Wade Michael - Digital Vortex PDF

Digital Vortex
How Today’s Market Leaders Can Beat

Disruptive Competitors At Their Own Game
Mike Wade
IMD Professor of Innovation and Strategy
Cisco Chair in Digital Business Transformation
The Global Center for Digital Business Transformation
• Cisco and IMD co-founded Global Center for

Digital Business Transformation in 2015
• IMD = Institute for Management Development,
ranked #1 globally in executive education
• Mission: Develop research-based roadmaps to
accelerate digital transformation
• Outputs: Original research, executive events
• A true partnership: Cisco executives, IMD faculty
co-create real-world research
© 2016 Global Center for Digital Business Transformation. All rights reserved.
Digital Disruption Is the #1 CXO Careabout
“ Two-thirds of CEOs (66%) see more threats

facing their businesses today than three years ago.
”
Source: PwC 19th Annual Global CEO Survey
“ All CxOs identified the risk of industry

disruption caused by an unlikely competitor
outside their industry as a primary competitive threat.
Source: IBM Global C-Suite Survey, 2016 ”
Digital Competition Is Intensifying 4.3 Telecommunications
Technology Products
more
companies & Services
at risk
40% Retail
Hospitality /Travel
Education
3.7 Financial Services

Market incumbents displaced CPG & Manufacturing
average
Media & Entertainment Healthcare
3 years
Expected time to disruption* Pharmaceuticals
fewer
companies
at risk
Utilities
1 in 4
Companies actively responding
*Disruption = Substantial change in market share among incumbents
Source: Global Center for Digital Business Transformation, 2015 Oil & Gas 2.5
No Industry is Safe
#7
Hospitality &
Travel #8
CPG &
Manufacturing
The Digital Vortex
#6
Education #2
• A force that pulls everything Media &
#1
toward the middle Technology
Entertainment
Products & Services` #9
• Chaotic: objects are drawn to #3 Healthcare
Retail
the center with exponentially #5
increasing velocity Telecommunications
#4
Financial Services
• Industries may dissolve and
recombine
#10
Utilities
• At the center, all value that #12
can be digitized is digitized Pharmaceuticals
#11
Oil & Gas
Three Categories of Digital Business Models
$ Cost Value Experience Value Platform Value
• Free / Ultra-low cost • Customer empowerment • Ecosystem

• Buyer aggregation • Customization • Crowdsourcing
• Price transparency • Instant gratification • Communities
• Reverse auctions • Reduced friction • Digital marketplaces
• Consumption-based pricing • Automation • Data orchestrator
In the Digital Vortex, Incumbents Must Learn
from Startups
Survey
Startup vs. Incumbent What advantages does
each type of company
have in its ability to
capitalize on digital
disruption? [941 respondents]
45% 24% 37% 17% 35% 14% 14% 33% 16% 32% 11% 29%
Innovation Agility Experimentation Capital Brand Customers
& Risk
Source: Global Center for Digital Business Transformation, 2015
“
The dynamics of the ‘Digital Vortex’ will require
organizations and governments to acquire a
new level of agility that will allow them to not
”
only change what they do, but to adapt often.
– John T. Chambers, Executive Chairman, Cisco

From the foreword of Digital Vortex
Digital Business Agility
Informed
Hyperawareness
A company’s ability Decision-making
to detect and monitor A company’s ability to
changes in its Informed make the best decision in
Hyper- a given situation
business environment Decision-
awareness
Digital Making
Business
Agility
Digital business
agility enables
companies to Fast Execution
counter and Fast
Execution A company’s ability
capitalize on digital to carry out its plans
disruption quickly and effectively
Hyperawareness Operating
Environment
Behavioral Awareness
Business
Workers – Gaining deep understanding of how Environment
workers act, what they think, and what they value
Customers - Gaining deep understanding

of how customers act, what they think,
and what they value Hyper-
Customers
Situational Awareness awareness
Digital
Business Environment – Sensing changes in the Business
marketplace -including the company’s customer Workers
Agility
base, competitors, and partner ecosystem—that
are relevant to an organization’s mission.
Operating Environment - Sensing changes in the

operating environment—including physical assets
such as oil rigs, manufacturing plants, vehicle
fleets, buildings, and facilities that companies use
to deliver the products or services they sell.
Here’s a question for you…
Which of the following has the most highly subscribed
YouTube channel as of today? Your choices are:
FC Barcelona
Justin Bieber
Katy Perry
Felix Kjellberg
The White House
What is Twitch?
21
Informed Decision-Making
Diverse
Perspectives Inclusive Decision-making
Diverse Perspectives – Ensuring that all
Inclusive the decisions benefit from the diversity
Environment
of perspectives within the organization
Ubiquitous Inclusive Environment – Fostering a

Informed Analytics culture where everyone is willing to
Decision- participate and engage
Digital making Augmented Decision-making

Business Ubiquitous Analytics – Embedding
Automated /
Agility Fast analytics directly into work processes
Decisions at the point of decision across the
organization
Automated / Fast Decisions –
Accelerating the speed of decisions
through automation and analytics
Steve is very shy and withdrawn, invariably helpful but with little
interest in people or in the world of reality. A humble and tidy soul,
he has a need for order and structure, and a passion for detail...
Is Steve more likely to be a farmer or a librarian?

Courtesy of Daniel Kahneman
Fast Execution
Dynamic Resources
Agile Talent – The ability to acquire, manage, and
rapidly shift talent as business conditions dictate
Agile Technology - The ability to acquire,

manage, and rapidly evolve enabling
technology as business conditions dictate
Dynamic Processes
Digital
Business
Rapid Enablement – The accelerated introduction Agility
of new organizational capabilities across a broad
spectrum of value-creasing activities
Rapid Agile
Rapid Intervention – Taking immediate Enablement Fast Talent
action to capitalize on opportunities or
neutralize threats, whether to capture a sale,
Execution
Rapid Agile
optimize operations, or prevent an accident Intervention Technology
Putting It All Together
Situational Awareness: Inclusive Decision-making: The
The ability to identify changes in an ability to make decisions based on the
organization’s internal and external shared intelligence that emerges from
environments, and to understand the collaboration of disparate
which changes matter individuals and teams
Informed
Hyper-
Decision- Augmented Decision-making:
Behavioral Awareness: awareness The ability to incorporate data
The ability to understand how Digital Making
and analytics into the decision-
workers and customers act, what Business making processes across an
they think, and what they value Agility organization
Fast
Dynamic Processes: Execution Dynamic Resources: The ability to
The ability to rapidly introduce new acquire, deploy, manage, and re-allocate
business processes and adapt existing resources (e.g., talent, technology) as
business processes to changing business business conditions dictate
conditions
Watch This Space
digitalvortex.com
imd.org/dbtcenter
imd-business-school
@dbt_center
dbtcenter@imd.org

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Digital Vortex

How Today’s Market Leaders Can Beat

• Cisco and IMD co-founded Global Center for

“ Two-thirds of CEOs (66%) see more threats

“ All CxOs identified the risk of industry

3.7 Financial Services

Media & Entertainment Healthcare

$ Cost Value Experience Value Platform Value

• Free / Ultra-low cost • Customer empowerment • Ecosystem

– John T. Chambers, Executive Chairman, Cisco

Customers - Gaining deep understanding

Operating Environment - Sensing changes in the

Ubiquitous Inclusive Environment – Fostering a

Digital making Augmented Decision-making

Is Steve more likely to be a farmer or a librarian?

Agile Technology - The ability to acquire,

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