Technological progress is rapid and accelerating. Biologist Paul Ehrlich reassures us that as long as the human brain is setting the pace, we needn’t fear – basic human intelligence has remained the same for thousands of years. On the other hand, Singularity Theory (e.g., I. J. Good 1965) warns that Artificial Intelligence could beget machines that design progressively more intelligent machines, eventually leading to an “intelligence explosion” that leaves humans far behind. While pundits debate how to keep AI in check, Strategy in the Digital Age by Michael Lenox teaches business leaders how to navigate and manage the digital transformation. Organizations facing the shifting business strategies of this new paradigm will benefit from this well-organized deep dive into all things digital.
Kodak was the legendary leader in photographic film and, though they foresaw the rise of digital imaging and spent billions to keep up, they still landed in bankruptcy. Smartphone cameras, digital watches, and word processors are all transformational technologies that disrupted established businesses. As if things weren’t moving fast enough, the COVID pandemic pushed digital innovation ahead even more. The foundational digital technologies of processing power, storage capacity and bandwidth have grown exponentially over the past half-century – the technology of today could easily be obsolete in a year. The author closes his first chapter by laying out the structure and strategy with which the book will address the transformation.
Competition will be different in the digital age, and asset-light businesses will exploit existing technology with software to connect independent providers directly with customers. Examples include Uber, Lyft, Airbnb, and eBay. These two-sided market makers discourage competition primarily through rapid growth. The more people who adopt these platforms, the more value they have – Facebook has ~ 3 billion users, while LinkedIn has close to a billion. These platforms can also vanish quickly (e.g., Tinder, Match) if deemed “uncool” by users. Understanding just how digital transformation spreads is key to developing effective business strategies. The author helps by clarifying the interconnectedness of various digital and non-digital technologies. <continue reading>
