Although it is tempting to look at the new decade through lens of technology predictions, it is much more interesting to think about the future in terms of what we all need to do to successfully navigate the 2020s. Each year we can expect major advances and events, some of which we can predict with reasonable confidence and some will surprise us. Regardless of what happens, there are some themes to the future of business that make specific predictions less important and can make most businesses more resilient and ready to win in a period of ongoing change.
Although technology could take many paths, there are a number of consistent themes that readers of my articles will be familiar with over many years. In particular, the power of network effects, our increasing alibility to harness information in new ways and the challenge to business of increasing complexity. These three themes have been important for many years but never more so than in the decade ahead.
The first theme is the power of the network and the resulting transition towards specialisation and away from generalisation.
From the 1980s onwards, we have become increasingly connected. Not only through digital solutions but also with industrial machinery and energy. Through these connections, businesses that depend on disintermediation have increasingly struggled as we all need less curation by businesses on our behalf.
In our daily lives, we see that around the world many of the grand old department stores are struggling. Once the best retail example of the generalist intermediary, department stores found and curated the most interesting products from around the world. With consumers able to do their own research and the cost of direct channels dropping by the day, this form of generalisation doesn’t stack up on its own without finding new specialisations to add value.
Today, the internet has similarly challenged other broad portfolio businesses by making it much easier than ever before to access detailed technical information and expertise. In my own domain of professional services, the generalist management consultant who could research any topic is less likely to be successful than a “T-shaped” professional who knows a lot about something and something about a lot. Similarly, in management, organisations are looking for deeper specialists to take senior roles combining leadership with experience in their field of expertise.
The second theme is the harnessing of complex information for new business models. I’ve termed this previously as the metaphor strategy trap.
So far, through the digital revolution, organisations have focused on doing what they did in the past but now through digital channels. If you started as a supermarket, you’re still a supermarket. If you started as a bank, you’re still a bank. Even the way we do that business over new electronic channels borrows from the physical metaphors. For example, if you previously signed a document, you now sign a digital document with a digital signature.
We’ve seen this in the past as the revolution of the internal combustion engine was started by “horseless carriages” made by carriage makers. Today we see this in the evolution of platform businesses, which are themselves being disrupted as fast as they are disrupting. How movies are made and watched, food is cooked and consumed, staff are hired and trained is all changing as different players and enabling platforms experiment with business models. The movie studio, restaurant and hiring conglomerate are all being challenged to sustain ownership of their traditional part of the value chain.
The 2020s will be won by those businesses that understand where the value lies in their business and is constantly experimenting with combining and recombining in new and innovative ways.
The third and final theme is simplification in the pursuit of productivity.
The continuing frustration of complexity is one that is being felt by organisations across all sectors of industry and government. As information systems have been built in layers on top of each of other over time, the systems have become more and more complex.
A number of Chief Strategy Officers I speak to lament the challenge of making simplification a reality. For existing businesses to win against their streamlined upstart competitors, spurious and unproductive complexity needs to be removed. It is much of this complexity that triggers automation and self-service solutions to fail. As a result, not only is this complexity unproductive, it also kills productivity.
At the end of the day, productivity is the key to growth in most markets as well as sustainably great customer service, both of which equal success for businesses that have bold ambitions for the decade ahead. Combining all three themes of being great at a smaller number of things, reinventing rather than evolving and prioritising simplification is a powerful way of taking control of the technology-driven transformation we all need to navigate.