Digital transformation is a hot topic--but what exactly is it and what does it mean for companies? In this course, we talk about digital transformation in two ways. First we discuss the pace of change and the imperative it creates for businesses. Next we provide the context for this transformation and what it takes to win in the digital age. Then we walk through BCG's proprietary framework, which helps you identify key areas to digitize, including strategy, core processes, and technology. By the end of this course, you'll be able to: --describe the underlying economics of innovation, technology, and market disruptions --weigh the pros and cons of current digital technologies driving advancement --utilize BCG's digital transformation framework as a ""how-to"" for digitizing your organization
Exponential Evolution of Technology
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來自 BCG 的課程
Digital Transformation
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從本節課中
How Technology Changes Business
The exponential rate at which technology is evolving creates an imperative for organizations to deconstruct their value chain to gain a competitive advantage. This week, we'll discuss three fundamental laws about how digital information can be processed, communicated, and stored. Then we'll look at how the exponential rate of technological change is driving changes in the industry. You'll also hear from the executive leadership of Pitney Bowes about their ongoing adaptation and transformation of their business.
與講師見面
Michael LenoxSenior Associate Dean and Chief Strategy Officer
Darden School of Business
Amane DannouniPrincipal at The Boston Consulting Group, Singapore
Sonja RuegerProject Leader, The Boston Consulting Group
Ching Fong OngSenior Partner and Managing Director, The Boston Consulting Group
Isn't it fascinating how fast technology is evolving over time?
When I was a kid, no one around me had a cell phone.
We had one landline,
only reserved for important or urgent uses.
We listened to FM radio and recorded music on audio cassettes.
Internet was still a theoretical idea at that time.
We had online courses like this,
but only in science fiction books.
And, now, not that many years later,
everyone has a smartphone.
We shop, we chat,
we play and we learn online.
We cannot imagine our lives without internet.
Within 15, 20 years,
digital has not only changed our personal lives
but has also fully transformed the business world and no industry,
no industry was immune.
But before talking about this evolution,
let's go back in time,
a few centuries actually.
I want to share with you an old legend about the game of chess,
not only because chess is the strategist preferred game but because
the story around the game creation will help us understand what digital is all about.
Surprising, isn't it? So, once upon a time,
there was an Indian king, a fighter,
who went into many battles.
One day, coming back from an exhausting fight,
he learned that he lost his son in the field.
He felt immense sadness and decided to withdraw into his castle.
This lasted for months then years until
one of his subjects named Lahur Sessa offered him a chessboard.
The king liked the game so much that he decided to grant the man whatever,
whatever he asked for.
Sessa kindly and humbly explained that he would like to
have one grain of rice for the first square of the chessboard,
two grains for the second square,
four grains for the third then eight grains and so on until the 64 squares
are exhausted.
Before telling you the end of the story,
I want you to estimate how much rice did Sessa ask for.
First, without doing any actual calculation,
what is your intuitive guess?
Would it be as heavy as soccer ball for example?
A dairy cow or a Boeing 747 fully loaded?
You can pause for a few seconds to really see in your mind what is the
intuitive answer.
Now, if you do the calculation,
you would see it was about two multiplied by 10 to the power of 19 grains,
which is in the same order of magnitude as the total Earth biomass.
Well, I cheat a little bit on the options but the reality is,
almost everyone's intuition would have been massively underestimating
the amount.
This is because our minds are more
adapted to estimating linear change than exponential change.
Linear change is when we move from 1 to 2 to 3 or to spice it up,
from 2 to 4 to 6.
At step number n, we are at 2 multiplied by
n. This hour twitching can estimate pretty accurately.
Exponential change, however, is when at step number n,
we are at 2 to the power of n. So we move from 2 to 2 to 4 to 8,
16, 32, 64.
Because our intuition doesn't handle this representation,
we have a way to show it.
We call it algorithmic scale or log scale for short.
In this representation, the vertical axis itself goes
from 1 to 2 to 4, doubling every step.
In this representation, when you see a line,
it means you have an exponential growth,
the kind of growth Sessa has asked for after all.
For those who are interested to hear the end of the story,
well, there are two versions.
One where the king rewards the clever ask reasonably and one where,
well, Sessa doesn't live very long.
Why start with this story?
Because interestingly, digital technology in the last few decades has
progressed just in the same way as
the number of grains along the chessboard, exponentially.
To see that, we will boil the progress down
to three fundamental laws that made all that possible.
These laws are addressing the core concepts,
the core aspects of
digital information management: processing, communication and storage.
Let's start with Moore's law.
What this law says is that every 18 months,
your computer will have twice as much power to process information.
Originally, it was formulated slightly differently.
It says that on a given silicon chip,
every 18 months, you can double the amount of transistors you fit in there.
The reality is this law in this original formulation is being
challenged because the more transistors you fit within the surface at some point,
you get to such a high density that quantum effects take
place and stop the way the processor is designed to work.
More responses to this is to say it is a temporary challenge, not a permanent one.
We can change the way we design the chips from 2D to 3D.
We can change the material we use, instead of silicone,
use graphite or even we can radically change the approach and go to quantum computing.
The second law you should remember is called Butters' law.
It states that the amount of data communicated through
a single optical fiber doubles every nine months.
If you plot the typical speeds and megabytes per seconds on a log scale again,
we see a straight line,
which means an exponential increase over the years.
There's a variation of this law for other communication media,
whether wireline like ADSL,
VDSL or wireless like 3G,
LTE and more recently, 5G.
The third law is called Kryder's law.
This law looks at hard drive storage capacity and state that the amount of
data stored per centimeter square of a hard drive will double every 13 months.
At least, this was the case in the late '90s and early 2000s,
when Mark Kryder formulated his observation.
The trend has actually slowed down to double every 16 or 17 months.
But, anyway, this remains faster even than Moore's law.
Maybe some of you remember the large blocks almost the size of
CPUs in the early 2000s,
which even required us to plug in
a power supply and this all to store half a terabyte or a terabyte of data.
Now, an external terabyte storage device is one centimeter thick,
the size of a passport.
Of course, this law describes the theoretical technology potential.
Only part of that potential goes into
performance improvement for the mass market devices.
The other part, however,
will go into consumer cost reductions so that computers,
internet connection and storage capacity
become not only better but also cheaper and cheaper.
This has strong implications on
the business world that we will discuss in the next video.
But before that, let's reflect on what this means
for our understanding of digital technology itself.
Let's go back to our legend.
The king knew that Sessa has asked for a lot of rice.
However, his mind was not capable of capturing
the magnitude of how the grain add up over the chessboard.
For us, it is the same with exponential advancement of technology.
We know that technology develops rapidly.
However, as the human intuition is tuned to seeing linear developments,
we tend to always underestimate the progress.
It is not surprising, therefore,
that companies also tend to underestimate or
even be completely blind to the impact of digital technology.
If companies develop linearly and technology evolves exponentially,
we see a gap between the two,
a gap between the company's actual value delivery
and what would be possible technology-wise.
And this gap is widening very quickly over time.
The gap is often filled by
innovative startups using technology to satisfy customer needs in a very different way,
a way incumbent players were unable to see or even worst,
saw and couldn't fully understand.
Companies like Kodak, Nokia or
Blockbuster paid a heavy price for this tendency to underestimate the trend,
and you will see in details how this happened in the next module.
What is it that we should take away from this session?
First, the three exponential laws.
The exponential increase of processing power,
communication bandwidth and storage capacity
are the technological foundation of today's digital transformation.
Second, our minds are tuned to seeing and predicting linear developments, therefore,
the first challenge that both individuals and
companies need to overcome is one of perception,
of understanding how digital technology is evolving.
And last but not least,
a gap tends to appear between how companies evolve and the technology potential.
This gap is often filled by startups that come to disrupt incumbent players.
