Technology is changing our society in enormous ways, and its impact on the business world is every bit as revolutionary as in other areas of our lives. Rarely, if ever, have business leaders given as much focus to technology as they are spending today thinking and talking about automation, artificial intelligence and “Digitalization”. These are heady times indeed, to be a CIO!
Because of their revolutionary disruption (or creation) of their industries, the business models of Amazon, Google, Facebook, Netflix and Uber are frequently held up by pundits, analysts and consultants as the model for business in the “Digital Age”. There is often an implied assumption that every business should be aiming for that level of automation–to reach nearly autonomous operation with completely tech-enabled customer interactions via the web and/or mobile app – if they hope to compete (or even exist!) in the coming years.
Over-generalization of this kind is understandable with the concepts being so new and the models so disruptive, and with the fear of being left behind so high on the worry list for every board of directors. I believe this broad-brushed over-hyped dynamic opens an opportunity for most CIOs to raise our profile and impact on our companies, to inform and influence corporate strategy in extremely meaningful ways. One part of the pundits’ cry for urgency is quite valid: successes and mistakes at this crossroads will make an extreme difference in every company’s competitive position in the near future.
Doing the wrong things can be just as dangerous as failing to do the right things. Strategy must be tuned to each organization and can’t be ditto-marked from tech giants in completely different spheres.
As CIOs, it’s our job to disentangle the myriad forces moving in the tech industry in general and apply them to our industries and our company specifically. No outside consultants will know better the nuances of our company’s positioning, current capabilities and competitive landscape; no one else on the executive team is better positioned to understand what all the buzzwords flying around in newspapers and business journals really mean for our companies. But it’s critical to start from the right mindset in making these kinds of judgments.
For those of us in the 10 other GICS sectors, technology is a means to an end, not the end itself. Even Amazon cultivates a “customer obsession” mindset.
My experience in capital markets and commercial real estate has made this crystal clear to me. When individual acquisitions or capitalizations regularly exceed $100 million on assets, which are unique in important ways, with revenue streams, liabilities and market positioning different each time from any other asset in the world, the idea of having humans involved in that transaction is seen not as a nuisance or delay, but as a critical source of deep expertise and advice to ensure the best terms possible.
“We leverage the rising power of digital technologies, artificial intelligence, data science, web and mobile interfaces to strengthen, not to replace, our core value proposition to our clients”
This is a nuance missed by the broad brush of tech pundits and consultants: capital markets advisory is known as a “relationship business” not because it hasn’t yet been automated to the extent of other industries, but because of the real importance of expertise, reputation, trust and professionalism in what we do. No doubt AI will continue to grow in power exponentially, but the size, complexity and uniqueness of transactions in capital markets is a key difference to the landscape.
As long as expert human insights remain even a few basis points better than the most advanced AI models, it will make strategic sense to keep people involved in what we do.
Does this mean technology has little to offer to firms full of knowledge workers like mine? Far from it. In fact, I think it makes our opportunity much more interesting and challenging than in an organization where the CIO’s mandate is to automate every human process they come across. We must tailor our IT strategy to bring the best tools, data, AI, analytics and process support to the fingertips of our experts, so they can add the value they’re uniquely qualified to add.
We leverage the rising power of digital technologies, artificial intelligence, data science, web and mobile interfaces to strengthen, not to replace, our core value proposition to our clients.
The impressive results of Amazon, Google, Facebook, Netflix, Airbnb and Uber are undeniable, but their strategies were designed to disrupt their specific niches. Most importantly, their success came not from how far they’ve gone in automation – that is a means to an end. They have succeeded and have become dominant for one basic reason, and it is a reason we should all have at the forefront of our strategies: they are better than their competitors at serving their customers.