When the first human landed on the moon on 21th July 1969, mankind felt that an amazing milestone in human history had been reached. That great achievement was the result of multi-years of focused research and innovation, which, even after the moon landing, caused organizations around the globe to adopt and enhance original NASA technologies for other Industry’ purposes.
Around 50 years have passed, but have we experienced such a “Eureka effect” again? Some people say: We are doing it right now! Because after the “Agricultural Revolution” and the “Industrial Revolution”, we reside in the age of “Digital Revolution“. Hereby, more precisely, we can identify several waves of Digital Disruptions, and find ourselves already in a more advanced stage: Organizations around the globe are not only digitizing their way of functioning, they are also digitizing their products and services. This is driving our society to become autonomous, managed by Digital Technologies.
What does this mean for organizations in current days? The answer is simple: Organizations have to invest heavily in new Digital Technologies – to not only grow, but to also ensure they stay alive. This article will describe how to successfully execute such a mission by guiding the reader through all currently important Digital Technologies and Trends, and then by describing how organizations can adopt and innovate in these areas to become well-prepared for the future.
1. What is Digital?
In today’s business, many organizations around the globe go Digital. This usually means they create digital versions of formerly analog products or services, or they enhance existing analog products with digital extensions, e.g., sensors for enabling IoT-scenarios. Sometimes, offerings are even digitally branded without having relevant IT affinity. All in all, this has led to different understandings in the markets of what Digital really is.
In this article, we define Digital simply as a form of economical usage of digital technologies by organizations and institutions. Additionally, for the term Digital Business, we will use another framework from Gartner which defines five progressive Digital Business stages organizations with digital business are assigned to:
Besides the written year in between each block, the progressive Digital Business stage of an organization explicitly depends on its maturity level. As you can see, most organizations in current days obviously fit into the fourth stage. But as follows, we will first start with a description of the third stage, since there are still many organizations concentrated on this one as well:
- Digital Stage 3 – Digital Marketing: The focus of such organizations is mainly on mobile, social, cloud, or other information-related technologies.
- Digital Stage 4 – Digital Business: In this stage, organizations are more matured, and target people, businesses and things. Besides many other innovative technologies like 3D Bioprinting, Cryptocurrencies and Smart Advisors, the overall IoT topic is a major innovative target here.
- Digital Stage 5 – Autonomous: This is the final stage where organizations will reach their highest digital maturity! Innovation targets like human-replacing capabilities or quantum computers will be the major focus.
Since several technology terms have already been mentioned above, it is time to take a closer look at how to structure and define Digital Technologies. Therefore, the following “chapter 2” will give a reasonable overview of them, while “chapter 3” will additionally explain major Digital Market Trends.
2. Digital Technologies
Critical Digital Technologies, which are of interest to organizations that fall especially into the afromentioned three progressive Digital Business stages, can be assigned to five different categories which are defined as follows:
1. Digital Devices: Today, we naturally consider a wide variety of Digital Devices like Computers, Monitors, Smartphones, and more, as standards in our daily life. But a much larger variety of Digital Devices, from the huge to the very tiny, are actually available for the benefit of both businesses and private applications. I will now mention a few that impact the current digital evolution, there are Smart Machines (e.g., Autonomous Vehicles like Driverless Cars, Robots, Drones, Intelligent Agents, Context-aware Computers, 3D/4D Printing and Scanning Devices), Microelectromechanical Systems (MEMS, e.g., Smart Dust), Environmental Devices (e.g., Multi-function Boards, Sensors for enabling IoE/IoT scenarios), Modern Chips (e.g., Biochips), Gesture Control and Wearable Devices (e.g., Head-mounted Displays, Smart Clothes), and many more – such a list of Digital Devices is nearly endless.
2. Software and Intelligent Apps: Besides the well-known trend to change more complex Software Applications into smarter (and smaller) Apps to make them run simpler on Mobile, Gesture Control, Smart Machine, and IoT Devices, new tractions can be seen in new generations of Applications like AI-powered Software, Ambient User Experiences, Embedded Software and Systems, Micro Operating Systems and Containers, and last but not least, within Business Applications where especially In-Memory Computing Technologies enhance the (speed and therefore their) functionalities. This new situation enables Smart Applications and Data Management (for example in the area of ERP software) as well as Smart Data Discovery (formerly also known as Big Data Analysis).
3. Digital Technology Architectures: This area covers the overall Digital Infrastructures (e.g., Networks, Data storages, On-Premise/Cloud Architectures), Digital Technology Platforms (e.g., Digital Ecosystems, IoT Platforms, AI Platforms, Quantum Platforms), and even can include topics like Virtualization (e.g., Virtual Reality, Augmented Reality) once closely connected to digital architecture frameworks.
4. Digital Security: Digital Security overlaps with some of the other clusters, but is often seen as a separate discipline due to its importance in current public discussions. Often also described as Cyber Security, it includes especially Cryptography and Encryption (e.g., Cryptoalgorithms, Cryptanalysis, Cryptosystems, Quantum Cryptography), Human Identification, Authentication, and Monitoring (e.g., via biometric methods), and Software-defined Security (SDSEc).
5. Digital Services: This area is huge. Just to mention the most important sub-clusters, I see Outsourcing (e.g., IT Outsourcing, Business Process Outsourcing), Automation (e.g., Robotic Process Automation, Cognitive-enabled Services), Digital Operations Management (e.g., Hardware Support, Custom Software Support, Microservices), Consulting (e.g., Business Consulting, Technology Consulting), Digital Collaboration (e.g., Social Media, Crowd Services, Digital Workspace, Online Classrooms), Cloud Services (e.g., via Cloud Business Models), Licensing and Entitlement Management, Digital Staffing, and last but not least, XaaS (“something” as a Service, e.g., PaaS, DaaS, SaaS, BPaaS, IaaS, or CaaS – better look here for these acronyms if you need further clarification).
6. Others: There are a lot of further digital-related technologies which are, e.g., in regard to Super Materials (e.g., Nanotube Materials), Location Intelligence (e.g., Passive Device Detection, Spatial Computing), Energy Harvesting and Storing (e.g. through mechanical vibrations, or the usage of Nanomaterial Supercapacitors), and many others. However, we will now stop listing further technologies, and will instead focus on the even more interesting current Digital Trends in the next chapter.
3. Digital Trends
Let us now focus on important Digital Trends where organizations and institutions see a huge market potential and invest a lot of efforts in current and future days. Please note that these are not assigned to sub-blocks of the above-mentioned categories; they are now separately explained due to their actual market importance in 2017 (and beyond):
1. AI (Artificial Intelligence): AI is intelligence of machines with cognitive elements (such as “learning” and “problem-solving”), that make machines more human-like. Typical uses of AI can be found within Neuromorphic Engineering (e.g., Neural Networks, Affective Computing), and Advanced Machine Learning (e.g., Natural-language processing, Learning Methods like Deep Learning). Distributed Autonomous Organizations (DAO) are another field where AI plays an important role, e.g., by enabling Autonomous Agent technologies.
2. Human Augmentation: The integration of cognitive and physical things into the human body is more and more applied to improve and optimize man’s efficiencies. One example are Human-Machine Interfaces (HMI), in particular Muscle-Computer Interfaces, Brain-Computer Interfaces (BCI), and Surgical Implants (e.g., implanted Magnets). Such solutions should help us overcome the limitations of basic human performances. Further disciplines lay within DNA Computing (e.g., Algorithmic Self-Assembly Methods), and Human Health (e.g., Mobile Health Monitoring, Digital Medicine and Surgery).
3. Blockchain: Blockchains are Distributed Ledgers with grouped blocks consisting of tokens like Bitcoins, or others. The unique thing is that each block is linked to its former block, and this overall chain is then distributed across a decentralized peer-to-peer network, using security mechanisms like cryptography. Having started in the Finance Industry (e.g., the establishment of Internet Currencies and Payment Systems), today, a lot of other non-Finance Industries are developing new Blockchain solutions (e.g., within the areas of Decentralized Voting, Decentralized Crowd-Funding, Smart Contracts, and more).
4. Quantum Computing: Other than in traditional IT (where a “Bit” is always either 0 or 1), Quantum Computers use “Qubits”, meaning atomic quantum states which have (besides the typical 0 or 1 outcome) also the ability for a “Superposition”, meaning they can hold any possible state simultaneously. This can make computing exponentially faster, depending on the Quantum Algorithm being used. Promising Quantum Technologies will enable, besides other, Cryptanalysis and Encryption, Random Number Calculations, Quantum Teleportation, Crossed Laser Beams, Database-search (with quadratic speed-up), and No-Cloning.
5. IoE (Internet of Everything): IoE is the integration of IoT (Internet of Things) with “network intelligence” by people, processes, data, and things. One of the main components in this architecture are Sensors which make billions of devices digitally connected and manageable. As of today, IoE/IoT is an enabler for new business scenarios, e.g., within Smart Cities, Smart Environments, Smart Fabrics/Factories/Supply Chain Management/Factory Floor, Office IoT (e.g., Things as Customers), Smart Agriculture, Smart Home/Connected Home, Smart Healtchare/eHealth, Connected Car/Smart Car, Digital Twins/Device Shadows, Smart Energy, Smart Education, and many more.
6. Virtual Reality (VR) and Augmented Reality (AR): “VR” talks about realistic artificial 3D worlds users operate using equipment like Head-mounted Displays (e.g., VR Glasses, or new Display and Projector Technologies) and Gesture Control Devices (e.g., Smart Rings, Smart Footwear). Typical business scenarios include, besides others, Military Simulations, Learning Environments, Carmodeling, Geomodelling, and Interactive Movies. The other term “AR” targets the real-time usage of information blended in devices like AR glasses or Electronic Contact Lenses, adding text, graphics, or other virtual content to the user’s real world. Typical business scenarios are, besides others, within AR Games (e.g., Pokémon Go), AR Customer Services, AR Facility Markets, and AR Industrial Maintenance.
7. Crowd Services: Crowd Services use the power of the crowd to enable a wide range of benefits supported by many people – they are often described as the Collaborative Economy. The most-known service hereby is probably Crowdfunding, which often targets the funding of Start-ups, Small or Midsize Business (SMB) loans, Movie Productions, and Disaster Relief. The other well-known service is Crowdsourcing, where Crowdsourcing of Microwork (e.g., via social interaction like Wikipedia, or for larger projects like Upwork and Topcoder), as well as (vetted and unvetted) Crowdsourcing Communities (e.g., Crowdflower, passbrains, CrowdWorx, Quirky) are examples. Crowd Services can be an option for organizations planning to advance into new business areas but lacking the power to do it alone.
8. Smart Machines: Smart Machines describe a very large field of, usually, autonomous things like Drones (e.g., Multirotors, Helicopters), Autonomous Vehicles (e.g., Cars with necessary In-Vehicle Technologies like Radar, Control Systems, Cameras, etc.), Robots (e.g., Humanoids, Research Robots, Factory Robots, Non-Industrial Robots like Space Robots or Military Robots), Intelligent Agents (e.g., VPA which stands for Virtual Private Assistants – or rather sometimes Personal Assistants, VCA which stands for Virtual Customer Assistants, and Intelligent Advisors, e.g., for Botsourcing), Context-aware Computers (e.g., for Context Brokering), Mobile and Communication Devices (e.g., Smartphones), Microelectromechanical Systems (MEMS, e.g., Smart Dust), and more.
These are the Digital Trends which may be the most-relevant in current and future research and innovation activities of institutions and organizations. However, many of them will still not evolve into the highest maturity to go-to market in 2017. For example, Quantum Computer Technology especially will not become mainstream even before 2020. Still, organizations should be flexible and adopt and/or innovate within these Digital Trends to gain a competitive advantage.
One professional way of evaluating the maturity of these Digital Trends is being developed (again) by Gartner who published in July 2016 a report titled “Hype Cycle for Emerging Technologies“. Within this report, you can see very well in a consolidated manner which Digital Trends are newly appearing, or being hyped, or finally maturing:
Now, you have read a lot about actual Digital Technologies and Trends. But what is your opinion? Which of them are really important, e.g., for your business? Please feel free to vote at poll below:
Note: Please come back to this website another day to check other people’s replies; please also consider giving any additional thoughts in the comment section below.
4. How Organizations can adapt and innovate in Digital Technologies
First of all, a Digital Vision has to be set (as part of the overall vision), which leads to the Organization’s Digital Strategy. Hereby, the most critical factor are the organization’s Leaders: Many Executives are still not familiar enough with Digital Technologies, however, they are the ones who have to decide if and when to start or rather how to manage the transformation of their business to become Digital.
Once this is the case, as one of the next success factors, the organization has to decide how to manage the Digital Innovation activities from an operational point of view. For example, the Harvard Business School distinguishes between four distinct Innovation Modes, which are the Specialist Mode, the Venture Mode, the Community Mode, and the Network Mode. These modes are separated from each other especially by the management of in-house innovation (e.g., internal Start-up team) vs. external innovation (e.g., Crowd).
A major question will then be: Where are the potential Digital Solutions coming from? To answer this question, we should spearate two different methods:
A: Organizations to create Digital Solutions from existing technologies:
A1. Creating digital versions based on the enhancement of existing (analog) products and services: Conventional products and services are enhanced with digital equipment, e.g., with Sensors to enable IoT-Scenarios. Example: Auto OEM-producers and their new Smart Cars.
A2. Partnering: Adding digital products or services to the own Business Model, taken from University’ Research Labs or Partnering Organizations (e.g., via licensing). Optionally, own value (e.g., enhancements, consultancy) can be added, while reselling is often a part of the go-to market. Example: SAP license re-selling from SAP partners like IBM and Accenture, while creating own solutions and implementing them with own staff.
A3. M&A: Adding new digital technologies into the own portfolio via company mergers or acquisitions. One of the risks is then still how to globally share the (new and old) digital solutions, because buying a company does not necessarily mean that its (new) IP can already be shared easily, crossing internal-company boarders. Example: Siemens acquiring a digital design automation and industrial software company, adding knowledge in industrial hardware and software fields. (Note: This is purely an M&A example on acquiring Digital Knowledge. IP-sharing within Siemens internally has not been analysed!).
A4. Digital product and service innovation via the combination of existing technologies: Hereby, Design Thinking and Problem Solving techniques can be utilized. The sources of information lay within already existing (digital and analog) technologies, while the target is on how to add value to a client by the meaningful packaging of technologies into a new solution. Example: Apple iPhone.
B: Organizations to manage the (scratch) development of new Digital Solutions:
B1. Digital product and service innovation via customer needs: New digital products or services are created (either internal, and/or via 3rd-party support) based on current and/or future customer needs. Example: Amazon’s Drone Program.
B2. Digital product and service innovation from scratch: This is the classic R&D approach: New digital products or services are created either from an internal R&D department or own Start-up, and/or via 3rd-party support. Design Thinking and Problem Solving techniques are utilized to create prototypes, and solutions are tested for their readiness for marketing. Example: Blockchain for Payment Systems. (Note: Blockchain is an example of an on-scratch solution creation, managed by several stakeholders, which started in 1991).
B3. Benchmark other organizations’ Business Models: By doing this, it is easier to identify still-missing digital products and services which can be a niche for the own R&D department. Example: Small and Medium-size Enterprises, often Start-ups, innovating in niches.
There is no silver bullet in choosing the absolutely right innovation approach from above for your organization. Each approach has its own risks and costs, and independently from any kind of innovation frameworks which especially larger companies have, it is often simply trial-and-error.
One effective way can be to target not only one approach, but also several others. But this depends on a lot of criteria that have to be carefully evaluated first. Criteria like: who is the addressee of the new digital solution (is it a customer, the own organization, etc.); how strong is the commitment of the organization’s Executives to support (which includes the availability of budget), and more, have to be carefully evaluated first.
We are facing an age of massive digital disruption: New Digital Technologies have become relevant for any industry – including formerly analogue-driven companies! A digitalized Business Model allows organizations to aquire an exponential amount of new opportunities. Depending on an organization’s flexibility to accelerate in the new Digital Technologies, they either survive, grow heavily – or even die if they cannot.
Last but not least, this will have a huge impact on our society, too: Our overall world will mature to become autonomous, where Robots, Autonomous Transports, Human-Machine Interfaces, Digital Twins, Printed Food, will become our standard of living.