Digital Transformation by Thomas Siebel – Here are my six lessons and takeaways

Digital Transformation“Urgent doesn’t begin to describe the insights contained in Tom Siebel’s Digital Transformation. His combination of historic perspective and an incisive approach to the specific technologies reshaping our world should be essential reading for any leader.”
Eric Schmidt, former CEO of Google Inc.

Digital Transformation is the guidebook every business and government leader needs to survive and thrive in the new digital age.

But… The threat of organizational extinction is very real.

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Note the four elements/drivers of digital transformation:
elastic cloud computing + big data + artificial intelligence + the internet of things

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News flash:  things keep changing.

And corporations, companies, organizations, even entire industries that do not get with it may become…extinct.  That is the alarming prediction that sits at the very foundation of the book Digital Transformation:  Survive and Thrive in an Era of Mass Extinction by Thomas M. Siebel.  I presented my synopsis of this book at the September First Friday Book Synopsis in Dallas.

Is this a good book?  Yes – quite good.  It’s not that it does a whole lot new.  But it does tie together the key pieces of what constitutes digital transformation in a particularly clear explainer.  This book will help you understand just what has changed, how the changes are accelerating, and how any entity that does not grasp and embrace such change will definitely not only be left behind, but…go extinct. In other words, this book is one great big scary warning to those leaders, and companies, who don’t get it.

Thomas Siebel knows what he is writing about.  After a career at Oracle Corporation, he pioneered the customer relationship management (CRM) category in 1993 with the founding of Siebel Systems.  And he has stayed on top of the technological changes…

In my synopses, I ask “What is the point of the book?”  Here it is for this book:  Progress is coming (in mostly wonderful ways), faster than ever. Those who embrace it and participate it will flourish. Those who ignore it, or reject it, will face extinction. Digital transformation is… here.

And I ask “Why is this book worth our time?”  Here are my three reasons for this book:
#1 – This books pulls together a number of concepts and developments into one accessible volume. It will teach you the current state of play in the world of digital transformation.
#2 – This book is a terrific technology history overview book.  It will give you the chronology of developments that brought us to where we are now.  This provides valuable reminders and knowledge.
#3 – This book is a stark, crystal clear warning – embrace digital transformation, or go extinct!

In my synopsis handouts, and presentations, I always include a number of key excerpts from the book; the “best of” Randy’s highlighted passages.  Here are a few of the ones I included in this synopsis:

From the Foreword by Condoleezza Rice: History teaches that those who take the lead in technological revolution—which today’s digital transformation most certainly is—reap the greatest rewards. The imperative to act, and to act swiftly, is clear and present.
We can now develop prediction engines. This is what digital transformation is all about. This is when the fun starts.
Every mass extinction is a new beginning.
Moore’s Law… …The exponential trend described by Moore’s Law—that the number of transistors on an integrated circuit doubles every two years at half the cost—is appropriate. But its application underestimates evolution.
Today the telecommunications industry is dominated by over 2.5 billion smartphone users. And it hasn’t even been 20 years!
Since 2000, 52 percent of the Fortune 500 companies have either been acquired, merged, or have declared bankruptcy. …40 percent of the companies in existence today will shutter their operations in the next 10 years.
Companies that figure out how to breathe big data—how to harness the power of this new resource and extract its value by leveraging the cloud, AI, and IoT—will be the next to climb out of the data lake and master the new digital land.
“Digitization was using digital tools to automate and improve the existing way of working without really altering it fundamentally or playing the new rules of the game,” says technology strategist and veteran industry analyst Dion Hinchcliffe. Digital transformation “is a more caterpillar-to-butterfly process, moving gracefully from one way of working to an entirely new one, replacing corporate body parts and ways of functioning completely in some cases to capture far more value than was possible using low-scale, low-leverage legacy business.” Simply investing in technology to digitize existing functions and processes is not enough to truly transform a company or industry. It’s a necessary ingredient, but not sufficient. Digital transformation demands revolutionary changes to key competitive corporate processes.
And it is why digital transformation can be so frightening: Companies must shift their focus from what they know works and invest instead in alternatives they view as risky and unproven. Many companies simply refuse to believe they are facing a life-or-death situation. This is Clayton Christensen’s aptly named “Innovator’s Dilemma”: Companies fail to innovate, because it means changing the focus from what’s working to something unproven and risky.
The gap between the companies and sectors that have digitally transformed and those that have not is already wide and will increase exponentially.
In the first wave, consulting firms began helping customers build their digital presence. Then with Web 2.0, consulting firms focused on interactive design and customer experience. Today, in the current wave of digital transformation, consultancies are helping clients use data to reinvent their business models.
Five years from now, 35 percent of the important workforce skills will have changed.
As recently as 2011, the message delivered by CEOs and corporate leadership worldwide was clear: “Tom, what don’t you understand about the fact that our data will never reside in the public cloud?” The message today is equally clear and exclamatory: “Tom, understand that we have a cloud-first strategy.

Here are some of the key points from the book:

I really liked his insight flowing from the two kinds of evolution:  Darwinian evolution is a force of continuous change—a slow and unceasing accumulation of the fittest traits over vast periods of time. By contrast, punctuated equilibrium suggests that evolution occurs as a series of bursts of evolutionary change. …These bursts often occur in response to an environmental trigger and are separated by periods of evolutionary equilibrium. …Punctuated Equilibrium. — Something that has been stable for a long period suddenly disrupts radically—and then finds a new stability.

So, what is digital transformation? It arises from the intersection of cloud computing, big data, IoT, and AI, and it is vital to industries across the market today. …Some describe it as the power of digital technology applied to every aspect of the organization. …I find it more valuable to describe digital transformation through examples.

Remember the “Laws” –

  • Moore’s Law – In 1965 Moore described a trend he saw that the number of transistors on an integrated circuit was doubling every two years at half the cost.
  • Metcalfe’s Law — The third reason IoT will transform business is the power of Metcalfe’s Law—i.e., the value of a network is proportional to the square of the number of its members.

Some vocabulary matters:
Digital transformation goes by many different names. Perhaps the most familiar is “the fourth Industrial Revolution.” …We are approaching a similar tipping point—where cloud computing, big data, IoT, and AI are converging to drive network effects and create exponential change. …Others refer to digital transformation as “the Second Machine Age.”
The first Industrial Revolution allowed humans to master mechanical power. In the last one, we harnessed electronic power. In the era of digital transformation, we will master mental power.

The real heart of this idea of digital transformation is found in the big four drivers; the key elements of digital transformation:

  • elastic cloud computing — Netflix, Uber, Deutsche Bank, and countless others now have all or a significant percentage of their information technology operating on public clouds.
  • big data — it is now possible for organizations to make near-real-time inferences based on all available data.
  • artificial intelligence — Machine learning can be divided into “supervised” and “unsupervised” approaches. – (AI; machine learning; deep learning…)
  • the internet of things — The basic idea of IoT is to connect any device equipped with adequate processing and communication capabilities to the internet, so it can send and receive data.

And here are my six lessons and takeaways:

#1 – Do not be in denial.  This is happening!
#2 – Start with an executive reading list. (The book has one at the end of the book – I have presented synopses of some of the recommended books). – Reading important books may be the overlooked survival skill.
#3 – People who “knew” may not be people who “know.” – In other words, yesterday’s IT person may not be today’s or tomorrow’s Digital Transformation person.
#4 – Establish a Center of Excellence re. digital transformation. (CoE) — The CoE brings together cross-functional expertise in digital technologies (AI, IoT) and transformation strategy, helping guide IoT product strategy and providing expert resources for other business units.
#5 – Extinction – of companies, or organizations, (of countries?) — is absolutely a possibility. Make that a certainty.  You must not let this happen to your organization.
#6 – And, don’t be surprised if punctuated equilibrium hits again, bringing a change that nobody saw coming.

There are other good books that serve to provide more of a complete picture of this changing terrain.  But I strongly recommend this to put near the top of your reading mix.

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My synopsis, with my comprehensive handout + the audio recording of my presentation, is available on the newest additions page of this web site. Click here to see the books I have presented in recent months.

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