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The history of digital technology has largely been one of denial followed by disruption. First came the concept of the productivity paradox, which noted the limited economic impact of digital technology. When e-commerce appeared, many doubted that it could ever compete with physical retail. Similar doubts were voiced about digital media.
Today, it’s hard to find anyone who doesn’t believe in the power of digital technology. Whole industries have been disrupted. New applications driven by cloud computing, artificial intelligence and blockchain promise even greater advancement to come. Every business needs to race to adopt them in order to compete for the future.
Ironically, amid all this transformation the digital revolution itself is ending. Over the next decade, new computing architectures will move to the fore and advancements in areas like synthetic biology and materials science will reshape entire fields, such as healthcare, energy and manufacturing. Simply waiting to adapt won’t be enough. The time to prepare is now.
Drive digital transformation
As I explained in Mapping Innovation, innovation is never a single event, but a process of discovery, engineering and transformation. Clearly, with respect to digital technology, we are deep into the transformation phase. So the first part of any post-digital strategy is to accelerate digital transformation efforts in order to improve your competitive position.
One company that’s done this very well is Walmart. As an old-line incumbent in the physical retail industry, it appeared to be ripe for disruption as Amazon reshaped how customers purchased basic items. Why drive out to a Walmart store for a package of toothpaste when you can just click a few buttons on your phone?
Yet rather than ceding the market to Amazon, Walmart has invested heavily in digital technology and has achieved considerable success. It wasn’t any one particular tactic or strategy made the difference, but rather the acknowledgment that every single process needed to be reinvented for the digital age. For example, the company is using virtual reality to revolutionize how it does in-store training.
Perhaps most of all, leaders need to understand that digital transformation is human transformation. There is no shortage of capable vendors that can implement technology for you. What’s key, however, is to shift your culture, processes and business model to leverage digital capabilities.
Explore post-digital technologies
While digital transformation is accelerating, advancement in the underlying technology is slowing down. Moore’s law, the consistent doubling of computer chip performance over the last 50 years, is nearing its theoretical limits. It has already slowed down considerably and will soon stop altogether. Yet there are non-digital technologies under development that will be far more powerful than anything we’ve ever seen before.
Consider Intel, which sees its future in what it calls heterogeneous computing combining traditional digital chips with non-digital architectures, such as quantum and neuromorphic. It recently announced its Pohoiki Beach neuromorphic system that processes information up to 1,000 times faster and 10,000 more efficiently than traditional chips for certain tasks.
IBM has created a network to develop quantum computing technology, which includes research labs, startups and companies that seek to be early adopters of the technology. Like neuromorphic computing, quantum systems have the potential to be thousands, if not millions, of times more powerful than today’s technology.
The problem with these post-digital architectures is that no one really knows how they are going to work. They operate on a very different logic than traditional computers, will require new programming languages and algorithmic strategies. It’s important to start exploring these technologies now or you could find yourself years behind the curve.
Focus on atoms, not bits
The digital revolution created a virtual world. My generation was the first to grow up with video games and our parents worried that we were becoming detached from reality. Then computers entered offices and Dan Bricklin created Visicalc, the first spreadsheet program. Eventually, smartphones and social media appeared and we began spending almost as much time in the virtual world as we did in the physical one.
Essentially, what we created was a simulation economy. We could experiment with business models in our computers, find flaws and fix them before they became real. Computer-aided design (CAD) software allowed us to design products in bits before we got down to the hard work of shaping atoms. Because it’s much cheaper to fail in the virtual world than the physical one, this made our economy much more efficient.
Yet the next great transformation will be from bits to atoms. Digital technology is creating revolutions in things like genomics and materials science. Artificial intelligence and cloud computing are reshaping fields like manufacturing and agriculture. Quantum and neuromorphic computing will accelerate these trends.
Much like those new computing architectures, the shift from bits to atoms will create challenges. Applying the simulation economy to the world of atoms will require new skills and we will need people with those skills to move from offices in urban areas to factory floors and fields. They will also need to learn to collaborate effectively with people in those industries.
Transformation is always a journey, never a destination
The 20th century was punctuated by two waves of disruption. The first, driven by electricity and internal combustion, transformed almost every facet of daily life and kicked off a 50-year boom in productivity. The second, driven by the microbe, the atom and the bit, transformed fields such as agriculture, healthcare and management.
Each of these technologies followed the pattern of discovery, engineering and transformation. The discovery phase takes place mostly out of sight, with researchers working quietly in anonymous labs. The engineering phase is riddled with errors, as firms struggle to shape abstract concepts into real products. A nascent technology is easy to ignore, because its impact hasn’t been felt yet.
The truth is that disruption doesn’t begin with inventions, but when an ecosystem emerges to support them. That’s when the transformation phase begins and takes us by surprise, because transformation never plays out like we think it will. The future will always, to a certain extent, unpredictable for the simple reason that it hasn’t happened yet.
Today, we’re on the brink of a new era of innovation that will be driven by new computing architectures, genomics, materials science and artificial intelligence. That’s why we need to design our organizations for transformation by shifting from vertical hierarchies to horizontal networks.
Most of all, we need to shift our mindsets from seeing transformation as a set of discreet objectives to a continuous journey of discovery. Digital technology has only been one phase of that journey. The most exciting things are still yet to come.
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