Rountables at Dreamforce, Part 2 of 3 The Hierarchy of Models
Geoffrey Moore
Author, speaker, advisor, best known for Crossing the Chasm, Zone to Win and The Infinite Staircase. Board Member of nLight, WorkFusion, and Phaidra. Chairman Emeritus Chasm Group & Chasm Institute.
This is part 2 of a 3 part series. Read Part 1 Here: http://ow.ly/StZzM
In the previous post, I reported out on a series of executive roundtables, summarizing the participants’ prioritization of disruptive technologies based on their current impact on their industries and companies. In summary prioritized order, the technologies discussed were:
- Data Science
- Cloud
- Mobile
- Social
- Internet of Things
That said, individual executives had their own priorities that varied considerably from this summary.
Once each of the roundtables had talked through their particular prioritizations, we then discussed what level of commitment they saw their enterprise making to their top priority disruption. Here we employed a simple framework a somewhat grandiose name—The Hierarchy of Models:
The framework calls out three escalating levels of commitment:
- At the infrastructure model level, the technical team leverages the new technologies in ways that are transparent to the rest of the enterprise. Such commitments are led by the CIO and focus on efficiency gains inside the IT operation.
- At the operating model level, a given function or process leverages the new technologies in order to modernize the enterprise’s operating model. Not only does this impact the infrastructure model below it, it is typically highly visible to customers, partners, and suppliers, and thus requires the full commitment of the operating executive in charge, who typically sponsors and often funds the initiative. The focus is to improve effectiveness by embracing next-generation systems and practices.
- Finally, at the business model level, an enterprise changes the way it does business itself, either by adding a net new line of business to the portfolio or revolutionizing the way it delivers and charges for its products and services. Such changes are hugely impactful on both the operating and infrastructure models below them, but more importantly impact the enterprise’s ecosystem, supply chain, customer base, and stock price. Thus they must be sponsored and funded at the highest levels, the goal being to alter the overall competitive posture of the enterprise.
When we applied this framework, here were some of the key takeaways:
- Cloud was pretty much an infrastructure model matter. Several of the participants said their companies had fallen behind and they were just trying to catch up. They weren’t trying to modernize their company’s operating model, just trying to leverage the new capabilities.
- Mobile was seen primarily as an operating model matter, although some participants who saw it simply as support for BYOD positioned it as an infrastructure only play. Mobile banking and retail clienteling were typical examples.
- Social was harder to position. Call center executives tended to see communities as an infrastructure model play to increase call deflection and thus lower costs. Consumer marketing executives saw more of an operating model change where user generated content and social listening were next-generation capabilities they needed to modernize their function.
- Data Science was seen primarily as the next big thing, and in that context, as either an operating model or a business model disruption. The former was linked primarily to marketing campaign effectiveness or customer intimacy initiatives, the latter to monetizing data as an asset independent from operations, positioning it as an additional service to current and future customers.
- Internet of Things was seen primarily as an operating model opportunity, with the focus being on efficiency and effectiveness in maintaining industrial infrastructure or individual health. Consumer internet of things, by contrast, looked to be a business model play, particularly around home automation.
The big takeaway for everyone was that any given disruption could reasonably be matched with any one of the three levels in the Hierarchy of Models, the results being starkly different depending on which one. This means we all have to be very clear about which level we are targeting.
Read Part 3 Here: http://ow.ly/SzE37
That’s what I think. What do you think?
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Geoffrey Moore | Zone to Win Book | Geoffrey Moore Twitter | Geoffrey Moore YouTube
Another great post Geoffrey Moore. I would argue some of the most disruptive companies in Business Model accomplished what they did primarily due to Data Science. Google? Yup, the algorithms that used user interaction behavior as indicators for search relevance had huge impact, and they became in Danny Sullivan's parlance "the database of intent". Amazon? Yup, one of the early pioneers here as well in terms of what product I'd like, and when. Netflix? Yup, their Netflix Prize back in 2009 was pure data science, predict the next best film for a customer to enjoy. LinkedIn? Yup, their algorithms on top of the social graph reconnect old colleagues, and connect recruiters to future employees. RelateIQ / SalesforceIQ? Yup, capturing and acting upon the signal in email and calendar was the innovation that drove better relationships and more efficient selling. The others (Cloud, Mobile, IoT, Social) all contribute data, but I'd argue that Data Science is the most dominant reason for the rise of these firms.
Retirement, how sweet the sound.
9yVery informative Geoffrey, thanks! I'd tend to think the Social and Mobile technologies are highly disruptive in many business models and worthy of much CEO attention. For example, Uber wouldn't exist without these technologies. Business needs an ever growing list of loyal customers and these two technologies are direct connections to "bring them in" without having to physically touch them. CEO should be spending 40% of his day brainstorming how to have his business expand using these platforms. Yes, I just made up the 40%, but it should be a lot! :)
Store Optimizer | Behavior Analytics
9yGreat insights. The division to business value, operations and infrastructure makes a lot of sense. The challenge is to define how the impact of the technology shifts between these models. Mobile, for example, affects the sales channel in retail. Is this an operational model or a business value? I'd venture that it would be both. The same argument can be made for the other disruptive technologies
Engineering and Management Leadership
9yGreat points. As an IT strategist we always have to consider all these depending upon your clients business motivations. The priority will change from industry to industry but I think one can not afford to ignore social and mobile - at any of the 3 levels - which then requires cloud. IoT is just the beginning but I consider it as "Machine Social" like we have "People Social".