TechSavvy: Is Your Company Winning the Race to Digital Transformation?

MIT Sloan Management Review, November 10, 2016

by Theodore Kinni


In some respects, the digitization of business is a pretty nebulous subject. It’s not like a company achieves digital transformation on some specific date — the darn target moves as new technologies and applications appear. That’s one reason why Jane McConnell’s 10th annual inquiry into “The Organization in the Digital Age” is worth a look.

McConnell frames digital transformation as an organizational imperative that manifests itself in three dimensions: people, workplace, and technology. Over the past decade, she has been gauging the progress that a broad, international group of 300+ companies and other institutions has been making toward this imperative in three stages.

The Starting stage is defined by an individual (rather than organizational) digital awareness — digital initiatives are ad hoc and infrequent; senior leaders are minimally involved; most decisions are made by traditional hierarchy; work mainly takes place in established channels, with some virtual venues. The Developing stage is defined by mobilization — a compelling vision for digital transformation exists; senior managers are leading the charge; most functions, levels, and entities are involved in digital initiatives. The Maturing stage is defined by trust — digital is considered a strategic asset; it is embedded in work practices; much decision making is decentralized; information and collaboration is organization-wide and includes customers and external partners.

“The 2016 data shows 16% of the survey participants in the Maturing stage, 52% in the Developing stage, and 32% in the Starting stage,” McConnell reports. Where does your company place? Read the rest here.

TechSavvy: How “Smart” Is Your R&D Spending?

MIT Sloan Management Review, November 3, 2016

by Theodore Kinni

Strategy&’s annual Global Innovation 1000 study, which examines the 1,000 public companies that spend the most on R&D (collectively 40% of the world’s total R&D spending), is always insightful. The most dismaying finding: In every one of the past 12 years, the study has found no statistically significant relationship between the financial performance of the Innovation 1000 companies and their R&D spending.

Assuming that fact doesn’t cause you to throw up your hands and use your company’s R&D budget for a massive beer bash, this year’s study, published in strategy+business, provided another insight that is well worth considering: A transformation in R&D spending is occurring.

“R&D is shifting more and more toward developing software and services,” write Strategy& principals Barry Jaruzelski, Volker Staack, and Aritomo Shinozaki. “Software increasingly carries the burden of enabling product differentiation and adaptability, and enhancing customer experiences and outcomes. Services, offered along with or separately from physical products, now focus more on new customer needs, providing enhanced value and improved usability.”

This shift, explain the authors, is driven by the ever-increasing capabilities of software, the embedding of software and sensors in products, the ability to connect products via IoT and the cloud, and, as always, customer demand. It’s manifesting in every kind of “smart” product and service.

Since 2010, the Global Innovation 1000 companies have increased their R&D spending on software offerings by 65% — to $142 billion. In addition, report the authors, “companies currently allocating 25% or more of their R&D budgets to software offerings reported that their revenues were growing significantly faster than those of key competitors with lower allocations.”

What does your company spend its R&D budget on? Read the rest here.

TechSavvy: Competing for Talent in the Platform Economy

MIT Sloan Management Review, October 24, 2016

by Theodore Kinni

Platforms are all the rage these days. Companies are being urged to create their own — à la Uber and Airbnb. But platform advocates often take one thing for granted: a seemingly infinite supply of workers who will happily do the platform operator’s bidding in return for, well, whatever the operator is willing to give them.

That may not be a sound assumption, especially as the competition heats up in platform markets that prove viable. Witness Sheelah Kolhatkar’s article on Uber’s fast-growing rival, Juno, in The New Yorker. “Juno’s business model is to take what Uber has created and appropriate it,” writes Kolhatkar. “Most of what Juno does is predicated on the fact that many drivers feel mistreated by Uber. … If Uber seems cold and impersonal, Juno will smother its drivers with attention. If Uber has raised its commission — the part of each fare that the company keeps — Juno will set a much lower one.”

As the folks at Uber think about how to frame a response to the wooing away of its drivers, they might want to read the new report on platform workers from the Institute for the Future. The IFTF did an ethnographic study of a select group of platform workers. It found the workers fit into seven distinct archetypes and that there are seven qualities that define the platform working experience.

The study also found out what platform workers care about. Their top three concerns: income potential; control over choosing which jobs to take; and work frequency, immediacy of payment, and convenience.

Uber isn’t the only company that should be reading the IFTF report. Its battle for drivers suggests that eventually all successful platform companies will have to compete for contract workers. So they better get to know them. Read the rest here.

TechSavvy: Beware the Paradox of Automation

MIT Sloan Management Review, October 20, 2016

by Theodore Kinni
Earlier this year, Facebook exorcised those pesky human editors who were introducing political bias into its Trending news list and left the job to algorithms. Now, reports Caitlin Dewey in The Washington Post, the Trending news isn’t biased, but some of it is fake. Turns out the algorithms can’t tell a real news story from a hoax.

Facebook says it can improve its algorithms, but errors of judgment aren’t the only pitfall in transferring human tasks to machines. There’s also the paradox of automation. “It applies in a wide variety of contexts, from the operators of nuclear power stations to the crews of cruise ships, from the simple fact that we can no longer remember phone numbers because we have them all stored in our mobile phones, to the way we now struggle with mental arithmetic because we are surrounded by electronic calculators,” says Tim Hartford in an excerpt published by The Guardian from his new book, Messy: The Power of Disorder to Transform Our Lives. “The better the automatic systems, the more out-of-practice human operators will be, and the more extreme the situations they will have to face.”

Hartford borrows William Langewiesche’s harrowing description of the crash of Air France Flight 447 to illustrate three problems with automation: “First, automatic systems accommodate incompetence by being easy to operate and by automatically correcting mistakes. … Second, even if operators are expert, automatic systems erode their skills by removing the need for practice. Third, automatic systems tend to fail either in unusual situations or in ways that produce unusual situations, requiring a particularly skillful response.”

The excerpt is worth a read — especially if it prompts you to ask if your company’s automation initiatives might entail similar risks. Read the rest here.

TechSavvy: Why Digitization Won’t Put Operations Managers Out of Work

MIT Sloan Management Review, October 13, 2016

by Theodore Kinni

On Oct. 3, ING Group joined a growing number of big European banks when it announced a big investment in digital technology (800 million euros) and a big reduction in force (11% or 5,800 jobs). “Unfortunately digital transformation means less jobs,” CFO Patrick Flynn told Bloomberg Television not very ruefully.

But perhaps not fewer management jobs. “Even as organizations balance lower investment in traditional operations against greater investment in digital, the need for operations management will hardly disappear,” write McKinsey consultants Albert Bollard, Alex Singla, Rohit Sood, and Jasper van Ouwerkerk in a new article in McKinsey Quarterly. “In fact, we believe the need will be more profound than ever.”

In the near term, the challenge will be the ability of companies “to embrace digital innovation and operations-management discipline at the same time.” That, the authors say, will require figuring out how to combine digital and human resources, modify employee roles to showcase and sustain digitization, support customers as they figure out how to work with the organization, and develop leaders and managers with “much stronger day-to-day skills in working with their teams.” Read the rest here.

Tech Savvy: Hacking Your Work-Life Balance

MIT Sloan Management Review, October 6, 2016

by Theodore Kinni


When I read CEO memoirs, I always keep an eye out for insights into how people in demanding positions maintain a healthy work-life balance. But when the topic is addressed at all, it’s usually in a dismal admission that life — mainly family life — got the short end of the stick. Happily, Michal Lev-Ram’s Fortune profile of Qualtrics CEO Ryan Smith suggests there might be a better way.

Smith has his hands full. The Provo, Utah-based online survey company he helped co-found in 2002 has 1,200 employees and a valuation of more than $1 billion. He and wife Ashley, who has a business of her own, have five kids ranging from 4 months to 8 years old. But he says he keeps it all together by “hacking the integration” of life and work. That means tracking both work and family time.

“Smith continually uses data to inform and guide the way he allocates his time,” explains Lev-Ram. “With the aid of an executive assistant who’s a former statistician, Smith tracks everything from the number of hours he devotes to interviews to how much one-on-one time he spends with each of his children. Ask him how many nights he spent away from home last year, and all he has to do is consult a spreadsheet.” Quarterly, the CEO reviews a colored-coded spreadsheet that summarizes how he spent his time, and then sets new goals and rules for work and life.

Who knows? If Smith keeps it up for another 20 years or so, maybe his CEO memoir won’t be quite as dismal as all the others. Read the rest here.

TechSavvy: That Sound You Hear Is Your Enterprise’s AI Technology

MIT Sloan Management Review, Sept. 22, 2016

by Theodore Kinni

Apple held its “Special Event” and, among other things, officially killed the iPhone’s 3.5-millimeter earbud jack, replacing it with $159 wireless AirPods. My first reaction: Meh. But then I read Mike Elgan’s paean to this development in Computerworld.

Elgan says that AirPods are actually artificial intelligence hardware. “The biggest thing going on here is the end of ‘dumb speaker’ earbuds, and the mainstreaming of hearables — actual computers that go in your ears,” he says. “Bigger still is that the interface for these tiny computers is a virtual assistant. When you double-tap on an AirPod, Siri wakes up, enabling you to control music play and get battery information with voice commands.”

What does this mean for your company? Soon every employee could have a supercomputer whispering in his or her ear. For instance, Hearables startup Bragi and IBM just announced that they plan to combine Bragi’s Dash earbuds and IBM’s Watson IoT platform “to transform the way people interact, communicate, and collaborate in the workplace.”

Earbud-sporting workers, according to the companies, will use the devices to “receive instructions, interact with co-workers, and enable management teams to keep track of the location, operating environment, well-being, and safety of workers.” Bragi and IBM have targeted six areas of initial focus: worker safety, guided instructions, smart employee notifications, team communications, workforce analysis and optimization, and biometric ID. Read the rest here.

TechSavvy: Monitoring Your Employees’ Every Emotion

MIT Sloan Management Review, September 15, 2016

by Theodore Kinni

Have you heard about the Cowlar? It’s a smart collar that dairy farmers can strap around the necks of cows to monitor their herds. It promises improved milk production, early disease detection, heat detection, and real-time monitoring and alerts. How would you feel about wearing one? I ask because it seems like it’s a question that more and more employers are asking their employees.

“Companies including JPMorgan Chase and Bank of America have had discussions with tech companies about systems that monitor worker emotions to boost performance and compliance, according to executives at the banks,” reports Hugh Son in Bloomberg Businessweek. They got the idea from MIT Sloan School prof Andrew Lo, who strapped wristwatch sensors that measure pulse and perspiration on 57 stock and bond traders to monitor their reactions in a simulated trading environment. “Imagine if all your traders were required to wear wristwatches that monitor their physiology, and you had a dashboard that tells you in real time who is freaking out,” Lo said to Son. “The technology exists, as does the motivation—one bad trade can cost $100 million.”

If this suggests that employee monitoring devices will be limited to high-risk occupations, you should read Thomas Heath’s Washington Post article on Boston-based Humanyze. Humanyze makes and monitors employee ID badges that hang around your neck. “Each has two microphones doing real-time voice analysis, and each comes with sensors that follow where you are in the office, with motion detectors to record how much you move,” writes Heath. “The beacons tracking your movements are omitted from bathroom locations, to give you some privacy.” The company’s CEO Ben Waber predicts that “every single” ID badge will be so equipped within three to four years.

As with other means of digitally monitoring and measuring employee activity, companies probably should expect some pushback, including legal challenges relating to privacy and discrimination. But Waber says that you can tell employees that their new IDs are “exactly like a Fitbit for your career.” I think it’s going to be a little harder to explain away their unflattering similarity to Cowlars. Read the rest here.

TechSavvy: A Code of Ethics for Smart Machines

MIT Sloan Management Review, September 8, 2016

by Theodore Kinni


Smart machines need ethics, too: Remember that movie in which a computer asked an impossibly young Matthew Broderick, “Shall we play a game?” Four decades later, it turns out that global thermonuclear war may be the least likely of a slew of ethical dilemmas associated with smart machines — dilemmas with which we are only just beginning to grapple.

The worrisome lack of a code of ethics for smart machines has not been lost on Alphabet, Amazon, Facebook, IBM, and Microsoft, according to a report by John Markoff in The New York Times. The five tech giants (if you buy Mark Zuckerberg’s contention that he isn’t running a media company) have formed an industry partnership to develop and adopt ethical standards for artificial intelligence — an effort that Markoff infers is motivated as much to head off government regulation as to safeguard the world from black-hearted machines.

On the other hand, the first of a century’s worth of quinquennial reports from Stanford’s One Hundred Year Study on Artificial Intelligence (AI100) throws the ethical ball into the government’s court. “American law represents a mixture of common law, federal, state, and local statutes and ordinances, and — perhaps of greatest relevance to AI — regulations,” its authors declare. “Depending on its instantiation, AI could implicate each of these sources of law.” But they don’t offer much concrete guidance to lawmakers or regulators — they say it’s too early in the game to do much more than noodle about where ethical (and legal) issues might emerge.

In the meantime, if you’d like to get a taste for the kinds of ethical decisions that smart machines — like self-driving cars — are already facing, visit MIT’s Moral Machine project. Run through the scenarios and decide for yourself who or what the self-driving car should kill. Aside from the fun of deciding whether to run over two dogs and a pregnant lady or drive two old guys into the concrete barrier, it’ll help the research team create a crowd-sourced view of how humans might expect of ethical machines to act. This essay from UVA’s Bobby Parmar and Ed Freeman will also help fuel your thinking. Read the rest here.

TechSavvy: Every Company Is a Tech Company and Tech Is No Longer an Industry

MIT Sloan Management Review, September 1, 2016

by Theodore Kinni

If you’re competing on the uneven playing fields created by so-called tech companies — like Uber, Airbnb, and Alibaba — that seem to be able to ignore the rules of the game with impunity, you’ll want to read Anil Dash’s latest missive on Medium.

“Once upon a time, it made perfect sense to talk about ‘the high tech industry’ in America — pioneering companies like Intel or Fairchild Semiconductor or IBM or Hewlett Packard made computer processors and related hardware, and most of the companies in Silicon Valley dealt with actual silicon from time to time,” writes Dash. “But today, the major players in what’s called the ‘tech industry’ are enormous conglomerates that regularly encompass everything from semiconductor factories to high-end retail stores to Hollywood-style production studios. The upstarts of the business can work on anything from cleaning your laundry to creating drones. There’s no way to put all these different kinds of products and services into any one coherent bucket now that they encompass the entire world of business.”

But we try anyway, and that needs to stop ASAP, argues Dash. “The reason is simple: A reductive name for the industry masks an enormous set of social challenges that we need to tackle quickly. Mature industries develop their own regulatory frameworks, their own systems for self-regulation, and their own standards for monitoring transgressions within the industry. Today, tech as an industry is almost completely lacking in all of these areas.”

The consequences? A lack of accountability — resulting in situations like the Theranos scandal in which “its founder and its investors all shielded themselves under the cultural cover of being a glamorous member of the ‘tech industry’ rather than a prosaic medical supplier.” The spreading of the “tech’s well-known shortcomings around inclusion and diversity into new fields” is another conundrum. And, continues Dash, “companies ranging from AirBNB to Uber [that] have relied on their status as ‘tech companies’ to systematically shirk inconvenient laws in each new city they enter.”

The solution? Since all companies are tech companies these days, we should define them by the businesses in which they engage, not how they choose to compete. “All it takes is a little discipline in how we communicate,” concludes Dash. “How we talk to each other, to our lawmakers, to the media — each of those little shifts will affect how we think about the impact that tech-enabled companies are having on the world. There’s no doubt that technology itself can have a hugely positive impact. But ensuring that it does may depend on us taking apart the idea that technology is created or sustained by a ‘tech industry’ in the first place.” Read the rest here.

TechSavvy: Delta’s Digital Black Swan

MIT Sloan Management Review, August 22, 2016

by Theodore Kinni

Condolences if you were flying — or more accurately, not flying — on Delta last week. As the tally of cancelled and delayed flights climbed into the thousands, Nick Taleb came to mind — you know, the Black Swan guy. Taleb wrote that black-swan events have three characteristics: “rarity, extreme impact, and retrospective (but not prospective) predictability.”

I don’t know if the power failure at Delta — and the chain of unexpected events that followed it — qualifies as a black swan by Taleb’s standards, but it must have felt that way to CEO Ed Bastian. The day after the failure, he apologized for the second time and ruefully explained that over the past three years, Delta has invested “hundreds of millions of dollars in technology infrastructure upgrades and systems, including back-up systems, to prevent what happened yesterday from occurring.”

Delta isn’t the only airline whose systems have crashed recently, and with more and more companies integrating their systems, it seems like a good bet that digital black swans may become more and more common. In an article for CIO Dive, associate editor Naomi Eide offers some lessons from Delta for companies hoping to avoid similar events. First, she says, beware centralized control points, because when they go down, everything goes down. Regionally dispersed control centers are more expensive, but more robust. Second, ensure redundancy measures are in place and test them regularly. Third, practice recovery plans and responses to worst-case scenarios.

All of this still may not be enough to save your company from a true black-swan event; Taleb made a pretty strong case that they will be with us always. But it may be enough to avoid the growing numbers of gray ones. Read the rest here.

TechSavvy: Four Lessons from IoT Early Adopters

MIT Sloan Management Review, August 12, 2017

by Theodore Kinni

To paraphrase the late Roy Scheider in one of the greatest of all summer movies, you’re gonna need a bigger router. In 2025, Machina Research predicts, the Internet of Things is going to be a $3 trillion market of 27 billion devices generating more than 2 zettabytes of data. Two zettabytes of data is something like twice the total global IP traffic we’ll generate this year, according to Cisco.

The IoT data deluge is, by the way, the first of four lessons drawn from early IoT adopters by contributing writer Howard Baldwin for his article in Computerworld. IoT initiatives at ARI Fleet Management, for instance, generate the same amount of data every two weeks as the company previously collected in two decades. “Understand where data is coming from, and determine how you’re going to analyze it,” writes Baldwin.

The second lesson is that IoT will require cross-functional collaboration. Because IoT is deployed and used in factories and fleets and products, the IT department is going to need to partner with other functions and business units. “Determine how and when to combine operations and information technologies for maximum data insight,” writes Baldwin.

Baldwin’s third lesson for early adopters is that IoT is likely to require working with and coordinating across multiple vendors. The new Kansas City streetcar line, for instance, required collaboration with Sprint, Cisco and other vendors. “In orchestrating the many moving pieces of an IoT rollout, make sure you know who plays what part,” writes Baldwin.

Fourth and finally, as applies to forays into any young, fast-emerging technology, watch out that you don’t get caught out too far on the IoT growth curve. “Some early IoT adopters have reported reliability issues with either sensors or vendors or both, and others have struggled to reconcile competing protocols,” writes Baldwin. “Be prepared for setbacks in an immature market, and try to select a protocol that has long-term industry support and a sound security footprint.” Read the rest here

Techsavvy: A Call to Arms Against the Hacker Hordes

MIT Sloan Management Review, August 4, 2016

by Theodore Kinni

Imagine being enthroned at the end of the long table in the C-suite. You’ve got riches beyond imagination at your disposal; tens of thousands of vassals are toiling day and night for you. Your knights surround you, awaiting your command. And, at this very moment, some evil-minded jester with a computer and an Internet connection is breaching the castle walls.

But wait, is that a war horn you hear in the distance? Yes, it’s the lawyers from Steptoe & Johnson riding to your rescue. Enough, says partner Stewart Baker and trusty clerk Victoria Muth in an article for Brink. “It’s pretty clear that building higher walls around our networks is a dead end. So is tighter scrutiny and control over what happens on the network,” they write. “Government is failing us…, too.” The solution? Fight back.

Attribution and retribution are the weapons in this counterattack. “It might mean building ‘beacons’ into documents so that when they are opened by attackers, they phone home to alert defenders that their information was compromised,” suggest Baker and Muth. “It might mean using information provided by beacons to compromise the attackers’ network and gather evidence as to the attackers’ identities. It might mean stopping a DDOS attack by taking over the botnet, or by patching the vulnerability by which the botnet conscripted third-party machines.”

And, of course, you’ll need more lawyers. “We need to bring private resources to bear on retribution as well as attribution — not by endorsing network attacks, but by encouraging retribution within the law,” the authors continue. “Luckily, once an attack has been attributed, legal remedies begin to look quite realistic.”

“In short, you don’t have to sit and take it anymore,” conclude Baker and Muth. “There are plenty of risks in trying to go beyond passive network defenses, but there may be more risk in doubling down on an approach to network defense that has been failing ever more spectacularly for 30 years.”

Oh yeah, we’re going all “Game of Thrones” on hackers. Read the rest here.

TechSavvy: Not All Digital Threats Are Disruptions

MIT Sloan Management Review, July 28, 2016

by Theodore Kinni

Thanks to Clayton Christensen, we throw the word “disruption” around pretty freely these days. But Strategy& consultant Alexander Kandybin reminds us that many of the competitive challenges that we call disruptions don’t actually fit Christensen’s definition of the term: “An innovation that is disruptive allows a whole new population of consumers at the bottom of a market access to a product or service that was historically only accessible to consumers with a lot of money or a lot of skill.”

In an article in strategy+business, Kandybin warns executives that misidentifying major competitive challenges — like new products, technologies, and business models — as disruptions can lead to flawed strategic responses. Instead, he counsels them to learn to recognize different kinds of market dislocations (“radical breakaways from the existing market that occur when a company introduces a business model or a product that sits apart from those of competitors”), the directions from which they can come, and the best responses for each.

Kandybin’s approach offers more nuanced strategic responses to digital competitive threats. “Two of them, matching the threat and absorbing the threat, can be effective when incumbents are facing new entrants coming from any direction (from the top, side, or bottom),” writes the consultant. “A third, leapfrogging the threat, is most effective in dealing with dislocation from the top and from the side. And finally, the strategy of ignoring the innovation is most commonly associated with disruption from the bottom.

“Each strategy has risks, especially when it is used at the wrong moment or against the wrong threat,” Kandybin adds. “But when you understand where the threat is coming from and how it is changing your market, you can choose a strategic response that is likely to sustain your business.” Read the rest here

TechSavvy: The $105 Billion Enterprise Market for Pokémon Go

MIT Sloan Management Review, July 21, 2017

by Theodore Kinni
Suddenly, Pokémon Go, the app based on the 20-year-old video game, is everywhere. People with smartphones are more like zombies than ever. Marketers are formulating their Pokémon Go strategies. Thanks, augmented reality!

The consumer market is not the only place AR is taking off, according to Bhavesh Kumar of VMWare AirWatch. “There’s increasingly reason to believe that AR could take off for businesses long before it goes mainstream with consumers,” he declared in a blog post that appeared one day before Pokémon Go, well, went mainstream with consumers.

But that doesn’t mean Kumar is wrong. He’s right in saying that the AR device ecosystem is more developed for the enterprise market than for the consumer market, and that the industry standards needed to put AR to work are already emerging.

Moreover, Kumar is backed up by a new study from Index AR Solutions, a developer of customized AR business solutions for the corporate market that is collaborating with Newport News Shipbuilding. Index AR forecasts that the enterprise market for AR will hit $105 billion within 15 years, including $49 billion in hardware, $11 billion in software, and $45 billion in services. Assuming, of course, that we can tear ourselves away from Pokémon Go. Read the rest here.

TechSavvy: Does Social Media Enhance Employee Productivity?

MIT Sloan Management Review, July 7, 2016

by Theodore Kinni


Do you know what your employees are doing online? Come next May, Singaporean prime minister Lee Hsien Loong won’t have any trouble answering that question. That’s when 100,000 computers used by the city-state’s civil servants will be disconnected from the Internet. The government is taking this drastic action to “tighten security,” writes tech editor Irene Tham in The Straits Times.

Being of a cynical bent, I think that eliminating employee access to Facebook and Twitter and other social media platforms might give Singapore’s government a nice bump in productivity, too. But I might be wrong, according to a report from the Pew Research Center that delves into the use of social media in the workplace.

“Today’s workers incorporate social media into a wide range of activities while on the job,” explain Pew Center researcher Kenneth Olmstead and University of Michigan School of Information professors Cliff Lampe and Nicole Ellison. “Some of these activities are explicitly professional or job-related, while others are more personal in nature.”

Sure, their survey says — ding! — that the number one reason why American workers use social media at work (34% of respondents) is “to take a mental break from their job.” Moreover, reason number two (27% of respondents) is to “connect with friends and family while at work.” But then comes a list that might make your inner CEO perk up a bit: 24% of the respondents use social media at work to foster professional connections; 20% to help them solve work problems; 17% to foster relationships with co-workers and/or learn more about them; and 12% to ask work-related questions of people outside their organization and/or inside their organization.

So, maybe your company shouldn’t follow Singapore’s lead. Anyway, aren’t all those civil servants simply gonna go all Hillary Clinton with their personal devices? Read the rest here

TechSavvy: Four Reasons Your Company May Be Susceptible to Disruption

MIT Sloan Management Review, June 30, 2016

by Theodore Kinni

Every MBA knows economist Joseph Schumpeter’s theory of creative destruction. So why is it that established, resource-rich companies still get the stuffing kicked out them by upstarts that seemingly appear out of nowhere? Steve Blank, who’s credited with launching the Lean Startup movement, offers an interesting take on that question in a new post on his blog.

“In the 21st century it’s harder for large corporations to create disruptive breakthroughs,” writes Blank. “Disruptive innovations are coming from startups — Tesla for automobiles, Uber for taxis, Airbnb for hotel rentals, Netflix for video rentals and Facebook for media.”

Blank says there are four reasons for this. “First, companies bought into the false premise that they exist to maximize shareholder value,” he writes. As a result, they subscribe to metrics like return on net assets, return on capital deployed, and internal rate of return that discourage investment in in long-term innovation. Second, too often company leaders are execs who excelled at functions like finance or procurement. “They knew how to execute the current business model,” says Blank. The third reason is “the explosive shifts in technology, platforms and markets that have occurred in the last 15 years.” Presumably, this adds too many wild cards for companies to track. And finally, there is the explosion of startups that has been engendered by easy access to venture capital. “For the first 75 years of the 20th century, when capital for new ventures was scarce, the smartest engineering talent went to corporate R&D labs,” says Blank. Now, these talented people are starting their own companies.

What can you do about it? Read the rest here

TechSavvy: Why Emojis May Be the Key to Employee Retention

MIT Sloan Management Review, June 23, 2016

by Theodore Kinni

The state of IoT in the U.S. companies: Frankly, I dread the Internet of Things. Samsung makes it out to be a charming ménage that will include my fridge, but the reality is more likely to be an endless stream of texts regarding the intimate details of my washer’s cycle. Meh.

That complaint registered, a new report prepared by Machina Research for the Telecommunications Industry Association (TIA) suggests that we’re all going to have a lot more stuff to reset whenever our ISPs hiccup. Based on 15-minute surveys completed by a relatively small group of 200 senior execs in companies with revenues of more than $10 million across industries, the TIA reports that 48% of U.S. businesses are already using IoT technologies, and another 43% will be joining them within the next two years. (In short, pretty much everybody.) And spending will follow suit: 44% of corporate IT budgets in 2020 will be dedicated to IoT.

The report further suggests that the corporate focus on IoT is shifting from its use as a straight-up enhancer of product revenue and profit to its use as a real-time data-generation machine that will yield valuable insights that can be used across the business. Read the rest here.

TechSavvy: The Stress Effect in Information and Communication Technologies

MIT Sloan Management Review, June 16, 2016

by Theodore Kinni

Two blips that simultaneously popped up on the Tech Savvy radar the other day gave me pause. The first is an article, by Fast Company reporter Cale Guthrie Weissman, which describes an employee communication software platform named Odo — shorthand for odometer. Qualtrics, a developer of customer experience, market research, and employee management software valued at more than $1 billion, developed Odo to better connect and enhance the performance of its 1,100 employees.

“Not only does this program provide a way for people within an organization to chat with each other,” writes Weissman, “but it also lets employees record their own metrics and request any internal task be done. The feature that caught my eye, though, is that it gives everyone access to birds-eye cameras looking over the office’s entire open floor plan.”

CEO Ryan Smith is convinced that Odo helps create a culture of radical transparency at Qualtrics. The system with its dozens of overhead cameras ensure that everyone has access to everything. “Bolstering this are the water coolers,” writes Weissman. “On every floor in the Provo office is a drink station with a screen and camera mounted atop it. This screen connects with the other offices around the world, making it possible for trans-Atlantic water cooler conversation. The system is voice-activated, so if someone is talking to the screen in Dublin, people in Provo will see who’s on the line.” Read the rest here