Fifteen years ago, I found myself in one of the most uncomfortable positions in which a chief executive officer could be.
I was in a conference room with a dozen IBM system consultants who had come to architect a computer system that would take my company into the 21st century. The year was 1989, and I had recently been named CEO of Marshall Industries, the fourth-largest electronics distributor in North America at the time. All eyes were on me when the consultants started asking questions.
How many customers do you think you'll have in 10 years? How many employees? How many branches? How many suppliers? How many countries? How many currencies? What new products will you distribute in 2000?
It was rapid-fire and whileI felt pressure to provide definitive answers, the only honest response I could give to most of their questions was, "I don't know."
I felt uncomfortable. How could the new CEO not have a clear plan for the future? That was my job, right?
During a break I had a chance to gather my thoughts, and it was then I realized that "I don't know" is exactly the right answer, especially when it comes to architecting a new operating platform and designing a new computer system.
"I don't know" had to become the design criterion for our future. Systems and companies have to be flexible, scalable, matrixed, and continually and dynamically aligned to ever-changing context if they are to survive.
I returned to the meeting energized, and by the end of the day we had defined an approach that could enable Marshall to be all of these things.
Clearly, the future is unknowable. Markets are uncertain; there will always be disruptive, nonlinear shocks that alter business assumptions and upset the status quo. No matter what business you're in, only the paranoid survive, as Intel's Andy Grove so famously put it. There are no safe havens, no protected markets or regions. There is no way to predict from where the next competitive threat will come, only that it will come.
Even today, I still believe "I don't know" is the right answer to questions about the future. In fact,
"I don't know" is far more accurate and realistic than all the best guesses and assumptions that go into developing a long-term business plan.
The fact that we cannot know the future is no cause for paralysis; instead it's a call to action. We need to be constantly scanning the horizon for signs of the future. Indeed, the job of a leader is to be an astute observer of all the things that could affect your business. You need to look beyond conventional expectations, beyond the four walls of your own company and outside your own individual experience.
Curiosity is the catalyst. Knowledge and insight are the assets that will enable you to thrive in today's business climate.
Of course, while you're trying to discern the signs, you need to stay rooted in the five timeless business fundamentals:
- Profitability. The unyielding quest for profit to fuel the future and support shareholder demand.
- Competition. Increasing global competition in more than 202 countries, each hungry to penetrate your markets and only a mouse click away.
- Time-to-market. Speed, speed, speed. The management of time requires continuous reevaluation of business processes, product development and supply chain transactions in order to reduce costs and maximize value.
- Quality service and systems. "Perfect" is the market's mandate. On the denominator side, it refers to defect-free processes (six sigma and other standards set the bar); on the numerator side, it means extraordinary features and benefits. Noncompliance is not an option.
- Delighting the customer. The customer wants faster, better, cheaper products. The insatiable demand of the market is captured in three imperatives: Free, perfect and now.
- It's the last item delighting the customer where companies can create true competitive advantage. Free, perfect and now are impossible, you say? That doesn't matter; the market seeks out free, perfect and now, regardless.
As you read this, somewhere around the corner or on the other side of the world, someone is figuring out how to design, make or sell your product cheaper, faster or better than you have imagined. It's your job to recognize that survival depends on your ability to create a business strategy that both anticipates and chases these elusive goals.
Consider four areas to explore on your journey toward delighting the customer:
- Emerging technologies and phenomena. A number of four-letter words, including RFID, VoIP, Wi-Fi and Wiki, will shape our future in unpredictable ways.
- Trend-setting companies. Innovators like Amazon, eBay, Google, Napster and TiVo have become verbs in just the last five years. And giant nouns like
- Wal-Mart are redefining the rules of business.
- Demographics. The average 11-year-old may not be your customer today, but Generation C uses technology in ways that will define business practices and customer interfaces in the future.
Supply chain management. It's your supply chain vs. your competitor's, not company vs. company. This requires new ways to work with customers to create and manage demand and new ways to work with the supply base to manage the flow of materials. You'll need new processes to service, manufacture and deliver these solutions so they add speed, flexibility, scalability and efficiency to your business.
RFID, VoIP, Wi-Fi and Wiki are all relatively nascent but will profoundly affect the way the world communicates and interacts. Exactly what applications they will spawn no one can be certain, but suffice it to say they will be disruptive. Your job is to be on the right side of the disruption.
Of course, you need to familiarize yourself with the technologies. But perhaps more important, you need to study the ways the market adopts and embraces them. Study the trajectory of adoption and the derivative opportunities. What drives an emerging technology to suddenly take off, to gain critical mass? What are the consequences of sudden proliferation for the early adopters and the latecomers? And how might these new concepts transform customer interfaces, supply chain transactions and economic models just as the Internet, e-mail and cell phones have done in the past?
Consider RFID. A radio-frequency identification system tracks the location of an object a boxcar, a pallet, a PC by scanning information contained in a tag. RFID enables a company or, more accurately, a supply chain to manage the flow of product anywhere in the world with great accuracy and efficiency.
As early adopters such as Wal-Mart, Proctor & Gamble and the U.S. Department of Defense mandate their suppliers use RFID, tags will become as common as bar codes. As the 96-bit EPC standard replaces the 12-bit UPC standard, and as billions of individual items are equipped to communicate with global infrastructure, the potential applications of RFID will explode. How are you applying an RFID strategy to your business?
Then there's wireless fidelity (Wi-Fi) and voice-over-Internet Protocol (VoIP). Wi-Fi is all about ubiquitous, always-on Internet connectivity from your PDA at Starbucks in Boston or your laptop at the Los Angeles airport. Wi-Fi has the potential to unshackle your sales force, boost productivity and improve your bottom line.
VoIP brings new meaning to the phrase "talk is cheap." As it matures and gains critical mass, VoIP will disrupt the communications industry status quo by delivering more cost-effective means for the world to communicate. A call from Bangalore to Baltimore costs no more than a local call today. VoIP leaves the convention of the plain old telephone system and embraces a powerful, microprocessor-based communication platform. Management of phone calls will never be the same.
Wiki Hawaiian for "quick" is technically the simplest online database developed to date that allows users to create and edit Web content using any Web browser. Wiki encourages the democratization of the Web and promotes collaborative content composition by nontechnical users.
Take a look at www.wikipedia.com, an open-content encyclopedia in many languages with more than 335,000 articles chronicling the knowledge of the world.
Mixing and matching these and other emerging technologies offers endless possibilities for delivering on the promise of faster, better and cheaper. If you are not experimenting with or at least researching these technologies, you are already behind the curve. Explore how other companies employ them. Benchmark their performance. Ask your logistics, supply chain and IT departments what's involved in implementation. Determine the impact on your suppliers, your internal operations and your customers. Get the answers, then launch a pilot project.
Companies that become verbs
How many times have you heard someone say "just Google it," referring to searching the Internet for a word or phrase? The company-that-has-become-a-verb has set new standards for how people access information, which is part of the reason Google had a market capitalization of more than $27 billion shortly after its initial public offering in August.
But search is just in its infancy. Imagine "Googling" your own company's databases; drilling deep into the recesses of corporate archives to reveal valuable insight or querying your supply chain dashboard to find trends hidden within the thousands of mundane daily transactions.
Similarly, Amazon and eBay have transformed the way we act, interact and buy. With more than 423 million items for sale and a virtual storefront for over 450,000 sellers, eBay serves 70 million customers a year. Amazon continues to disrupt its own online buying model by, for example, offering used books for sale alongside new books. While the move was a threat to the company's revenue stream, Amazon made it because its 75 million customers wanted the choice.
TiVo redefines TV, offering viewers the option of watching what they want, when they want. Talk about delighting the customer. TiVo facilitates the new concept of time shifting and effectively does away with the notion of prime time.
Napster's creator, college student Sean Fanning, set the music industry on its ear by letting users download music free. Companies such as Universal and Sony took the company to court and won on the basis of copyright infringement, but not until Napster was a household name serving 70 million music lovers. Now Napster has re-emerged as a legal source for subscribers to access more than 750,000 songs with a simple click.
Then there's the big noun: Wal-Mart. At $259 billion in revenue last fiscal year, Wal-Mart is arguably the largest, most powerful company on the planet. It differentiates itself by an ability to deliver massive quantities of low-cost product to market quickly, which translates into a best-in-class IT and supply chain infrastructure.
Wal-Mart is leading the mandate for faster, better and cheaper solutions by driving its top 250 suppliers to support the RFID interface and standards by 2005.
What can you learn from these companies and their unique business processes? They have transformed consumer expectations and are redefining what it means to delight the customer. What do they mean for your business? Plenty. Study the models and familiarize yourself with their processes. Where it makes sense, apply their practices to your own business.
All kidding aside
You can glean a lot about the future of business by studying the behavior of the next generation. Kids between the ages of 9 and 15 the so-called Connected Generation are emerging as a powerful new market force.
They were born into the electronics age and are at ease with technology. They live online and in real-time. They download files (both legally and illegally), play games, date, watch movies, chat, search, buy and sell. They are establishing new conventions of communication and consumption.
Ignore them at your peril because in a few years they will be your employees, your customers, maybe your boss.
Consider the Generation C phenomenon of instant messaging. With more than 7 billion messages sent every day worldwide, and about 250 million users, IM is a significant cultural force. Corporate usage accounts for about a quarter of today's users and is transforming e-mail into a real-time communications tool.
Then there's blogging. Short for Web logging, blogging is the posting of content on a Web site, usually in the form of a chronological journal. A blogger gains notoriety through the online equivalent of word of mouth
and can quickly establish a dedicated following numbering in the thousands or even millions of viewers.
If you think blogging is just for kids, think again. Presidential candidate Howard Dean used a blog to reach more than 562,000 new voters and raise more than $40 million. Bloggers were invited to the Democratic National Convention in July to cover the four-day event.
Blog strategy is now mainstream for political campaigns and corporate marketing is not far behind. Indeed, blogging is a marketer's dream at companies like Harley Davidson because it's a low-cost, low-tech vehicle for bringing together communities of like-minded people.
What do the online habits of today's kids hold in store for your business? Perhaps the most significant lesson is sophistication of your future customers' expectations about the online interface with your company and its products and services. The richer the electronic experience, the better.
The "now economy"
Try to imagine how all of these technologies, business processes and trends might converge and feed off each other. What does the nexus of VoIP, TiVo, IM, RFID, Google and Generation C look like? Here are a few things you can count on:
- Connectivity among people around the world will increase exponentially, using a variety of technologies.
- Instant access to information of any kind will be a given.
- A global grid will evolve connecting billions of things to millions of intelligent sensors or agents, creating a seamless network.
- Globalization will continue apace as markets open not just for goods and services but also for talent and intellect.
Call it the "now economy" or the "sense-and-response economy." Whatever the label, the future requires your company to be flexible, scalable, matrixed and dynamically aligned.
Here's one possible application that's just around the corner: the supply chain cockpit. What once was a two-dimensional dashboard that offered day-old data with red, yellow and green indicators is now an intelligent, real-time, sense-and-response environment.
What powers the cockpit? The convergence of all the technologies we've discussed here.
For example, instant voice, data and video connections enable you to "see" what's going on at factories, warehouses, airports and seaports around the world. You can drag and drop an alert from your news service about a supplier's factory fire in Penang to alert procurement. You can review global weather data and check airport and shipping traffic bottlenecks, then divert shipments around trouble spots. The system conducts arbitrage and currency conversions on the fly.
Even design and product development are streamlined through better communications enabled by a continuous dialogue with existing and potential component suppliers through a Wiki interface or robust publish-and-subscribe services.
Imagine the power. The power of a virtual company. The power of leveraging economies of scale and incremental deployment. The power of any company to harness the global ubiquitous reach of the Internet. The power to manage your supply chain like a Wal-Mart or match the distribution efficiency of an Amazon, the dynamic customer dialogue of an eBay, the ad hoc query capability, flexibility and penetration of a Google.
Sounds like science fiction, but elements of everything described above are in the works. These are the tools to harness today so you can delight the customer tomorrow.
Ultimately, your customers' desires are simply defined. They want it free. They want it perfect. And they want it now. These are impossible goals, of course, but they set a standard to strive for.
And while it may be accurate to say, "I don't know" to questions about the future, you must pay attention to the signs around you. Since no icon, technology or software program is likely to replace creativity, ingenuity and leadership, your future opportunities must be fueled by your own curiosity, investigation and learning in short, by your striving to find out what you don't know today. n
Robert Rodin is chairman of RDN Group Inc. and vice chairman and executive director of CommerceNet. He can be reached at email@example.com.