Steve Jobs, one of the pioneers of the digital revolution, once made the following quote:
“Everyone here has the sense that right now is one of those moments when we are influencing the future.”
Digitalization is considered – and very rightly so – to be the fourth big disruption in the last 150 years to the working world; right after the industrial revolution, the mass production and the introduction of computers. Its influence on the modern business world is tremendous. Recently on LinkedIn people shared this chart which among other contains the following impressive numbers:
In one single minute
- 150 Million emails are sent,
- 2.7 million videos on YouTube are being watched,
- while Amazon makes $200,000 dollars in sales.
If you take a look at the top 10 of the most valuable enterprises worldwide, you realize quickly that software businesses are on a winning streak. On the one hand, there are Apple, Alphabet (Google), Microsoft and Facebook. Four software companies which are currently ranked in the top 5. On the other hand, there is Exxon Mobile, for many years the most valuable enterprise, which lost its pole position to Apple. Looking at the Kodak case, filing for Chapter 11 in 2012, shows an even worse decline of a former worldwide operating enterprise.
Additionally, if we look at brand value, Google seems to be ahead currently with about $109 billion dollars when it comes to world´s most valuable brand, right in front of Apple ($107 bn. dollars) and Amazon ($106 bn.).
Being faced with these impressive numbers a question easily comes to mind:
“What makes digitalization so powerful?”
Machine Learning or the disruption of diagnosing cancer
In 2015 IBM published an interesting number. More than 90% of the available data of that time has been collected in the previous two years. Performing this exercise again in 2017, the chance of reaching the same or an even higher percentage is probably not too bad. Machine Learning, Data Mining and Big Data are just some of the keywords which are being used frequently; but their true magnitude can hardly be estimated by the majority of people.
Through algorithms, huge amounts of data first get imported, then processed and finally converted into new information. Today, artificial intelligence is a common thing. Machines with the ability to actually learn either new things by themselves or even from their own mistakes become the door-opener for a lot of new technology – many of which have been considered impossible until very recently.
In his attempt to demonstrate what a profound impact machine learning can have, Jeremy Howard referred in his speech in December 2014 to two teams of doctors in the US. One team was able to prove that with the help of machine learning cancer could be diagnosed more easily and more accurately while the other team concluded that their program was able to forecast the life-expectations of a patient better than a human doctor. In both cases, the computer analyzed a massive amount of historic data from other patients and their diagnostic findings in advance and compared the results with the situation at hand.
Big Data or we-know-you-better-than-you-know-yourself
Let’s take a look at the presidential election in the US. Clearly, for many of us, the outcome has been as shocking as it was surprising. As a key factor for Trump´s success experts stated his precise voter mobilization (by micro-targeting). Thereby his team relied on an algorithm based on the same principles as in the doctor example mentioned above. They analyzed millions of gigabytes of Facebook user data and behavior. In particular, they focused on the “Likes” of the Facebook users:
“[…] of 68 Facebook likes of a user, one can tell what skin color the person has (95 % hit probability). […] with 300 likes the machine can predict the behavior of a person more precise than their partner. And with more likes it even can outperform, what people might know about themselves and their behavior.”
Contradicting Paulo Coelho a little, it seems obvious that what has happened once, might happen again. This is basically the underlying assumption in machine learning and artificial intelligence and it works as follows:
- Collect a lot of data,
- create a model and
- compare it to a particular case.
Then, the outcome will be predicted stochastically.
Mobile First or #sharingiscaring
For sure smartphones have played a key role spreading the digitalization worldwide. With the iPhone being “born” 10 years ago, smartphones have conquered the pockets and lives of many. More than 2 billion people are using a smartphone nowadays and forecasts say this number will continue growing by at least 10% annually. This huge number of mobile devices (and therefore increased number of mobile internet users) led Google in April 2015 to the decision to downgrade web pages without mobile optimization. That implies that websites, that present their content automatically adjusted to screens of smartphones and tablets, get ranked higher in the organic search in Google. And people do not only possess smartphones, they also use it a lot. Australians for instance – a nation of roughly 22 million – glance at their smartphones 440 million times A DAY according to a 2015 Deloitte study.
The worldwide connectivity of people via the internet and consequently the ease of finding of suppliers and buyers have brought up a completely new business area: platforms. In 2015 Tom Goodwin stated:
“The world’s largest taxi firm, Uber, owns no cars. The world’s most popular media company, Facebook, creates no content. The world’s most valuable retailer, Alibaba, carries no stock. And the world’s largest accommodation provider, Airbnb, owns no property. Something big is going on.”
This statement is already one of the most iconic quotes of the digital revolution.
Cloud Computing or “nothing gets lost anymore”
The increased mobility of people together with the cost-efficient availability of smartphones and the new human desire for the latest information was without a doubt boosted by the existence of Cloud Computing.
One big pioneer has obviously been Salesforce, which was the first to provide a CRM in the cloud. The advantages are clearly visible – now:
- No installations needed,
- simplified maintenance,
- easy data backups and most importantly
- all employees are linked with each other via the internet which means that every person involved in the process has access to the same information in real time from anywhere in the world.
All departments can work on the same customer journey with the same data at the same time in order to improve the customer experience.
Through the wider coverage and the significantly improved quality of mobile internet in recent years, together with the introduction of ever better smartphones, the cloud has also become an interesting tool for private people. For instance, pictures of the last vacation don´t have to be stored on an external hard drive and physically carried to parents or friends. Instead once uploaded into the cloud (Facebook, Instagram, etc.), they can be presented everywhere. Alternatively, memories, messages or settings can be stored easily and safely in the cloud for backup purposes and to be used across devices.
Internet of Things or speaking refrigerators
Of course, digitalization has also advantages for everyone in their daily lives. Here is a classic that everybody at least once experienced for themselves. You get home from the supermarket and you realize you have forgotten to buy something, say milk. Either because you forgot to note it down or because you didn´t write a list in the first place. So, how easy would life be, if the refrigerator itself would write the list for you? Even better, not just a paper-based list but a note on your smartphone, which – let´s face it – you would never forget at home, or would you?
Today, when refrigerators, ovens, cars, radios or light bulbs communicate with each other, we are not surprised at all – at least we will not be in the near future. The driving forces behind these innovations are again the big software manufacturers: Samsung or Amazon are key players when it comes combinate hardware with software like in the case of “smart home solutions”.
Where are we now?
As you could see, the digital revolution consists of aspects and there is by far more to discover and talk about than presented here. For many, it is hard to say what the future developments will be or even how the possible end of digitalization will look like. One thing is for sure, though: digitalization holds great potential for many companies to develop themselves, but also their services or products.
“Digital is the main reason just over half of the companies on Fortune 500 have disappeared since the year 2000.”
Kodak, for instance, happened to dig their own grave. Already in 1975, the company invented the digital camera. But to protect their main product the company decided not to invest more into this technology. In this particular case, the (digital) revolution didn´t devour its children – but instead one of its fathers.