McKinsey & Company - Clouds, big data, and smart assets: Ten tech-enabled business tren... - 0 views
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1. Distributed cocreation moves into the mainstreamIn the past few years, the ability to organise communities of Web participants to develop, market, and support products and services has moved from the margins of business practice to the mainstream. Wikipedia and a handful of open-source software developers were the pioneers. But in signs of the steady march forward, 70 per cent of the executives we recently surveyed said that their companies regularly created value through Web communities. Similarly, more than 68m bloggers post reviews and recommendations about products and services.
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for every success in tapping communities to create value, there are still many failures. Some companies neglect the up-front research needed to identify potential participants who have the right skill sets and will be motivated to participate over the longer term. Since cocreation is a two-way process, companies must also provide feedback to stimulate continuing participation and commitment. Getting incentives right is important as well: cocreators often value reputation more than money. Finally, an organisation must gain a high level of trust within a Web community to earn the engagement of top participants.
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2. Making the network the organisation In earlier research, we noted that the Web was starting to force open the boundaries of organisations, allowing nonemployees to offer their expertise in novel ways. We called this phenomenon "tapping into a world of talent." Now many companies are pushing substantially beyond that starting point, building and managing flexible networks that extend across internal and often even external borders. The recession underscored the value of such flexibility in managing volatility. We believe that the more porous, networked organisations of the future will need to organise work around critical tasks rather than molding it to constraints imposed by corporate structures.
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3. Collaboration at scale Across many economies, the number of people who undertake knowledge work has grown much more quickly than the number of production or transactions workers. Knowledge workers typically are paid more than others, so increasing their productivity is critical. As a result, there is broad interest in collaboration technologies that promise to improve these workers' efficiency and effectiveness. While the body of knowledge around the best use of such technologies is still developing, a number of companies have conducted experiments, as we see in the rapid growth rates of video and Web conferencing, expected to top 20 per cent annually during the next few years.
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4. The growing ‘Internet of Things' The adoption of RFID (radio-frequency identification) and related technologies was the basis of a trend we first recognised as "expanding the frontiers of automation." But these methods are rudimentary compared with what emerges when assets themselves become elements of an information system, with the ability to capture, compute, communicate, and collaborate around information—something that has come to be known as the "Internet of Things." Embedded with sensors, actuators, and communications capabilities, such objects will soon be able to absorb and transmit information on a massive scale and, in some cases, to adapt and react to changes in the environment automatically. These "smart" assets can make processes more efficient, give products new capabilities, and spark novel business models. Auto insurers in Europe and the United States are testing these waters with offers to install sensors in customers' vehicles. The result is new pricing models that base charges for risk on driving behavior rather than on a driver's demographic characteristics. Luxury-auto manufacturers are equipping vehicles with networked sensors that can automatically take evasive action when accidents are about to happen. In medicine, sensors embedded in or worn by patients continuously report changes in health conditions to physicians, who can adjust treatments when necessary. Sensors in manufacturing lines for products as diverse as computer chips and pulp and paper take detailed readings on process conditions and automatically make adjustments to reduce waste, downtime, and costly human interventions.
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5. Experimentation and big data Could the enterprise become a full-time laboratory? What if you could analyse every transaction, capture insights from every customer interaction, and didn't have to wait for months to get data from the field? What if…? Data are flooding in at rates never seen before—doubling every 18 months—as a result of greater access to customer data from public, proprietary, and purchased sources, as well as new information gathered from Web communities and newly deployed smart assets. These trends are broadly known as "big data." Technology for capturing and analysing information is widely available at ever-lower price points. But many companies are taking data use to new levels, using IT to support rigorous, constant business experimentation that guides decisions and to test new products, business models, and innovations in customer experience. In some cases, the new approaches help companies make decisions in real time. This trend has the potential to drive a radical transformation in research, innovation, and marketing.
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Using experimentation and big data as essential components of management decision making requires new capabilities, as well as organisational and cultural change. Most companies are far from accessing all the available data. Some haven't even mastered the technologies needed to capture and analyse the valuable information they can access. More commonly, they don't have the right talent and processes to design experiments and extract business value from big data, which require changes in the way many executives now make decisions: trusting instincts and experience over experimentation and rigorous analysis. To get managers at all echelons to accept the value of experimentation, senior leaders must buy into a "test and learn" mind-set and then serve as role models for their teams.
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6. Wiring for a sustainable world Even as regulatory frameworks continue to evolve, environmental stewardship and sustainability clearly are C-level agenda topics. What's more, sustainability is fast becoming an important corporate-performance metric—one that stakeholders, outside influencers, and even financial markets have begun to track. Information technology plays a dual role in this debate: it is both a significant source of environmental emissions and a key enabler of many strategies to mitigate environmental damage. At present, information technology's share of the world's environmental footprint is growing because of the ever-increasing demand for IT capacity and services. Electricity produced to power the world's data centers generates greenhouse gases on the scale of countries such as Argentina or the Netherlands, and these emissions could increase fourfold by 2020. McKinsey research has shown, however, that the use of IT in areas such as smart power grids, efficient buildings, and better logistics planning could eliminate five times the carbon emissions that the IT industry produces.
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7. Imagining anything as a service Technology now enables companies to monitor, measure, customise, and bill for asset use at a much more fine-grained level than ever before. Asset owners can therefore create services around what have traditionally been sold as products. Business-to-business (B2B) customers like these service offerings because they allow companies to purchase units of a service and to account for them as a variable cost rather than undertake large capital investments. Consumers also like this "paying only for what you use" model, which helps them avoid large expenditures, as well as the hassles of buying and maintaining a product.
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In the IT industry, the growth of "cloud computing" (accessing computer resources provided through networks rather than running software or storing data on a local computer) exemplifies this shift. Consumer acceptance of Web-based cloud services for everything from e-mail to video is of course becoming universal, and companies are following suit. Software as a service (SaaS), which enables organisations to access services such as customer relationship management, is growing at a 17 per cent annual rate. The biotechnology company Genentech, for example, uses Google Apps for e-mail and to create documents and spreadsheets, bypassing capital investments in servers and software licenses. This development has created a wave of computing capabilities delivered as a service, including infrastructure, platform, applications, and content. And vendors are competing, with innovation and new business models, to match the needs of different customers.
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8. The age of the multisided business model Multisided business models create value through interactions among multiple players rather than traditional one-on-one transactions or information exchanges. In the media industry, advertising is a classic example of how these models work. Newspapers, magasines, and television stations offer content to their audiences while generating a significant portion of their revenues from third parties: advertisers. Other revenue, often through subscriptions, comes directly from consumers. More recently, this advertising-supported model has proliferated on the Internet, underwriting Web content sites, as well as services such as search and e-mail (see trend number seven, "Imagining anything as a service," earlier in this article). It is now spreading to new markets, such as enterprise software: Spiceworks offers IT-management applications to 950,000 users at no cost, while it collects advertising from B2B companies that want access to IT professionals.
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9. Innovating from the bottom of the pyramid The adoption of technology is a global phenomenon, and the intensity of its usage is particularly impressive in emerging markets. Our research has shown that disruptive business models arise when technology combines with extreme market conditions, such as customer demand for very low price points, poor infrastructure, hard-to-access suppliers, and low cost curves for talent. With an economic recovery beginning to take hold in some parts of the world, high rates of growth have resumed in many developing nations, and we're seeing companies built around the new models emerging as global players. Many multinationals, meanwhile, are only starting to think about developing markets as wellsprings of technology-enabled innovation rather than as traditional manufacturing hubs.
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10. Producing public good on the grid The role of governments in shaping global economic policy will expand in coming years. Technology will be an important factor in this evolution by facilitating the creation of new types of public goods while helping to manage them more effectively. This last trend is broad in scope and draws upon many of the other trends described above.