Winning the Digital Disruption Game: Answering the CASTing Call

Scott A. Snyder, Chief Technology and Innovation Officer, Safeguard Scientifics, Inc.
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Scott A. Snyder, Chief Technology and Innovation Officer, Safeguard Scientifics, Inc.

It was once a compliment to say that an organization was “a well-tuned machine,” but recent history is telling a different story. Those who achieved market leadership by building massive, high performing organizations and infrastructure now struggle to adapt in an age of digital disruption. As power shifts to empowered digital users, served by fast emerging tech giants who win on engaging experiences, traditional enterprises need to change their game to stay relevant.

When Jeff Immelt declared that the data coming from the equipment GE delivers will soon be worth more than the equipment itself, he created a mandate for driving digital innovation as a foundation for GE’s future business model. Likewise, when Francisco Gonzalez, the mercurial Chairman of BBVA, set the vision for a two-speed business model that could support rapid digital experimentation while continuing to deliver operational excellence in the core business, he likened it to “changing the tires on a truck still in motion.” Beyond the declaration by leaders like these that transformation is necessary, winning organizations are answering a new “CASTing call”— creating offerings and experiences that are Connected, Aware, Smart, and Trustworthy, enabling them to meet the rising expectations of customers, employees, and citizens in every segment of society.

True leaders know they cannot afford to fall behind the digital curve. According to a recent McKinsey study on Digital Quotient, digital leaders outperform their peers with 5X more revenue growth, 8X more operating profit growth, and nearly 2X better shareholder returns—yet only 16 percent of companies are really positioned to be digital leaders in their respective markets. Despite the top-of-mind status of “digital transformation” in the minds of most executives, there remains a significant gap in achieving the real impact of digitizing enterprises.

  True digital transformation requires rethinking how business is conducted 

To unleash these gains for your business, true digital transformation requires rethinking how business is conducted— including business processes, organization and talent, innovation models, and how to fully engage the digitally empowered customer. Despite the broad range of verticals and applications for the next generation digital technology, certain themes have begun to emerge. The new wave of products, services, experiences, and business models are ‘connected’.

Despite widespread emergence of connected consumers and their smartphones, the majority of the 50B devices that will be connected by 2020 will not be attached to humans. A swarm of interconnected things is continually raising the bar for ubiquity and scale. Declining cost, growing personalization, and 5G/Fog computing at the edge will extend the reach of this connectivity even further into every corner of our lives and businesses, enabling situational and contextual awareness like never before.

Being “Connected” is the nuts-and-bolts of bringing in the bits, whether they represent customers’ intentional communications or connected devices’ event-driven data, with consideration of volume and latency and accuracy—and probably, a stratified architecture that has enough knowledge at the edge to know what’s worth telling the center.

Aware

When IBM’s Watson machine intelligence beat Ken Jennings on Jeopardy!, and more recently Google DeepMind’s AlphaGo AI beat world champion Lee Sedol in Go, their victories asserted the power of machine learning to create deep and even original insights from massive amounts of data. Most companies today, however, are data rich and synthesis poor, and have not even begun to harness these powerful technologies.

It’s not enough to be connected to data: there must also be a commitment to turn that data into customer value, because customers who form collaborative and co-creative networks and communities will enrich data-driven insights through the collective intelligence of “the crowd”. GE’s Predix analytics platform is a powerful example of harnessing big data to drive insights and predictive maintenance, for everything from jet engines to appliances.

Being “Aware” is the everyday, increasingly 24×7 hard work of proving to served communities that the data they’re contributing inspires prompt and effective attention to their needs. This is making sure that the Facebook posts get answered, that the Tweets yield quick replies, that the telemetry gets reliably classified as to normal operations versus anomalies needing urgent response.

Smart

Companies like Nike, Netflix, and Progressive have become data companies masquerading as product and services companies. Nike is using its base of 28 million plus Nike users to sell the next sneaker when the runner’s treads are worn down. Progressive is driving new revenue and reducing risk through its usage-based insurance product, Snapshot. Netflix is harnessing the power of its viewing data to create new shows that outperform the major networks by a factor of 2X.

These companies represent the leading edge of next-generation AI, based on machine learning and prediction rather than “knowledge engineering” and rule-base maintenance. “Smart” is the necessary application of technology to leverage the hard work of awareness, in the face of the huge data volumes from connectedness, to enable personalized enlightened proactive interactions with your customers. Is your awareness making your actions smarter, or just busier? Are your connections moving you from prediction to “prescription,” or just improving your bookkeeping of the less enlightened things you've been doing too long?

Trust

Trust, in this context, means embedding privacy and security at all layers of interactions. Emerging technologies such as biometrics and blockchain hold the promise of reducing the friction and improving the transparency of digital interactions, but only if companies understand that they ultimately need to deliver benefit in exchange for collecting user data.

Businesses like Waze and Pandora inherently provide this balance of benefits upfront, as both the user and broader group of users benefit by increased sharing and participation. Unfortunately, most applications ask for too much data and deliver too little benefit—which is likely why 70 percent of apps are never used beyond the initial download.

Trust is also the acknowledgment of responsibility for personal data, whose breach is inherently harder to repair than financial and transactional data leakage or compromise.

Becoming “Trusted” means creating and sustaining a culture that says “We will collect data with respect, use it with consideration, and manage it with discipline.” Are you recognizing that today's customer is increasingly prepared to pay someone else a higher price, if part of what they’re buying is greater confidence in that vendor's or service provider’s data stewardship?

As the increasingly popular buzz phrase of “digital transformation” makes its way from the conference circuit to the board rooms of major enterprises, companies will need to decide what it means for them and how to truly become a leader versus a bystander in the digital disruption game. Digital Transformation is such a broad term that it gives no useful checklist for the essential components of a strategy; it can be so vague that anyone can claim to be running the race, when perhaps they are merely getting to the point of being able to take their mark and get set to start. CAST represents a core framework that will allow companies to compete and differentiate in the new era of empowered digital end-users. Are you ready to answer the CASTing call?

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