Organizations of the Future - Digital Darwinism and the Coefficient of Adaptability

The following is the first part of a multi-part series covering organizations of the future, covering vision, strategy, organization design, operational model, and culture.

The latest digital buzz is Digital Transformation, defined as the profound and accelerating transformation of business activities, processes, competencies and models to fully leverage the changes and opportunities of digital technologies and their impact across society in a strategic and prioritized way.

The average lifespan of an S&P company dropped from 67 years in the 1920s to 15 years today

75 percent of the S&P 500 firms will be replaced by new firms by 2027

Very scary thoughts for most enterprises. Some believe they’re safe because of their financial strength, strong asset base, but today that is not enough. We’ve seen it with Compaq, Eastern Airlines, Pan Am, General Foods Corp, DeLorean Motor Co, Circuit City, Lehman Brothers, MCI-WorldCom, Tower Records, Washington Mutual, Blockbuster - all out of business, and the list will keep growing. It is not the largest or strongest that will survive, but the ones most adaptable to change. Let us define Digital Darwinism as the phenomenon when technology and society evolve faster than an organization can adapt.

Organizations historically have focused on Change, today they’re focused on Transformation, but the ultimate goal should be Adaptability.

Change is defined as to become different, and organizational change is process in which an organization changes its structure, strategies, operational methods, technologies, or organizational culture.

Transformation is a thorough or dramatic change, and organizational transformation is process of profound and radical change that orients an organization in a new direction. By definition, Transformation is hard, expensive, a one-time event, and undoable.

If it takes your organization a few years to digitally transform, there is a high likelihood that by the time you’re done you will have to transform again.

Adaptability is ability of an entity or organism to alter itself or its responses to the changed circumstances or environment.

Said ability should be measured and benchmarked, and one of the top goals of any organization. Let us call this ability the organization’s coefficient of adaptability, or μa.

Over the next few articles, we’ll explore the vision and purpose, strategy, organization design, operational model, and culture, and ultimately define the formula for μa.

One of the most critical aspects of any successful company is to have great Mission, Vision, and Culture. There are many good articles about this, like [Execution Eats Strategy], [Culture Trumps Strategy], but today’s let’s talk about having a great vision.

A vision statement is a declaration of an organization’s objectives, ideally based on economic foresight, intended to guide its internal decision-making.

An MTP stands for a massive transformative purpose. If you ever read the book Built To Last by Jim Collins and Jerry Poras, it’s like a BHAG with purpose. It’s the higher, aspirational purpose of the organization.

Many companies have a vision statement, but not all are transformative with purpose.

MTP is

• Uniquely yours
• Highly Aspirational
• Neither narrow nor technology specific
• Aimed at Heart & Mind
• Declared with sincerity & confidence

Here’s a list of good MTPs

• Connect everyone and everything, everywhere, always
• Radical breakthroughs for the benefits of humanity
• Organize the world’s information
• Idea's worth spreading
• Make invention accessible
• Positively impact one billion people
• Improve the health and comfort of people around the world

A brand new one this week that inspired me is Mark Zuckerberg and Priscilla Chan announcing $3 billion initiative to ‘cure all diseases. What an amazing MTP: [Cure All Diseases in the World].

Some companies vision statements

• McDonald’s: To be a modern, progressive burger company delivering a contemporary customer experience
• Starbucks: To inspire and nurture the human spirit
• Panera: A loaf of bread in every arm
• Dunkin: To be always the desired place for great coffee beverages and delicious complementary donuts & bakery products to enjoy with family and friends

How many of these statements will drive long term strategy and sustained business innovation? Which one will stretch the thinking of the organization and drive advocacy? Which one is massive and with purpose?

What could be the MTP for The Restaurant of the Future?

• To Feed the World
• To Connect the World through Food and Beverages
• Universal Basic Nutrition
• Feed Body and Soul of every Human Being
• Advance Nutrition through Health and Science

Once you define your MTP, proceed to refine your long-term strategy, short-term planning, and executional roadmap. To help refine strategy, one particular tool I love is Scenario Planning, which starts by envisioning multiple plausible futures, then proceeds to build a business strategy based on the scenarios.

Scenario Planning

Scenario Planning is the process of anticipating possible futures by generating actionable insights through the creation a small set of scenarios for an organization’s future environment that are:

• Relevant to critical business decisions
• Distinct
• Individually realistic and believable
• Together cover the breadth of relevant uncertainties
  Scenarios are visions of alternative plausible futures.

Environmental Scanning Framework

The process typically starts with an environmental scan, assessing macro and micro forces. A good approach is to use the PEST(EL) framework. PEST(EL) stands for assessing Political, Economic, Sociological, Technological, and optionally Environmental, and Legislative trends.

Exponential Technology Trends

Technology especially, is driving a massive amount of disruption to every single industry and vertical. I recommend highly paying attention to the following 9 trends riding the Moore’s law of exponential growth:

• Infinite Computing
• Sensor & Network
• Robotics & Drones
• Additive Manufacturing / 3d Printing
• Nanotechnology & Synthetic Biology
• Artificial Intelligence

The New Entrants Game

One of the ways I’ve managed to have this conversation with senior executives is to have them envision the plausible future. It has to be credible with a clear understanding of how we get there from the current state, and covering most commercial aspects such as customer needs, organizational capabilities, and competitive landscape.

A fun way to have this conversation without all the pre-work is substituting scenarios with new competitors, and assessing how we plan to compete.

First thing to do is aligning in a horizon - typical horizons are 3-5, 5-7, or 7-10 years. I find that 3 years is too short, especially for transformational change; 10 years is too far, many execs won’t even be in position or working in 10 years. 7 years is the magic point, where it’s not too close, not too far, and a lot happens in that timeframe. 7 years is a good timeframe for a large traditional company to upgrade legacy infrastructure, evolve organizational structure, launch a new product, enter a new market, or achieve most long-term goals; however, in order to achieve these long-term goals, a company needs a clear vision, strategy, and organizational readiness in terms of structure, design, operations, autonomy, and decision making.

Once you align on a horizon, now it’s time to frame the game. Imagine a short-term future, 7-year horizon, where our company faces 5 new industry competitors; each competitor has a specific strategy and competitive advantage, and our company has limited resources and can’t compete in every category. Where do we want to play, and how do we want to win?

5 New entrants:

• Speedy Business: It’s a quick-serve restaurant that can deliver the same type, quality, and taste food as today’s QSRs, but excels in speed, cost, and accuracy. This Speedy Business has an optimized supply chain, buys menu components in large volumes, and invested heavily in robotics, automation, replacing a large portion of human labor with high tech kitchens and fulfillment mechanisms, thus reducing time, cost, and error. Their competitive advantage: Speed and Cost.
• Immersive Experience Business: it’s a destination restaurant that can deliver the same food as other restaurants, but excels in immersive environments and technology. You can find their self-serve ordering kiosks and tablets, audio visual additives such as 3d projections and directional speakers, olfactory technology, augmented and virtual reality. You can immerse yourself in the food experience using each one of your senses, and it’s unique to every guest. Their competitive advantage: Experience Technology.
• Hospitality Business: Restaurant dedicated to people suffering from technology overload and needed a retreat. It’s themed with back-to-basics, focusing on people interaction, high touch personalized service. Their advantage: scalable human force, training, and people-centric culture.
• Better Food Business: A restaurant that can deliver food at the same cost and speed as others, but it’s healthier and tastier. This restaurant invested in understanding their customers through better data, such as Tricorders, DNA Sequencing, and Microbiome Analysis; and combined it with personalized food manufacturing using DNA editing such as CRISPR and Organic 3d Printing. All food will be produced just-in-time with the perfect combination of ingredients, vitamins, and even taste to suit individual preferences and body needs. Their advantage: Personalized, Healthier, and tastier food.
• Food Everywhere: A restaurant that invested heavily in their distribution ecosystem, ranging from autonomous vehicles, drones, self-ordering vending machines, geo-distributed distribution centers, making it extremely accessible and convenient to get food anytime, anywhere, fast. If you think about it, it’s not even a restaurant, but an organization whose goal is to feed people everywhere.

Restaurants must first define their purpose - is it to bring people together in a social environment? Is it to fulfill the human need of being fed? A clear purpose will help steer the strategy. Most disruptive competition will likely not come from the traditional industry, but exponential organizations that mastered how to scale supply and demand at low cost, matching untapped abundance with with evolving societal demands.

Invest in the future of personalized nutrition, which resides in the future of the quantified self and future of food processing, manufacturing, and fulfillment.

Imagine a future where you could know everything about your body, including natural composition, but also real-time need state. Here’s a list of a few fast-moving trends that will enable that, all riding Moore’s law by doubling their price-performance every 9 to 18 months.

• Quantified Self:
  • DNA sequencing & Microbiome. The understanding of our body’s DNA has been a long-time human ambition. DNA sequencing started in the 1970’s, The Human Genome Project completed in 2003, and cost has fallen from 100Min2001, to100Min2001,to10M in 2007, to less than 1,000today, andoverthenext7yearsitwilllikelycostlessthan1,000today,andoverthenext7yearsitwilllikelycostlessthan10, and every person will have theirs.
    Our microbes outnumber human cells 10:1. Like the rainforest, the healthy human microbiome is a balanced ecosystem. Microbes perform essential functions such as digesting food and synthesizing vitamins. Studies have also linked the microbiome to human mood and behavior, as well as gut health, human development, and metabolic disorders. Real-time microbiome analysis will tell us exactly what our body needs.
  • Tricoders. A portable, wireless device in the palm of your hand that monitors and diagnoses your health conditions. By 2017 we will have a device that will accurately diagnose 12 diseases independently of a health care worker or facility, and better than 10 combined certified board physicians, for less than $100 per device.
  • Nanotechnology & Ingestible Computing. From DNA nanobots to ingestible computers - back in 2013 we were already experimenting with tiny pills with sensors and transmitters, allowing you to swallow them to monitor a range of health data and wirelessly share this information with a doctor. Just like everyone now is wearing their FitBit, Diabetics are monitoring their glucose, imagine soon we will have access to all our internal organism data, push it to the cloud, and decide how to share it or use it to maximize value.
• Manufacturing and fulfillment
  • Additive Manufacturing / 3D Printing. This technology has been available since the 1960’s, and slowly growing at exponential rate. In recent years, part the knee of the curve, it’s been getting massive visibility, where now you could buy a 3rd printer for less than $100. There are companies already printing food, like Hershey’s or Natural Machines’ Foodini. The first 3d printed burger appeared in 2013 and costed $300k, but expect synthetic proteins to exponentially come down in price, and increase in quality and taste over the next 7 years.
  • DNA editing / CRISPR. Modifying food, whether it’s vegetables and legumes, or livestock to provide better resistance to diseases, to change the vitamins, proteins, and nutritional components. RISPR gene edited cabbage grown and cooked for the first time already. In the future we may have an array of optimized natural food types, specifically engineered for certain nutrients and served by personalized need state.
  • Autonomous Vehicles & Drones. Uber already testing autonomous vehicles in Pittsburgh, Google delivering food in campus, and Amazon Prime Air delivering within the hour. The way people transport themselves as well as goods will completely transform over the next 7 years.

Now let’s bring it all together. Imagine if you could know your body’s composition, precise need state, understand impact of vitamins, carbs, proteins, and know exactly what you should consume at the moment. Now imagine if you can take this data and choose to share it with a food or service provider that can read it, understand it, and pick from a set of food that was pre-engineered for that specific need, or furthermore, manufacture it in real time just for you. After the food is made for you in real time, now imagine if you could pick it up at a restaurant, or a kiosk available at thousands of locations, or get it delivered within the hour, or print it directly in your home or office.

The future of the Food Service Provider industry integrates the future of personalized nutrition and future of food processing, manufacturing, and fulfillment.

The slowest aspect in any innovation is not technology, but cultural acceptance. Society has been moving towards organic food under a factual belief that it’s better for us, but we’ll soon understand that genetically edited food and manufactured food will have the ability to be better, healthier, cheaper, and more convenient.

In the last article, we’ll explore innovation portfolio management, innovation strategy, and internal organizational structures, design, operational models, and culture to maximize the Coefficient of Adaptability.