Mark Raskino

A member of the Gartner Blog Network

Mark Raskino
VP & Gartner Fellow
12 years at Gartner
27 years IT industry

Mark Raskino is a vice president and Gartner Fellow in the Executive Leadership and Innovation group of Gartner Research. Mark researches CEO priorities and attitudes to IT and major business technology trendsRead Full Bio

CEOs and CIOs – what’s your “techquisition” strategy?

by Mark Raskino  |  October 16, 2014  |  1 Comment

I am intrigued when I see a company in a traditional industry, acquire some kind of digital or information technology business. It’s a very modern M&A sub-trend I’ll call  “techquisitioning”. We did not see much of it during the original dot com and e-business boom of the early 2000’s. However, there are many more interesting entities out there to be considered today – some quite mature and ready to pick. Here are some recent examples:

I think some of the smartest traditional industry business leaders have rather suddenly woken up to the digital threats on the horizon in the post-recession new normal. Companies like Google, Amazon, Facebook and Alibaba have used digital era technology to amass a great deal of market power which they can use to either enter or pressure multiple industries. After a decade of relative under-investment in technology, catching up or leapfrogging isn’t easy for the traditional incumbents. Organic capability development is slow. So sometimes, jump-starting your future by acquiring a technology, online property, platform or talent team might make sense.

Let’s imagine for a moment that this is a good idea and it works (we cannot know yet, it’s too soon to tell). The early movers have started- what are you going to do?  Do you have the management team competency to find and evaluate potential targets? If so, do you have the funds and the investor tolerance to make your own fast follower moves? Finally – could you integrate such delicate and culturally disparate entities without crushing them? These are questions I think many boards of directors will be debating with their CEOs over the next couple of years. CIOs should be ready to help the leadership team develop answers.

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Business leaders: in the Internet of Things, remember products need names.

by Mark Raskino  |  September 29, 2014  |  Comments Off

Recently, I was using a gym in a hotel I visit once a year. The management had replaced all the fitness machines and I was keen to discover what the latest equipment can do.  There was better integrated TV, touch screen controls, and some local gamification – showing me my performance stats compared to other users over the last day. There were also lots of Facebook and Twitter logos trying to get me to be social with my gym stats.  Another thing was new this year – a kind of fitness machine I had never seen anywhere before.

The new machine was a variation on a cross-trainer – the one where you stride purposefully, as if using ski poles. But this machine had footplates at strange angles. When I got on it, the action was one of twisting from the hip at the same time as striding forward. Interesting indeed. I’m sure the company that makes the machine would love me to start tweeting about it and discussing it with you but there is a big problem. That machine had no name.  Screens full of mostly useless social logo clutter, but no name. Not printed on it, not on screen.

I discussed this with a colleague and we tried to think up names for it. She came up with one based on the movement.  I won’t repeat it here – it sounds similar to wincing, which is what I might have been doing if I had stayed on it very long.   But why would we try to find a name for it?  Simple – we wanted to tell some of our colleagues about the new machine. That old school process, dear marketers, is called word of mouth recommendation. It’s hard to achieve a good net promoter score if one person cannot promote your machine to another because they don’t know what to call it.

I suspect this is the beginning of a problem we are going to see a lot of in the internet of things world. There will be new kinds of products and in the rush to just get them out there, companies will fail to name them.  That is understandable, time to market counts. What is not forgivable is a CMO who use spends developer time and agency budget on superficial social integration that nobody will use, while failing to get the basics of marketing right.

Pizza drone, vaping device, iWatch – the list of emerging IoT terms is starting to grow. Job #1 for product marketers must be to create strong thing names. Without them we will all be at a loss for words. You cannot sell what we cannot communicate.

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CEOs should note this week’s Air France story, when designing digital business strategies.

by Mark Raskino  |  September 25, 2014  |  Comments Off

Yesterday, the CEO of Air France KLM  tried to end a very damaging labour dispute with these words :

“With the withdrawal of the Transavia Europe project, there is now no reason to strike because there are no longer any concerns about relocation.”

If you are a large company CEO, business strategist, business strategic CIO or chief digital officer this should make you shudder. The Air France pilots strike grounded half the firms flights and cost 15 million Euros per day.  The project he mentions “Transavia” is a low cost airline. Simplifying a lot – Air France was trying to grow the Transavia model while allowing the old core model to gradually shrink.  Its one of the hardest strategy manouevres any CEO can attempt – to progressively switch over from one business model to another gracefully. There is often a risk of schism.

This year I published a report with the title “every industry will be digitally remastered”. It explains why the process of disruptive change that happened to music, books and photography will now extend to all sectors. With that kind of thinking in view, I am regularly encountering companies that are hiring chief digital officers and  empowering them to set up digital development centers in which they will reinvent not only the business model but some of the the core products or services that the firm provides. It’s an easy journey to start, but a very hard one to complete.

The low cost airlines were a business model innovation of the 1990s. In many geographic markets, such as the UK and US, start-ups challenged incumbents and those incumbents had to adapt or die. There were scary moments for many airline CEOs in the early to mid 2000’s but the internal transition story is now mostly done.  Often airline majors had to create their own challenger brand operations ( do you remember United’s “TED”, Delta’s “Song” or British Airways “Go” ? ). At the outset the crucial question is whether such new model operations are intended to be the change or whether they will catalyze the change in the core business and then fold. The strategist must of course ensure the intent is never too obvious.

All the shiny digital business innovation centers being set up this year and next, if successful, will ultimately lead to the kind of dilemma Air France has been facing in recent weeks. Hopefully not all of the transitions will result in such industrial strife. But strategists should think very hard about the design of the new vehicle and the limits of its separation from the corporate core. If it’s too far removed, it will be deemed non-core and investors will call for it to be sold as soon as it makes money – thus having no net change effect. If it’s held too close it will be killed off by the powerful vested interests of the old core. Goldilocks design is needed. Think about that, before you decide to push your digital innovation off to California, hundreds of miles from the old political power center of your firm.

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Will the internet of products need digital ownership certificates?

by Mark Raskino  |  September 19, 2014  |  1 Comment

Recently, some suspicious cell phone towers were discovered in the United States.  It is believed they are spy towers – listening in on calls and or tracking people. It’s not known who put them there. At the same time, in Australia, Russia, the UK, India, South Africa and many other countries – innovators are working as fast as they can to develop delivery and other drones.  If you are in an airport right now, there’s a chance it is tracking your movement via your WiFi device, as Copenhagen does. If you are in the vicinity of a person vaping on an electronic cigarette, there’s a chance it’s trying to contact others nearby.  This is the world of connected, smart and powerful things.

Cars are also becoming part of that connected world. One day they will be doing limited self-driving – for example parking themselves without a driver. They are supposed to be very safe and incapable of running a person over – but how comfortable will we feel about them? (I’ve read that book Robopocalyse)  Of course all of these things will be valuable to us, but sometimes they will go wrong. When they do, we will want to know who is liable for any damage they cause. We will want to know who abandoned them – if they end up as rubbish on our streets. We will want to know who they belong to if they start to re-order their own supplies – as agricultural robots might.  In general – I don’t think we will accept an urban or rural environment full of smart connected devices buzzing around if they are anonymous.

Every significant object on the internet of things will be some company’s product.  Either that company will be liable and accountable for what it does, or the customer who bought it will be. Either way, any insurer will want an unambiguous record of to whom the thing currently belongs.  So I’m thinking some kind of digital certificate and ownership register probably needs to evolve.   Developing that system of registration and tracking might be a golden commercial opportunity for someone.

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South Africa has Digital Officers too.

by Mark Raskino  |  September 15, 2014  |  Comments Off

Last week I attended Gartner’s annual Symposium in Cape Town. It’s always one of the most enjoyable events on our global circuit. The thoughtfulness and positive energy of South African IT leaders is inspiring, as they continue their journey to forge the systems of an emerging great nation.

capetwon

This year it was interesting to note a few chief digital officer business cards starting to appear.  It’s a trickle not a flood but it shows that this new job role is now reaching all corners of the earth.  These few were not just digital marketers. They were the more strategic kind of CDO – looking at the whole of the firm and where digital shifts can make the most difference.

Digital business was of course the main subject of the conference. We had many intense conversations with CIOs about what digital really means in practice and how they should adapt.  A change of title is certainly not always needed – it’s more a change of perspective and posture. I have no doubt that the most successful CIOs and CDOs of the future will be creating the business technology agenda of their organisations, not just servicing it.

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A big strategy question for CEOs: how many cloud places will consumers need?

by Mark Raskino  |  September 10, 2014  |  1 Comment

Recently I took a photo of Copenhagen airport on a beautiful sunny morning, shortly after take-off. I used my phone of course.  When I landed and the device connected again, that photo joined all my others in the Apple iCloud. My music also lives there. My ebooks could live there, but they reside with Amazon. There is some natural clustering of entertainment and media. I am happy for those things to live with Amazon or Apple.  However I have also started generating other kinds of data and that lives elsewhere.

My calorie tracking data lives with some company called MyFitnessPal. My cycling data lives with another app provider. This kind of data is all related to personal health – some people call it ‘quantified self’. But what if I were an e-cigarette user and that device started connecting? What if my home capsule coffee maker starts connecting?  Is that quantified self or some other category?  If my car connects and starts saving all my driving  journey data, should that join my walking data or is it separate? In Denmark, all citizens have a government email inbox where they get messages about government services, taxes, social payments, speeding tickets and the like. But is that the way people will always want it – in one place because it is data from government, rather than in some other thematic space?

It’s not yet clear how many separate cloud or cloud-like places consumers will want to hold their data in, or what the natural theme boundaries will be. A race is on – many places will bubble up. Over time they will aggregate. Our initial ideas about the likely categories will probably be wrong. The natural categories and boundaries might vary by country, culture and other segmentation features. Those who make fairly good early bets now, then learn to pivot quickly, will end up controlling the big cloud places consumers trust. They will have huge market power in decades to come.

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Is Digital vs IT a generational leadership divide?

by Mark Raskino  |  September 7, 2014  |  1 Comment

Recently I was interviewing a couple of digital leaders about what drives them and what digital means. They mentioned several things that separate digital from IT but one surprised me. It was a sense that the current, ageing generation of CIOs still don’t really “get” the web. The old client-server guys never adapted to internet thinking but they are still occupying the CIO seats..   that was the accusation.

I was quite taken aback by this. The divide they point to was certainly very visible in the dot com / e-business era of the early 2000s – but it’s a sorry state of affairs if it still persists over a decade later. Indeed the digital leaders  raising  this with me are not so young themselves now- more Gen X, in their 40s – certainly not Zuckerberg contemporaries ( full disclosure:  this analyst is 52 – at the tail end of the baby boomers ).  I know plenty of CIOs who have moved on, but I do agree – some seem stuck with a repetitive playbook developed in the late 1990s and narrow perspective on what kind of IT matters.

I have never believed there’s a good excuse for technology professionals to get stuck on a particular generation of technology thinking.  We would not tolerate an old but still practicing medical doctor using outdated harmful techniques on us would we?  So why should we be comfortable with CIOs applying outdated concepts that might damage our enterprises? If you are a CIO, you have chosen to be a leader in one of the fastest advancing areas of human endeavor.  Keeping up is a professional obligation. Becoming a stick-in-the-mud is not really acceptable.

IT isn’t athletic. Muscles degrade, but our minds remain sharp well into retirement. There’s no fundamental reason why you should not keep up with the latest thinking and methods. So do cloud, do social, do mobile apps, do startup science, do data science. You can get up to speed with these things. You have the capability to reshape and redefine organisational capabilities. You have the power to block requests for incremental, low business value return changes to old systems – that end up consuming all your budget. That’s why you are the designated leader. If you don’t have time, then delegate more. Nobody is stopping you. It’s all about your choices.

If you are a tail-end baby boomer  – don’t be the CIO who held on to his preferred old way of doing things for too long and ended up strategically limiting of even damaging his firm, as the last act of his career. It’s time to do digital business full force; get with the program or get out of the way.

 

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The digital disruption of tobacco. Part 1: all CEOs must learn from this.

by Mark Raskino  |  August 4, 2014  |  1 Comment

My son is currently reading “Being Digital” by Nicholas Negroponte. He’s already impressed by how well it predicted the digital disruption of the media and music industries. But that is now a very old story (the book was published in 1995) and it’s a story mostly limited to things that were always inherently information goods. News is data – bits not atoms. A more recent and  tangible business history example – the disruption to Kodak and the other old chemical photography kings – has already been analysed to death.  Mention it and people’s eyes glaze over. The problem is that old stories of disruption are easily ignored or marginalized. That doesn’t help you get your people alter, thinking and acting.

So If you are trying to understand and explain what the future of digital business disruption might look like for your own industry – where should you look for examples?  There are several good ones, but my current  top recommendation is that you keep a close eye the tobacco industry. It’s an example that is providing a great deal of learning opportunity as it gets disrupted at astonishing speed.

Here are 7 key learning points so far. Over the next few blog posts, I’ll expand each one.

1)  A physical goods industry can be digitally disrupted.
If it can happen to tobacco – it can happen to anything

2) Product digitalization can be hard to believe and easy to deny and ignore.
It’s just an ‘electronic’ cigarette right? So where’s the digital?

3) Digitalization can progress at breakneck speed by sidestepping regulation.
Evading existing regulation, at least for a while, is turning out to be one of the biggest strategic plays in digital business disruptions.

4) Digitalization can kill an existing industry model within a decade.
The growth rate of e-cigarettes is huge; the tobacco cigarette is flat. The forward projection is easily calculated.

5) Disruption can come absolutely anywhere. Adaptability beats prescience.
The e-cigarette arrived suddenly, from China. What matters most is how existing tobacco companies react – not whether they predicted it.

6) Disruption creates great opportunities for incumbents, not just the entrants.
For example, the tobacco companies can use e-cigarettes to reinvent distribution channels, revenue models and customer relationships.

7)  Existing old industry players can end up winning  if they move smart and learn fast.
Book publishers didn’t learn from the iTunes case, so they got ‘Kindled’. The tobacco industry isn’t making the same mistake.

 

 

 

 

 

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CEOs take note: it’s an Internet of Products too.

by Mark Raskino  |  July 18, 2014  |  1 Comment

The Internet of Things is a curious name for what happens when objects other than computers, start to become electronically networked. With this capability we might take sensor data from them, to monitor our world and optimise things more effectively.  We might be able to control objects remotely from afar.  We might might send software updates to objects in order to upgrade their performance or add new functions.

To call this wonderful new world an Internet of Things is entirely accurate. It helps us discriminate a phase of innovation that is genuinely new, from that which has already happened. First we had an internet of connected computers – our PCs, laptops and servers. Then, via technologies like Smartphones, Facebook and Twitter we created an internet of connected people.  Now, because of Moore’s law and its continuing miniaturising and cost reducing effects, we can start to embed processing power, memory and connection directly into everyday things. What things?  Cars, wind turbines, tennis raquets, lamp posts, trash bins, dresses.. the list of things being connected is in fact endless.

Though the term Internet of Things is accurate, it is rather detached and it omits a key ingredient: a sense of ownership.   It makes it sound as if this will all just happen, as a result of some exogenous force. However there is no Fairy of the Silicon Valley,  flitting around the world with her  magic wand connecting things. It won’t happen unless we make it happen. Technologits have made it possible, but you have to make it happen. Becuase every single thing, in the internet of things – is some company’s product. The CEO of that company must decide when the time is right to start connecting his or her products, then create the capability to do so.

For now, the market has decided it likes the term Internet of Things, so that is what we all be reading about and saying for the next couple of years.  However, when you hear those words, make a point to correct them in your mind. It is an internet of products.  Doing that, will gently remind you there is an action point  pending on your strategy ‘to do’ list.  Sooner or later it will need to be an internet of your products too.

 

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CEOs – if the “Googazon” can reinvent your industry’s products and services, are you really in control?

by Mark Raskino  |  July 17, 2014  |  1 Comment

Some news items from this year,  so far:

From movie making to medical devices and from mobile payment systems to cars, Google and Amazon seem to be very comfortably entering multiple industry sectors.  This isn’t IT service support like you are use to getting from your favorite old school technology provider. In many cases its potentially the thin end of a very dangerous wedge. What might the thick end look like?  Well how about product reinvention, business model change, IP control, core competency substitution, repricing, and distribution platform control.

This is part of a process I have been referring to in my research as the digital ‘remastery’ of industries – where products and services are fundamentally re-engineered for the digital age. The shocking thing is how easy it seems to be for these new outsiders to enter so many sectors and reinvent their products. I now believe that no industry is truly safe from this. So shouldn’t some business leaders be just a little more shocked, embarrassed and reactive?

Imagine I’m a Warren Buffet style long term investor and you are the CEO of a company that claims to “lead its industry”, or aspire to, as so many do.   Can you really convince me you are in control of your destiny, if companies like Google or Apple are busy reinventing the  future of your service or product?  For sure – partnering with them might help you learn and stave off the problems for a while.  That’s what Marks and Spencer did, using Amazon as its retail e-commerce platform provider for 7 years. But in the end, your industry is your business. Whatever core is, you must be master of it. That new competency might be what you need to remaster your own industry. The question you should ponder is this: why isn’t it evolving from within your own R&D and innovation capacity – and when will you fix that?

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