Driving Business Sustainability In The Age Of Data And Technology
Driving Business Sustainability in the age of Data and Technology is a keynote lecture presented at the National Institute of Marketing of Nigeria (NIMN) Annual Conference on 16th June 2022 by Kola Oyeyemi, CEO, Axiom Intel Limited at the Eko Hotel & Suites, Victoria Island, Lagos.
When the esteemed Austrian economist Joseph Schumpeter coined the term Creative Destruction in the 1940s to describe how technological progress would improve the life of many at the expense of a smaller few, little did he know that the smaller few he referenced would keep getting bigger by each turn of the evolution to the point of great concerns.
Mainstream economic thinking believed that those that would be displaced by technological advancements would have newer opportunities in the new jobs that would be created by the obtrusive technology. Unfortunately, this has not often been the case. Many jobs and many industries have been made extinct by technology and with their extinction, many once upon a time successful companies and valuable talents.
There is no more concerning time in history than now with the explosion in data and very aggressively disruptive technologies to discuss the issue of Business Sustainability, not from the green planet and environmental impact point of view which is very important and cannot be discounted but from business performance fundamentals.
A futurist once said in 2012 that the world will fundamentally change in ten years more than it changed in the previous 100 years. We are in the tenth year of that prediction and how so true it is today. Let’s see some staggering stats on Data generation:
1. In 2018, according to Social Media Today, more than 2.5 quintillion bytes of data were created every day. This was the year people used over 3.1 million gigabytes of internet data and mined 1.25 bitcoin every minute.
2. According to World Economic Forum, the amount of data in the world was estimated to be 44 Zettabytes at the dawn of year 2020. A Zettabyte is 1,000 bytes to the seventh power. This means one Zettabyte has 21 zeros. This number came from a summation of the data generated daily by social media sites, financial institutions, medical facilities, shopping platforms and several other online activities.
3. At the beginning of 2020 according to World Economic forum, the number of bytes in the digital universe was 40 times bigger than the number of stars in the observable universe.
4. The World Economic forum High Scalability report says that by 2025, the amount of data that would be generated each day will get up to 463 Exabytes globally. An Exabyte is 1,000 bytes to the sixth power. In contrast
to this fact, all the words ever spoken by man according to the report, fit only into 5 Exabytes!
5. Internet World Stats recorded that as of July 2020, there were over 4.8 billion internet users in the world. This means nearly 60% of the people on the planet earth at this point were digitally active. 50% of the overall traffic came from Asia but Africa has been recording the fastest growth at about 12.44% between the year 2000 and 2020
6. Internet Live Stats says Google handles 1.2 trillion searches annually
7. Business of Apps recorded that 71.5 billion Apps were downloaded worldwide in the first half of year 2020. Google Play store did 52.3 billion and App Store did 18.3 billion. These are data consuming and data generating
8. Talking about E-commerce and Online Shopping, Visual Capitalist says the world spends almost $1 million dollars per minute on commodities on the internet.
9. 5G has the capacity to increase data transmission speed by up to 100 times and decrease latency from about 20 milliseconds to one millisecond according to CNET, Fierce Wireless, Light Reading and Statista. This will
cause an explosion in data usage. Imagine how much data gets consumed when it is possible to download a whole TV series Season in less than a minute! It is simply unfathomable but real!
This is the background and environment within which organizations and businesses must strategize to compete and win sustainably. The question is; How?
Before we get into the How of sustainability, there is still the unsettling issue of disruptive technologies. This is like riding a wild tiger. Any error can be very fatal. Technology can help you drive operational and financial
efficiencies. It can make you leaner, fitter, smarter, and more profitable. It can make you more innovative and enable faster access to market. However, technology can also accelerate your extinction. And it can come as a barbarian from outside your industry.
Let’s look at the Smartphone technology as an example. When IBM introduced the first Smartphone in 1992 and began commercial shipping and sales in 1994, little did they know that the explosion of the internet will
empower the smartphone to change the face of business and personal interactions forever.
This is one of the most visible examples of Creative Destruction. The smartphone took mobility of life and business to a whole new level and created a convergence of industries into this powerful device. That convergence also saw the premature death or a mutation of a lot of industries
Over 14 classic industries have been changed or are being changed by the Smartphone. Some of these industries are:
1. Music production and distribution
2. Video production and distribution
6. Print production
9. Retail brick and mortar channels
19. Medical Practice
These technologies have no regard for extant rules of engagement or the old factors of competitive advantage. They are barbarians who have pulled down old structures and systems and created a whole new frame for competitiveness beyond industries.
The need to drive sustainability in business in the environment painted thus far has been a global discourse that has engaged thought leaders in the last couple of years.
A school of thought believes that the age of Sustainable competitive advantage is gone for ever. That school postulated the new age of Transient Competitive advantage.
Rita Gunter McGrath, a Professor at Columbia business school and leading expert on Strategy in highly uncertain and volatile environments wrote a book that she boldly titled; The End of Competitive Advantage.
In the book, she challenged the age long foundational assumptions in the Strategy field. These assumptions are;
1.) Industry matters most. This assumption opines that industries are made up of relatively enduring and stable competitive forces. Once you invest in a thorough analysis of these forces, you are able to identify trends and then you can design your strategy accordingly. One of the famous tools and frameworks of those times was the Porters five forces of industry competitiveness. This assumption sits on relative industry stability and enables long term planning. So you had then, 3 years, 5 years and even 10 years plans.
The second assumption she challenged in the book is the assumption that once an organization achieves certain advantages, they are sustainable. All the company needs to ensure is that it keeps optimizing people, assets and
systems around the advantages.
According to Rita, the assumption of industry-focused sustainable advantage creates a bias toward stability. In a VUCA environment, this is most dangerous. It creates wrong reflexes. The incentive to build up on existing
business model is tempting. People generally and conveniently fall into habits and routines. Organizational rigidity festers and innovation is impaired.
In a volatile environment, this is certain death!
She submitted that organizations need to move away from industry focused competitive benchmarking and competitive analysis. We are in an age where industries compete against industries; business models compete against
business models even in similar industries and we have whole new categories emerge where once there was none.
Industry competitiveness is still important. However, a higher level of analysis beyond the industry is required for survival and sustainable success. Instead of industry competitiveness, she postulated Arenas. She sees these Arenas like waves of the sea and organizations and their leaders like the surfers.
When the waves rise, the surfers dive in to ride the waves and enjoy the thrill. However, once the waves attenuate, the surfers pick up their boards and wait for the next wave.
The focus is on capturing territories instead of an industry positional advantage. The measure of success is not market share but the share of potential opportunities. The threat is not intra industry but inter industry and
disruption of business models. Customer segmentation is not on geography or demographics. It is behavioral
While you are riding the waves or exploiting the opportunity, you differentiate from intra industry competitors, scale up quickly but refrain from over investment and complacency so your exit does not get encumbered when its
to me to move.
Closely related to the theory by Rita and team is Ecosystem thinking. Survival and sustainability in the VUCA world driven by data and technology is impossible with silo thinking and Silo business models. You need an Ecosystem thinking where you bring together various organizations to develop solutions where everyone inputs and value is shared. This moves the thinking away from Products and Services to delivery of solutions. This is the new collaborative economy. It calls for a multi-sided business model and not a a narrow focus business model.
Let’s take the Media business as an example:
Media company provides platform
Content producers or curators provide content at zero cost
Customers view for free
The Media company displays advertising consumed by viewers
Advertisers pay for eyeball or viewership data
Therefore, the richer the content, the higher the viewer number; the higher the viewer numbers, the more attractive the platform to advertisers. The more viewing hours generated, the more premium can be charged on advertising. This leads to growth in revenue and more value to share within the ecosystem. Richer contents can be procured to attract more viewers and the virtuous cycle goes on.
This thinking runs against the grain of the old model where I own the platform. I procure the content which is limited because of funds. I grow the audience piecemeal because I don’t have rich content. I chase and beg the
advertisers because my proposition is not compelling. I am not competitive and so I barely manage to survive. This business model is not sustainable any longer.
One powerful strategy that gives businesses a chance at sustainability and access to global resources and leading thoughts in Arenas or industries is the Mobility of Business functions. Businesses no longer need to warehouse all functions within a geography with the attendant costs. Operations can be located in areas where cost advantages are possible and still be remotely monitored and controlled centrally. Apart from the cost benefit, this also gives access to remote markets faster. IOT makes this a present reality.
Organizations that desire to pursue sustainability in the age of data and technology cannot afford to pay lip service to digitization. Mere leverage of technologies to digitize operations, assets and upscaling the workforce
cannot be enough in the digital economy. If you truly want to capitalize on emerging opportunities in the digital economy, there is a necessity for a total rethink and overhaul of structures, culture, business models and revenue
models, route to market models etc. Organizations must radically transform from the inside out.
Unfortunately, a lot of companies are approaching digitization furtively. It’s almost as if it’s a fad that will blow away like others before it. This is a grave error and can be very costly in the immediate future.
I have been involved in conversations on digitization before and it is amazing how people think it is of value but are scared to take the leap. Incremental progress is preferred over radical changes. This can go on safely until an
external aggressor comes after your breakfast. One of the most powerful strategies that is practically difficult to replicate is an excellent customer experience strategy. In the digital economy, this is most critical. Many folks are still locked in the old customer service or customer relations model that is more reactive than proactive; more accidental than intentional.
This is bigger than managing touchpoints. It is a deliberate strategy that focuses on customer journey design before product, service or solution design. Loyalty and churn reduction are by-products of a comprehensive, well
thought-through customer experience strategy.
The digital customer has high expectations and will not hesitate to punish you if you fail to deliver on his experience expectations. However, if you deliver on his experience expectations consistently, you can reduce your marketing cost and Cost of Sales as the customers become your advocates.
This leads me to speak to a subject I am passionate about; the customer ownership concept. Sustainable strategy built around a deliberate effort to own the customer is a sure guarantee of sustainability. If you manage to deliver excellent experiences, you can leverage this across verticals.
This requires a lot of data mining and analytics to get insights on the customers to design the right customer journeys, define performance metrics and organize the entire organization to deliver on same from the CEO
to the doorman.
The final point is to hire skills that can travel across categories and Arenas. This way, as you migrate to other verticals or even totally different businesses, you are not coupling and decoupling skills.
These strategies are by no means exhaustive. Business sustainability in a VUCA world of data and technology disruptions is an ongoing discourse.
However, If you would approach sustainability from business purpose, model, structure, intentional digitalization and a robust customer experience platform, you do stand a very good chance to succeed.
Kolawole Oyeyemi, CEO
Axiom Intel Limited
16th June 2022