The Grey Chronicles

2008.December.22

Watch Out for These Eight Business Technology Trends


In the December 2007 issue of The McKinsey Quarterly, Manyika, Roberts and Spraugue (2007), wrote:

“A number of new and emerging technologies, many aimed at enhancing the way the Internet is used, promise to change how companies innovate, managers make decisions, and businesses lower costs, tap talent, or realize new business opportunities. . . Over the next decade, eight technology-enabled business trends will really matter. Smart managers should start doing their homework now.”

The article distributed the eight technologies into three separate categories: managing relationships [1-4], managing capital and assets [5-6], and leveraging information in new ways [7-8]. Each of the eight technologies are profoundly described, and at the end of each exposition, a list of Further reading is supplied for smart managers to follow through. Here are some of the excepts:

1. Distributing cocreation “Technology now allows companies to delegate control to outsiders—cocreation—in essence by outsourcing innovation to business partners that work together in networks. By distributing innovation through the value chain, companies may reduce their costs and usher new products faster by eliminating the bottlenecks that come with total control. . . Companies . . . will have less control over innovation and the intellectual property that goes with it, however. They will also have to compete for the attention and time for the best and most capable contributors.”

2. Using consumers as innovators“As the Internet has evolved—an evolution prompted in part by the new Web 2.0 technologies—it has become a more widespread platform for interaction, communication, and activism. Consumers increasingly want to engage online with one another and with organizations of all kinds. Companies can tap this new mood of customer engagement for their economic benefit. . . get better insights into customer needs and behavior and may be able to cut the cost of acquiring customers, engender greater loyalty, and speed up development cycles.”

3. Tapping into a world of talent “. . . technology allows [companies] to parcel out more work to specialists, free agents, and talent networks. . . [Companies] will need to understand the value of their human capital more fully and manage different classes of contributors accordingly . . . Competitive advantage will shift to companies that can master the art of breaking down and recomposing tasks.”

4. Extracting more value from interactions “Companies have been automating or offshoring an increasing proportion of their production and manufacturing (transformational) activities and their clerical or simple rule-based (transactional) activities. . . . The application of technology has reduced differences among the productivity of transformational and transactional employees, but huge inconsistencies persist in the productivity of high-value tacit ones. Improving it is more about increasing their effectiveness than about efficiency. . . it will be necessary to couple investments in technologies with the right combination of incentives and organizational values to drive their adoption and use by employees.”

5. Expanding the frontiers of automation “Companies, governments, and other organizations have put in place systems to automate tasks and processes . . . becoming interconnected through common standards for exchanging data and representing business processes in bits and bytes . . . be combined in new ways to automate an increasing array of broader activities. . . Automation is a good investment if it not only lowers costs but also help users to get what they want more quickly and easily [with] the right balance between raising margins and making customers happy.”

6. Unbundling production from delivery “Unbundling is attractive from the supply side because it lets asset-intensive businesses . . . raise their utilization rates and therefore their returns on invested capital. On the demand site, unbundling offers access to resources and assets that might otherwise require a large fixed investment or significant scale to achieve competitive marginal costs. . . Companies that make their assets available for internal and external use will need to manage conflicts if demand exceeds supply. A competitive advantage through scale may be hard to maintain when many players, large and small, have equal access to resources at low marginal costs.

7. Putting more science into management “ . . . technology is helping managers exploit ever-greater amounts of data to make smarter decisions and develop the insights that create competitive advantages and new business models. . . The quality and quantity of information available to any business will continue to grow explosively as the costs of monitoring and managing processes fall. . . Information is often power; broadening access and increasing transparency will inevitably influence organizational politics and power structures.”

8. Making businesses from information “Accumulate pools of data captured in a number of systems within large organizations or pulled together from many points of origin on the Web are the raw material for new information-based business opportunities. . . the aggregation of data through the digitization of processes and activities may create by-products, or "exhaust data," that companies can exploit for profit.

Is your company ready for these?


Notes:

Manyika, James M; Roberts, Roger P. & Sprague, Kara L. (2007). Eight business technology trends to watch. New Ontario: The McKinsey Quarterly, December 2007. back to text

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