“If you want something new, you have to stop doing something old.”
– Peter Drucker
In the Internet era, we talked about being “amazoned”. In the digital world, we talk about being “ubered”. But what does it mean to be ubered? In simple terms, it means you’ve been disintermediated. The term is fitting, because Uber is perhaps the best example of digital disintermediation available today. Uber is marginalizing established competitors using a digital business model. As a provider of transportation, their model satisfies the laws of economy, matching supply with demand by directly connecting drivers and customers. The middleman has gone the way of the Dodo. But they’re not stopping there. True to the digital world they operate in, Uber is continually re-inventing itself. Experimenting with food delivery (UberEATS) and bike messenger (UberRUSH) services, Uber is disrupting its own business models to deliver relevant services to its customers. They could very well deliver your next pizza.
New technologies and diminished barriers to entry have created an ecosystem with unlimited business potential. There are now abundant opportunities to “uber” any business in any industry. So what does the future hold during this time of massive digital upheaval? I see the following trends having the most significant business impact in 2016.
- The IoT will be reality
In 2016, we’ll work smarter, not harder. Human beings, appliances, homes, factories, cars, businesses, and cities will become more interconnected. If these items aren’t already, they’ll soon be “talking” to the Internet of Things (IoT). In a few short years, there will be more than 25 billion devices generating data about every topic imaginable. We’ll see broader enterprise adoption of the IoT due to its economic impact (which analysts estimate to be between $4 trillion to $11 trillion in the next few years), as well as in terms of opportunities to improve productivity and gain better business insight.
The IoT will cause massive disruption through better automation, integration, and communication. Insurance companies are deploying sensors and software to monitor how drivers behave and generate risk profiles using big data analytics that accurately align to or construct on-demand products to suit individual behavior. Thermostats communicate with residents and accumulate behavioral data to formulate the most energy efficient and comfortable schedules and settings. Software agents move money, stocks, goods, and people around the world, routing, optimizing, and transacting innumerable times a year—and these are just three examples already in enterprise use today. They will quickly evolve and proliferate into 2016.
As we move forward through 2016 and beyond, more devices, agents, sensors, and people will join the IoT. Perhaps we will even progress as a society to a post-scarcity economy and information itself will become our commodity of trade. Monetizing the exchange of information, micro-licensing, and transactions become prominent tasks as our automation and machine-to-machine networks take care of daily needs. Imagine algorithms as apps for applying big data analysis over the connected masses of information generated by the IoT and its billions upon billions of connected devices in every aspect of our lives. Owning the data, analyzing the data, and improving and innovating become the keys to corporate success—all empowered by a connected digital society.
Though this may have some Orwellian overtones, the IoT is really about the Zen of Things—our application of software and technology to help customers consume products and to help businesses build better products and deliver better services. In 2016, the IoT will continue to combine big data, analytics, the Cloud, Artificial Intelligence (AI), robotics, and automation to propel industries forward and create the next industrial revolution.
- Social Media takes over the world
Social media sites are supporting populations that are bigger than entire nations. Facebook has 1 billion subscribers, Instagram has 400 million active users each month, over 300 million Twitter subscribers post 500 million tweets in 150 countries daily. These are massive numbers. Social media sites are diverse and always “on”. They are the new marketing forums. Your biggest opportunities are here because the most eyeballs are here. In 2016, digital engagement on social media sites will no longer be optional, it will be a business requirement.
Digital consumers have power. The new Digital Echo Chamber of Social has awesome powers of creation and destruction, and it needs to be actively managed. In the old days, if a customer was dissatisfied with a product they would speak to a manager and get their money back. Today, they post blogs, comments, ratings, or reviews on social media sites, potentially reaching millions of peers in hours and at no cost. Managing social reputation and being actively engaged is an absolute must. The moment a tweet or post goes live, consumers comment and share. Often, by the time a business has reacted, the story has gone viral. Digital memory is infinite and digital consumers are fickle—remember, your competitors are just a click away. The good news is, you can follow, monitor, and participate in the social interactions your customers are having. They’re more than willing to tell you what they want. You just have to be listening because the inverse is also true: a single customer sharing a positive experience can reach the same audience at the same speed to the benefit of the active Social Enterprise.
- Millennials enter the management ranks and reshape the world
In 2016, we will see Millennials enter management-level roles. These young leaders will radically restructure all aspects of business—from productivity tools to HR policies (like working from home and remote offices), and organizational structure to corporate cultural—essentially reinventing the workplace as we know it.
As managers, Millennials will be in a position to transform corporate culture, accommodating expectations like social media freedom, device flexibility, and a high tolerance for risk taking. Innovation will be a key competitive differentiator and its application will be based on new ways to collaborate that include crowdsourcing and co-creation with customers. Communication will be open, two-way, and always “on”. The office of the future will take root in 2016. Holographic images, interactive surfaces, and video conferencing will begin to replace the boardroom in earnest. The mobile office will replace the cubicle and work and life will reach an equilibrium and intermixing we haven’t seen before in this digital age.
As Millennials undergo a professional “coming of age”, the enterprise will follow suit. Culture will be a determining factor for failure or success in the digital world. Millennial managers will pull from a global pool of talent, hiring the best employees from around the world to create highly skilled, dispersed teams. Organizations with cultures that can attract (and keep) top talent will emerge as winners, changing the game and disrupting traditional business models—and even entire industries.
- Fast-growing, no-profit SaaS companies will collapse
The rise of Internet-based, Software-as-a-Service (SaaS) companies over the years has been tied to a new model: cash over time, rather than the traditional cash upfront model. But, the aim of profitability remains the same: no more waiting. Cash is still king and businesses need profit.
Many of these so-called multi-billion dollar businesses have no revenue, no asset value, no employees and no chance of survival, as long-standing, cash, asset, idea, and employee-rich companies reorganize to compete. Nimble, fast, and flexible is great—and the startups have done a great job in cornering that market. Enterprises might learn slowly, but they learn. And the further along they are on their journey towards digitalization, the more market share they can win back. So, as quickly as the fast-growing, no-profit SaaS companies have appeared, they will now begin to collapse.
- Digital becomes top priority for CEOs
It’s clear that in 2016 digital disruption will impact all markets. Earlier this year, I predicted that 50% of all market leaders will be obsolete in the coming decade because of digital disruption. Competition will come fast and furious from unforeseen sources. In a 2015 CEO survey, 58% of CEOs surveyed consider the rapid-fire rate of digital disruption a challenge to their business. But where there is risk there is also opportunity: 80% believe that disruptive technologies (mobile, the Cloud, analytics) will bring tremendous value to their business. That’s a heartening statistic.
To capitalize on opportunity, CEOs will need to understand how disruption impacts all functions of their organization. In 2016, CEOs will become the drivers of digital transformation initiatives, incorporating them in their corporate strategies and all parts of the business. Adaptive and creative leadership will succeed. Across the C-Suite, transformational leadership will overcome outmoded structures and old management styles to empower Millennials to self-direct, make decisions, experiment, innovate, and take risks; while providing the systems, structure and governance to protect the company, its assets and information from this ‘digital sandbox’ style cultural transformation. CEOs will have to obsess even more about the customer and rethink customer value and experiences. They will extend their ecosystems with a new willingness to partner to discover new consumers and markets.
Over the next five years, CEOs will lead by example, adopting a Digital Mindset. The Digital Mindset is driven by disruption, immediacy, and scale with centricity on journeys, experience, and a real-time-ness. Just like we have an IQ and EQ, organizations need to develop a DQ, a digital quotient, where strategy, culture, people, and capabilities converge. The CEO will lead this charge.
Whether you’re ready or not, the next wave of disruption is here. For more insight into what 2016 has in store, read my book ON DIGITAL.
I wish you all a Happy New Year and great success in 2016.