A friend of mine was very worried the other day. His son, based in Toronto, had just informed him that he was transferring his savings from one of Canada’s largest and most established banks to one that had virtually no physical presence. No typical neighborhood branch to walk into, no tellers to interact with over the counter. All transactions would be carried out over the Internet, mobile app or via telephone. He asked if he should stop his son from switching banks as such a “virtual” institution did not inspire his confidence.
I could not help but smile. “Welcome to the 21st century enterprise,” I said. “Get used to the new paradigm.” His son was moving banks for a simple advantage: A “no-fee” chequeing account with a convenient banking experience. Even though there was no imposing brick and mortar building proclaiming a strong (and costly) presence, this lean and agile financial institution was in fact rooted within a complex ecosystem of specialists collaborating at the back end. A convergence of partners to offer new and valuable innovations such as biometric technology for voice banking and e-signatures, along with all the usual banking facilities. Customers clearly seem to be loving the new virtual banking experience. I was not surprised to find that nearly 2 million had signed on and had even given it the highest customer satisfaction ranking!
It’s not just the banking industry that is witnessing such a transformation. We’re seeing this change in the entire business landscape. Across the world, the global economy appears to be tripping and re-setting itsef. The shelf life of a Fortune 500 company, for instance, has dropped significantly. Yale Professor Richard Foster recently concluded that the average lifespan of a Fortune 500 company fell from 61 years half a century ago to just 18 years by 2010. The Economist reported that one third of the firms in the Fortune 500 in 1970 no longer existed in 1983, killed by merger, acquisition, bankruptcy or break-up. On the other side of the coin, the number of companies valued at $1 B or more in the past decade has shot up drastically from 42 to 105. And out of these firms, the top 10 billion dollar club startups are all sharing economy enterprises. In fact, according to one estimate, more than three-quarters of the S&P 500 companies in the U.S. by 2020, will be firms that didn’t exist in 2000.
This massive churn has been caused by a troika of factors. New technology, which has leveled the playing field and reduced entry barriers; changing customer expectations as they adapt to the digital age; and competition from new and nimble born digital companies causing widespread disruption.
In the world of computers, this would be called nothing short of a reboot. In management circles, it is being seen as a “Copernican Revolution”: a paradigm shift from the 20th century view that customers revolve around the stationary “center of the universe”—the value chain of the organization—to the view that the organization is one of many organizations revolving around the customer to meet shifting needs and desires.
As analysts take stock of the fatalities in this realignment, the subject of organizational longevity is piquing curiosity. What is the key to survival? What is the magic potion that fuels longevity? I subscribe to a simple insight provided in the book The Living Company by Arie de Geus. According to his fascinating argument, organizations that have high longevity are the ones who see themselves as “living beings” because only living beings can learn and improve. And Geus should know as he has walked the talk during a 38-year stint at Shell.
So what do organizations need to learn to survive and thrive? As I see it, they have to remodel themselves as a 21st century enterprise – a “21CE” – which displays five distinct characteristics:
•Experience-centric: The 21CE strives to offer a unified experience. It is acutely aware of the fact that customers today have a distinct expectation of a consistently satisfactory experience end-to-end, and that they are no longer satisfied with point solutions as has been the case so far.
•Outcome-based: As a direct consequence of the first characteristic, the 21CE applies technology to transform its business model and deliver “outcomes” which cut across value chains. It no longer operates or measures performance in input silos. Its success is driven through outcome-based targets and it quickly builds bridges between the necessary teams across functions or partners to achieve these.
•Agile and Lean: Big is no longer necessarily beautiful for the 21CE. A large sized organization could well imply a white elephant today that is completely out of step with the market. To ensure a swift response to changing market conditions, a 21CE is “optimized” in size for fast paced maneuvers.
•Service-oriented: Irrespective of the sector it operates within, the 21CE is in the business of ensuring high customer satisfaction within a dynamic market landscape. To do so, these organizations are cognizant of the need to change their operating models and become technology agnostic.
•Ecosystem–driven: Finally and most importantly, the lingua franca of a 21CE is non-homogenous “ecosystems.” These are complex specialized networks wherein employees, suppliers, providers, freelancers, smart assets and consumers collaborate to extend the ecosystem beyond the enterprise with one common motive – to weave together an experience that enhances customer delight and provides predictable service outcomes.
If you were to look at these tents from the lens of Technology provisioning then I believe a 21CE will need the following core IT/Technology Services:
•‘Beyond Digital’ Services to Build Unique Consumer Experiences: There is no longer any doubt that it is smart transformation through digitalization which is feeding an essentially experience economy. Within this new landscape, technology lies right at the heart of the 21 CE, as it builds the digital universe that lies behind its customer experience. This not only entails the right IT services to build the digital products and services consumed by its customers, but also the complex analytics that go into understanding customer preferences before designing them, and facilitating channels of collaboration within a unified ecosystem that orbits around the customer.
•Smart Machines Solutions to embed intelligence in asset value chains: In order to thrive in an interconnected world, the 21CE will necessarily need to embrace the all-pervasive Internet of things and the Industrial Internet of Things, aka smart machines. These present a metamorphic opportunity that promises to add $15 trillion to global GDP over the next 20 years. Yet, this digital tsunami will wreck existing structures to transform independent machines into forceful, inter-connected ecosystems with the power to change the world of manufacturing. This induction of such smart assets would require a confluence of technologies and specialized IT support to seamlessly integrate physical and digital worlds, weaving the power of big data with machine-to-machine communication.
•Next-generation ITO to create a lean and agile IT Landscape: Clearly, this transformation is not effected through a one-time ‘bolt-on’ solution. Having made the switch-over, the enterprise would then need to ensure that its operations run smoothly in a lean and agile manner. This may well call for beneath the surface and above the surface automation, robotics and artificial intelligence, thereby making enabling IT support for hardware, infrastructure and even core applications, a mission critical piece of the jigsaw.
•Orchestration Platforms for Services & Ecosystems – earlier in the blog I talked about ‘collaboration’ being the core DNA of a 21CE, technologically speaking this concept can only be rendered or realized through deployment of platforms that can orchestrate Services and Ecosystems to provide catalogues outcomes across Business, Consumer, Employees and Smart Machines like Process Utilities, Function Utilities, Technology Utilities and emerging XaaS formats etc.
Unlike the brutally competitive landscape of yesterday’s business, the nimble-footed 21st century enterprises thrive in a shared environment. They gladly strike alliances with like-minded organizations and the right technology partners, to collectively provide the best customer experience. Together, they are resetting the winners’ mould.
As for my friend, he is still pondering over the new definition of a successful enterprise. How would you describe the change to him?
Read more about the trends of 21st Century Enterprise