1.1 Tech’s Tectonic Shift: Radically Changing Business Landscapes

This book is written for a world that has changed radically in the most recent years of your lifetime. Consider just a few examples: Uber, the world’s largest “taxi service,” owns no vehicles for hire. Airbnb, the world’s largest accommodations provider, doesn’t own a single hotel or rental property. Facebook, the world’s most visited media destination, creates no content. And the world’s most valuable retailer, China’s Alibaba, owns no product inventory of its own. Change is clearly afoot, and it’s wearing silicon sneakers, carrying a smartphone, and is being blown forward by cloud-fueled hurricane tailwinds.

Here are some more examples: At the start of the prior decade, Google barely existed and well-known strategists dismissed Internet advertising models. By decade’s end, Google brought in more advertising revenue than any firm, online or off, and had risen to become the most profitable media company on the planet. Today, billions in advertising dollars flee old media and are pouring into digital efforts, and this shift is reshaping industries and redefining skills needed to reach today’s consumers. The firm’s ambitions have grown so large that Google has rechristened itself Alphabet (http://abc.xyz), a holding company with divisions focused on markets as diverse as driverless cars and life extension.

At roughly the same time Google was being hatched, Apple was widely considered a tech industry has-been, but within ten years and powered by a succession of handheld consumer electronics hits (iPod, iPhone, iPad) Apple had grown to be the most valuable firm in the United States. The firm has since posted several of the most profitable quarters of any firm in any industry, ever. If app sales through iTunes, alone, were considered a separate business, they would constitute a firm larger than more than half of the companies ranked in the Fortune 500.

The smartphone and app store are the modern accelerant of business growth. It took telephones seventy-five years to get to 50 million users, but it took Angry Birds just thirty-five days to do the same. WhatsApp gained 700 million adherents in its six years of existence, a figure Christianity took nineteen centuries to achieve.

Social media barely warranted a mention a decade ago. Today, Facebook’s user base is larger than any nation in the world. Mobile is its lynchpin, with more than 1.25 billion users visiting on handheld devices each month, and roughly two-thirds visiting each day. Firms are harnessing social media for new product ideas, for millions in sales, and to vet and build trust. But with promise comes peril. When mobile phones are cameras just a short hop from YouTube, Facebook, Instagram, and Twitter, every ethical lapse can be captured, every customer service flaw graffiti-tagged on the permanent record that is the Internet. The service and ethics bar for today’s manager has never been higher. Social media has also emerged as a catalyst for global change, with Facebook and Twitter playing key organizing roles in uprisings worldwide. While a status update alone won’t depose a dictator or expunge racism, technology can capture injustice, broadcast it to the world, disseminate ideas, and rally the far-reaching.

Moore’s Law and other factors that make technology faster and cheaper have thrust computing and telecommunications into the hands of billions in ways that are both empowering the poor and poisoning the planet.

China started the century as a nation largely unplugged and offline. But today, China has more Internet users than any other country. China now tops the United States as the worldwide leader in iPhone sales. Watch your back, Apple; Chinese handset maker Xiaomi ended 2014 as the world’s most valuable startup. And China has spectacularly launched several publicly traded Internet firms including Baidu, Tencent, and Alibaba the largest IPO Initial public stock offering, the first time a firm makes shares available via a public stock exchange, also known as ‘going public.’ of all time. 

The world’s second most populous nation, India, has ridden technology to become a global IT powerhouse. In two decades, India’s tech sector has grown from almost nothing to a $73 billion industry, expanding even during the recent global recession. Technology has enabled the once almost-exclusively-agrarian nation to become a go-to destination for R&D and engineering across sectors as far-flung as aircraft engine design, medical devices, telecom equipment, and microprocessors.

Think the United States holds the top ranking in home broadband access? Not even close; the United States is ranked thirty-first in download speeds and twenty-sixth in mobile broadband. 

Today smartphones are used by 2 billion people worldwide. By the end of this decade that number will be 4 billion, with 80 percent of adults being smartphone equipped. The most popular brand in India, Micromax, sells entry-level smartphones priced below $40.

Even in the far reaches of nations in sub-Saharan Africa, fast/cheap tech is becoming an economic lubricant. Seventy percent of the region’s population lives within range of mobile phone coverage, a percentage of the population greater than those who have access to reliable and safe water or electricity. Forty percent of sub-Saharan Africans already have mobile phones. Tech giants including Google, IBM, and Microsoft now run R&D centers and significant operations in several African nations, tapping into world-class tech talent that’s finally gaining infrastructure for growth. Many nations in sub-Saharan Africa now rank among the world’s fastest growing economies. And entrepreneurs with local expertise are increasingly serving local needs and building impactful businesses. Ghanaian firm Esoko leverages mobile phones to empower the agrarian poor with farming info and commodity pricing, raising incomes and lowering the chance of exploitation by unscrupulous middlemen. The firm Sproxil uses text message verification to save lives by fighting drug counterfeiting in developing nations around the world. Kenya’s M-PESA and Somaliland’s Zaad use text messages to replace cash, bringing the safety and speed of electronic payment and funds transfer to the unbanked and leveraging mobile money at rates that far outstrip any nation in the West. Mobile money can cut corruption, too, an effort with broad implications as this tech spreads worldwide. When Afghan police officers adopted M-PESA and began receiving pay using mobile money, many reportedly thought they had received a big raise because the officers handing out their pay were no longer able to cheat workers by skimming cash for themselves. 

         Fast/cheap computing is also helping create the multi-billion dollar Internet of Things A vision where low-cost sensors, processors, and communication are embedded into a wide array of products and our environment, allowing a vast network to collect data, analyze input, and automatically coordinate collective action. (IoT), putting smarts in all sorts of products: lamps, watches, thermostats, door locks. Disney has embedded smarts in a wristband it uses to replace ticketing at DisneyWorld. GE thinks sensors and computing will save the planet trillions of dollars through a hyper-efficient, data-driven, collectively orchestrated set of devices, and has embedded smarts in everything from home air conditioners to high-end aircraft parts. Think the smartphone market is big? Research firm Gartner says there are already some 5 billion connected IoT devices in use today, with 25 billion on the way by the end of the decade. 

The way we conceive of software and the software industry is also changing radically. Apple, Facebook, Google, IBM, Netflix, and Oracle are among the firms that collectively pay thousands of programmers to write code that is then given away for free. Today, open source software powers most of the websites that you visit. And the rise of open source has rewritten the revenue models for the computing industry and lowered computing costs for start-ups to blue chips worldwide.

Cloud computing and software as a service are turning sophisticated, high-powered computing into a utility available to even the smallest businesses and nonprofits. Amazon Web Services, by far the world’s biggest provider of cloud computing services, has been adding about as much server capacity each day as its entire e-commerce parent required ten years earlier.

Three-dimensional printers, which allow designs for fabrication to be shared as easily as an e-mail, are poised to reshape manufacturing and transportation. Crafts marketplace Etsy is full of artist-created and custom-printed products, from jewelry to cookie cutters, and this technology has also been used to print tools on-demand for the international space station. 

Many organizations today collect and seek insights from massive datasets, which are often referred to as “Big Data.” Data analytics and business intelligence are driving discovery and innovation, redefining modern marketing, and creating a shifting knife-edge of privacy concerns that can shred corporate reputations if mishandled.

And the pervasiveness of computing has created a set of security and espionage threats unimaginable to the prior generation.

As recent years have shown, tech creates both treasure and tumult. These disruptions aren’t going away and will almost certainly accelerate, impacting organizations, careers, and job functions throughout your lifetime. It’s time to place tech at the center of the managerial playbook.