The digital transformation we are in right now is not our first technological transformation. In fact these transformations, or cycles happen every half century or so. Which means they are repetitive and that we can learn from previous cycles.
These cycles are started by productivity enhancing innovations that drive economic growth. Previous cycles were petrochemicals and automobiles in the 1950s, electrical engineering and chemistry in the 1900s, railway and steel in the 1850s and steam engine and cotton in the 1800s.(1)
New technologies and increased production efficiency creates new categories of products. As people get access to these products their demand patterns change, meaning what they find valuable to pay for changes.(2)
So, even if the first change starts in technology and productivity it doesn’t stop there, it doesn’t just create a faster world. It creates new customer demands that start influencing how we continue to redesign our technologies and our business models in order to produce new customer value and wealth.(3)
What was valuable in the old cycle doesn’t go away. It becomes infrastructure. A hygiene factor. And new opportunities for wealth are designed.(4)
The challenge in this situation is that there is no map anymore. Technology doesn’t tell us where it wants to go and customers — who are driving the need the technology and the business models are working to solve, don’t know where they want to go either. (5)
And so a company needs to decide. Do we A. stick with the old, B. adapt when the markets settle, C. listen to customers to keep up with their needs or do we D. experiment .. probing the customers for what they find valuable by offering them new ideas, capturing their response and quickly adapt our business practices as we learn?(6)
Are we laggards, do we transform to keep up with the change or disrupt to create the change?
Recommended resources and further reading:
(1). Business Cycles: https://en.wikipedia.org/wiki/Business_cycle
(2). The changing content of capitalism: http://www.180360720.no/?p=5112
(3). What technology wants: https://www.penguinrandomhouse.com/books/291671/what-technology-wants-by-kevin-kelly/
(4). The premium puzzle: https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/creating-value-in-the-age-of-distributed-capitalism
(5). The inevitable forces of technology: https://www.youtube.com/watch?v=pZwq8eMdYrY
(6). A leaders framework for decision marking: https://hbr.org/2007/11/a-leaders-framework-for-decision-making