The Technologies Senior Leaders Plan to
Deploy in the Coming Years
Despite
all the hype, augmented reality, virtual reality, mixed reality, blockchain and
3D printing have had a small impact on businesses in the last few years. Big
data analytics has had the biggest impact, according to a survey I
conducted with my colleague Nathan Furr of
317 INSEAD MBA alumni and participants in our Executive Education programmes.
Our respondents were mostly senior executives and around 50 percent of them
worked in large companies.
Big
data analytics, cloud and machine learning have all had a significant impact on
business in the past two years. Big data analytics seems to have changed almost
all business areas (creation of new revenues, core business protection,
improvements in operational efficiency, new customer acquisition, increased
retention and loyalty of existing customers). Cloud computing primarily helped
improve operational efficiency.
Looking
ahead to the next two years, however, our respondents expect that the use of
artificial intelligence will increase in almost all business areas, except
those concerned with the attraction and retention of talent. The use of cloud
is likely to decrease, or reliance on cloud technologies may simply become
more of a staple in all companies’ business models, much like smartphones
today. Interestingly, the use of the Internet of Things (IoT) and blockchain is
likely to increase in the next couple of years. The expectation is that
blockchain might primarily help companies improve operational efficiencies
while IoT might help them create new revenue.
In the next five years, i.e. over the
long term, big data, machine learning and artificial intelligence have the most
potential for disruption, while virtual and augmented reality as well as 3D
printing are expected to be the least disruptive. IoT and blockchain are in the
middle.
Alliances,
innovation boards and start-ups
When
faced with a new technology, companies have three options. They can either
build competencies internally, form alliances and partnerships with others who
have mastered them or make acquisitions. Less than a third of our respondents
tried to implement a new technology on their own, i.e. approximately 70 percent
formed at least one alliance or joint venture involving the new technology. The
picture is totally different with respect to acquisitions: Close to 70 percent
of the respondents did not buy any company to help digital transformation.
Apparently, companies use partnerships as the dominant strategy for dealing
with digital technologies.
In
addition to partnerships, decision makers increasingly turn to an unusual
source of innovative ideas – the board of directors. Traditionally, boards
exist to ensure compliance, manage risk and supervise the top management team.
However, over a third of our respondents (working for companies with a board of
directors) indicated that their board strongly encouraged top management to
pursue risky initiatives that could help reinvent the company’s business. This
is an interesting finding: It seems that many companies are using
directors as “innovation boards”. My own interviews
with top management indicate that, in some companies, board
members actively suggest potential alliance partners and review the company’s
alliance portfolio. In some firms, the CEO even actively takes his or her board
members on tech discovery safaris, so that they can become more acquainted with
opportunities (and partnerships) to challenge the CEO later on.
Finally,
slightly under 40 percent of companies joined start-up accelerators. Some of
them were start-ups searching for corporate partners; the others were in the
reverse situation. The needs of start-ups and corporate partners were different.
Start-ups sought funding, credibility and advice while the corporate partners
looked for innovative ideas, exposure to start-up talent and investment
opportunities.
However, corporate
partners do not automatically benefit from participating in accelerator
programmes. Even if a company choose to work with a start-up, it may not
necessarily be able to turn the start-up’s ideas in a concrete project.
Corporate partners that reported the most satisfaction from start-up
accelerator programmes had individuals whose formal role was to act as an
interface between the chosen start-ups and the rest of the firm. An engagement
manager ensures that the company execute on projects with start-ups, as well as
learn from them. (We need to increase the sample size to make the comparison
statistically meaningful, but this seems like a plausible relationship
consistent with our interviews.)
Overall, the
survey showed the transformational nature of different digital technologies.
Companies have a variety of options to deal with the impact of technologies on
their business models: partnerships, corporate board engagement and start-up
accelerators. There surely are other ways. We will be repeating this survey in
the future to find out more.
Andrew Shipilov, INSEAD Professor of Strategy | June 4, 2018
Read more at
https://knowledge.insead.edu/strategy/the-technologies-senior-leaders-plan-to-deploy-in-the-coming-years-9281?utm_source=INSEAD+Knowledge&utm_campaign=edc28006da-EMAIL_CAMPAIGN_2018_06_07_02_31&utm_medium=email&utm_term=0_e079141ebb-edc28006da-249840429#fIyOQAPmHl0FqqoP.99
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