Global trends in transforming businesses

I take you on a three-step journey. First the global technology trends transforming all our lives. Second their radical, exponential impact on our businesses. Third, and most importantly, the common traits of the winners of disruption, so we can become the successful company of tomorrow.

Nine trends, a selection rather than a complete list. Connectivity: for the first time more than half the world's population is online, the largest internet population is in China at 800 million, ninety-three percent of the connected reach it through a mobile phone, and 2018 is the first year with more 4G connections than any other technology. Cloud has reached the mainstream, with three in four organisations at least partly there and a third of IT budget going to it, for speed of delivery, flexibility, horizontal scaling, cost and, yes, security. The internet of everything passed a landmark this year, with more connected machines than humans on the planet, heading for over 20 billion by 2020. Machine learning has been superior to humans since 2015, and nearly everything we do with it comes back to pattern recognition, on images, video and voice, where the constraint is training data. Next-generation AI is about general intelligence and self-learning, where a system became its own teacher and reached superhuman play from first principles, where systems can now explain their own diagnoses, and where AI as a service removes the dependency on scarce data scientists. Virtual, augmented and mixed reality are going mass market. Blockchain is becoming the world's connected brain, already live in food safety, health records and loyalty schemes. Edge computing brings computation to the user, and algorithmic advances have outpaced hardware far enough to put a deep-learning model on a five-dollar board. Quantum computing has entered the era of supremacy, solving problems classical machines practically cannot.

Those technologies hit our businesses exponentially. Look back 120 years on a logarithmic axis and computing power has grown consistently, from the electromechanical tabulators that gave birth to IBM to the graphics cards now used for crypto mining. The factor is one billion billion, ten to the eighteenth. Our brains evolved in a linear world, extrapolating today into tomorrow, and they cannot grasp that. Plot the same curve linearly and we are at a magnificent peak. Plot it ten years from now and today looks like the stone age. That is why established companies, still led by humans, get caught by surprise, and Kodak is the case everyone knows. And the disruption does not stop: telco, advertising, entertainment, books, retail, travel and transport have already been through it, while healthcare, banking, manufacturing, insurance and education are next. The time it takes to reach 100 million users keeps collapsing: the telephone took 75 years, the mobile phone 16, the internet 7, Facebook 5, WhatsApp 3, Instagram 2, and my former company Reliance Jio in India did it in 170 days.

So what do the winners have in common? The canvas spans customers, employees, partners and shareholders.

It starts with the customer. The better we understand them the better we serve them, and companies double their chance of beating the competition on profit when they use customer insight and analytics. Technology gives us far better insight than before, from behaviour, from direct feedback and from third-party sources, and digital touchpoints reveal where a purchase journey fails and what customers say about the brand.

Then the portfolio of initiatives, because resources are finite. In global companies the ratio of bureaucrats to productive staff runs about one in five. Successful companies run projects rather than hierarchies, with self-organised work cells that follow the two-pizza rule, each with clear objectives and key results, so resources can be allocated across a portfolio balancing short-term profit against longer-term and riskier opportunity, and cleansed continuously.

Each initiative runs agile, because in an exponential world a long plan goes obsolete before it ships. Build a minimal viable product, get it tested, improve it, and every release returns more customer insight. Design the user experience along the journey rather than touchpoint by touchpoint, across online and offline, multimodal in text, voice and video.

Data and algorithms are the epicentre, and data is the new gold. Companies expect twenty percent return on it in three years and a hundred percent in five, and forty percent of B2C marketers already use machine learning for lead generation and recommendation. Connect the sources, get a common data lake, build the models, and democratise access across the organisation rather than routing it through whoever owns the spreadsheet.

The new gold has to be protected. Since 2013 more records have been lost or stolen than there are people on the planet, seven million a day, at an average of three million dollars per breach. Identify through logs and alarms, build employee awareness, encrypt, keep only the data you need, patch promptly, use two-factor authentication, and do not forget physical security.

Architecture has to move at the same speed, so break the monolith into self-contained atoms exposed through APIs, the same atomisation we applied to the organisation, with Docker and Kubernetes making it routine. Capital has to be as agile as the organic portfolio: in a study of 2,400 companies, the eight percent that climbed into the top quintile over a decade shared a string of acquisitions worth about thirty percent of their own market cap, dynamic resource allocation, capex in the top fifth of their industry, and margins in the top third.

Simplify and automate, in that order. Almost half of companies are deep in automation, with returns between twenty and two hundred percent in the first year, from physical robots in warehouses to cobots on the shop floor to software automation across finance. And never forget the rule: digitise a bad process and you get a bad digital process.

Reinvent the business model by asking a fundamental question. Are we a manufacturer, or a company that enables customers to perform tasks with our equipment wherever and whenever they need to? Netflix went from renting DVDs to streaming to producing content. Car makers are investing in car sharing and autonomous driving, because the car is becoming a service rather than an asset.

And take the organisation with you. Physical and basic cognitive skills give way to technological, higher cognitive and social ones, so the demand changes rather than disappears. The cultural shifts that matter are lifelong learning, flexibility in business units, and cross-functional agile team working.