Topic: IT & Infrastructure

ClipMagazine
October 18 1999

Topic: IT & Infrastructure

THE EXTREME FUTURE

What happens when all the rules suddenly change in the business world? That's when the "extreme future" begins, according to Dr. James Canton, the innovative thinker who shares insights from his new book Technofutures in this compelling Clip interview.

By Ryan Bernard

By now, everyone in the corporate world is well aware of how quickly things are changing in the world of e-business. But you ain't seen nothing yet, according to Dr. James Canton, founder of the San Francisco-based Institute for Global Futures, a think tank that advises governments and corporations on the impact of advanced technologies.

In his new book, Technofutures: How Leading-Edge Technology Will Transform Business in the 21st Century, he talks about four types of companies -- Traditionalists, Maintainers, Adapters and Innovators -- and how they will fare in building the virtual enterprises of the 21st century. According to Canton, the challenges ahead for business may result in death for some enterprises, and vast success for others. But enough of this lead-in -- let's turn quickly to Dr. Canton to see what it all means and what to expect as the business world enters the new millennium.

Where are we headed with this whole trend toward e-business?

In my book, Technofutures, I talk about how every business is an e-business whether they know it or not. And the central core of creating a sustainable, successful, profitable e-business is fast adoption to network-based computing at the enterprise level. We've got to think way outside the box -- I call it radical innovation.

You've got to think about ways to connect suppliers to partners to customers and be able to link all of this in an elegant, workable knowledge domain because ultimately the speed of change in complex new technologies is going to frustrate us or challenge us to provide more value to the customer.

How are companies responding to these new challenges?
In my book I indicate that there are four different styles of organizations out there that are affected differently by embracing new technology.

The first are Traditionalist organizations -- a culture of folks that are slow to change, particularly in networking the enterprise. They think that it may be a fad and not something that they want to invest in. Their motto is "if it ain't broke don't fix it."

Second are the Maintainers -- folks that for all intents and purposes say “yes” when they mean “no.” Their customers are screaming for interoperability and online apps and their suppliers are screaming for next generation EDI and a network-based communication or a purchasing system and they like to maintain the old way of doing things and are very slow to adapt. Their motto is "don't make waves."

Next are the Adapters -- they are willing to learn new things and transform the organization to look more like a network. Their commitment is to networking the enterprise way outside the traditional box of connecting suppliers, customers and partners and trying to adapt best-of breed examples from the marketplace -- even from competitors -- into a robust, interoperable, scaleable architecture.

These are the companies that are going to survive what I predict is going be a severe shakeout by 2001 and 2002 in most of the vertical markets. We surveyed 20 different vertical industries and what we found is that one of the key ingredients to creating a 21st century organization is the organization's commitment, the leader's commitment, to building a networkable enterprise for the 21st century.

Last are the Innovators -- organization that have a culture with people who are really out in front trying to lead change and trying to implement innovative solutions well before the rest of the marketplace. These companies are identified as innovators by their customers.

Why is networking the enterprise such a crucial determinant of future success?
It's very clear, in all of our surveys, that the key party driving change is customers all the way down the value chain. IT is now business-critical to the enterprise. It used to just be an add-on.

Many companies don't get it, particularly where the CEOs have the secretaries reading their e-mails. They think that it's something you think about after strategic planning, after you create your products and services or after you allocate your budgets and your marketing. [Companies that] understand that IT is business-critical to every function of the enterprise and [that are using] networkable solutions to [create] the virtual enterprise of the 21st century -- … [they] will survive the severe shakeout over the next three to five years in most industries.

More importantly, they'll grow their profitability, they'll be more sustainable, they'll provide more value to customers. And believe me that customers are looking for this -- customers are driving change. You don't want to be an organization that has to play catch-up with your customers.

What will happen to companies that don't follow this model?
Coming back to my change leadership model, if you are a Traditionalist or a Maintainer and your customer is an Adapter or an Innovator, you're going to have a hard time maintaining market share. And you're going to have a hard time being able to service a customer that's more innovative than you are and is making demands faster than you are.


If you are an organization that's an Adapter or Innovator and you have customers that are Traditionalists and Maintainers, you'll be able to bring them along and prepare them for the 21st century. This is going to be the most difficult time for business on the planet, probably in the history of humanity, because we're just coming into the age of convergence -- what I call the extreme future. The extreme future is the convergence of all these new technologies that are going to provide much more value but at the same time much more competition for all of business.

What is causing customers to behave this way?
What's happening now is that customers aren't as brand-loyal, they're not as sensitive to long-term relationships and ultimately the only real competitive advantage is radical innovation. If you're not continually, radically innovating your enterprise, and at the core of this innovation is really the networkable solution, the virtual enterprise of the 21st century. If you're not transforming your organization today, you're not going to be able to sustain this for the future.

Do you have any good examples of an Adapter company and how they have adapted in this way?
Absolutely. Cisco Systems is one example. These are the folks that make the pipes, if you will, to drive the Internet and the network revolution. Cisco has created a very robust, online marketplace where their customers can come in and configure what they want and buy on demand. And if they want service or support from a human, they request it.

Approximately 90 days ago they had an individual who at two in the morning went ahead and bought over $100 million worth of networking technologies without talking to one individual. Cisco is one example of a leading-edge company that has propelled its business using e-business very successfully to provide cost-effective value back to their customers.


Any other examples?
E-loan provides home mortgages. They give you a comparison based on the top 60 or 70 vendors who can give you the best deal. They do this online, they do this very efficiently and they're networking among sometimes competitors and sometimes they're linking amongst partners. But the point is that they're providing a value that would be very difficult to find someplace else.

I also think the auction models are very interesting. eBay and Priceline represent next-generation business models that are going to explode existing pricing structures. So we have to consider that the network enterprise of the 21st century, given all these explosive changes with e-business, are going to be forced into adapting to new business models. And the question is: are leaders in organizations today ready for these changes, ready for dealing with this extreme future and this kind of convergence? And a lot of these changes are very fastly coming -- and people are not waiting for them. They're using them as a competitive opportunity today.

In what other interesting ways will the "extreme future" affect how companies do business?
We're finding with the chemical companies, like Chemdex, that they're creating what I call “virtual private markets” where they're connecting online to the global marketplace buyers and sellers of chemical products, steel products oil and gas products. That is probably one of the most interesting developments of the Internet is that there's going to be this emergence of all these private markets that are dedicated to bringing together buyers and sellers in a very super-efficient way and providing the best price for the best product. And quite frankly that's going to have the biggest impact on the traditional industrial industries. It's already starting to do that -- most of the real value of the marketplace … when you talk to companies like General Electric … their parts division will sell a couple billion dollars online. Small enterprises are doing it too.


I-print is providing printing services to small- and medium-sized businesses and they're passing along, because they have a networkable and virtual enterprise, a 25-to-40 percent discount to the customer because they have a networkable solution. I think we're going to see this dynamic more and more. We're going to see companies offering discounts or at least a monetary or service advantage if you'll do business online. This is more and more the way of the future. You're looking at customer service via the Web that didn't exist as an industry three years ago and now it's over a billion dollars in sales and I'm projecting it to be over $7 billion in sales over the next not even five years.

We're in the midst of a major revolution that's just starting and what I think is important for managers to understand is this level of adoption and innovation. If you can move your organizational culture in this direction and start to take a look at adopting some of the best of breed examples you will ensure competitive advantage for the future.

So you do have a roadmap in your book for companies to follow in terms of getting their act together?
Absolutely.

Can you summarize them very quickly?
Analyze and adopt best-of-breed examples of innovation outside of your industry because most people don't look outside their own industry.

Create a culture based on adapters and innovators and create a culture where experimentation, innovation and looking at new possibilities is rewarded.
Do a very comprehensive customer analysis of what customers need to be happy, to be served in the future.
Think way outside the box about this virtual network enterprise for the 21st century. What ultimately would provide the most value to employees, partners, suppliers and customers? What would that network architecture look like? Then go out and create it.
Identify where the system breakdowns are. Many managers in organizations as well as presidents and CEOs don't hear about or are insulated from problems, criticisms or breakdowns, particularly between their suppliers and customers. Identify where the system breakdowns are and create new systems that will address these. Because often times the critical mass of customers will move from supplier to supplier without telling you exactly what the problems are because nobody asked them. It's often the death knell for organizations.
Ask yourself: Do we eliminate all of the closed-end systems? Many organizations have an old legacy system that doesn't talk to a client/server that doesn't talk to a desktop that doesn't talk to an intranet. Open up doorways between systems so that there can be shared knowledge, shared value and shared service -- both internally and externally.
Lastly, identify what your real knowledge value is. This is a tremendous opportunity for organizations to rethink their organization as a knowledge bank and rethink their jobs as knowledge engineers. Ultimately, knowledge is what empowers people to be successful. Let's analyze it, put it in data warehouses, provide data mining and distribute it above and beyond the enterprise to empower people to find what they want as customers and provide what people want as employees.