Agile in the new economy

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Are we in the middle of next revolution?

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The revolution is already under way.

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“Over the last few decades, we’ve grown beyond the Industrial economy - IT economy - Internet economy, each of which led to significant inflection points in growth and prosperity,” says Vivek Bapat, SAP’s global VP for portfolio and strategic marketing.

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“In fact, 52% of the Fortune 500 have been merged, acquired, gone bankrupt, or fallen off the list since 2000. The impact of digital disruption is real. However, it’s not the technologies that drive this change. It’s a shift in how new business models are created. We’re moving at a massive scale from systems of transaction (record) to achieving mass personalization at scale (digital)”.

R Ray Wang, Disrupting Digital Business, HBR

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Convergence of multiple forces is impacting business, economy, society …just name it..

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This new economy, …resulting from the convergence of Social, Mobile, Analytics, Big Data, Cloud, the Internet of Things and the Internet of Everything…. …catalyzed by a new era of hyper connectivity…. is creating spectacular disruption and new opportunities for innovation.

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Over the next 10 to 15 years, SAP estimates that the Networked Economy will represent a global economic value of at least $90 trillion.

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What this new disruptive digital economy would look like?

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Pointers Industrial Economy Digital EconomyEconomic Development Steady and linear, predictable Volatile, disruptiveMarket changes Slow and linear Fast and unpredictableLifecycle of Products/ Tech Long ShortKey Economy Drivers Large industrial firms Innovative, Adaptive firmsCompetition The big eats the small The fast eats the slowBusiness Approach Vision, goals, action plans Opportunistic, dynamicSource of Competitive Advantage Cheap labor, capital, scale Speed; partnership

Organizational Structures Hierarchical, bureaucraticFlat or networked structure

Leadership Command-and-control Self organized teamsSkills Mono-skilled, manual labor Multi-skilled, intelligence

Changing Paradigm

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• Technology and society changing faster than business - accelerated pace of disruption

• Marginal costs of producing and sharing goods/services declining

• Students are enrolling in free massive open online courses

• Social entrepreneurs are bypassing the banking establishment and using crowdfunding to finance startup

Disruptions

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Disruptions

• In SF, Uber has 3x revenue of the entire prior taxi and limo industry.

• Without owning a single room, Airbnb has more rooms to offer than Hilton. Airbnb has 800 employees, while Hilton has 152,000.

• Top Kickstarters raise tens of millions of dollars that once required top-tier investment firms.

Source: Tim O’Reilly

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• First time more than 50% population live in cities• 3 billion connected people so far, will grow 1.5

billion more by 2020, per ITU.• Innovation explosion with more connected

people• More room for Design Thinking, Creativity,

Imagination• Creates more disruptive stress or opportunity

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Disruptions

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Disruption Scenarios

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Source: Future Scenarios: Frank Diana

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Startup surge

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97 startups have over $1 billion valuations (WSJ - May 2015)

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What will happen if Google comes up with the autonomous car?

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• Google says accidents will decline by 90%• No auto insurance, car makers will cover that• Fewer body shops• Roadside motel industry will get impacted• Health insurance cost will decline • Car dealers will become app dealers• Car entertainment industry will flourish• What happens to all those Uber drivers when

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Disruption in Education

• Pressure will be on employable workforce• Content becomes open and commoditized• Demand for university building, libraries, lecture

hall, student housing plummet• A teacher in a disrupted world will become more

of a facilitator, seeking to package, conduct, and monitor an optimal experience for learners.

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Disruption in Education

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Disruption in Home

• Smart home disrupts elder care industry• Connected Health will provide health services

everywhere• Home security industry will be disrupted by low cost

options• Insurance companies could provide home security as

well or vice versa• Smart home integrators will emerge• EarlySense and Evermind have created devices that

track patients' sleeping habits and monitor if they are using their life-saving medical devices, respectively.

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Disruption in Fintech

Banking•Simple, BankMobile, Moven provide banking with no fees. Disruption: Checking accounts, savings accounts and checks.

Money Transfer•Venmo, PayPal, Google Wallet, Snapcash, Transferwise Disruption: ATM cards, cash and checks. Blockchain, a protocol that allows for secure, direct, digital transfers of value and assets (think money, contracts, stocks, IP).

Wealth Management•“Roboadvisors” - Acorns, Betterment, Wealthfront, Robinhood allow you to invest money with free stock trades, portfolio management tools and automated investing. Disruption: Large investment corporations like Fidelity

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Disruption in Fintech

Receiving Payments•Square, Braintree allow small businesses to accept payments Disruption: Credit card companies.

Business Loans•LendingClub, eToro (not in the US), CAN Capital and Kabbage , Fundera (match you with lenders) Disruption: Big banks with restrictive loan policies

Payroll•Small businesses that can’t afford a dedicated accounting team. Zenefits, Wave and ZenPayroll. Disruption: Accounts payable departments

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Disruption in Fintech

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Disruption in Telecom

• The Telcos will lose a combined $386 billion between 2012 and 2018, UK firm Ovum predicts, from customers using apps like Skype and Lync.

• VoIP will grow at 20% resulting in $63 bil in lost revenue in 2018, Ovum says.

• Chat apps WhatsApp and WeChat offer social networks that retain user loyalty and stickiness pushing people to go for smaller voice/text plans.

• Telcos homegrown apps for existing customers may not scale

• Netflix-Comcast like partnership opens new doors

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Why big companies need digital transformation?

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Businesses are realizing that future success is tied to digital transformation: -We are no longer an economy of products and services.

The digital transformation demands that we focus our attention on experiences and outcomes.

- An effort to renovate business vision, models, and investments for a new digital economy

I often use the iPhone as an example of a device that destroyed 27 business models.

- Enabling companies to operate in a rapidly changing business environment.

Products are getting obsolete very fast. Companies releasing faster into production.

Digital Transformation

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• Internet Companies and start-ups have the advantage

• Barriers for new market entrants continue to collapse.

• But most companies are traditional companies and have long way to go. – Their organizational policies, practices,

processes and structures that inhibit digital transformation will change.

Threats/Opportunities

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Big companies are not structured for future•Existing assets are getting obsolete•Technology undermines advantages of scale•Need new Agile thinking

– Growth oriented– Networked, flat– Management 3.0 – Entrepreneurial and innovative– Agile practices– Fast, Iterative, experimental

Threats/Opportunities

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Road to Redemption

Digital transformation requires an integrated strategy enabled by converging advances in •Technology (Cloud, Mobile, Social and Big Data, plus future scenarios)•Principles and Concepts (Lean/Agile, user centered design, design thinking, Microservices, automation, continuous deployment/integration)•People and Organizations (Mastery, autonomy, purpose, self-organization, collaboration, small distributed teams, crowdsourcing, holacracy)

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The Art of Possibility

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Presented By

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