Velimir Srića

Living in Times of Digital Transformation

“It is exceedingly difficult to make predictions,

particularly about the future” • Niels Bohr

1. THE PRESENT IN NUMBERS

2. KEY TRENDS

3. DIGITAL TRANSFORMATION

4. THE NEW LEADERSHIP

The Present

• 3.5 billion people are Internet users, they control 92% of global wealth

• LinkedIn has more than 400 million registered users around the world, Facebook over 1.55 billion

• In 2015 Internet accounted for US$1,672 billion of the global GDP, about 3.4% of the total in the leading 19 countries

• There are more mobile devices than people in the world (since May 2015, the number of smart phones exceeds the number of toilets)

The Present

• Mobile phone payments amounted to 500 billion US$ globally; annual growth rate 39.2%

• The amount of information stored worldwide is 5.8 zettabytes (1021) of data in 2014; it is expected to grow 50 times by 2020

• By 2018, the US will have 190,000 unfilled analytics positions and a shortage of 1.5 million managers and analysts skilled in big data analysis

• In 2016, more than 80% of Fortune 500 companies will be unable to effectively exploit big data

The Present

• The MOOC Queen Coursera has more than 3 million users and 107 partners; and edX, a partnership between MIT and Harvard has 1.7 million users

• The new Appsolutism – there are over 4 million apps • There are already more than 6 billion Internet connected

devices (IoT) • In 2016 the worldwide shipments of 3D printers are

expected to reach 500,000, a yearly growth of 103%

According to Executive Studies (Accenture, McKinsey, Capgemini 2015)

• 90% managers - agree digital is strategic priority • 80% companies – have a digital strategy • 40% haven’t begun – „digital transformation” • 90% see – a “pressing need for digital talent” • 7% companies - are „digitally integrated”

• They are 2X above the average in profit & growth

• Most executives focus on the “D” (digital tools) and

not the “X” (the transformation)

Why transformation?

• Banking is necessary, but banks are not! • Tom Peters

• The corporation is not likely to survive the next 25 years. Legally and financially yes, but not structurally and economically.

• Peter Drucker

• 2/3 of all IT projects either fail or are „challenged”. • Standish Group

What’s the problem?

• The story of five monkeys

Key Trends

• Mobile and cloud computing are converging to the „third platform” - leading to explosion of new services, and professions like cloud brokers

• Towards the World of Smart Machines – 3D printing and IoT integration + wearables + AI and robotics;

• From Internet of Things to Web of Things –need for coordination between things in the real world and their counterparts on the Web

Key Trends

• A shift from Big Data to Extreme Data - requires new paradigms and practices in data management and analytics, and the race is on to establish leaders

• Towards the New Learning – MOOCs are creating a demand for learning that is happening continuously via different technologies

Key trends

• Social networks turn into the key organizing principle of Internet communication and collaboration;

• Smart and connected healthcare - development of intelligent systems, wearables, apps, gadgets, and mobile systems

Key trends

• Smart and connected government - improved services, transactions, and interactions with citizens, businesses, and other arms of government

• Scientific Cloud computing –breakthroughs possible through extreme data, high-performance computing (HPC), high-throughput computing (HTC), many-task computing (MTC), and data-intensive computing

Alternative Productivity Applications

• „The outside-in enterprise” - crowdsourcing, crowdfunding, crowdsharing…

• IT as Utility and Virtualization – IaaS and PaaS

• BYOD & BYOT

• Gamification

• Business intelligence

• Telework and virtual offices

• ERP, CRM etc. as a bunch of cheap apps

• Webinars, teleconferences

• Industrial robotics and manufacturing automation

TRADITIONAL IT IS OUT!

TRADITIONAL CIO IS OUT!

TRADITIONAL ENTERPRISE IS OUT!

Extreme Data

The US National Security Agency has built a data centre in Bluffdale, Utah - codenamed Bumblehive - capable of storing a yottabyte of data

Artificial Intelligence

IBM’s supercomputer Watson has analyzed over 600,000 medical reports on cancer-treated patients, 1,5 million patent applications in oncology and over 20 million pages of clinical drug treatment analyses and articles in medical journals.

All these „Data” are the basis for a decision-support system of the Sloan-Kettering Cancer Memorial Center, New York.

Digital-physical interaction

• Wearable devices like Google glasses are used at Boeing 747 assembly plant in Seattle, instead of traditional „manuals”

Digital-emotional projects

• Teddy’ The Guardian

• Electronic auction

• Amazon Air

1. Building digital into company’s DNA

2. Searching for disruptive business models

3. Searching for digital leadership culture

Build digital into your DNA Acxiom - one of the biggest companies you've never heard of: DB with 500 million potential clients – the data obtained from „analysis” of 50,000 billion „transactions”

Digital Newspapers

Why did Jeff Bezos buy The Washington post?

Digital Transformation in Bayer

• In May 2015, 150 leaders from Bayer came together for The First Digital Summit.

• Outcome: a new vision, a digital council across the entire organization, digital transformation teams, a digital accelerator, digital initiatives (Grants4Apps – web-based crowdsourcing; Your Perfect Match - awareness campaign for contraceptives; a video with 1,4 million views on YouTube…)

Airbnb - the pioneering lodging-rental service

Disruptive business models

Uber - connects people seeking ridesharing

services

91%

88%

77%

76%

73%

70%

63%

58%

56%

24%

20%

16%

Trust in the Integrity of Leaders

Question: Who would you generally trust tell the truth? Doctors

Teachers

Professors

Clergymen/Priests

TV News

Scientists

The Police

Ordinary person in street

Base: 2,017 EU adults aged 15+,

February 2013 Source: Ipsos MORI

Business leaders

Politicians

Journalists

Judges

% Trust

The smart leaders needed

• The great change is taking place:

– Technology (mobile, cloud, IoE, 3D printing)

– Institutions (democracy, market, corporations, universities…)

– Infrastructure (crowdsourcing, crowdfunding, bitcoin, social networks, cloud…)

– Culture (values, harmonious instead of disharmonious, cooperation vs. competition)

– Leadership (win-win, creativity, multiculturality)

• Sources of competitive advantage:

– Better resource management („utility”)

– Better process management („ERP” and „ISO”)

– Better „culture” management („digital

leadership”)

Changing CIO Role

Chief

INTEGRATION

Officer

Chief

INNOVATION

Officer

Chief

INFRASTRUCTURE

Officer

Chief

INTELLIGENCE

Officer

The DT

C-I-O

External Focused

Internal Focused

Bu

sine

ss Focu

sed

Te

chn

olo

gy F

ocu

sed

The Four Roles of CIOs

The modern CIO –

harmonious leader

Promotor of a new digital

transformation culture

Agile and Harmonious CIO

• Harmonious strategy

• Harmonious bosses

• Harmonious teams

• Harmonious projects

• Harmonious corporations

• (Harmonious economy

• Harmonious society

• Sustainable growth)

Digital Transformation Values

Why is Silicon Valley Great?

• Close university-industry relationship (Stanford) • Entrepreneurship tradition (Shockley, XEROX, Apple, HP, Cisco, Bell

Labs, Google, Yahoo, Facebook…) • Money (40% of the US venture capital) • Knowledge (San Jose 4,000 patents per year, Sunnyvale 2,000 ppy)

• Culture and Mentality: – Not make-money but make-things! – Reengineering mentality („radical” innovation) – Failure is a source of learning: Startup environment – Overall lifestyle and HARMONIOUS CULTURE

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50 Rules of Harmonious CIOs

CIOs are enterprising: they assist CEOs in strategy Leaders learn and unlearn: they bring new ideas, faster

Leaders choose the right people: Leaders love ideas: they are innovation-oriented

Leaders organize and disorganize: infrastructure and „transformation” Leaders catch you in doing your best:

Leaders want everyone to win: Leaders think Kaizen:

Leaders love consensus: Leaders are generous:

Leaders see through the eyes of others: Leaders think more and work less:

Leaders dislike bureaucracy Leaders prefer binoculars to the rear-view mirror

Leaders care…

CROATIA 2020 One possible future

Thanks!

http://www.velimirsrica.com/en/