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Pointing to VR

I love it when organizations do something clever with technology.

British Airways have a very clever billboard in Piccadilly Circus that has a young boy pointing to a BA plane flying overhead with the Billboard stating where the plane is going to or coming from.

If you haven’t seen the advertisement there is a link below to YouTube:

It is a taste of what is to come in the future – the use of new technologies such as Virtual Reality and Augmented Reality to change our experiences.

I think these technologies are still underused by most organizations. We do see places like IKEA starting to use it to show how furniture will fit within your own home.

At Deloitte we use them as a good training tool and we are starting to use them increasingly to show clients what an outcome of an initiative would look like.

How important is Innovation?

US$456 billion important.

That is how much the top 1000 Global companies spent on Innovation in 2017.

In fact between 2012 and 2017 they increased their innovation spend at a 6% CAGR.

Those stats would indicate that Innovation is incredibly important and the major companies are only seeing it as increasingly so.

A recent survey indicated that one third of executives expected their innovation spend to increase by 50% in the years 2017 to 2022.

87% of companies have a lab or space dedicated to innovation and there has been a 27% growth in innovation centers since 2016.

And the results of this spend?

No question that results are mixed.

Risk aversion, incrementalism, impatient capital, internal politics and misaligned incentives all hamper the effectiveness of innovation and innovation centers.

But those that are clear on the importance of Innovation, provide top leadership backing and can articulate what they want to achieve are having success.

Innovation can’t be a spray and pray exercise. It needs to be directed and result in tangible outcomes. Gone are the days where the view was that you just needed to spawn innovation everywhere and something of value would pop out.

Innovation is a process and there should be a clear objective in mind.

At Deloitte, we believe it should be about changing all or part of the organization’s business model to compete in a world of Industry 4.0 – a world where physical and digital collide.

Changing culture – repeat, repeat, repeat

I spent a few hours with the CEO of a major organization talking about changing the culture in an organization – something that is easy to say – but incredibly difficult to do.

In most organizations, the rules of how the organization works and how people treat each other and interact are not codified – by that I mean written down and standardized. But despite this, the cultural rules and norms are hard wired – people quickly pick up on ‘that’s how we behave around here’ or ‘that’s how we do it’.

Changing the culture is a step by step process – being very deliberate about what you want to change and demonstrating the change through actions, recognition and reinforcement.

A key component is repeat, repeat, repeat – telling the message again and again until you almost feel ill saying it again – and only then is it starting to sink in.

Without continued demonstration of what is required and repeating of the message, existing behavior quickly reverts.

There is no question that getting the culture right is vital. However, I don’t support the view that ‘culture eats strategy for breakfast’. If either strategy and culture are misaligned or either is poor, you will not be successful.

A great culture doesn’t make up for a poor strategy and a great strategy can’t be implemented if the culture is not aligned and positive.

Nike and all trying to create a platform

SWOOSH

Today Gartner put out a story on Nike developing a new AI capability to enable people to get the right shoe size – apparently 3 out of 5 don’t have the right size. (See link below on Nike’s game changer)

Nike, like its competitor Under Amour, have invested heavily in technology to try to create a platform – get customers/users to connect and provide and receive data that enables them to offer services that go beyond shoes and apparel.

The sports companies are no different to every other major brand organization – the top 30 organizations by brand are, or are trying to be, platform organizations.

The likes of Apple, Google, Amazon, Facebook are obvious and all started out as platform organizations. And all are nearing the $1Trillion market capitalization due to their massive reach and flywheel model.

Others that may not be so obvious are the likes of:

  1. BMW, Mercedes Benz, Toyota and Honda – using the car as a platform, both receiving and transmitting data
  2. GE – with IoT technology and sensors, connecting up the huge base of installed engines and machinery
  3. Walmart – have invested heavily in technology to become a ‘smart technology enabled retailer’ to effectively fight the threat of Amazon on retail sales
  1. Disney- creating a digital linkage to customers on all their offerings

Platform businesses can create a leverage effect and spawn the ‘flywheel’ models that are all the latest rage (and the subject of a future post).

https://www.l2inc.com/daily-insights/nikes-game-changer

Automation should be an A

A lot of Executives ask ‘what should be a key priority for my Business?

I know they are generally concerned about high order issues – such as growth, sustainability of their business model, customer intimacy, disruption and transformation.

But my initial answer goes to a lower order fix – that saves money, creates capacity and helps set the base to tackle transformation and the higher order challenges.

The ‘fix’ I talk about is automation – ensuring that critical processes and activities in their business are streamlined, codified and automated.

Automation, and particularly refining and documenting the processes and activities to enable automation, ensures that the organization has a standard way of doing things. If done well, it eliminates unnecessary activity and duplication. Digitizing activities sets the base for transforming the organization to a more digital future and creating new online business models to create better customer knowledge and intimacy.

But to date, their is a surprising reluctance to really embrace automation in many organizations.

I hear a range of reasons:

1. A lack of understanding by senior personnel

2. A fear that it will eliminate roles and create people concerns

3. That documenting what is done will highlight the inefficiencies that sit within the current system

4. That people are so busy doing the everyday that capacity can’t be devoted to automation

5. That existing systems are old and creaking and their is concern to ‘tinker’

6. That the new systems we are putting in will have all that!

7. I don’t want to make investment right now.

A well structured approach to automation solves all these issues – with generally fast payback. Investing in additional capability to get going will create money and capability and staff generally respond well. They realize the flaws in existing processes and in the main are pleased to be part of an organization that is modernizing.

And both old and new systems are not a barrier or replacement for automation.

So to me, Automation should be a A priority issue for most.

AI – not for fast followers

AI has been spoken about for quite a while and you hear people say that ‘they have not yet seen the benefits’.

As with all new technologies, there is often a period of ‘over-hyping‘ – but for organizations that have been investing over a period of time, they have generally come through the period of disillusionment . To me there is no question that AI is starting to, and will continue to have a major impact on all businesses.

Below is a link to a great report by Deloitte colleagues looking at the State of AI by country.

https://www2.deloitte.com/insights/us/en/focus/cognitive-technologies/ai-investment-by-country.html

A key thing for me is that in most situations, I don’t believe you can afford to be a fast follower when it comes to AI. Sure, for some of the simpler or ‘commoditized’ processes it might be ok to not be first.

But to truly gain competitive advantage in your core business from AI, there is a requirement for considerable investment of time and resources  – ensuring the right data structures, algorithms, evolution of machine learning and determining how the results can be applied.

And while I am not a fan of the word exponential , there is no question that there is an exponential improvement in the benefits that accrue once an organization ‘gets it right. An organization that has truly started to reap the benefits in their core business will be difficult to catch.

Money and mission

This week I gave a talk to 120 young people on strategy, innovation and purpose – all critical topics in today’s world.

A lot of the questions were around purpose – and what Deloitte was doing to ensure purpose and better the community across the globe.

The great thing is that we can be very proud of what we are doing – in terms of diversity and inclusion, improving the lives of 50 million underprivileged people through creating opportunities in education and providing money and expertise to help an array of ‘for purpose’ organizations.

However a lot of the questions were about why weren’t we doing more on this cause or that cause. And all of the causes were worthy.

However, I always return to my two key principles:

1. There is no mission without money – the businesses that can afford to do the most in terms of social license and the community are the businesses that are financially strong in the long term. So getting the basics right on financial performance is vital if you want to be a great social contributor

2. Like strategy and innovation, purpose and social license are about choices – being clear about what area and how you will make an impact – making sure you are not spreading your focus and capabilities (and money) too broad and wide. Just like strategy there are many initiatives you can back – but it really is about having clarity on the choices you make

Interview on Innovation

Yesterday I was interviewed by John Durie a senior journalist at The Australian on innovation, disruption, Asia and what is happening globally.


Word on research

The Australian, Australia  by  John Durie 03 May 2019Business News – page 26 – 323 words


US companies account for 57 per cent of US spending on research and development, but in Australia it’s just 34 per cent.

The good news is this means the universities and others are filling the slack, but the Deloitte figures show corporate Australia has some heavy lifting to do if it wants to remain competitive.

Deloitte’s global strategy chief John Meacock is in town to spread the word and the Australian native said in an interview that perhaps Australia’s record 27 years of growth had made companies too conservative.

Asia is high on his to-do list, saying everyone talks about the region, but the key is to shift from a trading relationship to building business.

Ironically he is not the only one to raise this issue, with no one in business calling a recession, but noting there is a new generation in the workforce who have never lived through a prolonged downturn.

Deloitte regards itself as a professional service firm with just 13.5 per cent of Australian revenues earned from traditional audit work. Instead, Meacock says the firm has extended and developed its strength to partner with clients to help them transform their business. Deloitte itself has partnered with companies such as McLaren to tap its expertise on a range of issues – including, of course, using data.

He has noted that compared with his new home there is more discussion about policy in Australia, and while President Donald Trump has divided the US he has been positive for business, with the past four years seeing less regulation, with red tape now at just one-third of European levels.

Companies, he said, now understood they had to be profitable but for a purpose that includes making a social contribution and the key was to get the balance right.

Artificial intelligence, he argues, is the wrong term because machines and people working together is very real and instead we should talk about augmented intelligence.

Business Model change – Impact on the everyday

I’m currently in Sydney for a couple of weeks and staying in an AirBnB apartment. Until a few years ago, the automatic choice would have been a hotel.

During the stay I have used Uber and GoGet (car sharing) to travel around, booked restaurants through Opentable, had food delivered through Grubhub and chatted to colleagues in the US and Europe on Skype.

Most of the interactions have been done using my iPhone – not through a computer. It is all just part of everyday life – seems normal and done without a second thought.

But if you take a step back to reflect on all the names that I have mentioned above, it highlights the enormous Business model changes and how they have impacted our lives.

It really does answer the question I get often from Directors and Executives on ‘how real is technology disruption and business model change?’

And I still believe that the change is just beginning. New technology – AI, cognitive, cloud and big data – will continue to drive change and that change will be exponential. And like my experience in the last couple of weeks, the old ways are quickly forgotten as we race to adopt the new.