Latest / The Innovation Show / Digital Transformation Playbook (10 Years On) AI, Disruption & Platform Strategy with David Rogers

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Digital Transformation Playbook (10 Years On) AI, Disruption & Platform Strategy with David Rogers · The Innovation Show

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Today's guest is the world's leading expert on digital transformation.
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We like to call him the OG of Digital Transformation.
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He's a member of faculty at Columbia Business School and an author of five
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books and another one on the way.
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He is a friend of the show, and today he's with us to celebrate the 10 year
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anniversary of his landmark bestseller.
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That book was the first book on digital transformation
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and put the topic on the map.
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He defined the discipline by arguing that digital transformation DX is not
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about technology, it's about strategy, leadership, and new ways of thinking.
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We welcome back the author of Digital Transformation Playbook.
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Rethink Your Business.
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David Rogers.
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Welcome back to the show.
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Thank you so much, Aidan.
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It's great to be back here.
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Great to be with you.
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And great to be talking about that book
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It's so interesting reading back.
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I love reading back and seeing how things played out, and you got so much right.
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So many things.
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You called out Apple, apple valuation, the platform businesses, so, so much more.
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But I thought we'd start with what you've seen in that 10
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years, what's remained the same?
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What's different?
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What's been the impact of the book, et cetera.
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Sure.
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Well it was.
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It was the impact was pretty strong.
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As I said, it was the first book on the topic.
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So as I was developing it I've been looking at the intersection of
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digital technologies and how they were changing systems and markets and
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networks and enterprises for years.
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But I was trying to pull this book together about really a lot of the writing
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at that time was all about startups.
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It was like digital was seen as this new open space for the startups.
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And the dominant narrative out of Silicon Valley was every company
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that was born before the internet was just gonna be gone in about a decade.
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Like it's just a matter of time.
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They're all dinosaurs.
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And that wasn't really what I believed to be true from what I was seeing.
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So I was working on this book about.
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What were the essential things?
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What would make the difference between the companies that would
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adapt and those that wouldn't?
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and I was grasping for terms and the title came together,
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digital Transformation Playbook.
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My, my publisher wanted something that really sounded was clear in communicating.
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This was very practical.
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and then the book came out and of course you could look at like a
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trend line of Google searches on the term digital transformation.
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And it went from practically zero to the top of the chart.
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So it was an experience for me as an author timing things.
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It really, you know, it was a global bestseller.
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It was 13 languages.
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I'd never had that before.
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And so the impact has really continued to this day.
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I was just in Bangalore in India with Tata Tata Motors actually.
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So biggest company in India, the biggest automaker in India.
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And one of their top IT executives comes up to me during the break and says, I just
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wanna let you know that 10 years ago I got your book, the Digital Transformation
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Playbook, and I was supposed to figure out what are we doing about digital?
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And this was my guide.
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I was like, ah, okay, I'm ready now to sort of like put together our plan,
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our, our roadmap for our company.
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So that's been great.
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For me personally, the impact, it took me around the world over the last
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decade, really having a chance to advise companies in pretty much every industry.
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Banking, insurance again.
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10 years ago, there was still an argument, well, does digital affect us?
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Right?
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I don't get that argument.
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Depending what kind of business you're in, it's the banks, insurance, industrial
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businesses steel manufacturers, mining companies, automotive consumer goods,
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they've all gone on this journey.
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And obviously they were forced, if you will, they're on the journey
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'cause of what was going on in technology and the environment.
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But I think in terms of the impact that's what I've been most gratified
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is the folks who have said I love it when they bring me in to advise
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them, obviously on a particular strategic question or on ironing
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out the next stage of their roadmap.
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But I really love it when they just tell me, Hey, I read your book and
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like, here's all these ideas I got and here's what I did just on my own.
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. I was telling you David off air, and I was telling you last time we spoke that
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the book was so valuable for me in my role and I wish I had it earlier because
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when I started that journey in 2009 and there was so much that you'd spelled
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out and then came the roadmap, your follow, the roadmap, your follow up book,
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and it really did simplify the thing.
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I highly, highly recommend it and it, it's one of the top, listen,
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listen to shows we've ever had on the show as well, just so you know.
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So.
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Oh, I. I I'm glad to hear it was a great show.
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I I I, really love your show a across the range of guests and topics, but
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when I'm sharing some of the, the interviews examples of, of, of, of works
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of mine, yours is one of my favorite interviews to share with others.
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'cause we really got into about the sequel, if you will, that,
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that interview about the roadmap.
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One of the things that we talked about was what's changed and what's remained the
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same, that quote, more things change more.
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They remain the same.
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Lots have stayed the same impacts were slower in some cases, faster
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in others, but AI comes along.
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And I know you're writing a new book with the theme of ai, and I was thinking
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about this before we came on air.
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When you talk about digital transformation or digitalization, a lot of people
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now throw AI in that bucket and they're about right and wrong, and
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I'd love you to correct us on that or give us your version of that.
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Sure.
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My version of that big picture is that digital transformation
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was not a response to one change.
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Right.
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That was an early misconception was like, oh, the internet landed and
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there was a bunch of change between maybe whatever, 94 and 98 or something,
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and now we're just orienting our companies, and this was this mindset.
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We're at a new plateau, a new steady state.
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And so companies say, we're gonna spend a couple years, we're
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gonna do this transformation thing and then we'll be set.
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And that's not at all what happened . If you look at the history of the
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last 25 years, 30 years going on now, is that it's been a successive
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one wave of digital change after another that has built on each other.
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Right?
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First we had the internet that we had social media, interactive media.
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Then we had streaming content, then we had the smartphone mobile computing
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revolution, then we had cloud computing, internet of things, blockchain.
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Each one couldn't really happen without what came before.
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Each one has brought in new winners, new losers.
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Totally transformed industries.
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So the point is things never actually stopped.
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They keep building and accelerating.
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AI did not start in 2023, right?
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AI has been it's been a field of research and study for about 70 years,
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but the first big really practical breakthrough was around artificial
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neural networks over a decade ago.
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That led to actually a lot of value creation, a lot of business application.
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The thing was, at that stage, machine learning was a very
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highly technical topic, so it was really a domain of experts.
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So most people, even inside the companies using it.
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Didn't know, meaning the company was using it.
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Most employees didn't even know like, oh, what are we doing with ai?
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That was like a very technical concept.
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Now because of these consumer facing tools, everyone
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thinks they know what AI is.
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So there's, and it's true, it is a whole nother wave of change.
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The LLMS and related technologies have sparked this is the biggest
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thing happening right now in terms of the latest digital wave of change.
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Going to disrupt businesses, going to create new opportunities, new winners
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and losers really requires, once again requires transformation and requires
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companies that are willing to rethink the boundaries and the definition of the
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business they're in, and really redesign their organizational structures around it.
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So the sort of, the challenge, the hard part, as I always say,
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is yet again, transformation.
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Not to downplay the technology at all, but it is the most important technology today
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building on a series of technologies.
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And my bet is 10 years from now, at least, if we're talking about sort of
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LLMs and the current era of ai, we'll be talking about that in the past tense,
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and everyone's gonna be obsessing about the thing that then built upon that
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. Looking forward to David as well, and, and the more you read this
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stuff, the more confidence it gives you, which is why I do the show.
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You're always very, very generous with frameworks that you give away,
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both in the book and then on your own website that we'll share later on.
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Some of the frameworks I'd love to touch on today, the platform business
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models, coopetition, and one of the really interesting things, right at
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the end of the book, you sneak in your own theory, updated theory of
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disruption, updating the work of Clayton Christensen, which is fascinating as well.
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So that's all ahead.
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But I'd love to start with the fascinating story of Encyclopedia Britannica.
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I have still in my family home, those Britannicas are there.
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I still remember doing college, projects and going through them and now it's
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totally changed Wikipedia Encarta.
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I remember the disc of Encarta when it first came out
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Yeah.
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and the story is the dinosaur gets wiped out.
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But that's not the case for Britannica, and it's beautiful to tell these stories.
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Yeah.
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So in the United States, if you're old enough I'm barely old enough.
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There's a famous image of a newspaper headline, and it's
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President Harry s Truman, holding up a newspaper that says Dewey wins.
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Thomas Dewey was running, I think it was Thomas, somebody Dewey
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was running against a Truman.
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Who was the incumbent president for reelection, and it was a close
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race, and this was before the days of incredible statistical models and
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predictions and pollings and coming down to the hour and what we're
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used to seeing on election night.
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So in that era, this newspaper got it wrong and because it was looking like
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Dewey was gonna win, and they just went ahead and printed the headline.
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And so Truman's famously was gloating.
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He's like, ha, you thought I, I was gonna lose.
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Well, that's what happened with Encyclopedia Britannica.
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It was at a certain time it became this wrong headline
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about digital transformation.
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People had been going around in conferences and they were trying
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to scare incumbents by saying look, worst case scenario, what's gonna
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happen to you if you don't change?
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And they would typically talk about blockbuster.
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And they would talk about Kodak.
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Kodak was a little older of course failing to adapt to the shift
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that to digital photography.
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Blockbuster failing to respond.
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And I tell that story in a little detail in the book, and it wasn't illogical.
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It was just myopic, which is the classic problem of leadership you're looking
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at the business of today, and more importantly yesterday, rather than
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looking ahead to where things are going.
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So in this case.
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suddenly started talking about Britannica as yet another example
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of a classic stalwart business that had been disrupted by the internet.
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And at first I thought, oh, that's interesting.
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But I dug into it a little bit, right?
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And it turned out the dinosaur was still alive and kicking.
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This was completely misconstrued, right?
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What changed, which was worth a headline, and I'm sure that was the
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original headline was that they had stopped printing the books and that
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was a culturally noteworthy moment, 244 years, they had been publishing some
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version of the Encyclopedia Britannica.
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It had grown over the years.
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That was the old idea pre-internet, you just keep adding another page
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every to each section every year.
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And the editions got bigger and bigger.
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It was 30 leather bound volumes.
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but of course with the digital era, the world had moved on that was not
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really sustainable as a business model.
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And so they announced that they were no longer printing it.
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But the fascinating thing was that the company actually managed to survive.
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and so I lay out in the book the story of how they went, made one
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pivot, one change after another.
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'cause it wasn't even just one wave of change at that point everybody said, oh
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yeah, Wikipedia disrupted encyclopedia Britannica because that was the current,
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at that moment, the digital equivalent, but it had even started sooner than that.
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So I talk about the different stages, how they had responded and adapted and
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really what kept them going, which was not at all obvious, which is that they
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understood who their customer was.
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most importantly, they understood who their most important customers were.
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And this is a key principle I talk about in the final chapter about disruption.
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When you're truly facing and you recognize you are truly facing a, a, a seriously
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disruptive threat, one of the strategies you can deploy is to identify is there a
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defensible part position in the market, smaller position, but double down on that,
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entrench yourself there and build out.
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And that's what they did.
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So their core customers was not, bless you, Aidan, and your family.
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And a fam there were lots of families who did have the encyclopedia at
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home, but most families didn't.
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most important customers were actually schools, right?
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School librarians and school teachers.
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And so they reinvented, and this is the other key idea which comes
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up very much in the book, is about reinventing your value proposition.
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they really did a good job of saying, why are we useful?
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What problems are we solving for these teachers in the classroom?
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Trying to educate young people for the librarians and so forth?
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And how can we do that better?
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And how can we not just keep , solving the problems we did in the past?
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'cause guess what, maybe Wikipedia does a lot of that well, right?
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How do we figure out what are the new problems, the new challenges they're
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facing, the new things they would like to do for their students, where
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our expertise and our reputation that combination, our skills and
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our, and our market relationships would allow us to do it well.
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And so they reinvented themselves as a paywall paid.
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And they've continued to change.
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But at the sort of critical moment when they shut down the paper edition,
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they were focusing primarily on a, on a paid subscription service
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that had a lot of educational tools in addition to just the content.
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And that was really what allowed them to like navigate through
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this incredible period of pressure and come out the other side.
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And they're still today an active business.
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So it was a re it was a remarkable story.
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And I used to give that speech and people's eyes would like light up.
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They're like, really?
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They're still around and they're all griping about how their, I don't know,
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their desktop computer business or their professional services business or
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their teleco company is having trouble.
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And I'd say, look, if these guys can transform you can too.
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It's possible.
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And, and that is really the core message of the book.
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I loved thinking about that.
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Literally like a dinosaur, and I'm like, they're just now an alligator.
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They've right sized for the environment.
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Yeah.
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That's a great analogy.
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Exactly.
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They evolved into an alligator and found a healthy swamp to say
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like, Hey, we've got a new home.
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Yeah.
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Exactly, or, or as Rita McGuire, our mutual friend
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would say, arena, not a swamp.
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Yes.
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I found the right arena to compete in.
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Exactly.
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I'm gonna throw this out now, I don't think we're gonna get to it.
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There's five key domains in the book of digital transformation customers,
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competition, data, innovation, and value.
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We'll touch on them, but I really wanted to make today about some
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of the tools that we could provide because you mentioned disruption.
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I'm gonna jump right to the end of the book and my notes, and let's share
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firstly the evolution of the theory.
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'cause you go right back to Schumpeter, you go to Clayton Christensen, and
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then you go, that's the background.
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Here's my version.
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And then we might share the tool as the first tool reverse how
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the book and probably how you usually did interviews on this one.
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So disruption in a sense is an idea that's been around for a long time.
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Joseph Schumpeter was a famous economist who wrote about it under a different term.
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He used the phrase, creative destruction, and he was looking at this process
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through which, as he saw it, capitalism inevitably leads to one success, leads
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to breaking down old systems, old what we would call business models,
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old sort of economic models that they're inherently unstable, right?
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That the new one will come along and break apart the old and make
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it no longer viable and replace it.
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And he looked at that at a sort of a macro economic level and things like
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a shift from an agrarian society to an industrial society and so forth.
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Clayton Christensen came along with a much more specific, a very
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powerful theory in the 1990s that he developed called Disruptive.
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Well, when he first wrote it, it was about disruptive technologies,
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and then he redefined it or calibrated as disruptive innovation.
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And this was a really powerful tool for understanding a lot of what was
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going on, why companies in some cases, but not all, were facing challengers
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that they seemed unable to respond to.
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And in the classic Christensen model, what happens is the challenger
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comes in with a cheaper, worse version of your product or service.
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Right?
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And that's part of why it's difficult to respond because it
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doesn't even look like a threat.
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And more specifically, and this is I think to me, the most enduring
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insight of Christensen, the reason why you don't respond is 'cause your
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current customers are not interested.
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Right.
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And so we have to be careful about customer centricity, right?
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When we talk about customer centricity, which is of course essential for every
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business focusing on the customer, one thing you do have to be mindful
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of is, of course you should focus on your current customers once you're an
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established business, but somewhere in their organization, you have to have
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people whose job is actually to not think about the current customer, right?
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And to have a different focus and be thinking about people who are not
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your customer and what do they need.
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And obviously that's not the primary focus of your business in the moment, but
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most companies are not set up that way.
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And so they say, look, this new version, this new product is crappy.
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It doesn't work.
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It's not as fast or as cheap, or whatever.
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It's not as good actually, it's more performance.
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It doesn't perform as well as what we have.
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So our current customers don't want it.
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But in the Christensen model, it is either, it is either
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cheaper it is more accessible.
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Think of on demand, think of online rather than in a physical store.
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Some reason why it's easier to get access to.
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Um, and so what happens is it doesn't take your current customers, it takes these
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other customers you're not caring about.
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And these were folks who could never use your product, right?
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And so again, it starts to now that gives it room to start building while
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again, you're feeling unthreatened and you're not paying attention.
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But the point is that any any product tends to, a running
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business is successful.
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The performance will improve over time.
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And this is the second insight of Christensen, is the, the incumbent keeps
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making their product better and better.
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And it's nice to have the additional performance or whatever,
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but it's not essential, right?
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It's sort of like, oh, a little extra gravy for the current customer.
20:14
Now this weaker but maybe cheaper version or solution also gets gradually
20:19
better and better until a tipping point when suddenly it's good enough.
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That your core customers start saying, Hey, that doesn't suck as much anymore.
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Like, maybe we could use that at least for some of our jobs 'cause
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it sure would save us money.
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Let's at least do some pilots.
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And they find it works pretty well.
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And then they start using more.
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And then you have this rapid departure of customers.
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So he laid this out really elegantly.
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It's a great theory.
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The problem was, it was developed.
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What I would say, looking back or it's not a problem, it's a great
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theory for many cases, but the limitations of the theory is it is
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really focused on and was derived from analyzing B2B sales and B2B marketing.
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That's the era of technology it grew out of.
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So I came with a, again, not really just what I would call my model,
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what I call a business model.
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Theory of disruption is an expansion.
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It tries to explain more than what the Christensen model does.
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In my notes here, I have your definition as written in the
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book, and you write as follows.
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Business disruption happens when an existing industry faces a challenger
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that offers far greater value to the customer in a way that existing
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firms cannot compete with directly.
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There's a lot of unpacking in there, and I'd love you to unpack.
21:39
Sure.
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Well first of all, we are talking about business disruption.
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'cause the phrase disruption at some point became something that was
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to use, talking about everything.
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And the other next key point is this is about an existing industry.
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So people started to equate.
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with innovation.
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If something is innovative, if it's new and valuable, it's disruptive and they
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actually mean two different things.
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I think that was because it was good in a certain era to put it in your pitch deck.
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Investors wanted to see that you were disruptive, but disruption means
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you have some existing industry.
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It's really not about you whether your business is gonna succeed or not, right?
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It's about in succeeding.
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Will it wind up?
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Breaking apart an existing business model, right?
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And invalidating it.
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So you've gotta have an existing industry and the new entrant has to do two things.
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It has to offer far greater value, not like, incrementally better, right?
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Then you get in a typical sort of arms race of like, okay, we will add a feature.
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You add a feature, you'll add more to your sales force.
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We'll hire more people for our sales force.
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We'll reduce our price.
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That's standard competition.
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It has to come in, like the difference between a digital
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camera and a a, a print camera.
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Right?
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Now, some customers might say, I prefer the film camera.
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But there's no question that for many customers, and in many situations,
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digital camera, it's like the number of pictures you can take.
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It's not 10% or 20% more.
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It's like a hundred times or a thousand times more.
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So it's like far greater value.
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You, right.
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That's the key here, sort of this qualitative difference
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in value to the customer.
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And then the second, there's some reason why you cannot, as the incumbent, simply
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compete directly, why you can't just.
23:30
Say, okay, great.
23:31
We're adding that to our lineup as is and gonna roll out one of those.
23:35
That to me is the essence of what the phrase disruption has
23:38
come to mean in the digital era.
23:41
And so what I wanted to do in the, in this chapter was to really,
23:45
with this theory, is to figure out how do we anticipate that, right?
23:50
How do we know if we're really in that hot water?
23:53
Because guess what?
23:54
Christensen got it wrong.
23:55
For example, he was asked when the iPhone came out, whether
23:58
it was gonna disrupt Nokia.
24:00
Nokia was the dominant mobile phone player at the time, and he
24:04
gave a categorical no, he said no.
24:07
And he explained quite correctly why his theory predicted that
24:10
Nokia would defeat apple.
24:13
But that was simply because the iPhone did not fit that.
24:17
Theory.
24:18
And so again, how do we anticipate all these circumstances where this
24:23
outside outside threat is going to have that level of impact on us?
24:28
And that was, so my goal in the book was A, to correctly predict it and
24:32
B, lay out what are your options to respond if that should happen to you.
24:37
So if you're intrigued, pay attention to us.
24:40
Now I'm gonna share one of the tools, two elements of this tool.
24:44
So David has the disruptive business model map in the book, and I'm
24:48
gonna share it on the screen.
24:50
Join us on YouTube, if you will, and I'll share in the link to his David's
24:53
website just sign up for his newsletter and you can get access to these tools.
24:57
So I'm gonna share on the screen now the disruptive business model
25:00
map, which is extremely useful.
25:03
It makes you think totally differently about it.
25:05
As you can see, we start with who's the challenger?
25:07
You gotta define who's the challenger, who's the incumbent, right?
25:10
This is all about the interaction between them and just as important,
25:13
you have to define the customer.
25:15
Who is the customer that they are competing over here, right?
25:18
And then with that, you look at two critical.
25:22
Variables, if you will.
25:23
So one is the value proposition.
25:25
What is the difference in value proposition between what the
25:29
incumbent has been offering and what the Challenger is now offering?
25:33
Right?
25:34
So I call that the differential, and I have a set of what I call generatives to
25:38
look at what are the ways that sometimes.
25:41
Challenges will come in and create again, the value proposition
25:45
can't be a little bit better.
25:47
It can't be incrementally better.
25:48
It has to be dramatically better.
25:50
And so I lay out some examples of why, but that's the first test.
25:54
Does it create a value proposition that for this customer is dramatically.
26:00
Right.
26:00
And then the second test is on the other side, what I call the value network.
26:04
And these are all the things in your business model that go into
26:07
delivering that value proposition.
26:09
The, maybe it's data, maybe it's partnerships, maybe it's distribution,
26:12
maybe it's physical manufacturing assets, people, talent, IEP brand,
26:17
all the things that are required that have to come together to deliver
26:21
this offering to the market, right?
26:23
That is what is called an academic theory, a value network, right?
26:28
So you look at the two, what's the value network of the incumbent?
26:31
What's the value network of the challenger, right?
26:33
And when you see what does it take to deliver this new offering, the digital
26:37
camera, the iPhone experience, right?
26:39
Whatever it is, what are the things that allow this company to do it?
26:43
And then the two part test, right?
26:47
the challenger's value proposition radically surpass or displace
26:54
in some cases 'cause it's the value of the incumbent, right?
26:57
It just makes it irrelevant.
26:59
And then second is in the value network,
27:02
is there a barrier to imitation?
27:04
And in every one of these cases, whether it's Apple against Nokia, whether
27:08
it's Netflix against Blockbuster, time after time, there is something
27:12
in the value network of the challenger that the incumbent does not have.
27:18
They don't have that critical ingredient, they can't get it.
27:21
There's some reason why they can't just say, oh, okay, we'll put that in
27:25
production and will do the, will deliver the same offering to the customer.
27:29
And that is where you find yourself in the trap.
27:32
So that is what this tool does.
27:33
It helps you to truly assess, is this competition or is this really
27:38
disruption that we're facing?
27:40
It's a fantastic tool and I'm sure many people would be intrigued to
27:43
go, oh, oh, oh, is am I in there?
27:46
And I was talking when we, we did a series, a long form series on Clayton
27:51
Christensen's work, and I had the honor to speak with Matt Christensen,
27:55
who's Clayton's son, he came to Dublin especially to record with us.
27:59
And he told me that he, so he's responsible for the investment
28:03
firm that specifically looks for disruptive innovation.
28:07
Disruptive innovation theory businesses.
28:09
So when they qualify for this,.
28:12
And he was saying one of the things they actually look for is, did the
28:15
incumbent look at you and go, Uhuh, not worth thinking about those guys.
28:20
They're not a threat.
28:21
And that's actually like a trigger point.
28:23
Then they go, yes, tick, tick the box for that one.
28:26
But on the flip side, then you offer a new tool here.
28:30
So if you do feel the breeze at your heels, Shumpeter's Breeze, Jupiter's,
28:36
Gail, blow blowing behind you, there's the disruptive response planner.
28:42
So I'm gonna share this on the screen next, and I'd love you
28:44
to take us through this one.
28:46
so this is again, the second tool this is if you assess you are facing a disruptive
28:50
threat, what can we do about it?
28:53
And it starts with analyzing three key variables about the nature of
28:59
this threat that's coming at you.
29:01
So the first is what I call the customer trajectory.
29:04
So in the classic Christensen model, there's only one way
29:06
this happens, it is outside in.
29:09
So that means the cus the, the Challenger is going after customers outside your
29:15
current market and then hopefully hoping to over time their way in.
29:20
Is that the trajectory though, or is it inside out?
29:23
And this is an example where the iPhone was the case, right?
29:27
People, very few people were buying an iPhone who didn't
29:29
already have a mobile phone.
29:32
We, you think of Netflix when they arose when they're challenging.
29:35
Blockbuster initially the people who were using Netflix had all used blockbuster.
29:40
So this is actually the kind of the reverse in this case, the Challenger
29:45
is starting right at some sub-segment.
29:48
Maybe not all of your current customers, but some of your current
29:51
customers, and then looking to get a foothold and expand out.
29:55
Want to ask, okay, which customers are adopting this first?
29:57
Even if it's just a few, who are those early adopters?
30:01
is gonna be next and what are gonna be the triggers, right?
30:03
Right.
30:04
Now it may be most customers are not interested, but what's the reason?
30:07
What would make the difference?
30:08
What would then what should you be concerned about?
30:11
Hey, if this challenger can solve this problem or address this
30:15
issue, all of a sudden more of my customers would be interested.
30:17
So that's all about gaming out the customer trajectory.
30:20
So the second box is the disruptive scope.
30:23
'Cause there's this common myth that whenever disruption happens,
30:27
it takes over the entire market.
30:29
The old model is just gone.
30:30
It's like the horse and buggy, and then automobiles come along.
30:34
And I actually talk about that in the book and some of the
30:35
interesting history of that.
30:37
But okay, automobiles took 99.999% of the market.
30:42
In North America today, you have to go to Central Park if you wanna ride a horse.
30:47
And buddy, most disruption doesn't actually happen that way, right?
30:50
So that's a misperception.
30:51
You see this starting to happen.
30:53
You say, oh, the gig is up.
30:54
There's nothing there's nothing left for us.
30:56
Or let's just fight on every front.
30:59
So instead you want to figure out.
31:01
are the use cases for the customer where the disruptor is so much more valuable?
31:07
'cause sometimes it is in some cases, but in other situations, the old
31:12
version is actually better, right?
31:14
You wanna look at customer segments, right?
31:16
Other times it has to do with who the customers are.
31:18
You have certain segments who will immediately gravitate towards
31:22
and prefer the new offering.
31:24
But other segments who for very logical reasons, prefer the incumbent, right?
31:29
And then you wanna look at network effects, right?
31:31
Is this gonna happen on a sort of a customer by customer basis or because of
31:36
same side or cross side network effects?
31:37
Are you gonna see that as more and more start to adopt the new.
31:42
Challenger, everyone else is gonna be dragged along through the network effects.
31:47
thing is you want to look at are there other incumbents besides yourself
31:51
who are facing the same challenge?
31:53
And I walk through how to identify them and what disruption they might be
31:56
facing through the, looking at their value train, looking at substitution
31:59
dynamics, looking at laddering.
32:01
And then once you understand these three kind of dimensions, if you will,
32:06
you can figure out what responses may or may not be available to you.
32:11
And so I lay out six in the book.
32:13
Three of them are variations on how do you become the disruptor yourself,
32:17
and three of them are variations.
32:19
And basically if you can do that, you start with one of those, but in many
32:23
cases, none of those are available.
32:25
And you assess that.
32:26
And if so, how do you, the other three are about mitigating your losses
32:29
through refocusing, through diversifying or through a fast and orderly exit.
32:34
And so that's the sort of six responses we've got here.
32:37
And again, the point of the tool is.
32:39
When you face a disruptor, it's not just a matter of denial, denial, denial,
32:43
and then say, well, nothing to be done.
32:45
You should identify early.
32:47
You should develop a strategic response and you should get to work on it.
32:51
David, one of the things I try and do in the show is make sure
32:55
everybody's on the same page.
32:56
So there was a couple of terms you used there and you go deep into them in the
33:00
book and highly recommend the book for bringing yourself up to speed with the
33:03
language of disruption and digital, actually digital transformation language.
33:08
But you mentioned.
33:09
Not just network effect, but same side and cross side.
33:12
And I thought just maybe we'd share that very briefly.
33:16
So we often think about network effects generically and it's a,
33:20
some kind of a snowball effect that as a customer, as a company
33:23
starts to grow, it builds momentum.
33:26
Or as it acquires customers, it's easier to get the next customer.
33:29
But in actual fact, if you really understand these kind of really these are
33:34
what we call platform business models.
33:36
There's two different kinds of network effects.
33:38
So one is called same side network effects.
33:40
So that is.
33:42
The more customers of one kind you attract or acquire, the easier it is to get the
33:49
next one, because the next one actually has is you know, you give more value
33:53
because there's more customers like them.
33:56
So the classic example of that is any kind of communication network.
33:59
The first fax machine when there was only one person with a fax
34:02
machine was no use when you had two people with a fax machine.
34:06
Okay?
34:06
Two people can use it when you've got.
34:09
Of all businesses have one.
34:11
It starts to become valuable.
34:13
We see this in Facebook, we see this in all the social networks.
34:17
The more people you know, every time you learn about whatever it is.
34:20
Blue Sky was maybe the latest that was sort of a, communication based
34:24
network where I looked on say, Hmm, do I, is this worth my time?
34:27
And of course, one of the first questions is of the people I want to connect
34:31
with or follow or communicate with, how many of them are already there?
34:34
It could be the best tool in the world, but if it's a communication
34:38
tool the people wanna communicate with, aren't there, that's not helpful.
34:41
So that's same side.
34:42
It's like me and other people like me, but there's another kind which
34:46
we call cross side network effects.
34:48
And so that's when a business is based, a platform business is based on.
34:53
Exchanging value between different parties.
34:56
So a classic pre-digital example of this is something like a credit card,
35:01
but you see it in the digital economy as well with something like any kind of
35:05
payment platform, whether it's WeChat or a Venmo or PayPal or whatever it is.
35:13
You've got like businesses and individuals, right?
35:16
So whether you're bringing in your credit card or whether you're thinking
35:19
about do I sign up for WeChat pay?
35:22
You as an individual want to know, well, how many businesses?
35:26
gonna accept this payment.
35:29
the business wants to know, well, how many customers are
35:33
gonna ask to use this payment?
35:35
Is it worth me going to the trouble to install it?
35:38
Right?
35:39
common example that we're all familiar with is ride hailing.
35:42
So every time Uber was trying to move into a new market, it faced
35:46
two simultaneous challenges.
35:49
writers would only download the app, download the app, and try it
35:53
if they knew there was a certain number of drivers in their city.
35:56
It doesn't matter how many Uber drivers there are in the world.
35:59
I wanna know in this city, are there many Uber drivers?
36:02
But at the same time, the drivers, they don't care about
36:05
how many drivers they are.
36:06
They care about.
36:08
How many rider are out there?
36:09
Like, do I wanna use this app or am I really gonna get many
36:13
additional rides per day?
36:15
And so you have to manage as a business, the strategy of how do you grow is
36:20
actually different if you're dealing with same side versus cross side.
36:23
Both can be done, but it's a different strategy to make it work.
36:26
And again, backing to the disruption scenario, either one can be a threat,
36:32
but you want to understand what's happening with this this challenger
36:37
who's coming in to understand, hey, can I effectively respond And in which way?
36:43
Fantastic.
36:44
Fantastic.
36:45
I was thinking about, I, I've tried so hard in vain to get people to use
36:50
Signal instead of WhatsApp because I don't like Meta as a business.
36:54
Right.
36:54
Yeah.
36:55
Yeah.
36:56
Have you ever seen the, the, well, I bet you've seen it.
36:59
Indiana Jones and Raiders of the Lost Arc, and
37:03
Yeah.
37:03
gets to the, the final scene where there's a, there's like a knight
37:07
protecting the arc of the covenant.
37:10
He's atrophied and he can barely carry a sword.
37:14
And I, I always have that as this metaphor of me waiting for people to join me.
37:21
In the promised Land of Signal.
37:24
Yeah, it's really, it's really annoying.
37:26
It's like it's, this is the, again, when you talk about this, it's like there's
37:31
often one winner and that winner wins big and there's small losers then,
37:35
or people might be able to make some business model outta it, but it's very,
37:39
very difficult if you've lost the race.
37:41
So David talks about that deeply as well.
37:44
But let's talk about platforms because I'm gonna do a deep dive into platforms.
37:49
Actually coming soon, we'll have all the, GOATS of platform strategy.
37:54
Coming onto the show, we're gonna do a platform series, but
37:57
Excellent.
37:58
Okay.
37:58
there's a couple of things you mentioned there.
38:00
You mentioned.
38:01
Competition.
38:02
And in the book you talk about, you have to think differently about competition,
38:06
especially as a platform business, if you're an Apple, if you're a Google,
38:11
even though you, you're frenemies.
38:13
And another guest we have coming on the show, you mentioned 'em in the book, Barry
38:16
Nalebuff, who wrote the book Co-opetition.
38:20
He's coming onto the show in a few months time as well.
38:24
But maybe we'll just say a word on competition and the changing
38:27
nature of that because people who before you would've actually
38:31
tried to kill as a, as an enemy.
38:34
Now you have to embrace them even if you don't want to.
38:38
Yeah.
38:38
Well, I in, in the first chapter of the book, I lay out kind of
38:42
some of the fundamental kind of mindset shifts that we have to make.
38:45
As leaders in these five domains thinking differently about our
38:50
business in terms of customers thinking differently about our competition,
38:54
thinking differently about the way we use data, thinking differently about
38:58
our approach to innovation and thinking differently about our value proposition.
39:02
So the kind of big in thinking that I have seen is required in
39:08
the digital era around competition.
39:10
one is we're shifting from thinking about defined industries, which
39:14
was the old way of thinking.
39:15
I am a telco company, so I compete with other telco companies.
39:20
I am a handset manufacturer, so I compete with handset manufacturers.
39:24
Well, Apple's a computer company, they're not a competitor know,
39:28
another is that we used to think there was a clear distinction between
39:32
partners and rivals and and therefore competition is a zero sum game.
39:38
Right.
39:39
Where it's all about I win, you lose, we're fighting over
39:43
things like market share.
39:44
Right?
39:45
And by contrast, what I see today is we have this blurred distinction
39:50
between partners and rivals and competitors have to learn to cooperate
39:55
with each other in key areas.
39:56
And this is, I I take the term from Barry Nuff of, of a competition to describe
40:02
this is how do we manage I talk about the, the locus of competition has shifted
40:07
from yes, we still compete with those directly who are just like us, right?
40:12
But actually the harder job is how do we manage these relationships with companies
40:18
with whom we both compete and cooperate?
40:21
Those are the much more dynamic and ultimately.
40:24
our success or failure, the more important relationships, I would say to work out.
40:30
And you look at how digital native companies are really used to this
40:34
Google and Apple and that that was a classic early example because they
40:39
were duking it out for supremacy in the smartphone world, Android versus iOS.
40:44
But at the same time, Google was paying billions of dollars to Apple to be on
40:50
the iPhone in with their search business.
40:53
So a lot of old fashioned companies would never have done that Walmart, and I'm
40:59
not saying they're wrong, but Walmart to this day will never put anything
41:02
of theirs on Amazon Web Services.
41:05
Yeah, they don't compete with them in, in the area of cloud computing, but they're
41:09
like, you're our competitor in retail.
41:11
We're not gonna give you our our stuff.
41:13
We're gonna work with Google.
41:16
A bit, that is the old way of thinking.
41:18
Where is the digital born companies that have really gotten to scale, are
41:22
willing to engage in these kind of three dimensional chess if you'll relationships
41:28
with other businesses where they're competing and partnering at the same time.
41:34
Other sort of the last other things.
41:36
One is you're thinking about what I call asymmetric
41:39
competition as well as symmetric.
41:41
So that's again, this distinction between.
41:43
Competing with another company who is offering sort of an equivalent a
41:48
product in the market versus competing with a company who has a totally
41:52
different business model than you, but that may impact the relevance
41:56
of your product in the market.
41:57
So think of a car manufacturer versus a ride hailing service, right?
42:02
And or, or a Waymo, for example, as a service and for the user.
42:07
Ultimately, all I want is transportation.
42:09
And so you are competing, whereas in the old way of thinking, you'd
42:12
say, well, the product is different.
42:13
We make cars.
42:15
They don't so we're not competitors.
42:17
So thinking about asymmetric competition.
42:19
And lastly, which sort.
42:21
a lot of these themes is the whole dominance of platform business model.
42:25
So I talk in great detail in that chapter about understanding what is
42:30
and is not a platform business model.
42:32
'cause that is the other term I would say as much as disruption
42:36
that has just come to be used to mean anything that's digital.
42:39
And that's absolutely not what it means.
42:42
People for years have been calling Netflix, listing it among
42:45
digital platforms because it's digital and I use it on my phone.
42:49
So it must be a platform.
42:51
It is not, Tesla is not a platform business model, right?
42:55
Some are companies are and some are not.
42:57
So I lay out what actually is a platform business model and
43:02
what makes them different.
43:04
And some of those things make it.
43:06
Challenging to build one the, the sum takeaway is it's not the only way to
43:12
build a successful digital business.
43:14
It's probably one of the harder ways to get started, right?
43:18
If you're pursuing a platform, a business model, there are more things you have
43:22
to get right upfront, when you succeed, you will be able to, or if you succeed,
43:28
you will be able to grow faster and in many cases be more harder to attack.
43:34
You'll be more defensible and more dominant.
43:36
And so we really look in the chapter about those kind of key strategic
43:40
questions to understand how do we think about platforms in a way that's
43:44
gonna benefit our own business?
43:46
Beautiful.
43:47
You've teed me up perfectly for two things.
43:49
One, I have a slide on the four types of platform business, so that
43:54
will help people get some clarity.
43:56
And then you have a brilliant tool, another one of these great tools
43:59
that you offer in the book about the platform business model, which
44:02
helps you answer questions like, who are the platform's key customers?
44:06
What is the role or value contribution of each customer type?
44:10
What draws each party to the platform and how does the platform monetize?
44:14
It was so helpful to read that and I'd love to share both those
44:17
tools before we run outta time.
44:19
David, as usual,
44:20
. So the four types of platforms, and I wanna be clear looking back, this
44:24
is not, was not meant to be and is not a. Definitive or a complete list.
44:32
This is starting from the definition which I offer, which is a platform,
44:38
is any business that creates value by facilitating direct
44:44
interaction between two or more distinct types of customers, right?
44:48
So you need two different types of customers who have some
44:50
different role to play, right?
44:53
And you are, it's this really interesting in-between space.
44:57
You don't just buy things from A and then resell it to B because then A and
45:01
B have no direct interaction, right?
45:03
So this is why.
45:05
It is a direct interaction between the two.
45:07
Think of me, look, I'm traveling to Europe next week.
45:11
I have an Airbnb.
45:12
I go on that service.
45:13
I am actually interacting with the person who owns the, the,
45:17
the, the the property, right?
45:19
So that direct interaction, right?
45:21
But the platform is facilitating.
45:24
The platform is not background architecture.
45:26
It's not my Comcast, my internet company or something where
45:31
it's just in the background.
45:32
It is defining that experience.
45:35
It is providing certain choke point, setting rules, ensuring different parties
45:41
so that we feel safe and so forth.
45:43
So it's this interesting balance of the business model is both defining, shaping
45:48
the experience, creating the terms, but also not dictating everything is
45:52
allowing this interaction between parties.
45:54
That's what makes it a, a platform.
45:57
Now, with that definition.
45:59
Because that can sound a bit abstract.
46:01
What I point to is, look, 90, 95, the vast majority of companies who you see of, of
46:08
this type fit into one of four categories.
46:11
So this is where we commonly see them.
46:13
One is what I call an exchange, right?
46:16
And so that would be something like a dating website, right?
46:19
A product marketplace like eBay or Etsy, right?
46:23
A service marketplace like Airbnb.
46:25
And so you've got these sort of buyers and sellers of some kind of good or
46:29
service working through the platform.
46:31
Lots of these businesses operate that way.
46:35
Another would be a financial transaction system.
46:38
So this is digital payment systems, digital currencies, and many of these
46:42
cases you see a digital equivalent of the old credit card model where you've
46:46
got you have an issuer of credit, right?
46:49
That's typically a bank.
46:51
You've got a a, a, a merchant who's the, the business accepting your payment.
46:58
You've got the, the.
46:59
Card holder or the account holder the payer who's the,
47:02
the consumer, so to speak.
47:03
So you actually have three different parties, right?
47:06
So it's not always two, right?
47:07
It's two or more distinct parties.
47:10
So in this case, you've got three different parties you
47:11
have to bring together, right?
47:13
A third common one we see all the time is ad supported media.
47:18
And this is sometimes we don't even think about this as being a platform
47:21
business model, but it absolutely is.
47:23
So this is any website with advertisements.
47:26
This is Google search, for example, right?
47:28
The business model is based on bringing together two things.
47:32
The advertiser who is sponsoring some subset, a minority of the
47:38
search results, but some of them.
47:39
And then the person who's searching and Google has to meet
47:43
the needs of both of them, right?
47:45
Because if the, if you don't, if it's not a great search engine and
47:48
people aren't using it, you're, no advertiser's gonna show up.
47:52
if you.
47:53
If you don't have any advertisers, if some, if you had no way to monetize
47:56
or if the people you attracted were somehow not of interest to your
48:00
advertisers, then you couldn't afford to keep running the the business, right?
48:04
So this is the digital age equivalent of things like newspapers from before.
48:10
the fourth sort of common category here is what I call a
48:12
hardware or software standard.
48:14
And these are well known in the digital era, the mobile operating systems.
48:19
So the incredible success of something like iOS as the operating
48:24
system for the iPhone or Android.
48:26
In each case, bringing together app developers, right as one
48:31
key party the phone users.
48:35
Right.
48:35
And in the case of Android, there's a third party, which is
48:38
the, the handset manufacturers.
48:40
Now Apple's case, they keep that inside, so they only have
48:43
two distinct customer types.
48:46
Android, there's three distinct customer types.
48:48
Each one, again, you've got to facilitate the value exchange between each of them.
48:54
So those are the four I have seen in the years since.
48:58
Some hybrids commonly, some, some company examples that sort
49:01
of mix a bit of this or that.
49:04
But most platform business models fit in those four buckets.
49:08
So I find it a helpful way to think about this in a concrete sense.
49:12
Where do I most commonly see this kind of business model?
49:15
So let's segue straight into it because of time, the.
49:19
Platform business model map.
49:21
And unfortunately you use Facebook here ne neither of us really like this
49:27
company and like them even less since you wrote the book, I have to say.
49:31
But it's a useful model to understand and this is a good way and to bear in mind
49:36
as well, this was over 10 years ago and the business model has changed a little
49:40
bit and there's been some more additions.
49:42
Just like any platform business, they have opportunities to buy and acquire
49:46
and add new elements to it as well.
49:48
Not the metaverse, let's say it.
49:51
Yes.
49:51
Yeah.
49:52
And again, this is a tool to answer questions, right?
49:58
So that's why I want to take it here, not as a way of understanding where
50:01
was Facebook in 20 16, 20 15, 20 14.
50:06
as you can see here, it's a visual.
50:09
model mapping tool is built on this principle.
50:14
At the center, you have a platform business model, and maybe this is when
50:18
you're imagining and you're scheming, you're dreaming up, or maybe this is a
50:22
current, a threat, a competitor, someone you're trying to analyze, an existing
50:26
business model, but you've got the platform and then around it you have
50:30
two or more distinct customer types.
50:33
So you're identifying which ones there are, and then you see these
50:36
arrows going back and forth.
50:38
That is all about the value exchange.
50:41
So with each customer type, you want to understand what value are they getting
50:46
from the experience you offer, and what value are you capturing back from them.
50:52
And another sort of dimension here is the value flowing through you, right?
50:56
Is the user getting a benefit that is primarily it's actually provided
51:00
by you or by other users, or maybe by someone like an app developer, right?
51:06
The advertiser is not creating a lot of value in a media platform
51:11
typically, that the user cares about, but the user is creating a lot of
51:15
value the advertiser cares about.
51:16
So these things aren't always reciprocal in that sense.
51:19
But the whole key here, why you need to draw this out and why it's
51:22
so critical is there are a lot of things you gotta get right to make
51:28
a platform business model succeed.
51:30
And so I just wanna recap the key questions.
51:34
This using this tool will walk you through is, first of all, who
51:38
are the customers that are gonna be essential to making this work?
51:42
How will you monetize?
51:44
Right?
51:45
At what point you'll notice most of these arrows are not about monetary value.
51:50
Which ones are, what are the points?
51:52
Which customers, where is someone going to pay?
51:55
How will you monetize it?
51:57
Understanding the network effects, which customers have network
52:01
effects that are acro across what we call cross side network effects.
52:05
They're pulling in that other customer type, which customers have same
52:09
side network effects, meaning they attract more of themselves, more of
52:14
the same kind of customers, right?
52:16
That will help you figure out who are your most important customers.
52:19
'cause if you have two or three, or maybe even four different customer
52:24
types and you're trying to get started, you've gotta figure out, well, is
52:27
someone what I call the linchpin?
52:29
That's the customer type.
52:30
Where if as long as you really make them happy and you're attracting them,
52:35
the others will start to follow, right?
52:38
You need to know that.
52:40
And lastly, the whole thing requires that your business model, what
52:44
I call, has to be in balance.
52:46
And what that means is.
52:48
Each customer type has two things.
52:51
They have got to receive enough value that you are gonna attract them, right?
52:56
And very often this is the mistake, right?
52:58
You've gotta have a compelling enough value proposition to really draw
53:01
them in, you also have to make sure that they are contributing something.
53:06
Right.
53:06
Again, most of the value here is passing through you as the platform.
53:11
So they've gotta be bringing something in some value, some data, some eyeballs,
53:17
some product or service they're bringing.
53:21
There's lots of different ways that a party can bring in value, but you wanna
53:24
make sure for each one, there's this kind of balance, there's enough value
53:28
that it's worth their time and effort, but there's also enough value that
53:32
they're bringing that you can afford to chase them down and market to them
53:37
and really get them onto your platform.
53:39
And that's what I have seen.
53:41
Again, platform business models can take a hundred different shapes and
53:45
forms, but those are the questions that always are critical to success.
53:49
And so the point of this tool is to help you understand what are gonna
53:52
be those critical success drivers for your own particular business model.
53:56
Such a brilliantly useful tool as well.
53:59
And even, even if you're not gonna use these, it challenges to think
54:03
differently about your own business.
54:05
It made me think about the innovation show slightly different to think about
54:08
the different elements and one per person I was think forgetting about with the
54:14
whole value proposition is the publisher.
54:16
So if you have new books for example, you're helping out a publisher
54:20
by actually bringing on the show.
54:21
'cause I always focused on the guest and actually it makes it
54:25
really useful to actually just drive your thinking a little bit more.
54:28
We're running outta time and there was one tool I just couldn't let
54:31
you go without sharing was so useful and one that you don't hear
54:35
enough of, which was Value train.
54:38
And
54:38
Hmm.
54:39
the book you talk about value train, but you do an analysis of
54:42
HBO Go and it's useful for people who understand that business model.
54:47
It'll give us a quick rendition of what a value train is, and
54:50
then I'll show as our last tool the value train analysis of HBO?.
54:54
Well, so value train is a concept I introduced in this book and it is
54:59
not to clarify a value chain, which is more of an enterprise question.
55:03
What are all the competencies that are, that we need to bring to bear and which
55:07
do we have inside and outside the company?
55:09
The value train looks at a given offering, offering, value proposition to a customer.
55:17
And it asks how do we get there?
55:19
And so you actually start with the customer.
55:22
the last car in the train, so to speak.
55:24
And then you go backwards and there's typically different parties at different
55:29
steps, and it depends on the industry, but classically, there's usually some
55:33
kind of final distributor, if you will, who's the one who touches the customer
55:37
and hands off whatever that service is.
55:40
In many cases, you have a producer who puts together the final product
55:45
or service who might not be the distributor, and then you may have other.
55:49
Upstream, sort of originators of key components and so forth that go into it.
55:54
So that's the analytical tool.
55:56
And the point here is of doing this is to understand how is our business model,
56:02
how is our our, sort of our industry?
56:05
'cause this is often not just you, it's you and the other companies you work with.
56:10
How are we currently constructed?
56:12
How do we currently coordinate to ultimately deliver this service
56:16
or this product to the user?
56:18
And how might that change?
56:20
So it's really helpful when new entrants are coming in, when someone is trying
56:24
to intermediate or disintermediate you and understanding what is the threat.
56:30
Is it a threat?
56:31
Can you cooperate with them?
56:32
How do you respond?
56:33
And so forth.
56:34
And so it's both to respond to others, but it's also a great
56:37
tool for gaming out, Hey, maybe we wanna change the rules of the game.
56:42
What if we wanted, for example, go direct to customers?
56:45
And so one of the cases that I, I lay out, which was a wonderful
56:48
case when it happened to learn from and still is today, was HBO.
56:55
The interesting thing here is HBO was facing a clear challenge, which
57:00
was Netflix had arrived, had proven a demand for streaming media and
57:04
consumers obviously wanted it.
57:06
Now some people.
57:08
Didn't know the business very well, would say, well, gee, why doesn't HBO do this?
57:13
They're so stuck in the mud.
57:14
They're just old fashioned.
57:16
They should have a streaming service.
57:18
But HBO was facing a classic dilemma a classic business dilemma,
57:24
which is called channel conflict.
57:27
And that is when there is a strategy that you as a business want to pursue
57:32
it's profitable, the customer's demanding it, whatever, it's
57:35
more sustainable in the long run.
57:36
There's clear reasons why we know we should do this, you are in conflict
57:42
with your channel, meaning you're distributor, the way that you deliver
57:47
your goods to the market currently.
57:49
And typically distributors often, or those channels often
57:54
have a lot of leverage over you.
57:55
And so you're stuck between a rock and a hard place.
57:59
It's we do what we would be good for us or good for the customer, or do
58:02
we do what's good for our channel?
58:03
And so HBO was really stuck in this situation because it was
58:08
wholly dependent at that time.
58:10
Not oh, a lot of its money comes through the, in this case, the
58:14
cable companies that was the established legacy distributor.
58:18
It was all of it.
58:19
Like the whole thing, the whole market, all of its money from the legacy business
58:23
was coming through the cable companies.
58:25
And the cable companies said, we don't want you streaming.
58:29
We don't want any of you guys, any of the, the networks streaming.
58:33
So I lay out the story of how they methodically understanding
58:37
and this strategic constraints.
58:40
Where they were today and where they wanted to go.
58:42
In other words, today's value train and the value trade, they wanted to get to
58:45
how they built the case to gain leverage and work around this problem solve channel
58:54
conflict and ultimately be the first.
58:57
There's a very clear reason.
58:58
They were absolutely the first traditional TV network to launch a
59:03
streaming service despite that channel, conflict barrier do it successfully.
59:08
And once they broke the dam, all the others followed and
59:11
they followed very quickly.
59:12
It was clear they had built the technology, they were just
59:15
scared to launch the products, and they were waiting for HBO.
59:18
And once HBO pulled it off, they all in a matter of months, started to
59:23
launch their own streaming services.
59:24
So it's a great sort of lesson in competitive strategy and how to
59:28
think creatively and hopefully the tool, the value train, will help you
59:33
think that through yourself as you're thinking about your own next innovative
59:36
moves in your own business model.
59:39
I was thinking about it when I read about it as the Roger Banister effect
59:43
for, for new platforms as well.
59:46
The Roger Banister effect.
59:48
No,
59:48
Oh man, I was telling my son about this.
59:50
So the idea was that this guy, Roger Banister was, he was the first guy
59:55
to b to break the four minute mile.
59:58
And before that people thought you'd die or you hardly explode.
1:00:02
And then within a few months of him breaking it, three
1:00:04
more people had broken it.
1:00:05
And then it was nothing to break the four minute mile after that.
1:00:09
right?
1:00:09
Suddenly when you knew it could be done
1:00:12
Exactly.
1:00:12
made all the difference.
1:00:14
There, there's one piece of unfinished business, and it's not asking you
1:00:17
where people can find all these tools, which we will in a second.
1:00:20
It is.
1:00:22
What's changed, what hasn't?
1:00:23
And before you answer that, I just wanted to quote a beautiful little couple of
1:00:27
lines from the book that I found, and it was earlier on in the book actually,
1:00:31
but I just thought this, talked to the exact spirit of the book and then I'm
1:00:35
gonna pass over to you to tell us where people can find you, but also answer this
1:00:39
cliffhanger that we set people up with.
1:00:41
But you wrote beautifully.
1:00:43
"The only sure response to a shifting business environment is to take a path
1:00:47
of constant evolution, looking to every technology as a way to extend and improve
1:00:52
our value proposition to our customers, rather than waiting to adapt when change
1:00:57
becomes a matter of life or death.
1:00:59
Businesses need to focus on seizing
1:01:01
emerging opportunities, divesting from declining sources of
1:01:06
advantage and adapting early to stay ahead of the curve of change.
1:01:10
I absolutely love that, man.
1:01:11
That was a beautiful line.
1:01:13
I actually, I'm gonna stick that in good reads.
1:01:15
That's a, that's a keeper.
1:01:17
So what we're
1:01:18
Aidan.
1:01:18
Close, David, let, let's start with where people can find you.
1:01:22
Where can people find me?
1:01:24
So I'm on easy to find on LinkedIn.
1:01:27
David Rogers, R-O-G-E-R-S.
1:01:30
you can find me on my website, David rogers.digital
1:01:35
not.com or.org, but.digital.
1:01:40
And I have a Substack newsletter, which I publish at periodically erratically.
1:01:47
And you can find that either from the website or from or right at
1:01:51
the top of my LinkedIn as well.
1:01:52
So it's easy to find me there.
1:01:54
And you can find information on All On, on my sequel to the Playbook, which was
1:01:59
a book called the Digital Transformation Roadmap and which I talked about.
1:02:05
I've got a great two sessions talking about this with, with
1:02:08
Aidan on a previous show.
1:02:10
And also you can find out about what I have coming up.
1:02:14
But to your, your question of looking back, it's been 10 years since the
1:02:18
playbook was published what's changed?
1:02:22
What's the same?
1:02:24
Really when I think of what's changed the role in a sense has changed.
1:02:30
There was an era when I was mostly talking to chief Digital officers
1:02:35
heads of digital transformation.
1:02:38
That is still the case in a good number of companies.
1:02:42
But I do see a transition happening.
1:02:44
And what's interesting is I see that digital transformation is now just
1:02:48
becoming, I say just, it's becoming a core leadership job for general managers.
1:02:54
This is what I find.
1:02:55
The people who are in charge of it, who are coming to me, whether it's
1:02:58
taking a class of mine at Columbia Business School or reaching out to me
1:03:02
directly to engage me, Chief operating Officers, they're general manager of
1:03:08
business unit, they're a CEO, right?
1:03:10
It has become if you're in that kind of a role, strategy,
1:03:16
developing, recruiting and developing your talent and people, right?
1:03:20
Financial discipline.
1:03:22
And one of the core things you do now is also digital transformation, right?
1:03:26
It's not the sexy new thing.
1:03:28
It's like central to the life of the company.
1:03:32
that sort of ties into the other thing I think that has changed was we have gotten
1:03:36
past this idea that this is a project, oh, we're gonna do a transformation
1:03:41
and will be done in three years.
1:03:43
And we recognize this is an ongoing job and it's not a
1:03:46
job for just some companies.
1:03:47
It's really every industry.
1:03:49
This is part of leading and adapting and growing your company for the future.
1:03:54
Wave after wave of change.
1:03:57
Now what has, what is the same?
1:03:59
As you said, the more things stay change, the more they stay the same.
1:04:03
mean, I would start back with the very first quote you let off our
1:04:06
conversation with, which is, digital transformation is not about technology.
1:04:10
And that is so true today in the AI era.
1:04:14
Is companies, many are, the distinction I would say between those who are getting
1:04:19
real enterprise value out of AI and those who are not is the ones who are thinking
1:04:24
about the technology first versus those who are thinking about the business first.
1:04:28
The challenge is not about the technology, it's about rethinking
1:04:31
your business, re-imagining it, redefining it, redesigning it.
1:04:35
That's the hard part, right?
1:04:38
The tools are amazing, but you're not gonna unlock value from them
1:04:41
unless you start with the business.
1:04:43
So when I see AI today, I see most companies are just obsessed
1:04:48
with kind of this first level of.
1:04:51
Value, which is efficiency and operations.
1:04:54
Now I'm not, of course you should be doing that, but a lot of
1:04:57
companies don't even get past that.
1:04:59
They're just thinking about how do I run my current business cheaper
1:05:02
and maybe even faster, right?
1:05:05
The better companies are those who are also thinking about what new
1:05:10
value could I create for the market?
1:05:12
So that's a lot of my thinking now is looking at how do I define the templates
1:05:15
of where do we find new sources of value with this new generation of ai?
1:05:20
How do we do something we haven't done before?
1:05:24
How do we create new value for the market?
1:05:26
Improving con, our business model as it is, and then an even higher
1:05:30
level of change or transformation or more ambitious, is thinking about
1:05:36
how might AI allow us to reimagine and explore new business models.
1:05:43
what we do versus what others do.
1:05:45
What part of the business do we operate?
1:05:47
What do we outsource?
1:05:48
Where is our value trade going back to that value trade rechanging,
1:05:52
what's our position gonna be?
1:05:53
What are we gonna occupy?
1:05:55
Where do we add value?
1:05:56
Where do we capture value?
1:05:57
Where do we partner with others?
1:05:58
Where do we operate like a platform?
1:06:00
That's the kind of level of thinking that is still required so this
1:06:05
book was all about how do we, the playbook was all about how do we
1:06:09
do this in the digital era, right?
1:06:11
How do we operate across all these different levels of change?
1:06:15
And that's really continues to be what I'm actually looking at today.
1:06:20
And so as I said, I'm working on my next book.
1:06:22
I don't even have a title yet, but it's deep in development.
1:06:25
But it is really re-looking back at those same questions, but through the
1:06:30
lens or the context of the current era of ai, which creates all kinds
1:06:34
of opportunities, but really brings us back to a lot of those same
1:06:38
fundamental challenges of change.
1:06:41
Beautiful.
1:06:42
And I have to say, always learn so much from you man and over David's shoulder.
1:06:47
There you'll see on, on his right shoulder.
1:06:49
The network is your customer.
1:06:50
Another gem of a book.
1:06:51
I was hoping to get to that next, but it sounds like you might
1:06:54
interrupt that pathway and have the new have the new book out as well.
1:06:58
The, these are classics we've covered before the Digital Transformation
1:07:01
Roadmap and today we covered this.
1:07:03
Beauty HA hasn't, while it's aged, it hasn't aged that much and the all the
1:07:08
tools are still extremely valuable.
1:07:10
The Digital Transformation Playbook, highly recommended and
1:07:13
the author once again, David Rogers.
1:07:15
Thank you for joining us.
1:07:17
Thank you so much, Aidan.
1:07:18
It's always a pleasure to be on your show and I look forward to the next time.
1:07:22
All my best.
1:07:23
As always, thank you to our sponsor, Kyndryl, with a unique blend
1:07:26
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1:07:34
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