Contribution by, Matt Hatton, Founding Partner, Transforma Insights
On the 30th July along with my co-founder Jim Morrish, I ran a webinar entitled ‘7 ways to harness AI, IoT and other disruptive technologies for competitive advantage’ based on an extensive set of analysis that we have been doing recently of hundreds of real-world examples of new technology deployments.
Technology is transforming companies and markets like never before. Sectors as diverse as agriculture, manufacturing, retail, financial services and healthcare are going through more rapid change now than they have in the past 50 years courtesy of technologies such as Artificial Intelligence, Internet of Things, Blockchain, Edge Computing, and Robotic Process Automation. And let’s not forget COVID-19, which has been a massive stimulus for new technology adoption, although whether the disaster recovery plans translate into long-term transformation is a moot point. Nevertheless, large numbers of companies are engaging in a ‘Digital Transformation’ to harness these technologies for their competitive advantage. Based on our forecasts companies will be investing over $5 trillion in digital transformation initiatives between now and 2030. Against that background, every company must be tech-savvy to an extent that has never been seen before.
The unfortunate thing is that businesses have generally been quite bad at adopting new technology. If you spin back 10 years the expectations for 2020 were sky-high. In the world of IoT, for instance, there was talk of 50 billion connected devices and transformational business models. The reality was some way off that. That was the subject of a book I wrote earlier this year called the IoT Myth which would make a blog post in its own right. In the webinar, however, we focused on one thing that adopters of new technologies should be doing in order to maximise their benefit: use lessons from what other companies had done badly or well in the past to educate themselves about how best to address the future opportunity.
Digging into the experiences of previous adoption over the last few years a pattern emerged of companies largely focusing on low-hanging fruit. The vast majority of the use of AI, IoT and so forth is in addressing internal process efficiencies rather than in changing outward facing products or in disrupting the market overall, as illustrated in the chart below.
Furthermore, few applications are what we would term ‘mission critical’ and complexity levels of the deployments are very low. While different case studies may have functional, geographical or stakeholder complexity, it’s quite rare. And it’s almost unheard of for a project to be complex in more than one dimension. It is also noteworthy that there is a close relationship between complexity and impact. Impact of the adoption of these technologies is generally low (with an honourable mention to Robotic Process Automation) reflecting the fact that these are simple deployments focused on incremental change to existing processes. The complexity of rolling out the new technology is putting them off opting to engage in more transformational projects.
Of course, the lion’s share of the responsibility for driving out the complexity sits with the vendor community. They’ve largely come on in leaps and bounds in the last few years, but there’s still a lot to do. In the webinar we identified seven key things that companies can do to mitigate the complexity that still persists and help adopters get to a productive use of disruptive technologies faster than their peers. In the webinar, for each of these areas we use real-world examples as diverse as a Norwegian dairy farmer using AI to a Turkish construction company’s adoption of drones to illustrate the points. Here is a brief summary:
- Do your horizon scanning. Technology is disrupting every sector and if you don’t understand what’s coming there’s much less opportunity to harness it. You need to consider technological, commercial and regulatory changes, all of which will have an impact. You also need to consider not just the direct impact of a new technology but the secondary ripple effects that it might have. Understanding what’s coming and what your competitors are doing will allow you to make informed decisions about your own product lines, for instance in rolling out new product upgrades, changing your marketing mix or even retiring products.
- Maintain a prioritised portfolio of projects. There are a huge variety of projects that you might want to pursue. You need a structured approach, firstly filtering based on viability and then ranking based on fit for the business and attractiveness. The next step is looking at timelines and dependencies. Finally, you need to feed back into the planning process. For instance you might have made a decision to adopt a particular technology platform which might make certain projects more addressable.
- Match team structure to the project. Projects are highly diverse and require different skill sets. In the webinar we explore the difference between a smart agriculture solution and a smart meter roll out. Your teams will need different skills based on what type of project you are pursuing.
- Maintain flexibility through the implementation phase. Here the key word is ‘agility’. Throughout the roll out of the project you need to feed back into the overall planning process and adapt it accordingly. What you don’t want to do is have project teams solving their own problems independent of the overarching technology strategy.
- Start with the process that needs changing, not just interesting technology. The big stumbling block for most organisations when deploying AI, IoT or whatever, is to focus exclusively on the technical. They need to focus instead on the process they want to change and ensure they consider technical and commercial angles in parallel. Ideally this isn’t done by the IT department!
- Security must be front of mind. Lack of security is a systemic challenge, with high profile problems like Mirai and Ring hackings having knock-on effects on confidence. What’s required is the baking in of consideration of security into the development process from the start and furthermore a constant review and iteration on security approach based on a trade off with commercial factors like profitability or churn, and with other ‘trustworthiness’ factors like reliability or privacy.
- Be prepared for change. The lack of adoption of truly transformational technology is largely because of a lack of consideration of the requirement to change. This takes many forms including business process, business model, finance, people, partners, systems and culture. Any new technology adoption will require organisations to make some changes to some of these, and the more transformational, the more it will permeate through all of these various elements.
There is a tremendous opportunity associated with adoption of technologies such as AI, IoT, RPA, distributed ledger, additive manufacturing, AR/VR and digital twins. However it requires a co-ordinated and strategic approach to considering how the technologies will change the organisation adopting it. Digital transformation means change, but no-one ever found a competitive differentiator by doing things the same.