McKinsey & Co’s James M Manyika, Roger Roberts and Kara Sprague have identified eight technology-enabled trends that will help shape businesses and the economy in coming years.Managing relation
1.Distributing co-creation: The Internet and related technologies give companies radical new ways to harvest the talents of innovators working outside corporate boundaries. Today, in the high-technology, consumer product, and automotive sectors, among others, companies routinely involve customers, suppliers, small specialist businesses, and independent contractors in the creation of new products.
Outsiders offer insights that help shape product development, but companies typically control the innovation process. Technology now allows companies to delegate substantial control to outsiders. That is why ‘cocreation’ is the essence by outsourcing innovation to business partners that work together in networks. By distributing innovation through the value chain, companies may reduce their costs and usher new products to market faster by eliminating the bottlenecks that come with total control.
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Information goods such as software and editorial content are ripe for this kind of decentralised innovation. Companies can also create physical goods in this way. Loncin, a leading Chinese motorcycle manufacturer, sets broad specifications for products and then lets its suppliers work with one another to design the components.
2. Using consumers as innovators: Consumers also cocreate with companies; the online encyclopedia Wikipedia, for instance, could be viewed as a service or product created by its distributed customers. The way companies cocreate with customers is really a separate trend. Here the nature and range of the interactions, the economics of making them work, and the management challenges associated with them are different.
As the Internet has evolved—an evolution prompted in part by new Web 2.0 technologies—it has become a more widespread platform for interaction, communication, and activism. ‘OhmyNews’ for instance, is a popular South Korean online newspaper written by upwards of 60,000 contributing “citizen reporters.”
It has quickly become one of South Korea’s most influential media outlets, with around 700,000 site visits a day. Another company is the online clothing store ‘Threadless’, asks people to submit new designs for T-shirts. Each week, hundreds of participants propose ideas and the top six designs are printed on shirts and sold in the store; winners receive cash prizes.
3.Tapping into a world of talent: As more and more sophisticated work takes place interactively online and new collaboration and communications tools emerge, companies can outsource increasingly specialised aspects of their work and still maintain organisational coherence.
Top talent for a range of activities—from finance to marketing and IT to operations—can be found anywhere. The best person for a task may be a free agent in India or an employee of a small company in Italy rather than someone who works for a global business services provider. Software and Internet technologies are making it easier and less costly for companies to integrate and manage the work of an expanding number of outsiders.
This trend should gather steam in sectors such as software, health care delivery, professional services, and real estate.
4.Extracting more value from interactions: Companies have been automating or offshoring an increasing proportion of their production and manufacturing activities and their clerical or rule-based activities.
As a result, a growing proportion of the labour force in developed economies engages primarily in work that involves negotiations and conversations, knowledge, judgment, and ad hoc collaboration. By 2015 we expect employment in jobs primarily involving such interactions to account for about 44 per cent of total US employment, up from 40.
Managing capital
5.Expanding the frontiers of automation: Companies, governments, and other organisations have put in place systems to automate tasks and processes: forecasting and supply chain technologies; systems for enterprise resource planning, customer relationship management, HR and Web sites.
Now these systems are becoming interconnected through common standards for exchanging data and representing business processes in bits and bytes. What’s more, this information can be combined in new ways to automate an increasing array of broader activities.
During the late 1990s FedEx and UPS linked data flowing through their internal tracking systems to the Internet, to let customers track packages from their Web sites. This dramatically reduced the cost of serving them while increasing cutomer satisfaction.
More recently, Carrefour, Metro, Wal-Mart Stores, and other large retailers have adopted digital-tagging technologies, such as radio frequency identification (RFID), and integrated them with other supply chain systems in order to automate the supply chain and inventory management further.
6.Unbundling production from delivery: Technology helps companies to utilise fixed assets more efficiently by disaggregating monolithic systems into reusable components, measuring and metering the use of each, and billing for that use in ever-smaller increments cost effectively.
Information and communications technologies handle the tracking and metering critical to the new models and make it possible to have effective allocation and capacity-planning systems.
Unbundling works in the physical world too. Today you can buy fractional time on a jet, in a high-end sports car, or even for designer handbags. Unbundling is attractive from the supply side because it lets asset-intensive businesses—factories, warehouses, truck fleets, office buildings, data centres, networks, and so on—raise their utilisation rates and therefore their returns on invested capital.
Handling data
7.Putting more science into management: Technology is helping managers exploit ever-greater amounts of data to make smarter decisions and develop the insights that create competitive advantages and new business models.
Leading players are exploiting this information explosion with a diverse set of management techniques. Google fosters innovation through an internal market: employees submit ideas, and other employees decide if an idea is worth pursuing or if they would be willing to work on it full-time.
8.Making businesses from information: Accumulated pools of data captured in a number of systems within large organisations or pulled together from many points of origin on the Web are the raw material for new information-based business opportunities.
The Internet has brought greater transparency to many markets, from airline tickets to stocks, but many other sectors need similar illumination. Real estate is one of them. In a sector where agencies have thrived by keeping buyers and sellers partly in the dark, new sites have popped up to shine.
Moreover, the aggregation of data through the digitisation of processes and activities may create by-products, that companies can exploit for profit.
A retailer with digital cameras to prevent shoplifting, for example, could also analyse the shopping patterns and traffic flows of customers through its stores and use these insights to improve its layout or the placement of promotional displays.
Conclusion
Creative leaders can use a broad spectrum of new, technology-enabled options to craft their strategies. These trends are best seen as emerging patterns that can be applied in a wide variety of businesses. |
