Tuesday, January 8

Eight business technology trends to watch from McKensey’s brainy chaps

Eight business technology trends to watch from McKenzie’s brainy chaps I read this article in the McKenzie Quarterly Magazine which talks about how eight emerging technology trends are transforming many businesses and markets. These trends fall within three broad areas of business activity: managing relationships, managing capital and assets, and leveraging information in new ways. Managing relationships

  1. Distributing cocreation

  2. Using consumers as innovators

  3. Tapping into a world of talent

  4. Extracting more value from interactions

Managing capital and assets

  1. Expanding the frontiers of automation

  2. Unbundling production from delivery

Leveraging information in new ways

  1. Putting more science into management

  2. Making businesses from information

I am afraid I am not impressed by their formulation because of three main factors. The first is the use of the word “cocreation”; second is the rather limp and tentative drawing of trend characteristics/boundaries and finally their conclusion which I quote: These trends are best seen as emerging patterns that can be applied in a wide variety of businesses. I am afraid these trends are spotty at best. For every example they quote to support their case for a trend, there are many cases which do not support their argument for the trend.

The first issue, the use of the word cocreation is clearly from the Martin Lukes School of Management. People who are familiar with Martin Lukes from the Financial Times would know that words such as creovation or cocreation do not really mean anything. The authors use this word to suggest that outsiders help create or innovate a firm’s products and/or processes. Well, yes, but since when did this become a new trend or something emerging? This pattern of new product development has been in economic history since centuries. Take the development of firearms, for example. The development of projectile weapons by firms has been driven by suppliers, customers and other external parties for centuries. How about glass making in Venice? Or how about cooking? Or how about bicycle manufacturing? Or what about weaving? The mind boggles, but neither the word makes sense nor is this an emerging trend. And as I showed with the example of firearms, this technology trend has been seen for a long period of time across a wide swathe of the world. Second, is that the boundaries that they draw are way too nebulous. Even when one talks about factors such as (#5) - expanding the frontiers of automation, they give the example of RFID. Well, yes, but that sounds like a solution going in search of a problem. More automation has issues, for example, if you automate say business processes, you lose firm knowledge of those processes. Why did industry have to pay such horrendous amounts to recover from the Y2K problem? Because ever increasing automation made sure that the knowledge was not captured as time went on. Remember when new automated luggage handling systems went into operations at many airports? They went completely belly up and caused tremendous issues. So automation should not be applied willy nilly. I quote: Automation is a good investment if it not only lowers costs but also helps users to get what they want more quickly and easily, though it may not be a good idea if it gives them unpleasant experiences. The trick is to strike the right balance between raising margins and making customers happy. I can only say, yes, d’oh, but is this is an emergent trend? Nope.

Finally, as I showed above, these trends are not uniquely defined, I am afraid. Again, it felt like they came up with the trends, and then looked around for examples to fit into those trends. Take the automation aspect mentioned above, for example and try to understand how the issue of call centre automation fits in? Think about the time when regiments started getting equipped with firearms? How about the time cavalry regiments started to get replaced by battle tanks? Or how about emails versus letters? Or how HR tasks have been automated to such an extent that you can well go from year to year without having had a chance to see your HR person. Now that’s a clear case of automation without a good business case, because you are increasingly ending up with dissatisfied employees and increasing attrition/turnover rates. Still, it is an interesting read, but would have been richer if it was written in a less pretentious tone and was more grounded in terms of determining a technology trend. Oh, and a bit of knowledge of history of commerce would help as well! All this to be taken with a grain of piquant salt!!!


Phiscal said...

Then again....how deep does not expect McK to be? :)

BD said...

fair point indeed, Phiscal, but they do have pretty smart cookies.. :)