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Tag: change

Posted by Tom Cheesewright on

Google’s antitrust fine: facing platform fear

Google’s antitrust fine: facing platform fear

Google’s antitrust fine: facing platform fear

For most companies, the prospect of a £3.8bn fine would be an existential threat. For Google, it’s perhaps the cost of doing business, and at just a few percent of its cash reserves, an affordable one at that.

Google is being pursued by European authorities for throwing its weight around, applying the leverage of its dominance in smartphones to shore up its position of strength in search and browsers. Three numbers assert the scale of this dominance: Google takes over 90% of search queries, provides the platform for 80% of smartphones, and has 60% of the browser market.

It is a principle of our moderated markets that if one company becomes too dominant in one area, then applies that dominance to squash competition in adjacent areas, authorities will intervene on the consumer’s behalf, on the grounds that consumers lose out when competition is impossible.

This provides some hope for the direct competitors Google faces, in Europe at least. Their prospects of getting their own browser or search engine onto people’s Android devices may be improved. But such regulations have done little to settle the nerves of companies perhaps less directly related to the current EU campaigns.

I haven’t yet engaged a corporate client in a discussion about strategy without the global tech platforms — Google, Facebook, Amazon particularly, Apple and Microsoft to a lesser extent— being number one on the agenda, or thereabouts. Some are concerned about direct competition, in retail, media, or digital services. Some are worried about the power these companies command over the channels between them and their customers. All want to know what the the platforms are going to do next.

I can’t tell them of course, though I might point in certain directions. But I can tell them how to prepare for whatever it might be. The prescription always follows similar lines.

— First, pay closer attention to the future. Many of my clients run infrequent but serious looks at the 30 year horizon. All run detailed planning for the next twelve months. In between, things get a little fuzzy. I advocate a six-monthly foresight process focused on the next 2–5 years following a formal process designed to break people out of their blinkered view of the world.

— Second, get closer to your customers. People have higher-than-ever expectations of their suppliers and you need to be more responsive to direct and indirect signals. Increase your listening capability and either accelerate the flow of information to decision-makers, or even better, push that decision-making power as far to the edge of the organisation as you dare.

— Third, experiment more. Experimentation is cheaper now than it ever has been, and it’s easier to test and validate prototypes with good data. Test the things customers tell you they want, but crucially test the things they don’t yet know that they want. Do it consistently.

— Fourth, prepare the organisation for radical change. This has many components: structural, cultural, operational. It’s about transparency and comprehension: how well do you know how your organisation *really* works, and would you know how to change it when the time comes? It’s about attitude: do your people fear change because it threatens their role and their comfort? Are they prepared to learn? And it’s about process: How does information flow through your organisation and how much friction and risk is involved in that flow?

Ultimately, every company, and every leader, has to face their fear of the platforms. They can choose to do it today, or they can wait for the threat to become real.

Posted by Tom Cheesewright on

How different do you want the future to be?

How different do you want the future to be?

“Past performance is no guarantee of future returns.”

Ever seen that disclaimer on an investment ad? Despite this standard warning, history is often used as a weapon with which to fight arguments about the future. “It has never happened like that before so why should this time be any different?”

I’m all for a level of conservatism: every prediction (and particularly those with the most hype around them) should be subject to challenge and question. But as the Cambridge historian David Runciman says, “history is a poor guide”. Now is different to then. And tomorrow? Well, tomorrow could be anything.

The question is, how different do we want tomorrow to be? And how fast do we want the change to come?

The one lesson I do think we can take from history — and that has direct parallels in my original discipline, engineering — is that rapid change is often less stable change. When the pendulum swings too far, too fast, the resulting correction is often pretty violent as well.

This is in part why democracy has been so successful: it promotes a relatively slow and steady pace of change with regular swings back and forth. Two steps forward, one step back, but ultimately towards a healthier, wealthier population.

The ideal would perhaps be consistent slow steps forward. But how do we achieve this?

Competing ideologies

Democracy maintains slow progress because of the competition between two distinct ideologies. One government may reverse some of the steps of the predecessor and vice versa. But in business we should be able to avoid this oscillation.

Futurism — strategic planning in general — needs to be conducted at two speeds, or rather focused on two distinct intervals.

There is the long term, potentially a 25–30 year vision: what do we want to be, to see, to deliver? How do we believe our ability to deliver that vision will be affected by the influence of macro factors?

Then there is the near term: inside the agreed framework of our vision, how will we be affected in the next 2–5 years by macro factors? What will have the greatest impact — positive or negative — and how do we respond?

In the immediate term, there is a process of constant innovation, driven by the near-term challenges and opportunities identified. In theory we should be able to maintain most of the changes of direction within this process through experimentation and testing. Occasionally the whole company will need radical change. But if this innovation process is run consistently, and at sufficient scale, it should be possible to minimise these dramatic changes of direction.

Should and do

Of course, few people or companies operate like this. Change programmes are generally undertaken when there is a clear external motivation: falling profits or market share, mergers and acquisitions. It is hard to devote a sufficient proportion of our time and effort to changing the business. I’ve rarely met a small business owner, large company MD, or frankly a CEO, who didn’t want to spend more time ‘on’ the business and less time ‘in’ it.

But somehow we must.

Posted by Tom Cheesewright on

How will automation affect the third sector?

How will automation affect the third sector?

Yesterday I spoke at The Gathering, the annual event for Scotland’s charities and third sector organisations, run by SCVO. Alongside me on the panel were Dr Kendra Briken from the University of Strathclyde and Rhodri Davies from the Charities Aid Foundation.

The question we were posed was, ‘How will automation affect the third sector?’ We all came at it from different perspectives and I found myself furiously scribbling notes on my phone as Kendra and Rhodri spoke.

Here’s (roughly) what I said.

What defines your organisation? Is it the mission? Is it the values? Is it the culture and behaviours?

The coming wave of automation is going to make you think very hard about these questions again. Because the choices you make won’t just about technological possibilities, they will be about your strategic priorities.

Automation is nothing new. Since the first Australopithecus afarensis sharpened a rock three and a half million years ago, we’ve been applying our understanding of the world to make our lives easier. We are a race of toolmakers and as our tools get more sophisticated, they can take on more of our work for us.

In every wave of technological advancement in the relatively recent past, from the agricultural revolution through the industrial, technology has enabled economic growth, which has in itself created more work.

But it looks increasingly like this will not be the case this time. General purpose computing can be applied so widely to such a range of tasks that it is hard to see how it doesn’t result in either large scale unemployment or its modern equivalent, the further degradation of high quality jobs into gig economy work.

Let me give you some examples:

In China, the government’s Made in China initiative promotes the rapid automation of its industries. Some cities, like Dongguan, are even offering grants for companies to invest in machines that displace people. The results have been dramatic. 87,000 workers were replaced in Dongguan between 2014 and 2016. Apple’s largest supplier, Foxconn, replaced 60,000 workers in a single factory with robots.

This is physical automation, something we have been familiar with for centuries. But it is newly enabled by the cheap availability of computing power. These robots aren’t just mechanically sophisticated, they are digitally smart.

This intelligence translates into automations that will potentially be very relevant to the third sector.

The first is what is happening in stores, with systems like Amazon Go. Here, tills are eliminated by a network of cameras placed around the store. People tap their phones on a terminal on the way in, and then whatever they pick up and put in their bag, they are charged for.

This may look like it will only be available to high tech stores like amazon or maybe the big supermarkets. But the hardware required is actually very simple and cheap. The likelihood is that Amazon and others will offer such systems as a service to retailers at a relatively low monthly cost.

That cost may still be more than a volunteer. But as more and more shops adopt this technology, queuing at a till to make a purchase is going to start to look pretty archaic. Like the 20MB data limit on the wifi, on my train here. Stores using this technology are going to know a huge amount about their customers or supporters. It will also facilitate very rapid pricing and stock taking.

The second big physical shift that may be relevant is the advent of autonomous vehicles. This class of automated transport and delivery systems will range from the pavement-roaming Starship drone to the driverless car. And they will likely be here sooner than you think. This drone has already been trialled on the streets of London.

Less anthropomorphic

When we think about automation, it’s natural to think of physical tasks and machines that in some way perhaps resemble us. After all we have been replacing humans with machines in a manufacturing and agricultural context for a few hundred years. But what about automating more cognitive and interactive tasks. Like call centres.

Amelia is a virtual member of staff that can interact with people via voice or text. She doesn’t need to be programmed with answers. You feed her information, connecting her to your CRM systems, etc, and she finds answers based on the questions she is asked. She is sensitive to emotion, and tailors her responses accordingly.

Amelia can answer every call on the first ring. She can typically answer 80% of queries. And scariest of all, people often prefer dealing with her to dealing with another human — particularly when dealing with potentially embarrassing issues.

In the back office

Amelia is a particularly visible kind of automation, but there is a much less visible kind as well. The automation of document and data processing. An incredible amount of work in most office environments is still devoted to re-keying data, reproducing documents that are very similar to those that have been produced in the past. It has taken much longer than anyone expected, but this friction in day to day operations is slowly being eliminated. The barriers between different systems are being broken down. The production of reports and documents is being automated.

This isn’t so much automation as augmentation. Few whole roles will be eliminated by this type of technology. But with it, fewer people can achieve more, meaning you don’t need as many people in total.

Structural change

Automation as a general rule more greatly affects the lower levels of the hierarchy, where work is more often repetitive. As you climb the hierarchy and work becomes more about creativity and adaptation, automation becomes augmentation: a smaller number of people equipped to do more. This has the potential to change the shape of the organisational hierarchy: low down a small number of people augment and maintain a largely automated workforce. Higher up there may actually be more people in those organisations that successfully make the transition to a more automated world. Their creativity and relationships with customers or partners may be the bottleneck that limits growth. Ultimately though, we return to a pyramid at the top.

The response

In the next few years, you can undoubtedly apply capital to reduce your operational costs through automation. Success is a question of good design as much as the right technology, but it’s a realistic prospect and the investment levels required to start to have an impact are actually relatively low.

The question comes back to your priorities. Are you here to achieve your mission at all costs? In which case, there’s a strong argument you should be pursuing every solid prospect for automation and augmentation reducing your costs and increasing your efficiency.

Or is your charity also a vehicle for wider social good? Is it important that you create employment?

Finally, where do volunteers sit in this mix? How much do they actually cost you? And could their work be done, or at least supplemented by machines? This might be the trickiest area to assess.

Tom Cheesewright