Today, we wanted to take a step back from the specifics of cloud computing and understand the broader context that drives disruption overall and the special implications of today’s innovation.
Disruption – an Age Old Tradition Reinvented
For much of the twentieth centuries businesses drove technology innovation. Machine power, energy and utilities, communications, transportation and logistics – progress in these areas was driven by attempts to improve business operations. Later derivative technologies benefited consumers through new products and services. When disruptions occurred, they were most often businesses competing with other businesses. Clayton Christen concisely chronicles the nature of many of these in the Innovator’s Dilemma – citing examples ranging from mini steel mills to floppy disk drives.
Then, sometime around the turn of the century the Internet emerged and changed the essence of technological change. For the first time in history the world was connected and interactive. New sources of collaboration and communication allowed people to work together more easily and broadly than ever before. All of a sudden, both innovation and disruption had new sources. We began to see innovation begin in the consumer sector and then drive back into the operations of businesses. As consumers we experienced a technology driven renaissance – suddenly we were able to manage a financial portfolio, buy movie tickets, compare alternative routes of travel in real time, find products and services in an instant, communicate via video and voice for free, share massive amounts of news, pictures and video with anyone around the world and much much more. The “green screen” terminal-like experience we had at work felt like a recurring bad dream.
Disruption also came from new places. A struggling computer company named after a fruit decided it could produce music players, then telephones and sell to individuals – accidentally disrupting the landscape of corporate collaboration. The iPhone stormed into the lives of business through the hands of employee consumers who rejected being downgraded to last generation technology in their workplace.
Technology innovation became an unpredictable force of nature.
Technology Disruption Lead to Faster Industry Change
Any leap forward in innovation disrupts existing industries. But now, often without any specific intent or design, industries and products became increasingly important – or void of value – almost overnight. The transition from records to tape took decades, from tape to CD to digital less than one. Newspapers, video rentals, bookstores and many others are undergoing a ruthless reinvention of their industries – all without a traditional competitor or rival.
This faster rate of change is even impacting the very nature of technology creation itself. Technologies like cloud computing and social collaboration networks are trying to connect businesses and innovation in the same way as the Internet connected individuals just a decade earlier. For the first time, these tools enable a virtual worldwide labor force that operates in many contexts as effectively as co-located teams.
For example, enterprise business systems historically had a life-cycle of 5-10 years. In that time, entire labor forces of potentially millions of workers organized around learning the usage, programming languages, and best practices of these systems. Today, cloud computing driven business applications (e.g. salesforce.com and Workday) make new innovations available instantly to every customer several times a year. How companies take advantages of these to create competitive differentiation may be all that separate success from failure. As a result an industry of millions of people must completely re-examine how to organize and train its people for this dynamic change.
Technology Innovation Makes it Easier to Start and Scale a Business
Contributing to the high rate of industry change is the ability of technology innovation to allow businesses to start and reach scale faster and more efficiently than ever. Almost overnight a business can:
- Get created – legal advice, incorporation, recruiting, payroll, advertising, and every other daunting activity can be easily accessed.
- Go from local to national to worldwide – Just a website and online advertising, or marketplaces like eBay have allowed entire economies of small businesses to move beyond just their local geographies.
- Access technology previously reserved for large enterprises – Marketing, sales, customer services, social networks, and business operations capabilities are available even to newest of businesses – allowing them to compete on both their product and service.
This, combined, with the economic struggles the past several years, have resulted in US small business creation rising to a fifteen year high. In addition, over that same period of time, small businesses created almost ⅔ of all new jobs.
Yet, the rules above apply for people all over the world. So these technology innovations also opened the doors for small businesses and individual workers to experience global competition – faster than ever before.
Special, But Still “Just a Tool”
Despite its many unique characteristics technology innovation is still just a tool. Its like a special hammer that is constantly changing and able to do more and more – if in the hands of the right operator. This applies even to cloud computing, its still a matter of what you do with it. However, the cloud is a tool, like fire is a tool. Treating it just like artifacts that came before it will badly miss its point and potential. Ultimately, in each of our companies, we need to create an environment where everyone internalizes the inevitability of change and embraces evaluating new tools and techniques.
Consumers can quickly adopt every new technology and simply later reject it. For businesses it’s a more nuanced process. Organizations must simultaneously encourage and find a way to drive innovation, but still be highly pragmatic in key operational areas. Even more daunting is that in most cases, it is not possible to broadly separate the places to innovate from the places to be deliberate. In most cases this two pronged approach must be applied within every area.
Apply this to our often discussed topic of cloud computing – a technology area that can deliver results an order of magnitude faster and more nimbly than its predecessors. Organizations need to help their businesses owners and technologists understand whats possible so that the right lens can be placed on each part of an initiative. It requires technologists be more intertwined with the business than ever before, and that business users better understand concepts like data, process and analysis. Then together, it becomes possible to understand what’s important (value) and whats possible (cost) so an effective portfolio of actions can be executed. Ultimately, cloud computing will become an inevitability for everyone, but success through the transition will vary dramatically and become either a tailwind or headwind on your entire business.