Thanks to the digital business transformation, the world around us is changing—and quickly—to a very consumer- and data-centric economy, where companies must transform to remain competitive and survive.
Yes, it is a bold statement, but it is also very true. For companies today, it is a full-on Darwinian experience of survival of the fittest. Never mind the mass influx of new and diverse data flooding in from every direction—we all know that is happening. What we may not realize, however, is how much influence the internet, mobile, and the toy box of highly interconnected social platforms have on the reinvention of industries all around us. From auto insurance to media and entertainment, today’s most data-driven companies are proving, time and time again, that the entire body of industry is undergoing a period of explosive disruption that we simply cannot ignore. We see this in the way business models are changing, in how organizations are interacting directly with their customers, or even simply in the new breeds of companies that are springing up and changing the nature of their industries.
To the latter, one top-of-mind example is Uber, a company that is—at least according to its website—“evolving the way the world moves.” Unlike taxi services of the past, Uber connects riders to drivers through an app. In one tap, Uber uses your phone’s GPS to detect your location and connect you with the nearest driver via a mapping and pricing algorithm that is often cheaper than metered taxis (unless you hit a surge pricing moment, like at rush hour or on a holiday) and generally always in a much cleaner vehicle. While Uber is changing the game for commuters needing a quick ride, it is also reshaping the taxi economy from the inside out, too.
For example, cities like New York City sell a limited number of “medallions” that give car owners the right to operate taxies. These limited-supply medallions have been known to go for more than $1 million each. In the traditional model, taxi companies recoup their investments by renting their vehicles to drivers, gouging meter prices for riders, and giving as little monies back to their drivers as possible. Uber, instead, simply requires drivers to have a late model car and a clean driving record, and passes on a cut of each fare—no million dollar medallion needed. They give their drivers flexibility too: drivers can choose when they want to drive by simply switching their app on or off [Jim Edwards]. This is data-driven disruption, transformation, and reinvention, plain and simple.
If we boil it down to its simplest form, we could proclaim that companies looking to upsurge their disruptive fitness need to follow three steps: understand business disruption, build capabilities by design, and deliver a platform of speed. But first—and arguably more important—we need to approach the conversation by taking off the rose colored glasses of analytic possibility and thinking about how companies need to work in today’s marketplace. This is the part of the conversation that should precede any decisions about action—the part about change and vision. We can talk all day about BI or big data or analytics, but the reality is that the business itself needs new capabilities in order to be competitive with those leading-edge companies that are paving the way of reinvention.
This reinvention is not a by-product of technology either. Technologies—like Hadoop, the cloud (public, private, or otherwise)—is just that: technology. There are no silver bullet solutions to become suddenly a better data-centric company, and there are solutions lurking around the corner looking to sell you a magic bean for a problem that does not yet need solving. Instead, once you understand your business’ disruption model, then you can design the most appropriate data architecture and bring in the technology you need to enable it as a platform.
It is the old wisdom of not putting the cart before the horse. To understand change, you must first understand why you need to change, and then how to make that change happen. Data and reinvention aside, this is the premise of change leadership, and reminds me of one of my favorite quotes from Simon Sanek’s Start With Why, a book I encourage all of my graduate students studying leadership to read early on in their studies. In the introduction to his book, Sanek says “there are leaders, and there are those who lead.” Today’s most disruptive consumer- and data-centric companies are not those who are merely seeking to be leaders in their respective industries. They are the ones who are looking to lead their industries.
With that in mind, let us talk about the power of disruption.
To understand the power of disruption, we first need to understand what a digital life looks like now, compared to what it looked like before. Most of us are connected to our devices (yes, plural devices) and sharing and generating much more data than we realize—and that data is being used. I would wager to bet that those of you reading right this second have at least one device on you, maybe more. Smart phones, fitbits or other wearables, tablets…? What about those of you readers who have chosen the e-book format of this text over the paperback? On top of that, how many readers are multitasking and juggling reading with some kind of social activity (if you are, please tweet “@lindy_ryan’s new #dataviz book is G8”—just for fun)? This is not an idle guess: a 2012 Pew survey of 2,254 people found that 52% of all cell phone owners said that they multitasked on their mobile devices while watching TV. This is known as “media multitasking,” and involves using the TV, web, radio, telephone, or any other media in conjunction with another in simultaneous use [Marguerite Reardon]. (It is not necessarily a good thing, either, with a growing body of research on cognitive distraction in multitasking springing up since 2009.)
Likewise, we have to understand the new generation of “connected consumers”—the digital natives and the millennials, who are staking a bigger claim in the influencer pool of innovation just as much as the surprisingly tech-savvy older generations. (I can say that because, before she passed away my 70-year old grandmother somehow had a larger Facebook following than I do. I tease about this number often, when giving data presentations at data events, and it never fails to get at least a few surprised looks from the audience.)
Of course, in theory this paradigm shift is not unlike those that have happened before. Consider back when getting an email address was all the rage. I remember staying up many late nights listening to the sound of dialup logging into AOL, just so I could troll chat rooms. It is a little traumatizing to realize that the first major commercial Internet Service Providers (ISPs) hit the scene in the early 1990s; 1995 was the year of AOL, Prodigy, and CompuServe, and webmail services (like Hotmail) starting coming around in 1996–97. By late 1996, about one in ten Americans were on the Internet [Farhad Manjoo]—and that was already twenty—yes, twenty—years ago. Today, one email address still is not the norm—but for a completely different reason. For example, between work, personal, university, and other various social email addresses
I have something like half a dozen different digital contact methods (not including phone, SMS or MMS messaging, or social media handles). On the other end of the spectrum, some digital natives do not even bother with email addresses because there are so many “other” ways to connect with someone online: you can text, tweet, Facebook Message, Skype, Snapchat, etc. Who would have thought, in 1997, that email would be the old-timers digital communication method? Kids these days!
The point is, simply: today’s digital natives are even more digital than we could have anticipated them to be before (and, often times also more digitally naïve about the risk of data and sharing too much information—the dark side of the Internet).
Thus, we will need to learn how to experiment and move fast to meet those digitally demanding needs. Here, we can all take a lesson from learning to think like a startup—something that is counterintuitive to many of us. But, we often hear about big companies that recognize how big they are, so they find a separate building down the street, rent it, and staff it with their creative thinkers. It is a haven for innovation—the “stay hungry for new ideas” model versus the “protect what we have” model. Think about it, big guys: your competitors are moving fast, and you do not have choice.
As industry after industry is getting shaken out in the wake of change, you have to innovate before you can optimize. It is the time to move fast, find a market, hone a product, take advantage of lean product development, and worry about optimizing later. This is not the age of the tortoise and the hare, where the lovable, sluggish tortoise wins the race with diligence and determination. In the digital culture, speed—a necessary prerequisite for disruption—wins over perfection. It is an era of creative destruction: capture the market base with first mover advantage, move in and own it while your competitors try to catch up, and then create enough upheaval that when you leave—before anyone can show up second—you have made your success almost impossible to duplicate. That is the core premise of disruption: an unreproducible innovation that creates a new market or value network, eventually disrupting an existing market and displacing what came before.
Netflix, the subject of my graduate thesis on creative destruction, is the posterchild for this disruptive innovation—or, as [David K.] Hurst calls it, ethical anarchy, wherein disruptors become pioneers and then owners of a market. In later examples of data-driven companies, Netflix will be at the top of our discussions. Of course, Netflix is not alone on the list of disruptive companies that have become impressively consumer- and data-centric and are now thriving in the very digital culture that they have created for themselves. There are so many familiar stories we could talk about that it is almost hard to choose a reasonable few. But, later in this chapter, we will talk about four—Netflix, Facebook, Starbucks, and Amazon—and I will share the data on why these companies are, arguably, the Fantastic Four of disruption.
Image courtesy of Shutterstock
This article has been excerpted from The Visual Imperative, 1st Edition: Creating a Visual Culture of Data Discovery; L Ryan; Copyright 2016, Morgan Kaufmann.
Adapted with permission of Morgan Kaufmann Publishers. This book is available from Amazon and the Elsevier Store.