While the business world went through some unexpected turbulence in 2013, I believe three major factors are going to make 2014 even more disruptive and challenging for CEOs.
This perfect storm for the CEO includes unprecedented shifts in workforce demographics, the ongoing surge in data volume, and the rapid emergence of the “Internet of Things” in which tens of billions of devices will be infused with intelligence and connected to our online world.
These profound changes will provide great opportunities for forward-looking leaders who can get out in front of these disruptive forces and exploit them to create new and higher-value products and services, smarter and more-capable workforces, and more-intimate engagements with customers.
At the same time, companies that can’t or won’t remake themselves to leverage these sweeping changes will become less competitive, less innovative, and less relevant to customers. Over the next few years, they’ll find it increasingly difficult to keep pace with customers’ shifting needs and demands, to find and hire the best people, and to develop vibrant new products and services that tap into an increasingly interconnected world. That’s a downward spiral from which it’s very difficult to escape.
Let me explain why this imminent perfect storm will drive very different outcomes, and why I believe CEOs have such a rich opportunity to get on the right side of these changes—but only if they begin to take the initiative now.
1) The Demographics Revolution. In Europe, China, the United States, Japan, and other parts of the world, aging populations point to an unprecedented turnover in the workforces across all of those regions. Some studies indicate that in the U.S., at least 25% and possibly up to 40% of the workforce will retire in the next 5-10 years. That means one out of three workers will be gone in a relatively short period of time! On top of that, many of the new workers who’ll fill those tens of millions of vacancies will be millenials whose outlooks differ wildly from those retiring Baby Boomers in terms of technology, careers, compensation, collaboration, social media, mobile workstyles, and more. Unlike the Baby Boomers, these new workers have lived their entire lives immersed in technology, from smartphones to PCs and tablets to online shopping and banking to iTunes, Netflix, FitBit, and more. That tech-immersed lifestyle blends seamlessly into how they work and defines the workstyles many millenials will demand: always connected and able to use their own gadgets—and utterly intolerant of poor technology and unsatisfying tech experiences.
This imminent war for talent will extend well beyond this clash in professional perspectives and outlooks. It will begin with recruiting and the ability to use modern and social-driven tools and approaches to finding, attracting, hiring, training, retaining, and enriching the careers of these young people. World-class CEOs are leading the way in this war for talent, and in the process are leading the transformations of their HR organizations from back-office record-keepers to front-line leaders bringing high-value new talent into the company and ensuring those people are happy, productive, and fully aligned with the corporate strategy and objectives.
2) The Data Revolution. CEOs around the world have told me their company’s data volumes are expanding at a rate of about 40% a year. And with the cost of data storage now roughly $7,500 per terabyte, those CEOs are looking at huge increases in IT expenses just to keep up with that data growth, let alone being able to extract value from it. We’re talking tens of millions of dollars—in some cases hundreds of millions—just to keep pace.
It’s a pattern that clearly can’t continue, and businesses need to find new and better ways to keep up with the data explosion without spending themselves into oblivion. (We think we can help with that.) The right solutions will reduce data-storage costs dramatically, thereby providing the funding for innovative business-analytics and Big Data tools to turn all that data from cost centers into raw materials that companies can mine and manipulate to create new products, services, and revenue.
Again, the CEO has to be a front-line leader here for two reasons:
- The necessary changes go right to the heart of the economics of IT strategy and traditions and will require sweeping new approaches; and,
- This new type of approach will require fresh and decisive thinking about viewing data as a highly valuable raw material that can be shaped into products and services that customers want and need.
These changes are rooted in helping CEOs evolve their business strategy, their product-development strategy, and their corporate culture—the new data-storage technology and analytics become servants to those higher-value causes, not the end in itself.
3) The Devices Revolution. Another reason CEOs need to aggressively champion new approaches is because the third big factor in our perfect storm—the connection of tens of billions of devices to the Internet—will surely push today’s already-scary data volumes to unprecedented levels.
As big as today’s data-storage numbers are, just wait until this phenomenon called the Internet of Things starts to kick in, and we go from 8 billion or 9 billion devices connected to the Internet today, to 40 billion or 50 billion Internet-connected devices a few years from now. Everything from warehouse pallets to medical devices to pets and household appliances—not to mention clothing and tools and plants and swimming pools—will be tied into the Internet, streaming huge volumes of data about all sorts of things.
Here’s why all of this is so important: Companies that can deploy new data-storage technologies will be able to transform this data explosion and device explosion from runaway expenses to sources of enormously valuable insights and raw materials for new products and services, new and better ways of engaging with customers, and greatly enhanced abilities to anticipate what’s over the horizon.
Oil companies seeking new sources of energy miles below the surface of the Earth are enhancing their equipment with intelligent sensors and software to identify high-potential places to drill, or to warn of likely maintenance problems so they can be fixed before those problems happen, thereby saving millions and millions of dollars in downtime costs.
In a similar fashion, modern airliners are being outfitted with thousands of data-transmitting sensors to monitor and improve performance, evaluate new and enhanced procedures, and again detect and prevent costly maintenance problems and downtime.
So whatever industry you’re in—heavy manufacturing, retail, financial-services, healthcare, logistics, transportation, energy and utilities, and so on—the data volumes we’re talking about are simply staggering, and your CIO better be working very hard right now to help you find ways to get out in front of these trends. If not, that $7,500-per-terabyte cost of storage will not only continue to play havoc with your capital expenses, but also undercut your strategic ability to capitalize on the emerging Internet of Things phenomenon that’s sure to disrupt every type of company in every type of industry.
As always, top-performing companies will find ways to take full advantage of profound changes and will exploit these new worlds of demographics, data, and devices to their own advantage and to the benefit of their customers.
And best-in-class CEOs will understand that the time to begin turning these shifts into strategic assets is now.