

One step ahead of Google Glass, we foresee the innovation and research toward bionics that will offer wearable bionic contact lenses. This technology could allow wearers to read floating texts and e-mails or augment their sight with computer-generated images. Early tests show the device is safe and feasible, say researchers at the University of Washington in Seattle. Currently, the crude prototype device can work only if it is within centimeters of the wireless battery.

But now that initial safety tests in rabbits have gone well, with no obvious adverse effects, the researchers have renewed faith about the device's possibilities. They envisage that hundreds more pixels could be embedded in the flexible lens to produce complex holographic images. For example, drivers could wear them to see journey directions or their vehicle's speed projected onto the windscreen. Similarly, the lenses could take the virtual world of video gaming to a new level. They could also provide up-to-date medical information like blood sugar levels by linking to biosensors in the wearer's body.

A Swiss company called Sensimed has already brought to market a smart contact lens that uses built-in computer technology to monitor pressure inside the eye to keep tabs on the eye condition glaucoma.

There are many possible uses for virtual displays. Video-game companies could use the contact lenses to completely immerse players in a virtual world without restricting their range of motion. And for communications, people on the go could surf the Internet on a midair virtual display screen that only they would be able to see. “People may find all sorts of applications for it that we have not thought about. Our goal is to demonstrate the basic technology and make sure it works and that it's safe,” says Babak Parviz, who heads a multidisciplinary University of Washington group that is developing electronics for contact lenses.

What to Expect with a Customer-Centric Business in 2020

The Force 5 Tornado will continue to power business transformation and increasingly become an integral fabric of our lives. Convergence yielding big data analytics will embed intelligence into that technological weave by creating a network of intelligent business ecosystems to enable us to live and work in a smart environment, the Internet of Things.

Imagine what the world would be like if computers were so small, so powerful, and so cheap that they could be built into everything and interconnected to share data all around the world. Well, look around; the precursors of IoT are already in place. Marketing 2020 is envisioned by McKinsey & Company in “The Coming Era of ‘On-Demand’ Marketing” by Peter Dahlström and David Edelman (McKinsey Quarterly, April 2013):

Digital marketing is about to enter more challenging territory. Building on the vast increase in consumer power brought on by the digital age, marketing is headed toward being on demand—not just always “on,” but also always relevant, responsive to the consumer's desire for marketing that cuts through the noise with pinpoint delivery.

What's fueling on-demand marketing is the continued, symbiotic evolution of technology and consumer expectations. Already, search technologies have made product information ubiquitous; social media encourages consumers to share, compare, and rate experiences; and mobile devices add a “wherever” dimension to the digital environment. Executives encounter this empowerment daily when, for example, cable customers push for video programming on any device at any time or travelers expect a few taps on a smartphone app to deliver a full complement of airline services.

Going forward to the year 2020 and beyond, we will see the digital business model as the mainstream means to deliver customer experience as an integrated relationship management practice across the physical and digital touchpoints in the business ecosystem. The Force 5 Tornado technologies using IoT enable devices, such as near-field communication (NFC) chips, will create an information rich environment. McKinsey envisions that these innovations coupled with ubiquitous global mobility, HTML5 web interactive workspaces, and advanced big data handling engines will transform customer experience:

Consumers may soon be able to search by image, voice, and gesture; automatically participate with others by taking pictures or making transactions; and discover new opportunities with devices that augment reality in their field of vision (think Google Glass).

As these digital capabilities multiply, consumer demands will rise in four areas:

1. Now. Consumers will want to interact anywhere and at any time.
2. Can I? They will want to do truly new things as disparate kinds of information (from financial accounts to data on physical activity) are deployed more effectively in ways that create value for them.
3. For me. They will expect all data stored about them to be targeted precisely to their needs or used to personalize what they experience.
4. Simply. They will expect all interactions to be easy.

This is the new world and its implications for leaders across the virtual enterprise. One thing is clear: The consumer's experiences with brands and categories are set to become even more intense and defining. To mobilize for the on-demand challenges ahead, digital businesses must:

• Bring managers together from across the business to understand consumers' decision journeys, to speculate about where they may lead, and to design experiences that will meet their demands (Now, Can I?, For me, and Simply).
• Align the executive team around an explicit end-to-end data strategy across trends, performance, and people.
• Challenge the delivery processes behind every touch point—are the processes making the best use of your data and interaction opportunities, and are they appropriately tailored to the speed required and to expectations about your brand?

After writing this far, we realize that we are extremely vulnerable and must always be alert, agile, and adaptable to the changing environment that we are living in today. Despite our attempt to provide you with some details about the foreseeable future, we submit that this chapter may not have covered many areas and innovations taking place globally in all business areas at almost the same time. For example we have barely touched on the next generation of big data analytics that provides the foundation for the burgeoning field of artificial intelligence that is driving cognitive computing. Yet that is “grist for the writers mill” in order to update the next version of the Creating Business Agility story.

We would be remiss to close this book without a cautionary tale that has an upbeat note on the value of business agility in the context of the dual challenges of cybersecurity and digital privacy. These futures in 2020 are two sides of the same IoT coin in terms of the business value of IT. On one hand, this Force 5 Tornado drives us to change our digital business practices and transform our business ecosystem culture to create the business agility that enables a sustainable competitive advantage, while on the other hand it threatens us with extinction if this technology convergence not embraced and harnessed.

Remember that one of the central themes of Creating Business Agility is to adapt management decision making in real-time to balance the strategic goals: decrease costs, increase revenue, and manage risk. While managing cost and revenue are fundamental to business success, risk is the threat that keeps senior executives awake at night. One of the paramount business risks today is associated with managing enterprise information as an asset in the context of the business value of IT as a strategic initiative. Executives want to avoid the “C-change” that disrupted the careers of the CIO and CEO of Target when inadequate policies and practices for cybersecurity management caused highly visible threats to the financial privacy of over 100 million customers. Today the risk management challenge is to manage the unavoidable and avoid the unmanageable—this is what business agility is all about!