05/04/2022

Digital Requires Reimagining Business Models

Stop avoiding the digital dimension of your organization

Asking what your digital strategy is today is a lot like asking what your electricity strategy was at the turn of the last century. Seems absurd. Yet both questions reflect how a shift in an underlying technology fundamentally changes what is possible.

Electrification of factories and plants took a long time.  I mean, a really long time.   Usable electric light bulbs were invented in the 1870’s.  Thomas Edison build electricity generating plants in New York City and London in 1881.  Yet, by 1900, less than 5 percent of mechanical drive power was supplied by electric motors.  Instead, the last-generation technology, steam power, stubbornly remained the go-to technology for manufacturers.  The norm for factories at the time was that they were powered by a central source – a massive steam engine or a river, for instance. That meant that every operation within the complex was designed around the logic of a central driveshaft, with ingenious devices connected to it by pulleys, ropes and ties.

Once small electric motors were introduced, it became possible for every station in a factory to operate on its own power, when and as needed.  But to take advantage of that new capability required rethinking everything – how equipment was built and used, how workers were recruited, trained and paid, how costs were allocated, and a myriad of other major shifts in operations. No wonder the early factory owners balked at making such a momentous shift. Indeed, just as leaders today try to do what they have always done but use digital to make it faster and cheaper, leaders then tried to use electricity but to keep their factories more or less the same.

Please select this link to read the complete article from Rita McGrath Group.