In the fourth part of this series on digital maturity, CEO of Innovation Platform, David Swank, gives some insight into current digital trends and how to integrate those into your organizations' digital platforms and foundations. Read the full transcript below.
David: Welcome to another edition of The Digital Change Podcast. We're glad that you have joined us again, today. We are in the midst of a five-part series and this is the third episode of the five-part series. Over the last several weeks, we've been talking about digital maturity and the demands for digital maturity within our organizations and within our communities and why it's so important to the economic viability of our organizations and communities. Over the last few weeks-- the last two weeks-- as we were talking about digital maturity, we discussed the importance of having a digital strategy plan first. To recap, those first two stacks of the digital maturity stack or the digital solutions stack, as we call it here at the Global Innovation Platform; we talked about digital planning in the context of first understanding the health of our organization. What's the digital health of our organization? No different than when we are faced with an illness in our own lives, we go to the doctor to determine what our condition is and come up with an assessment or a prescription on how to begin to remedy whatever that ailment may be. The same would go for our organizations and communities. The importance of really doing a health assessment to understand our condition and how to prescribe the right strategies. After doing that, we talked about in this digital strategy planning process that it’s important to understand our capabilities. Our capabilities as it relates to the human resource side of skills and competencies, but also our capabilities as it relates to our current investments, especially those investments that will serve as a catalyst for this digital economy. We talked about digital strategy in the context of our operations. Understanding our business processes and how business processes will be impacted by digitization. At the customer interface, how we're interfacing with our customer in leveraging the digital experience. Then, we concluded that particular session at talking about the return on investment. As we begin put together digital strategies, understanding what kind of investments that we can make and what we should anticipate from those investments. What outcomes are we driving toward?
In the last episode, the second of the digital solutions stack, we talked about the digital access and adoption. What we meant by that is how important it was to have a digital inventory, to truly inventory your overall systems -- hardware, anything that really serves as an element of the digital access or digital strategy. We talked about having an assessment of your internal operation as your customer interface and your ecosystem. Then, of course, the digital adoption or where you stand in regard to not only internally adopting digital, but in terms of the ecosystem that you're serving. So, those were the first two episodes of our digital maturity process. This week, we're going to be talking about a very important subject. It really becomes this execution or the implementation of the digital maturity process as we begin to talk about the platform business model that actually serves as the hub of this digital experience. Today, as we talk about digital platforms-- which is our subject today that third stack of the digital solutions stack-- we're going to talk about the need, not only for a business model platform, but also how that relates to a productivity hub that single view experience. How you use a platform for interfacing with not only your internal customers but also your entire ecosystem. The use of an analysis framework within a digital platform. Creating relational data. Then, the last piece we'll talk about today is doing use cases. We call it coring or prototyping the digital experience through a digital platform.
Before we jump into talking about those subject matters in particular, I'll just share a few things that relate to the trends that are happening with platforms, this new term that we hear today regarding platforms. If you have the opportunity, I would really encourage you to read a book called The Business of Platforms. We've read numerous books about platforms, about digitization, about the digital economy. This book specifically talks about the use of platforms in this digital era that we're in. It specifically talks about the value and what's happening in this market of digital platforms. How it's changing our business models and business plans. Trends that, I would just point out to you, are happening today. In regard to the effects of platforms, McKinsey & Company recently reported that powerful platforms have given digital natives like Alibaba and Amazon global reach and really towering market capitalizations. The performance effects are cumulative with the earnings before interest and tax improvements adding to a yearly gain. McKinsey & Company’s estimates suggest that over a five-year period, platform players may capture an additional 10% on earnings before interest and tax growth. Collaboration can offer greater market strength through the complimentary products and ecosystems. Digital platforms have become a feature of the corporate landscape as we look at it, today. For incumbents, a platform strategy pursued alone or cooperatively is becoming a competitive necessity, stated by McKinsey & Company. According to Accenture, while it used to take Fortune 500 companies an average of 20 years to reach a billion-dollar valuation, today's digital startups can get there in four years. Digital platforms are largely responsible for this shift as reported by Accenture. Information Technology and Innovation Foundation reported that globally platform companies have a combined market capitalization of $2.6 trillion and they have a wide-ranging impact on businesses, workers and consumers. They reported that digital platforms make it easier for companies to find customers, monetize underutilized assets and reduce transaction costs.
These are just some trends that are happening with digital platforms and why it is so important that organizations and communities begin to engage in this process of thinking about platforms as a new business model or a new business framework for meeting the needs of their customers and meeting the new demands of a digitized economy. Recently, I read a book from John C. Maxwell called Leadershift. He spoke about this idea of maintaining versus creating. One of the things that Maxwell talks about in this book is today, as organizations, we have so often been working toward maintaining our client base, maintaining systems, maintaining assets and yet, in this world where we're seeing digital transformation, he points out how important it's going to be for leaders to shift their thinking. To begin to think more in ways of being creative versus maintaining. Vince Lombardi once said, “The joy is in creating, not maintaining.” I would agree with that. I think today we definitely need leaders. When we think about this digital era of this digital economy and maturity, it's going to require that we have leaders who begin to think in a creative way. Maxwell pointed out that we really need to recognize, as leaders or as an organization, where we are at or what zone we are in, as he calls it. He challenged the readers in his book by asking the question, “are you in the coasting zone?” Which basically means I do as little as possible. “Are you in the comfort zone?” I do what I have always done. “Are you in the challenge zone?” I attempt to do what I haven't done before. “Or are you in the creative zone?” I attempt to think what I have never thought before. I share these comments with you and these thoughts from this book and this author because I think we would all agree, when we're talking about disruptive challenges and transformation, it is going to require that we have leaders in our organizations who can think differently than they've ever thought before.
There were a few mental blocks that he pointed out that I thought were interesting as well and things that I think before we engage in thinking about digital platforms, because digital platform thinking is completely different than the way we have thought in the past. It’s no longer linear thinking and it's no longer thinking about the consumer only from a consumer being a consumer. We're hearing terms like ‘prosumer’ where consumers begin to actively participate in the business model. Here are some mental blocks he pointed out that I thought were interesting and worthy of noting. One was that we are always driven to try to find the right answer, but his point is that we need to be open to multiple solutions. To begin to expand the data set, to expand our modeling, to look at things differently than we looked at them before. Another mental block he pointed out that I thought was interesting is, that's not logical. We are constantly trying to take the complex, make it simple, make it logical, if you will, but Albert Einstein once said, “Imagination is more important than knowledge. For knowledge is limited, whereas imagination encircles the entire world.” Imagination takes steps that logic can't. Today, we're going to have to begin to think and imagine things that perhaps were unimaginable before. Mental block follow the rules. Most revolutionary ideas have been disruptive violations of set of rules and many of the rules that were created in the past were created based on the technologies of that day. We must begin to look at technology today and say, how do we capture and harness the value of those technologies? How do we begin to create a new set of rules that allow our organizations and our communities to thrive economically and even for quality of life?
He talked about the mental block of “avoid ambiguity”. I find it interesting today, as we sit down and begin to talk about the digital experience, we begin to talk about technology, in many cases. So often, we go back to the lowest common denominator or we want to take something that is very complex and make it simple. The truth is technology is complex. Life is complex. As leaders, we should and must take complexity and create simplified processes and methods, but leaders understand that confronting challenges and complexity is the first step to success. This digital platform is going to require new learning and new thinking. It's going to require leaders who are willing to confront that complexity and find ways to begin to unpack it. To make sense of it. To create processes and methods in which the organization can take true advantage of it. He talks about the mental block that “failure is bad”. There's going to be failures as we move into this transformative digital era. Creative people do not avoid failure. The last mental block that I would mention is he talks about the fact that we all say or think we're not creative. Hugh MacLeod once stated, “Everyone is born creative. Everyone is given a box of crayons in kindergarten. Then when you hit puberty, they take the crowns away and replace them with dry, uninspiring books on algebra, history etc. Being suddenly hit years later with the creative bug is just a wee voice telling you, “I'd like my crayons back, please.” It really is going to require that we, as leaders and as individuals who are expected to lead our organizations and communities, begin to think about how we can be creative in utilizing these new technologies and tools that are afforded to us.
As we seek to put broadband, fiber and 5g into our communities and organizations, a big part of that, at its root, is about driving data and the digital experience, which is going to even a deeper root that require people who are creative and can respond to this type of transformation. Let me just share with you a story that I think drives home how important it is going to be for us to, in essence, take the breaks off. To really open our minds to the challenges that are around us. The story was told that one dark night outside a small town, a fire started inside the local chemical plant. Before long, it exploded into flames and an alarm went out to fire departments from miles around. After fighting the fire for over an hour, the chemical company president approached the fire chief and said, “All of our secret formulas are in the vault in the center of that plant. They must be saved. Then he said, “I'll give a $50,000 reward to anyone who can rescue those documents. They must be saved.” As soon as the chief heard this, he ordered the firemen to strengthen their attack on the blaze. After two more hours of attacking the fire, the president of the company offered $100,000 to anyone who could rescue those files. From the distance, a long siren was heard, and another fire truck came into sight. It was a local volunteer fire company composed entirely of men over 65. To everyone's amazement, a little fire engine raced through the chemical plant gates and drove straight into the middle of the inferno. In the distance, the other firemen watched as the old-timers hopped off of their rig and began to fight the fire with an effort that they had never seen before. After an hour of intense fighting, the volunteer company had extinguished the fire and saved the secret formulas. Joyous, the chemical company president announced he would double the reward to $200,000 and walked over to personally thank each of the volunteers. After thanking each of the old men individually, the president asked the group what they intended to do with the reward money. The fire truck driver looked him right in the eye and said, “The first thing we're going to do is fix the brakes on the truck.”
Now that's a humorous story, but it says something. It says that, in many cases, we do have the brakes on. As leaders, we're going to have to drive into the fire of this digital transformation. It's only then that when we get into the middle of it, we put ourselves into the midst of it, that sometimes we have the intensity to really begin to confront it. To confront the challenges that that this is going to require of us. It's going to require that we take the brakes off of our creativity. Take the brakes off of our dreams. Because our brakes on our dreams and our creativity become the brakes for our organization and the brakes for our communities. An entrepreneur once stated, “The world is full of negative people, dream killers. They have a thousand reasons why your dreams won't work and they're ready to share them with you at the drop of a hat. don't let someone or anything blow your dream away.” If you're a leader in your organization or a leader within your community that is learning and reading and understanding what's going on in this digital era we're in and you have aspirations and you see opportunities to take advantage of these new tools and opportunities and to enhance your organization’s or community’s value, do not let others take away those dreams or those ideas. Do not let people take away your crayons. Continue to work and drive toward creativity. We see example after example in today's economy whether that be Amazon, Alibaba, Netflix, Uber-- the list goes on and on of companies who have broken through the barriers of what we would call dream killers. Let's jump in today and talk about platform business models. I shared some of those thoughts with you in the introduction today because I think it is important to understand that a maintaining mentality, as described by John C. Maxwell, will not allow us to move into this creative era of uncovering new opportunities for our organization.
The digital platform we're discussing today represents a new business model. What's interesting about platforms is if you just think about that word ‘platforms’. We have political platforms. We have physical platforms. We have product platforms. But, what we're really talking about today, as described in the book I referenced earlier, The Business of Platforms, is an industry platform that provides numerous benefits to organizations and communities who choose to operate on these types of platforms. In this book, the authors state that platforms bring together individuals and organizations so they can innovate or interact in ways not otherwise possible with the potential for nonlinear increases in utility and value. That word nonlinear is very important. We're used to working in a very linear environment. I come from the utility sector and we all know that's a very linear-driven, engineered industry and not only industry but the way in which we operate today. We have to begin to think more in terms of a kind of spoke model-- connecting different users and market participants to each other. Economies of scale are intimately related to this network effect. Again, at Accenture, this report pointed out that the platform markets total value is $4.3 trillion which speaks to the value of these new types of business models. The book points out there are two types of platforms. So, I would mention to you today that there are what we would call “innovation platforms” and there are “transacted platforms”. The Global Innovation Platform represents a hybrid of these platforms. An innovation platform really is about connecting people. Connecting people for purposes of collaboration, connecting ecosystems, actually allowing people to share information. Think about your ecosystem today and how important that ecosystem is in terms of the value chain and the opportunities to enhance that that value proposition. To allow each and every participant in that ecosystem to increase its value.
That's what we're talking about in an innovation platform. A transactive platform is pretty obvious. It really is an online marketplace that makes it possible for people and organizations to share information to buy or sell. What it really allows for is the consumer to become a participant and not just being a consumer, but also being a prosumer. We saw the effects of that when we look back at eBay where consumers now had the opportunity to really be prosumers. To produce into a platform. If you visit our website at www.globalinnovationplatform.com, you will see us talk about our platform and reference the iEcoNet, standing for intelligent, ecosystem and global network. Intelligent ecosystem meaning how do we enhance through this online experience and platform. the intelligence across the entire ecosystem. We hear the term knowledge-based economy and as we work and live in a knowledge-based economy, how do we as organizations, how do we as communities capture this impact or this effect of platforms and increase knowledge? In other words, putting more data and more information in front of the right people at the right time for the right decision. That's what the iEcoNet is all about. It's about networking people, networking devices, networking data and again, same thing, putting the right information and right data in front of the right people the right time for the right decision. In this platform business model, we talked about platform as a service.
When you think about AWS or Microsoft Azure, you're talking about, in some fashion, platform as a service. Platform as a service where apps can be a developed. There’s integration of those applications. The ability to create advanced visualization. The ability to create APIs. We talk about infrastructure as a service where we're using things in scale-- so using as we do Microsoft Azure as the infrastructure that deals with the networking, the security, the user ability, the scalability. Another key element of the digital platform is software as a service-- literally providing software applications that are either developed within the digital platform or that are integrated in the platform. When we talk about business models or digital platform I should say this is what we're speaking of. The next element I would speak of, in regard to this digital platform, is what we refer to as the productivity hub or the single view. Think today about terms like big data. When you think about big data and the amounts of data that are actually coming into our organization from multiple systems, disparate systems, siloed systems, systems that all require a different view, a different experience. What platforms represent, what Global Innovation Platform and iEcoNet represents is a single view. The ability to access these disparate databases and to bring all this into a single view. You've heard the statement every, “If every tool you have is a hammer, you tend to see every problem as a nail.” Truly, as we look at independent systems, many times those independent system operators see everything as a hammer because that system only represents one element. Whereas, when you think about bringing big data together into a single view, you really begin to expand your toolset and your thought process because a single view begins to create a story of data. Beginning to understand that data is just a collection of numbers until you turn it into a story. Showing reports and dashboards can be very overwhelming, especially as you look at that from independent systems, but any great insight, the insights we're looking for, is when we're able to bring that data together and begin to overlay it and begin to relate it and turn it into a real story.
Deeper insights are going to require contextual information. Contextual information meaning that I may be looking at one system, but by looking at multiple systems in one view, I now have the full context to make a better decision. Visualizing relational data increases our analysis and, therefore, increases our accuracy in terms of decisions. Connecting data from multiple sources is what we mean by productivity hub or a single view and we have technologies that allow you to do that. The third element of this digital platform process is what we would call “enabling ecosystem connections”. Creating digital partnerships with companies that are a part of your value chain. Every organization today depends on multiple people to connect. One of the focus areas of the Innovation Platform is what we refer to as the “built environment”. When you think about the build environment, you think about large projects-- construction projects, commercial industrial projects-- and the amount of people that engage in those processes and the need for data, the need for information that increase efficiencies. That increase the time element. That improve the overall end product. That's what we mean by connecting the ecosystem. Creating those connections. The fourth element is what we call in the digital platform “the analysis framework”. In other words, if I'm going to have a platform, I'm going to create a platform. I'm going to create a single view. I'm going to create this ability to connect the ecosystem. This fourth element is how do I create an analysis framework? How do I structure the data? How do I leverage the relational data, the importance of formulas and analysis? How do I take real world data and real evidence data and begin to create the enhanced experience? Some significant elements of that process of an analysis framework is we must have the necessary skills within our organization to analyze. Even once we have those skills, do we have an analysis framework that really serve as a catalyst? How do we avoid biases? An analysis framework really sets up that we're beginning to use more evidence- based formulas, more evidence-based analysis by putting together an analysis framework that really challenges us to make better decisions and look at data in a more contextual way. Following acceptable norms and disciplines, determining statistical significance, reliability and validity of data-- all these things are part of what we would refer to this fourth element of analysis framework.
The last element of the digital platform that I would mention to you today that should be considered is use cases. We would refer to those as what would be coring. In other words, the prototyping of how we're going to actually use the platform to transform a particular use case. We talked a lot about that internally, in regard to tools like those of placemaking. Placemaking being how do we take a particular development area, a defined location, and begin to look at the area in a whole different way. Begin to create use cases where those use cases change the way we've thought about building infrastructure. Change how we thought about buildings and residents operating. Begin to model those in a completely different way because now we can model use cases due to the fact that we have one a platform that allows us to see things in a single view and to bring the data together. We have the ability to enhance our modeling and use cases because we now have the full ecosystem participating. We have all the pieces of the formula. We have an analysis framework that really begins to challenge us in the way we're thinking. Then we can begin to prototype and do the coring of what we're talking about. Today, we've talked about a number of items in this digital platform. I would tell you again the core elements of this digital platform are that we need to look at it as a business model. We need to consider how this platform serves as a single view, a productivity hub. We need to consider how it enhances our entire ecosystem. We need to think about it in terms of the analysis framework and, as I just concluded, we need to begin to prototype and look at use cases on how the platform can change or transform our business model.
In closing today, I would just share with you one last story because I think it's relevant to the challenge that is in front of us. It's a story from Zig Ziglar, a well-known business author, and he talked about visiting the Washington Monument. One day, as he and his party approached the monument, he heard a single guide announce loudly that there would be a two-hour wait to ride the elevator to the top of the monument, however, the guide stated with a smile on his face that there is no wait to go to the top if you're willing to take the stairs. A simple statement but such a truth in today's world. Today's challenges that we're talking about are going to require leaders, communities and organizations to realize that this desire to have a smart community, a smart organization, to transform your organization to digital is not going to be as simple as jumping on the elevator. It is going to require that we take the stairs. That we take one step at a time. As we have begun this process of digital maturity, I would remind you part of the reason for the digital solutions stack is to truly engage in each step that's going to be required. Again, think about your planning from a standpoint of your current conditions and capabilities. Think about current access points, you know an inventory. Then, today is this third stack of the digital solutions stack which as we described is beginning to be the framework and the catalyst. To take those things you plan for. To take those things in which you have inventory and to begin to build them into this new business model that we're describing here today called a digital platform. If you have any questions about a digital platform or how a digital platform can benefit your organization, I would encourage you to contact us here at the Global Innovation Platform. You can visit our website at www.globalinnovationplatform.com. Next week, we're going to be talking about the convergent architecture where we now take these next two steps and begin to think about how we're going to optimize digital and optimize our data. Next week, we're going to talk about how we take these emerging technologies that are coming at us at exponential rates and how we can begin to converge these technologies to enhance or to accelerate the digital experience. We thank you again for joining us here on The Digital Change Podcast and we look forward to visiting with you next week as we discuss convergent architect.
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