There’s a massive market shift underway that’s redefining how enterprises succeed. Are you ready? Or will you be left behind?
By Charlie Bess, HP Enterprise Service Fellow
The New Model of Efficiency
To survive in the current business environment, enterprises must do something radical. It’s not enough to be agile and flexible, responding to changes and shifts as they occur. The nature of business has changed, demanding entirely new strategies. Enterprises need to start breaking things to gain advantage.
More than 10 years ago, up to 90% of work was operational. Today the average organization still spends 70% of its annual budget just “keeping the lights on,” leaving a scant 30% for innovation. That ratio must be flipped. Why?
Even if your business is doing OK right now, your model is probably based on outmoded assumptions that won’t generate results much longer. Here’s why:
- Change is no longer a periodic disruption. It’s the new stasis, an ever-shifting state that needs to be encouraged.
- Although “business as normal ” may be comfortable, it’s not where value is generated.
- Enterprises must be flexible and react quickly, or get left behind.
Traditional Models Are Extinct
Traditional business models are based on information scarcity. In the past, we were desperate for information. We immediately consumed whatever data we received and were grateful for it.
Today’s biggest challenges are driven by an abundance of data and computing power. Information comes at us in quantities greater than we can consume. Attention is the new scarcity. To cope, organizations must develop new business models that effectively harness information streams and focus scarce attention on the relevant data embedded in those streams.
That means shattering the old business model mindset. Old business models based on information scarcity focused on reaction to disruptive events, such as the economy or unforeseen competition. New business models based on information abundance must focus on provoking strategies that engage probable conditions before they occur.
Put Data In Context—the Information Ecosystem
How does an organization execute amidst this abundance? Information must be properly analyzed and packaged so that it becomes useful for innovation. People don’t make decisions based on data. They make decisions based on the context the data describes and the environment in which the data (and the enterprise) lives. This is critical because most organizations are unsuccessful sifting through and putting information into proper context.
For example, HP has partnered with Shell Oil Company to create an information ecosystem that drives faster, better decisions. Through a network of wireless sensors embedded in the environment, vibration, shock or changes in velocity are measured. The data creates high-resolution seismic images that pinpoint abundant new reserves. The result is a significant leap forward in oil and gas exploration and production.
Like the sensor-driven network, new business models must embrace visibility, flexibility (such as work force, computing resources), cooperation, and efficiency.
The Collaborative Enterprise
This new model also has to nurture diametrically opposed dynamics. Organizations must be standardized, yet customized. Think about interlocking building blocks: Legos are standard, yet customizable. Enterprises must be secure, yet collaborative. These conflicts point to the need for innovation.
“Coopitition”, where one organization’s commodity becomes another's differentiator, will be the norm. Enterprises must focus on core and leverage at low cost anything that is relatively standard. For instance, a health insurer that prints statements in a unique way, as opposed to a standard process outsourced to a print distribution center, is going to pay a high price for that customization.
Business models must move away from “if it ain’t broke, don't fix it ” to “if it ain’t broke, I must break it” to seize the innovator's advantage. This is where value will be generated as we enter the next wave of technological change.
There's a massive market shift underway that's redefining how enterprises succeed. Are you ready? Or will you be left behind? Accelerate Your Shift From Technology To Business Outcomes
From “coopitition” to “smart clothes”, Charlie Bess is a frequent contributor to . He is an HP Enterprise Services Fellow in the Office of Technology and Strategy at HP.
