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Costas Markides - How Technologies of the Social Era Are Changing the Way We Do Business

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  • 1. The New Future: How the Technologies of the Social era are Changing the Way we do Business Professor Costas Markides London Business School
  • 2. A Simple Exercise: • In sixty seconds: Add all the numbers from 1 to 100 and tell me the sum total (without using a formula)…
  • 3. An Amazing Transformation: • How you tried to solve this problem… • (in particular, how many of you did not even try to solve it!)
  • 4. An Amazing Transformation: • How you tried to solve this problem… • Compared to how people used to solve this problem in the early 1990s (when I first started using it…)
  • 5. An Amazing Transformation: • How you tried to solve this problem… • Compared to how people used to solve this problem in the early 1990s when I first started using it… • Compared to how typical teenagers do it today…
  • 6. The First Change: • The new technologies are changing your employees as people: how they think, how they behave, how they work, what motivates them, what their values are…
  • 7. Your Employees Are Now: • Less attentive • More Informed • Less Loyal • More Connected • Less Patient • More Demanding
  • 8. For Example: Research by Professor Gary Small, UCLA 1)Surfing the internet can physically rewire our neural pathways 2)Just 5 hours of exposure to the net is enough to change the structure of our brain. 3)The internet is altering our brains: Cursory reading Hurried and distracted thinking Superficial learning Attention span reduced to seconds
  • 9. More Connected: Facebook • 845 million monthly active users • 2.7 billion Likes and Comments every day. • 250 million photos uploaded every day. • 100 billion friendships
  • 10. More Informed: • 72% of Europeans take their mobile phones or iPads to bed! • The last thing they see before falling asleep and the first thing they check when they wake up is news…
  • 11. More Informed Workaholics: • 93% of executives take their blackberries on vacation. • 47% tell their partners that they left it at home • (data provided by RIM)
  • 12. Global Citizens: • Get to learn what is happening around the world fast… • More likely to engage in a “cause” far away from home. • Have become more sensitive to other cultures…
  • 13. More Culture Sensitive:
  • 14. Informed Choices: • Not only do we get the necessary information on the Internet… • But increasingly “word of mouth” from anybody around the world is becoming our source of information.
  • 15. Less patient: The “Now” Era • Instant Messaging • Instant Feedback • Instant Gratification • Instant Information
  • 16. Decentralised Workaholics: • When do you stop work?
  • 17. A New Employee • I could go on here… • But the key point is: You are now dealing with employees (and customers) that are fundamentally different from us or our parents.
  • 18. Your Employees Are Now: • Less attentive • More Informed • Less Loyal • More Connected • Less Patient • More Demanding
  • 19. What is the Implication #1? • Generation X managers trying to manage Generation Y employees… • It’s as if they come from Mars!
  • 20. Are we out of our depth?
  • 21. What is the Implication #2? • How do you “control” such a decentralised, informed and demanding workforce?
  • 22. The Wrong Thing to Do: • You cannot “control” the new employee…[for example, how do you know if they are working or are “wasting time” on Facebook?] • And you certainly cannot “control” them with rules and regulations.
  • 23. The Only Way Forward: • Strong shared values that act as the parameters within which people can operate with autonomy. • Think of what you do with your children…
  • 24. But Note: • They are strong because you actively “sold” these values to them and won their emotional commitment. • Move your values from the wall to people’s hearts.
  • 25. The Second Change: • Not only are the new technologies changing our employees as people, but they are also changing how they work.
  • 26. The Hierarchy is Dead: • Decentralised: Work from home, at the airport, at Starbucks…
  • 27. For Example: • In 2009, it was estimated that over 50 million US workers (40% of the working population) worked from home at least part of the time. • The forecast is that this number will jump to more than 75% by 2020.
  • 28. The Hierarchy is Dead: • Decentralised: Work from home, at the airport, at Starbucks… • Virtual Teams, Geographicallydispersed giving rise to the Network Organisation…
  • 29. The Hierarchy is Dead: • Decentralised: Work from home, at the airport, at Starbucks… • Virtual Teams, Geographicallydispersed giving rise to the Network Organisation… • From employees to Co-Creators: working with outsiders (nonemployees) on common projects
  • 30. Some Examples: • Singularity University • TEDx • McAfee
  • 31. What are the Implications? • How do you keep them all focused and motivated? • How do you avoid chaos? • How do you promote innovation?
  • 32. Innovation: Physical proximity is important • Study by Isaac Kohane at Harvard Medical School. • He analyzed 35,000 peer-reviewed papers mapping the precise location of co-authors. • He related the quality of the research (by counting the number of subsequent citations) to how close the co-authors’ offices were.
  • 33. What he found • When co-authors were closer together, their papers tended to be of significantly higher quality. • The best research was consistently produced when scientists were working within ten metres of each other. • The least cited papers tended to emerge from collaborators who were a kilometre or more apart
  • 34. Physical proximity is important • If you want people to work together effectively, these findings reinforce the need to create architectures that support frequent, physical, spontaneous interactions.
  • 35. A Couple of Examples: • Steve Jobs at Pixar: a central atrium (with the only set of bathrooms in the entire building) • Building 20 at MIT: More innovations coming out from this building in 1942-45 than in the previous 100 years.
  • 36. Even More: • With employees working anywhere and/or with outsiders in a decentralised, dispersed and virtual way, how do you avoid chaos?
  • 37. The Only Way Forward: • Strong shared purpose that unites and galvanizes disparate people towards the common goal.
  • 38. For Example: • Facebook: Give People the power to share and make the world more open and connected. • Apple: We will change the way people think of computers (or music or TV or news…)
  • 39. But Note: • It is “strong” because you actively sold this purpose or vision to them and won their emotional commitment.
  • 40. HOW TO WIN EMOTIONAL COMMITMENT I KNOW I UNDERSTAND YES, I THINK I CAN I WILL
  • 41. The Third Change • The new technologies are changing how we interact with customers.
  • 42. For Example: • Customised Products
  • 43. Marketing Design 5% Shared parts 15% Shared platform 25%
  • 44. Marketing Design 15% Banks Shared parts 30% Memberoffers Shared platform 30% Kontakt Support Salg
  • 45. SystemBanks – B2E DJØF EsF Bank Politibanken DTS-Bank SPOR-Banken IDA Bank DFL-Banken DADL Gl OfficersBanken CS banken DM PoKoBank Ældre Sagen Safu-Bank
  • 46. For Example: • Customised Products • Customised Marketing
  • 47. For Example: KLM
  • 48. For Example: • Customised Products • Customised Marketing • Customised Promotions
  • 49. For Example: Target • Store Loyalty card • Online purchases • Coupon redemptions • Email click-thru • Online browse behavior • Online cookie • InfiniGraph (that “listens” to shoppers’ online conversations on message boards and internet forums) • Rapleaf (that sells info on shoppers’ political leanings, reading habits, charitable giving, what they like…) • Analyse your photos and statements on Facebook, Linkedin, etc…
  • 50. And then What? • Centralise and Analyse all this data per customer • Develop “customized” product offerings; delivered in a “customized” way. • Tricky part: how do you offer something specific to a customer without them knowing you are “spying” on them?
  • 51. Not All Positive: • Here are three examples of how our changing relationship with customers is affecting HR…
  • 52. For Example: United
  • 53. For Example: Comcast
  • 54. The Question Is: • Every single interaction with a customer has the potential to be either a global PR disaster or a PR triumph for us. • How do we ensure that every employee (not just Marketing people) deliver excellent customer service, anytime, anywhere, all the time?
  • 55. The Only Way Forward: • Customer-centric behaviors have to be institutionalised in the culture of the organisation…
  • 56. The Fourth Change • The new technologies are changing the internal processes of the organisation.
  • 57. For Example: • From internal R&D to Open Innovation…
  • 58. Open Innovation • P&G: Connect and Develop strategy • Developing software at Netflix that can predict what movies a customer is likely to enjoy. • Streamlining the R&D process at Roche
  • 59. An Example of Open Innovation:
  • 60. Changing Our Processes: • From internal R&D to Open Innovation… • From centralised financing to Crowdfunding…
  • 61. An Example of Crowdfunding:
  • 62. Changing Our Processes: • From internal R&D to Open Innovation… • From centralised financing to Crowdfunding… • From fixed pricing to dynamic pricing…
  • 63. Dynamic Pricing at Amazon
  • 64. Changing Our Processes: • From internal R&D to Open Innovation… • From centralised financing to Crowdfunding… • From fixed pricing to dynamic pricing… • From top-down strategy to democratic strategy…
  • 65. Lots of Changes! • I do not want to give the impression that the new technologies will change everything! • Some things will stay the same…
  • 66. What Will Stay the Same?
  • 67. It’s a new World • Not everything will change… • But hopefully I have challenged you enough to start thinking about the many things that YOU need to change in your companies.