The future remains fanciful for many businesses, if strategies are overly influenced by new technologies
Speaking to people in the technology industry, you are likely to hear that a coup d'état by the robots is just around the corner – replacing inefficient humans and bringing about a glorious future for them, all at the same time. No future challenge is impossible to solve.
It is undoubtedly true that technology has played a crucially important role in business in general and in the formulation of business strategy. While it will continue to do so, the reality is, however, that the future might be more nuanced than the technophiles will have us believe.
Thirty years ago, many organisations still had substantial typing pools where secretaries typed a plethora of company documentation, including letters, documents, memorandums, etc. working from audio messages or rough – and often illegible – notes from their bosses. The introduction of the personal computer and word processing software in the workplace obliterated these typing pools with one fell swoop.
We can be very certain that new technology – based on machine learning (ML) and artificial intelligence (AI) – will again change the business landscape. The question is just: to what extent?
Humans have always had difficulty to envision their future role in conjunction with the use of new technology. This lack of vision is further complicated by the tendency of people to think in terms of ‘either or’ scenarios. It is either a complete technology take-over or the perpetuation of the status quo. It cannot be a combination of both or parts of both.
A good example of this is the predictions that were proffered when e-books were first published. Many believed that these books would replace physical books in totality. This has not happened yet. In fact, Amazon opened its first physical book store in 2015 and is continuing to open more. These stores combine some of the positives of their online technology with the positives of the physical world’s features. For example, a customer can read readers’ reviews on a specific physical book displayed in the store.
Amazon’s physical book stores are the ‘both and’ philosophy – the exact opposite of the ‘either or’ philosophy. This type of scenario, where both features of the traditional method and the new technology are combined, is what we generally see more of.
Technology – and technology take-overs – will always follow the path of least resistance. In instances where there is still a clear or perceived value attached to the old technology, e.g. a physical book, that technology would in all likelihood co-exist with the new technology. One modern-day example of this is the late 19th century pneumatic tube system that is still in use today – some of these installations did occur as far back as 2017!
And there are still Cuckoo Clocks around!
Just so, our offices are still not the paperless spaces many people envisioned twenty years ago.
However, it is also true that if the total value proposition of an old or current technology could be completely replaced by a better and new technology’s value proposition, it will happen. A good case in point is word processing software which – without any doubt – was a better technology – in its entirety – than the typewriter. Therefore, we saw the disappearance of the typewriter and typing pools.
If advanced ML and AI could replace the total and perceived value proposition of current technology, it would mean the complete replacement of the old technology and associated manual tasks. Yet, where the value proposition of new technology cannot demonstrate a total new value add, a combination of old and new technologies would still be in use, including the associated manual tasks.
In other words, to use books as an example: there are still too many pros and cons in the use of both physical books and e-books. If there were only cons for physical books and only pros for e-books, we would have seen the demise of the physical book a long time ago.
It is therefore my opinion that technology specialists are premature in their opinions that ML and AI would replace the human being completely. In this case, the future is not determined by anyone’s wishes and fancies. The future of new technology will be determined by the perceived value gained by customers and clients from the use of that technology.
Also, importantly, legislation – in effect society – will also have a say in this. A good example is India’s decision not to allow autonomous cars in India.
It is safe to say, therefore, that the future and business strategy entail far more than just the imagined world of the technology industry.
While there have been significant technological advances and developments in the field of ML – and its ability to free humans and businesses from certain manual tasks – I believe that a business’ strategy is determined by much more than just technological advances. There are far more important factors that play a role in determining a company’s long-term strategy, viability and sustainability. Let me provide three examples.
Firstly: a key indicator that human capability is far from being diminished in the future is encapsulated by the philosophy of the macro-historian Arnold Toynbee. He argued that societies – and I believe businesses as well – are on the rise if there is a creative minority ‘responding in an appropriate manner to the challenges of the environment’. However, this creative minority should have the support of the majority (i.e. all stakeholders), in order to for change to be effected in organisations.
When there is no creative minority – or a lack of support from the majority – I believe that an organisation has far more serious problems than missing out on possible AI or ML applications. Creative people are needed to drive AI and ML implementations in a proper manner. They are also going to need the support of the majority.
Secondly: in order to demonstrate that business strategy should consider more factors than just the use of new technology, it is a well-known fact (and well documented (1)) that the fall of the Soviet Union provided a final impetus for the National Party government to start negotiations in South Africa in the early 90s. Simultaneously, the event placed pressure on the ANC – now without the moral and financial support of a Communist empire – to negotiate and compromise on private property rights. This had a significant impact on South Africa’s future in general and on the business environment in particular. As a matter of fact, property rights is still a contentious issue and has the potential to change the local business landscape, and impact on business strategies, in more profound ways than AI and ML in the short to medium term.
Thirdly: while many observers foresee that China will be the next superpower in the world, there are geopolitical experts and Futurists claiming that this prediction is anything but guaranteed. Some Futurists (Futures Platform (2), 2017) identified a ‘wild card’ on the medium to longer-term horizon (i.e. 2025 and beyond) regarding China’s future. According to this article, titled “the collapse of China”, the following concern was raised:
In practical terms, the country is being held together only by its coercive power structures, i.e. the military and the police. Distrust between the different areas is increasing and it is possible that the country could slide into a civil war. Unrest and violent riots have become increasingly common. The challenges posed by the gigantic and ageing population combined with the rapid decay of infrastructure, depletion of water resources, and destruction of arable land further increase the likelihood of crises.
However, experts have presented a number of reasons why China should be unable to continue on the path of constant growth and is likely to collapse before 2030. The Chinese economy is expected to become clearly less dynamic and the most drastic prognoses even expect the Chinese state to split into multiple nations.
What does this mean for your business strategy? Do not place all your eggs in one basket. Do not overly rely on business relationships with China. The potential fall of China will have a substantial impact on the world economy – and so much more if your business exports only to China.
Regardless of what sophisticated technologies are in use at your business, it would not be able to protect you against such a scenario. This goes for other geopolitical events – and many other contextual trends and emerging issues – as well. These could make or break a business.
By developing a business strategy which is based on more than just technology trends, a business is in a better position to weather the storms and to seize new opportunities.
Of course, there is one important difference between technology and the rest of the contextual environment. A business has less control over contextual events, such as geopolitics, than the implementation of technology. Technology is indeed one contextual element which is more under the control of a business than the rest of the contextual environment. This might explain why so many businesses’ strategies are overly influenced by new technology.
However, the uncertainty around the contextual environment cannot be used as an excuse to ignore it. There are strategic foresight methodologies which could be used to consider different strategic avenues in the future, depending on changes in the contextual environment. This includes hard and soft trend identification, normative and explorative scenario planning, macro pattern identification and many other tools and methodologies to be found in a Futurist’s strategic toolkit.
Technology is a key initiator of permanent change in a society, but we should not forget that it interacts in a systemic way with other systems, including the political, economic and social spheres of a society. A holistic approach is urgently needed for business survival and success.
- Giliomee, H. 2013. The last Afrikaner leaders – a supreme test of power. Tafelberg, Cape Town.
- Futures Platform. 2017. Collapse of China. Globalisation, climate change and economic growth. Wild card 2025+, 12 September. [Online] Available: https://go.futuresplatform.com/phenomena?view-phenomena=All
Read more BDO Insights