Should CEOs care about software?
You might have seen the commercials making the rounds. It says, “You are the CEO.” A couple of CEOs discuss what could get them fired these days. It paints a rather foreboding image of the risks facing the top tier. We have seen on one end the rise in visibility of software choices in negative cases (Target CEO’s ouster was certainly influenced by the Holiday Hack). On the other side we see the rise of software and data being used positively: a machine learning algorithm has been trusted enough to be named to the board. Either extreme suggests that the CEO should be aware of software and the risks and/or rewards it entails. Lets take a look at some driving factors that are shaping the landscape.
A new capitalism:
We are seeing the rise of a new form of capital: data capital. The MIT-Oracle article linked says that a significant part of the value of large companies come from the data they able to harness: either to make better decisions themselves or enable their ecosystem to perform better by channelizing (monetizing) the data they hold. If the companies are not able to capitalize on the value of the data they hold or they can get access to, the lost opportunity could be in the tune of trillions. This form of capital operates in a different way than traditional capital does and it is easy to miss the value that can be leveraged.
Near instantaneous saturation of technology
It is a well known fact that newer technology is reaching market saturation faster than before. We have seen meteoric rise of technology adoption in the 1900s. It seems to be the norm in this millennium. New technology that gains initial traction seems to be destined for widespread adoption. While individual technology trends could be successful, the companies riding that curve (or sheer vertical walls) need to be particularly adept at hanging on and climbing that rock wall.
More new trends per lifetime:
As the speed of technological advances accelerates and our lifetimes grow longer, it is easy to see that the average person will have trends zooming past us ever faster. That does not bode well for product loyalty. Customers cannot be expected to take the time to learn new systems. Some technologies might not reach full 100% market adoption. By the time late adopters straggle in, the early adopters have jumped on the next bandwagon.
Even if your company is riding the technology trend du jour, it does not guarantee success (or) longevity.
Traditional growth vectors are slowing down:
According the latest Mary Meeker internet report (full PDF), the engines of growth that have consistently performed over the past 20 years are either losing steam or going the other way. A CEO cannot expect growth in overall available market (emerging economies) or available buying capacity (low interest rates/government debt) to provide the propensity for her company’s growth.
The S&P 500 list today is vastly different from the list 10 years ago. The only way to respond to a rapidly changing clientele, with a shrinking traditional market, and an increasingly choosy customers is to build your business on something that is as pliable as the market. Software is the most flexible asset available to companies. CEOs need to be well read up on how to leverage their software strategy to thrive in the new market reality. The CEO exists to maximize the value of the entity. That function is served by protecting what has been won and growing into new areas. Both are increasingly driven by software and data.
We, at Persistent, agree with the other chief executives that think that software should be included in the new literacy on par with reading and math abilities. We are collating the minimum viable prescience (MVP) required from every CEO on software and data. Watch this space…