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.

How do countries regulate?

IMG_0153Regulation is a major issue for business.

A lot of it is good and needed – to make sure we have standards that all must abide by and ensure fairness in the system.

But increasingly, regulation of an industry is driven for purely political reasons – done to achieve a political aim without really understanding the implications across a system.

While undertaking research on regulation I found that Europe has enacted 4 times as much regulation over the past 4 years as the US. A significant imbalance.

And the orientation of regulation changes by jurisdiction:

– the US generally regulates to favor big business

– China generally regulates to favor the SOEs (State Owned Enterprises)

– European regulation generally favors the individual

None of these are wrong – it just means significantly different outcomes for each piece of regulation – often creating unintended consequences for stakeholders that aren’t the primary audience of the regulation.

Truly understanding the impact of regulation on all stakeholders in a system is not too much to ask – or is it?

I’m back

I am now the Global Chief Strategy Officer for Deloitte based in NY.

So much has changed since I started this blog – with new technologies, new business models, AI and regulation taking hold and shifting the dynamics of our world.

Yet, in some ways – so much has stayed the same. The need for great strategy, the importance of continually innovating and mostly how connecting with people is still the most important determinant of success.

I will be more diligent in maintaining this site to bring relevant insights and views

Best John

The case for innovation 

Today I will be a speaker at the UNSW Innovation summit, sharing some of the insights of a 10 year innovation journey. 

In today’s market, the need for breakthrough innovation, particularly in business model is acute. 

A range of the old truths regarding innovation are no longer truths:

  1. To get breakthrough innovation you need lots of ideas – in fact focused innovation is the key to creating business model change
  2. Fail fast, fail quickly – absolutely you have to be prepared for ideas and investments that don’t succeed. But this statement has become an excuse for indiscriminate and unfocused idea generation 
  3. Process kills innovation- regulation can create a lack of agility but the right processes – processes that create a disciplined approach to take ideas to implementation is what is needed to bring innovation to life. 

For Australian businesses, Innovation is not an option. 

Last year Australian businesses spent $30bn on innovation- sounds a lot but places us 19 on the innovation list (comparative to market size) and we are a poor 76 on innovation efficiency. 

In my view business needs to do more. 

How we approach innovation, how we lead our organisations to embrace business model change and how we drive to make our businesses ‘future ready’ will determine the long term sustainability of our organisation. 

Innovate or copyvate? 

Innovation is now essential for all organisations. 

The rapid changes occuring in business model, driven primarily by new technologies, means if you are not innovating your business model, service and product you are unlikely to be sustainable in the medium term. 

I believe innovation can come from internal innovation (innovate), acquiring externally developed ideas or products (acquivate) or innovations developed in conjunction with customers, alliance partners and your ecosystem (ecovate). All forms are important as you need a portfolio to be effective. 

A traditional school of thought has been to pay attention to competitors and be a fast follower – letting a competitor spend the R&D and rapidly copy any new feature or release (copyvate).  This is a legitimate modus operandi for all organisations- having strong competitive intelligence is essential. 

But if this is your only or primary focus, it comes with significant perils. Why? 

1. Certain of the new models are largely winner takes all. Network or platform models ( think Uber, Airbnb and Amazon) are incredibly difficult to compete with as a fast follower once they have established their base. 

2. Innovation is as much cultural as it is programmatic. Being a fast follower only, does not build the spirit within your people that I believe is needed to keep driving the company forward with new ideas and improvement. 

3. Being a fast follower only means the company is often fixated with the one competitor and fails to recognise disruption coming from other organisations or the opportunities from adjacencies. 

Having a portfolio of innovation, including all sources of innovate, acquivate, ecovate and yes, copyvate, is essential and increasing in importance in today’s fast changing world. 

We’ve moved from big data to big A!


So what does the A Stand for?

The companies that are thriving are the ones that get a lot of users and data – but what sets them apart is their Algorithm. Companies such as Google and Amazon use their algorithm to personally tailor the site or offer for every user. This makes them far more effective than companies that display the same site regardless of the data and (often uncurated) knowledge they have of their customers.

Amazon is the most effective at this – constantly looking at what you’re shopping for and displaying the most relevant products. They are also scouring the net to make sure they are providing the most competitive pricing.

Facebook, Instagram, Google are all strong and improve their algorithm all the time. Never resting to ensure they can get even the smallest incremental benefit by improving their algorithm.

Clearly it is easy to think about online companies when we talk about tailoring the offer or product. But this approach is just as relevant for all companies – creating dynamic segmentation to ensure you are always tailoring your offering or taking a service or product to customers with similar characteristics.

This isn’t new – it’s just with AI/Cognitive techniques and huge amounts of data – it can be done far more effectively and tailored to a target audience of one.

Not all new age companies are good at it – but that’s a story for another day.

Have we got the acronym AI wrong? 

Is the term artificial intelligence (AI) the right term? 

If you think about it, what is artificial about the intelligence created by machines?  

Using cognitive technology or machine learning to create insights that seem to be pretty real to me. 

The term artificial obviously refers to non- human intelligence; but again I believe this is taking the wrong position. 

It is referring to a world of ‘man against machine’. We should be thinking of ‘man with machine’ and the huge opportunity that human intellect and creativity and machine intelligence can bring together. 

Surely the right term for AI is augmented intelligence – and the thoughts of how we can harness all for a much better world.