Cars changed the course of history. They changed how we live, how we work, and the industries upon which whole economies depend. Not everyone welcomed the innovation, however, as the author of a letter to The Times, British magistrate W. S. Gilbert, in 1903 illustrates:
“Sir,–I am delighted with the suggestion made by your spirited correspondent Sir Ralph Payne-Gallwey that all pedestrians shall be legally empowered to discharge shotguns (the size of the shot to be humanely restricted to No. 8 or No. 9) at all motorists who may appear to them to be driving to the common danger. Not only would this provide a speedy and effective punishment for the erring motorist, but it would also supply the dwellers on popular highroads with a comfortable increase of income. “Motor shooting for a single gun” would appeal strongly to the sporting instincts of the true Briton, and would provide ample compensation to the proprietors of eligible road-side properties for the intolerable annoyance caused by the enemies of mankind.”
History is full of game-changing inventions and social attitudes, such as the telephone, women’s right to vote and the personal computer.
The last game-changing, beginning-of-an era was back in 1995. The internet had been around for a while, but it stayed largely the realm of tech companies, programmers and government agencies. Then in 1995, the internet crossed the line from geek to commercial.
That one year gave us Microsoft Windows 95 (graphical user interface replacing MS-DOS), internet browsers (Netscape, AOL and Internet Explorer), the PDA (personal data assistant that could sync contacts and calendars), the USB and ZIP disks (that killed the floppy disc), companies like Java that made web pages user-friendly, second generation (2G) mobile technology spread making SMS and connections to the internet possible, and The New Yorker began making content available online.
Two decades later, the significance of 1995 is obvious. 1995: The Year the Future Began, (2015) by W. Joseph Campbell describes it as “the inaugural year of the 21st century, a clear starting point for contemporary life.” Business magazine, Fast Company, in its December 2015 article, 1995: The Year Everything Changed, states: “In retrospect, it’s easy to see why 1995 had so much impact. It wasn’t because the year marked the dawn of anything. Instead, several trends which had been emerging for years coalesced into an ideal environment for the introduction of useful new ideas.”
If you knew what you know now, what actions would you have taken in 1996?
Of course the only way to be certain of a game-changer is with hindsight, but just as there are indicators that can help predict the weather or a recession, we have signs that several innovations, trends and ideas are converging and consolidating that will make 2015 another transformational year.
In 2015, Millennials (or Generation Y) became the largest demographic in the workforce, and as the largest ever generation, they will control the biggest spending power in history. Ordinary people experienced the light side of mobile and big data (including personalisation and convenience), and its dark side (such as the continuing fallout from the NSA spying and Ashley Madison hacking scandals). Social media completed its transition out of the social space to become a mainstream application used for everything from shopping and news consumption, to loans and workforce management (Facebook alone surpassed 1.5 billion monthly active users).
One way to identify a new era is by a change in how capital produces wealth. In the first industrial revolution of the 1800s, it was the use of energy-powered machinery. In the second industrial revolution of the early 1900s, it was the mechanisation of labour. The knowledge era began in the 1970s. Technology led the way in the 1990s. Opportunities are there for those that adapt to the use of capital as Ford did in the second industrial revolution and Microsoft did in the 1970s.
If the opportunities from the last era came from the application of personal technology, the 2015 equivalent is the application of social capital. Social capital refers to the norms that shape a society’s relationships and interactions. It is valuable to any enterprise because it helps build better relationship within and outside of the organisation, it enables an environment where collaboration and innovation flourish, and it becomes the promise behind a brand.
While these have always been important to business success, other forms of capital like product output and patents have dominated the balance sheet. Social capital was never considered a real form of capital.
However, since the Global Financial Crisis a new social conscience has developed that can be broadly described as ‘mindfulness’, meaning experiencing the ‘now’ and living with greater awareness. We see its effects in the trend to measure our health (e.g. Fitbit), in how we express ourselves (thanks, GoPro), how we balance obligations and freedom (the majority of the workforce will be freelancers within the next few years), how we now join our peers to form new marketplaces (e.g. taskrabbit.com), and how we choose businesses to support (such as considering a company’s social behaviour when making our buying decisions).
The combination of technology and social conscience allow us to monetise social capital. The lack of physical presence used to be a barrier to people buying online. They could not see the product, and they did not know who sat behind the website. As people saw more businesses with solid physical presence consistently proving themselves to be untrustworthy or unreliable – Volkswagen and FIFA, for instance – and the online world has prioritised trust, such as through peer reviews and transparent pricing, the last of reservations about transacting online has fallen away.
This is what it means to be a digital enterprise. It means to operate and organise in the environment in which people and technology interact today. Unlike last century’s reliance on physical capital – which is by definition scarce and depreciating – social capital is potentially infinite.
Other leading organisations say:
“…because the less digitized sectors are some of the largest in terms of GDP contribution and employment, we find that the US economy as a whole is only reaching 18 percent of its digital potential. This gap underscores not only the challenge of continuously adapting but also the size of the opportunity still ahead.”
~ McKinsey & Company, Digital America: A tale of the haves and have-mores, December 2015
“In 2016, the gap between customer-obsessed leaders and laggards will widen:
Leaders will take on the hard work of shifting to a customer-obsessed operating model.
Laggards will aimlessly push forward with flawed digital priorities and disjointed operations.
Many companies have underestimated the magnitude of change needed to operate a customer-obsessed business and the speed required to catch up to dynamic customers and disruptive competitors.”
~ Forrester Research, The 2016 top 10 critical success factors that will determine who wins and who fails in the age of the customer, October 2015
“There’s a lot of ‘disruption’ coming in the next five years that we’re pretty sure of. Commonly acknowledged trends include:
- The aging population
- Rising healthcare costs
- The use of wearables
- The sharing economy
- Increased trade with Asia
- A focus on predictive data
- Social media sharing; and
- The digital economy
Combine these trends with the Design Thinking process for innovation, which involves repeatedly testing a hypothesis and learning, and future disruptive trends should not come as a surprise, but as an opportunity.”
~ In Digital Pulse by PwC, Turning disruption into innovation: Five key digital trends for future growth, March 2015
“Innovation has become the key to survival. A Standard & Poor’s company can expect to survive just 15 years. That’s down from 67 years in 1920. By 2027, 75% of the S&P 500 firms today will be replaced by new ones. Design-led innovation has become a must, and the merging of departments in the conversation about those innovations is equally as important.”
~ In Agenda by World Economic Forum, 10 trends to watch in 2016, December 2015
Following the patterns that enabled the growth of Amazon, Craiglist and eBay in 1995 and the likes of Google and Netflix soon after, it is hard to see how an enterprise that organises to develop and apply greater social capital for the digital era will not outperform those that persist with last century’s reliance on managing physical resources.
Changing what has worked in the past takes courage and an open, inquisitive mind. Just a few years ago the thought that an accommodation company could grow without owning a single room, or a publishing company could reach millions without a single writer, or a taxi company would not own any cars, was laughable. Yet it has taken less than ten years, but a lot of social capital, for Airbnb, Facebook and Uber to be worth billions.
If you don’t think you need to change, you are in good company.
- Thomas Watson, Chairman of IBM in 1943 poo-poohed the idea of computers saying, “I think there is a world market for maybe five computers.”
- Amongst the arguments against women having the right to vote was the fear that once women became involved in politics, they would stop marrying, having children and the human race would die out.
- Western Union ridiculed the telephone as a toy that could not be taken seriously when Alexander Graham Bell offered to sell the rights to them for $100,000. Two years later they hoped (in vain) for a chance to buy it at a bargain of $25 million.
I hope your 2016 is a big year for your success. If you would like to know more about succeeding in the digital era, you can sign up here.