Friday, May 1, 2009

Envisioning the Business Impact of Technology

"This 'telephone' has too many shortcomings to be seriously considered as a means of communication. The device is inherently of no value to us."

Western Union internal memo, 1876

It happens all the time. . . Too often, the industry leader invariably misses the chance to grab onto an emerging business. Wells Fargo failed to get into the railway business, Western Union did not get into the telephone industry, and the Rail Companies, lords of transportation in the nineteen century, missed out on the chance to capture the automobile industry.

One can prognosticate the future of technology with techniques that suggest the importance of maintaining a proactive effort in monitoring new developments coming out from the world’s R&D labs, but the challenge is to understand the transformative impact these technologies can have on the business. The problem is that figuring out the future of business will always be more of a divination-based exercise.

Even today, it’s difficult to predict, let alone prognosticate, the ultimate future business impact that the emergence of Web 2.0 services such as Youtube.com, Facebook.com, or Twitter.com represents. This is not to say that techniques used to prognosticate technology cannot also help in imagining “what-if” scenarios for business, but the ability to prognosticate with sound information and well-founded assumptions is at the core of what it means to be a true visionary. After all, most resumes today include some form of “I am a visionary” claim rather than that of “I am a prognosticator”, which would not sound as legit.

Envisioning the future of business is as intriguingly fun as it is difficult. If it weren’t so, there would be far more billionaires roaming the face of the earth these days. Look at how Amazon has transformed the book industry (and continues to do with devices like the Kindle), or the way Apple took the music industry by storm when it properly combined a number of differing technologies and created a viable online music distribution business model (a business that no one from the traditional music industry had the foresight to invent, perhaps because they were focusing too much of their energy fighting Napster rather than riding the winds of change!).

Granted, although the Virtual Presence example may be a bit obvious, there can be no question that a formally established Virtual Presence would seriously impact the travel and hospitality businesses; not to mention the possible impact on industries such as entertainment, education, and healthcare.

True, worrying about this impact might be, well . . . a bit premature, but nevertheless, visualizing possible outcomes can help to position your business as a leading entrant. It can’t hurt to be prepared should something develop more quickly than expected.

We can envision that the initial versions of Virtual Presence will be so expensive that its use will have to be leased from large, well-established Virtual Presence providers. This service can be viewed as the start for a potential transformative development in the future but still unclear is whether hotels will be the natural focus centers for these types of services.

As the cost of technology drops, its availability becomes the realm of opportunistic service providers. Witness the emergence of Internet Cafes; still popular in countries where Internet access is not prevalent, and I still remember that as a child I had to pay twenty cents to watch TV episodes of The Lone Ranger at my neighbors.

Once the technology cost becomes affordable by individuals, you begin to see a gradual segmentation of services based on quality of service. Most of us can use Internet based video-conferencing using “free” tools like Skype, but for more professional Videoconferencing, you would utilize professional office support businesses such as those from Kinko’s. Also, for large employee teleconferencing gatherings, you could lease the services of movie theater operators who advertise this service.

From my previous blog example, if you are trying to understand the implications of Virtual Presence to your hospitality business, you would do well to evaluate whether there is a business model that combines a future Virtual Presence capability with meeting room facilities. For example, you could estimate additional food and beverage revenues, plus sleeping room accommodations for people arriving from regional distances to attend this Virtual Presence event.

Then again, although Virtual Presence technology does not yet exist, this should not stop you from imagining its eventual advent and deciding whether it makes sense to position your system by entering the present Teleconference business. For example, notice today’s placement of high-end Telepresence services like Marriott’s and HP’s announcement[1] to enable the use of HP’s Halo Telepresence Technology from Marriott’s conference room facilities. Clearly, Marriot is looking ahead in this area.

In any case, as much as this prognostication/envisioning exercise showcased the importance of continuous technology monitoring, defining your very own R&D roadmap, and assessing the impact technology can have on the business. While you should avoid becoming an order-taker when it comes to articulating the IT Transformation plans, you should never forget that ultimately everything revolves around the business.

At the core of any prognostication and envisioning exercise is how to match your transformation direction with the business strategy. If your hotel company (in this example) is typically focused on leisure travel, for example, then the idea to push for investments in Telepresence technology will likely not to be well received. That is, unless you find an angle that leverages the use of teleconferencing by vacationing guests, in which case you might end up with a powerful competitive differentiator.

In the end, no matter what, you will need to business-justify the investment on technology transformation, if you are to get it done. This is the subject of my next blog!




[1] HP and Marriott International Form Alliance to Open "Public Access" Halo Telepresence Rooms. http://www.telepresenceoptions.com/2008/03/hp_and_marriott_international/