We are in an era where complete industries are undergoing an accelerated transformation. Human capital in no longer the decisive factor in an organization, and the organizational center of gravity is becoming technological instead of human. The entire organization is turning into a machine, and CEOs need to adapt accordingly. Ram Jaulus, CEO of NGG Global Consulting Solutions, delivers a clear message to all organizations.
For several decades Kodak has lead the photography market worldwide, basing its business model on selling films required per camera. Over the years, cameras became more sophisticated and films became smaller and easier to use, yet no one predicted the digital camera that eliminated Kodak’s core business in a very short time, losing its competitive edge and disappearing quickly.
Blockbuster, a large company for movie CD and cassette rentals, has been a must-visit site for many people over the years. The ability to conveniently take movies home from a large rich library worked well. No one predicted video on demand – and of course the internet’s impact – on the availability of music and movies. All these have quickly become common everywhere and eliminated the need to go to any store to borrow a movie, take it home, and then also return it to the store. Blockbuster’s core business was also damaged and it disappeared.
Amazon began as an online book store and turned into a huge connected commercial arena, with a powerful distribution chain and recognized influence everywhere, putting all western retail chains in danger, where only similar companies from the east present any risk.
What is common to these three known examples, is the impact from technological innovation on business models and the creation of disruption, a disruption that changes world orders.
All this is old news that has been discussed in length, however this is the point that indicates the overall trend of change in the global organizational order, which has gone to the next level. Data and its availability, open communication, connectivity, interactive technology from customer to provider and vice versa; all these are turning organizations from their original format, organization = consortium = based on human capital, to something essentially different.
The organizational center of gravity is becoming technological instead of human, a process happening quickly without us understanding its scope and implications. Complete industries are undergoing a transformation, where many activities performed manually are becoming technology based – credit companies, banks and insurance companies, public services. But not only them, also medical services, logistics and even retail chains. The revolution is powerful, far-reaching and perhaps touches upon all industry verticals in developed countries.
What does all this mean for organizations?
The meaning is that business models are impacted by technology, the ability to commerce is becoming technological, and decision making is also influenced and becoming dependent on technology. There is hardly any business decision, in any type of organization that is not influenced by technology. Sometimes performance ability is dependent on machines, and sometimes the business decision itself, the model or ability to implement it are based on a technology of some kind.
The climax is when the organization, for the most part, is already technological and then essentially the overall way of thinking is such. And no, this is not referring to hi-tech companies that develop technology, since clearly they lead with technological thinking and understanding. This refers to regular organizations, what we used to call low tech, retail commerce, banking, other services and medical services as well.
Considering the latter, in the past doctors were measured by their ability to diagnose and determine the right treatment, sometimes medication and sometimes something else. Surgeons are measured by their ability to perform complex procedures with their hands and eyes, skill and experience. Yet today, both diagnosis and solution are becoming more and more dependent on technology and the required skill is the ability to implement and use it.
The organization is turning into a cyborg. Human capital is no longer the decisive factor in the organization, but rather it shares its significance with the technological aspect, and lately is significantly more dominant.
So what will CEOs do, who grew on business understanding, negotiation skills, operating sales people? Where will they find themselves in the future? How will they make decisions?
There is no clear cut answer but the trend is apparent.
An interesting trend is emerging where its buds can already be seen today, which is appointing technological people to CEO positions in organizations that until today were not perceived as technological – in the insurance and finance world, service providers, production organizations and others.
Technological understanding has become critical for making strategic decisions in all organizations, and CEOs that want to survive in their role must use their hands, legs and mostly their head to understand what is going on in their organization and what their VP Technology or VP Information Systems are doing.
CEOs must get involved and understand the consequences and implications, investigating the different components of the technology and its effect. Technology and its effect also at the organizational level, and also at the level of business models and environments.
True the CEO is not alone, however if once considered as the provider for organizational solutions, today information systems or technologies (as they are being called in more and more places) are becoming so significant that they entail decisions that influence the organizational strategy and its ability to succeed and survive in the near future.
If the organization is a cyborg, CEOs must reconnect to the operating system and perhaps turn into such, because if they do not, someone else in the organization will fill in the vacuum created.