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Part One
Overview and Background
Chapter 1
Digital Disciplines, Strategic Supremacy
Exponential Value Creation

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IT is an exponentially accelerating whirlwind that is feeding on itself. “Things” such as sensors, devices, equipment, vehicles, and buildings are creating an avalanche of big data, which is uploaded over networks to the immense computing resources of the cloud, which is running sophisticated algorithms to process and interpret it, linking to social networks, and driving real-time and predictive decisions implemented by people and things.

Estimates of the number of things that will be connected in the next few years range from tens of billions to trillions.14 These estimates may seem far-fetched, but there are already billions of cell phones and smartphones in use. eReaders and tablets and PCs and smartphones and wearables and smartwatches and Wi-Fi cameras and light bulbs and toasters and refrigerators and video security cameras and digital photo frames and planes and trucks and traffic lights and who knows what else will connect to each other and the cloud over wireless (and occasionally, wired) networks. Even pills are becoming connected: the FDA-approved Proteus Pill already incorporates a wireless sensor the size of a grain of sand that signals – from inside the digestive system – when the pill has been taken.15

These devices, in turn, will generate massive and increasing amounts of data: purchase transactions, video streams, status updates, tracking data, oil pressure, turbine speed, and ambient temperature, on top of documents, slideshows, spreadsheets, songs, and photographs.

Data will increase in frequency and resolution. Netflix used to have a few data points for each movie: number of days out and possibly a rating. Now it knows the number of times you've watched it; on what device; at what time; where; and which scenes you've skipped or replayed. The stream used to be standard definition, then became high definition, now is becoming 4K, and eventually will be 8K, 3D, and holographic. Or consider this: reading utility meters every 15 minutes rather than monthly leads to 3,000 times more data. This means not just more data, but the ability to deduce when you are running the dishwasher or the air conditioning. The doctor used to know your gender, height, weight, temperature, and blood pressure. Then, your cholesterol and triglycerides. Now she can access your electrocardiogram or electroencephalogram on a continuous basis, not to mention your entire genome, which is about 700 megabytes.16

Multiply all these trends together: more devices, each generating more data, more often, and you are multiplying exponentials.

This is driving a global increase in data traffic. Wired data is growing by well into the double digits annually, but mobile data is growing at 60 percent per year.17 Mobility is growing for many reasons, such as convenience and speed. The ability to do something now ties into our innate need for instant gratification, which surfaces in behavioral anomalies such as hyperbolic discounting, where immediate results are perceived as being of significantly higher value than those requiring a wait. And, time compression is important for businesses as well, whether to create differentiated customer value or to reduce supply chain costs such as inventory carrying costs. Consequently, the mere act of making a function available on a mobile device can be a market hit: CUNA Mutual developed a smartphone app allowing car buyers to get a loan while at the dealership – generating a billion dollars in loans in only two years.18 Put differently, mobile by itself can support operational and information excellence, not to mention when used in conjunction with other technologies.

In turn, there is a need to store and process that data, helping accelerate the growth of cloud computing. Amazon Web Services, at the time of this writing the largest cloud provider, already stores trillions of “objects” – documents, photos, databases, movies, etc. – in its S3 Simple Storage Service.19 Companies such as Amazon, Google, and Microsoft each are estimated to have hundreds of thousands, if not over a million servers.20

Underpinning it all is our innate, inescapable human need to be connected and to care about others and what they think. As UCLA professor Matt Lieberman, cofounder of a field of study called social cognitive neuroscience, puts it, “We are wired to be social.”21 Originating as a mammalian need for mothers and their infants to stay connected, he argues, this orientation drove language, growth in the neocortex, and ultimately homo sapiens' immense abilities in problem-solving, pattern detection, and collaboration. And social media is not broadcasting or marketing in a traditional sense. It is all about two-way interaction, connection, relationships, and engagement.

Social media increases the value of all four digital disciplines. It enhances collective intimacy, by strengthening bonds between company and customer. It accelerates innovation, by enabling collaboration, providing early customer and partner input into needs and wants, and supporting co-creation of solutions. Connection to social networks is often an essential part of today's leading solutions; even cars – and sharks – now connect to Facebook or Twitter. It impacts multiple touchpoints in driving information excellence, including product awareness, purchasing, delivery, use, billing, and return processes. In the old days, consumer purchasing decisions would be based on history with the vendor and word of mouth. Today, those decisions are based on vendor relationships and social selling, often created and maintained by social media, and referral marketing – that is, word of mouth, which has become word of Twitter, Foursquare, Instagram, Facebook, TripAdvisor, or Yelp.

14

Peter Lucas, Joe Ballay, and Mickey McManus, Trillions: Thriving in the Emerging Information Ecology (Hoboken, NJ: John Wiley & Sons, 2012).

15

Peter Murray, “No More Skipping Your Medicine – FDA Approves First Digital Pill,” Forbes.com, August 9, 2012, www.forbes.com/sites/singularity/2012/08/09/no-more-skipping-your-medicine-fda-approves-first-digital-pill/.

16

Reid J. Robison, “How Big Is the Human Genome? In Megabytes, Not Base Pairs,” Medium.com, January 5, 2014, https://medium.com/precision-medicine/how-big-is-the-human-genome-e90caa3409b0.

17

“Cisco Visual Networking Index: Forecast and Methodology, 2013-2018,” Cisco, June 10, 2014, www.cisco.com/c/en/us/solutions/collateral/service-provider/ip-ngn-ip-next-generation-network/white_paper_c11-481360.html.

18

Nash, “State of the CIO 2014.”

19

Frederic Lardinois, “Amazon's S3 Now Stores 2 Trillion Objects, Up From 1 Trillion Last June, Regularly Peaks At Over 1.1M Requests Per Second,” TechCrunch.com, April 18, 2013, techcrunch.com/2013/04/18/amazons-s3-now-stores-2-trillion-objects-up-from-1-trillion-last-june-regularly-peaks-at-over-1-1m-requests-per-second/.

20

Rich Miller, “Estimate: Amazon Cloud Backed by 450,000 Servers,” DataCenterKnowledge.com, March 14, 2013, www.datacenterknowledge.com/archives/2012/03/14/estimate-amazon-cloud-backed-by-450000-servers/.

21

Matthew D. Lieberman, Social: Why Our Brains Are Wired to Connect (New York: Broadway Books, 2014).

Digital Disciplines

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