Data, Innovation, Acceleration: the Digital revolution in three words !

3 January 2019
data innovation acceleration
Among the myriad trends, concepts and technological innovations that are becoming part of our everyday lives, let’s focus on three major phenomena that are driving the Digital movement to shed light on its dynamics and its journey. By Pierre-Sylvain Roos.

It may have escaped you but it has been ten years since the transition to the digital age began. It was back in 2008, amidst the ruins of the subprime crisis, that large American companies launched the movement looking for new ways to create competitive advantages.

Of course, over the past ten years things have changed considerably and are better defined, especially in light of the unprecedented technological progress that the world has experienced recently.

Today, when we talk about Digital or Digital Transition we tend to think about a multitude of ideas, concepts and applications: Cloud, Big Data, Platform, Uberisation, Chatbot, Artificial Intelligence, Blockchain, Mobility, Robots, Automation, Connected Objects, Industry 4.0, Smart Cities, Agility, Social Networks, etc.

Especially as we are witnessing an unprecedented proliferation of technologies that are evolving at high speed with new releases every day.

Talking to our customers, partners and teams, it is clear that many issues surrounding Digital technologies remain blurred. We hear that it is difficult to get an overview or coherent picture of the situation.

So to help clear things up, we will focus arbitrarily on three major phenomena that have had a massive impact on this new era!

 

DATA

Eric Schmidt, the former Executive Chairman of Google, set the ball rolling on 4 August 2010 when he declared in an interview that “now, every two days we create as much information as we did from the dawn of civilisation up until 2003”. This seemingly astonishing claim has since been widely corroborated in a number of studies. What was predicted to happen ten years ago has already happened - and way more!

It’s a fact! We are producing more and more data and this increase is exponential.

And it’s not set to halt: new forecasts for 2025 predict a probable global volume of 175 zettabytes compared to the 33 zettabytes of data stored in 2018. In other words, the global volume of data will more than quadruple!

The world is invaded by, awash with and sustained by data. In the space of just a few years, it has become an indispensable resource and one which is key to the development of companies and the economy in general. This proliferation of data is closely linked to the increase in and personalisation of services, which make up a large part of the economy and that are now delivered in real time. And the biggest producers of this data is us e.g. each time you communicate, travel, place an order, make a booking, shop, use utilities, etc. In 2025, over half of all data will be generated by connected objects.

The possession and use of this data is a high stakes business especially with the advent of Data Market Places where it can be bought and sold like any other commodity.

In the future, the very survival of companies will depend on their ability to collect, organise, analyse and enhance data, whether it is their own data or someone else’s!

The ability to do this is concurrent with the increasing automation of business processes and the mass introduction of smart devices that generate, process and share operational data more efficiently. The aim? To fully map and orchestrate an organisation's in-house data for complete ‘digital continuity’.

Just like for any resource, companies will have to opt for ‘make or buy’ strategies i.e. whether to produce the data themselves or acquire it. They will also have to ensure effective Data Management, and develop and maintain effective data processing and usage infrastructures.

 

INNOVATION

In 2005, a team of INSEAD researchers came up with the ‘Blue Ocean’ concept i.e. taking a market creation approach based on ‘value innovation’. This means adopting a differentiation strategy in order to create a free space for competition by developing new activities that do not follow any pre-existing rules.

It directly opposes the ‘Red Ocean’ concept in which competitors try to outperform one other and where growth potential is inexorably eroded leading to a collapse in margins.

This approach is a small revolution in and of itself as previously it was believed that in order to innovate and create a new market, it was necessary to destroy value. This is Schumpeter’s ‘creative destruction’ principle on which disruption is founded. Hence, replacing vinyl records with CDs, then disrupting the CD market a few years later with the introduction of streaming and the MP3 format, etc.

However, with the Blue Ocean concept disruption is not inevitable, it is just one possible option to innovate - leaving innovators free to explore virgin territories. This was the case for Orange with its mobile payment solution. Since 2008, it has targeted a market of more than 338 million users in 22 African countries with users who did not have access to a bank account!

But of course, we didn’t have to wait for digital to innovate - far from it.

We all know at least one great innovation story, how someone had a ‘good idea’ (e.g. Roland Moreno who invented the chip and pin card), or how, following an ‘error’, someone saw a business opportunity (e.g. Post-it notes following the invention of a glue that did not stick properly).

But what has changed is the way we innovate and the importance of innovation in the global economic field.

It is important to understand that now everyone innovates, or more precisely, that all companies have to innovate if they wish to survive in their field or business sector. 

Also, the mechanisms of innovation have become incredibly collaborative and interactive. Even if this indicator makes sense at the macro-economic level, it is no longer the number of patents used to measure an organisation’s innovation but rather its ability to understand an ecosystem and rapidly turn innovation into value. This ability is materialised by the introduction of new products on the market or, increasingly, new services. At the heart of this process, we find the end user or customer i.e. the one who directly benefits. All attention is now focused on the customer so that he/she immediately adopts and falls in love with the innovation and can’t live without it.

Innovators don’t want to be the ones to discover a product or service but don’t know how to profit from it - who remembers R2E? This was the design firm that invented and marketed the Micral, the first microcomputer, back in 1973.

Another point to bear in mind is the central role that technologies play in innovation processes today. Of course, with any innovation it is always great to have ‘the right idea’ but it is not always enough. Where would Uber be without its App and servers? Digital success stories are the result of significant R&D investment. In all the sectors involved in innovation, it is ‘tech’ that leads the dance: FinTech, AdTech, MarTech, LegalTech, etc.

To innovate we tend to rely on technologies by developing new solutions or systems (e.g. platforms), through integration or, more simply, by implementing available technologies in a different field of application (e.g. blockchains).

When Steve Jobs first unveiled the iPhone back in 2007 in his now famous keynote speech, he explained a very simple principle: an iPod + a telephone + internet communicator in a single device. An object that nobody had thought of making before Apple came along. Curiously, Steve Jobs overlooked one major function - an integrated camera! At the same time in 2007, Facebook had just become public, Tumblr had just been created, Instagram didn’t exist and the ‘selfie’ was known as a ‘Myspace Pic’ (even though the word had been used in Australia for years). Even visionaries have their limitations!

Another point of interest, at that time Steve Jobs believed the iPhone was five years ahead of other smartphones. In fact it was just two years before Samsung launched the Galaxy and three years before the Galaxy S, which would become the iPhone’s main competition.

And so the world has become a gigantic laboratory making blue oceans, which are inevitably destined to turn red. This transition from blue to red and back to blue again creates the perpetual movement that is the driving force of the new digital economy.

 

ACCELERATION

If we can believe what we read, the world is speeding up... but how does this manifest itself?

The findings are clear; it now takes less than ten years for a new global player to appear, and either disrupt an existing market or create a new one.

For current actors, it is no longer possible to forecast, beyond a few years, the state of their market and where the biggest competitive threats will come from.

Four-figure growth has become the norm. A quick glance at Technology Fast 50 (growth over the past four years) reveals the winners such as Ubitransport with + 6,528% for 2017, or the even more impressive Horizontal Perspective with + 8,339% in the previous year.

Another rising star is Chauffeur Privé, which saw growth of +7,020% between 2013 and 2016 with a turnover of €48.6 M, and over €100 M in 2017. By focusing on operational quality and regulatory compliance, this chauffeur-driven car outsider had over 2 million customers in 2018 and over 18,000 drivers. Backed by Daimler since late 2017, it is now poised to take over from Uber in France thanks to its investment policy and frugal innovation i.e. well below the massive sums consumed by its direct competitor.

This long-term hyper growth is known as ‘scaling up’!

To achieve it, companies must develop certain key characteristics, namely agility and speed.

To reflect ever-changing non-predictable perspectives, you have to be comfortable with change. Hence agility is key i.e. knowing how to constantly restructure and create new value chains as often as necessary. It is also necessary to learn how to rapidly ditch anything that prevents an organisation from developing and moving forward e.g. outdated management and business models, old-fashioned and ineffective practices, etc. And finally, doing away with the belief that we can change by doing the same thing in the same way.

Another important factor to consider is that the strength of a company does not only reside in its market capitalisation or in the volume of investments. It actually resides in its speed. Speed is what counts. The speed required to get new products and services to market, and the speed required to develop them in quasi real time. Hence, we no longer say ‘time to market’ but ‘speed to market’.

So, in terms of this acceleration that we see day after day, the rules of the game have changed and tomorrow’s winners will be the ones that move the fastest!

Taking a deliberately simplified view, the first logical conclusion that emerges is that a transition towards Digital or within Digital is continuous - there is no reason to stop. In this respect, it appears from the outset that Digital is a powerful lever to support a business model based on growth. It can also be seen as a real asset when it comes to finding alternatives and developing more flexible solutions to major crises, notably climate, ecological, food and energy.

A second more serious conclusion is that the phenomena we have just described are neither inevitable or fortuitous. They are the result of human activity! We must also consider the individuals who work in Digital - and they are very numerous - as well as their projects, culture, sensitivity and creativity. We need them to build the future.

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