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, AI-smart hurricane tailwinds. While technology is fundamentally transforming business environments, managers seem painfully ill-equipped for the transition. A report in Forbes suggests 72 percent of firms are failing at digital transformation.

Here are some more examples of the speed of tech-fueled business change: At the end of the dot-com bubble, 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. The Apple Watch alone has sales greater than the entire Swiss watch industry. Apple also puts a big fat exclamation mark on the 21st century key to tech-business success—create platforms, not products. Apple’s integrated ecosystem has launched a constellation of apps, add-ons, and services that add value to Apple ownership. And Apple’s growing business of consumer services—Apple Music, Arcade, Apple TV+, Apple Fitness, News, and iCloud—now bring in so much coin that if it were a separate division, it’d be deep into the Fortune 100, bigger than Pfizer, Coke, Nike, Oracle, or Delta Airlines.

Today there are 3.8 billion smartphone users worldwide, and 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. TikTok gained roughly 700 million adherents in its first four years of existence, a figure Christianity took nineteen centuries to achieve.

Today, Facebook’s user base touches an astonishing 3 billion people—a reach no media firm or government had ever remotely approached. Mobile is its linchpin. Facebook made no money on mobile when it first sold stock to the public, but today mobile represents over 90 percent of Facebook’s revenue. 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. Yet technology itself has no morality. We’ve seen leading social media firms struggle as their platforms are used to spread hate, pornography, terrorism both foreign and domestic, and fake news in ways that enrich organized crime and enable the influence of hostile foreign governments and domestic tyrants.

As we emerge from a global pandemic, tech has become even more deeply embedded into our lives. Our screen time has skyrocketed, boosting online ad revenue to make up over half of all ad spending for the first time ever, and pushing profits even higher at Google, Facebook, and Amazon; a triopoly that rakes in more than half of all digital ad revenue. Streaming services boomed, and e-commerce exploded, pushing Amazon to hire more workers in a shorter time than any corporate employer, ever. The year saw Amazon praised for providing much-needed, above minimum-wage jobs at a time of unprecedented layoffs, yet also criticized for workplace safety and brutal working conditions. Online grocery delivery, a segment that had seen slow consumer adoption in the U.S. prior to COVID-19, saw demand double in just a few months. Tech was also front-and-center responsible for acceleration of vaccine development, allowing a handful of treatments to hit the market in record-shattering time, and almost certainly saving multimillions of lives. Yet while technology and strategy combine for some of the business world's strongest winner-take-all, winner-take-most advantages, major tech firms are also under investigation for their influence and competitive practices. Apple, Amazon, Facebook, and Google are under investigation in the U.S. and Europe. China is investigating Alibaba, and collectively the tech giants face investigations in Australia, Brazil, Canada, Japan, South Korea, and the U.K. The influence of tech firms is sending ripples throughout society, causing many to rethink our current notion of capitalism. Tech’s role in fueling conspiracy theories, hate, misinformation, and as a tool for sowing political discord and division has led many to wonder if we can put the most evil outcomes of the tech genie back in the bottle without limiting the economic benefits that digital advancements have brought the world. Managers and employees face a deep set of ethical challenges associated with firm size, competition, data access and use, privacy, security, partnership and alliances, and much more. Want to lead today and in the future? Tech will be deeply embedded in nearly every decision you make, and will likely empower your decision-making through analytics and artificial intelligence (AI) insights, as well.

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 both empower the poor and poison the planet.

China started the century as a nation largely unplugged and offline. But today, China has more Internet users than any other country, and China has emerged as a clear leader in smartphone payments. The most downloaded app worldwide, TikTok, is from a Chinese firm. Chinese mobile payment volume is over 250 times greater than the payment volume of their counterparts in the United States. China has spectacularly launched several publicly traded Internet firms that now have market caps and profits to match their U.S. rivals, 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 information technology (IT) powerhouse. India now hosts a nearly $200 billion IT services industry, and Apple has even begun manufacturing iPhones in India. Technology has enabled the once almost exclusively agrarian nation to become a go-to destination for research and development (R&D) and engineering across sectors as far-flung as aircraft engine design, medical devices, telecom equipment, and microprocessors. India’s TCS (Tata Consulting Services) is the world’s number two technology solutions firm, second in size only to IBM. India has three-quarters of a billion Internet users. And India’s consumer e-commerce sector is growing so quickly that Walmart recently won a high-stakes bidding war against Amazon, paying $16 billion for a 77 percent stake in India’s Flipkart, a leader in South Asian online shopping and payments. India has also begun to match China in consumer Internet influence launching multibillion dollar startups and boasting both the lowest data rates and highest usage on earth.

Think the United States has world-leading Internet access? Not so much. The United States ranked twentieth in mobile download performance, behind Croatia and Bulgaria, among other nations. The U.S. did better in fixed broadband (landline connections like cable), but the nations ahead of the U.S. included Thailand, Romania, and Hungary.

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. Adoption rates are astonishing: 84 percent of adults in Tanzania use mobile phones for money transactions. 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 multibillion dollar Internet of Things (IoT)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. , putting smarts in all sorts of products: lamps, watches, thermostats, and door locks. Disney has embedded smarts in a wristband it uses to replace ticketing at Disney World. GE thinks sensors and computing will save the planet trillions of dollars through a hyperefficient, 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? There are already more so-called IoT–connected devices than the entire world population of humans, and that number is only growing. 

Cheap processors and software smarts are also powering the drone revolution with far-reaching impact. Today’s farmers use drones to regularly survey crops at closer distances and with greater regularity than satellite or plane flight could ever match. A combination of conventional and infrared imagery can show irrigation variation, crop success, plant damage, fungal and insect infestations, and offer other insights to improve crop yields, stave off crises, improve farmer profits, and cut consumer costs. Today’s agricultural drones can be purchased for less than $1,000, as compared with agricultural plane flights that cost more than $1,000 an hour. And while Amazon and rivals race to replace UPS with drone-to-doorstep delivery, Silicon Valley’s Zipline is leading the charge for the humanitarian community, delivering medical supplies and blood to remote regions of the world (rural Rwanda is up first), offering life-saving packages at pizza-delivery speed.

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 startups 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, business intelligence, and so-called machine learning 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. While tech creates new giants that dominate the top of lists of the world’s most valuable and most profitable firms, also know that half of the Fortune 500 companies on the list in 2000 have fallen off since then as a result of mergers, acquisitions, and bankruptcies. 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.