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1.1 Tech’s Tectonic Shift: Radically Changing Business Landscapes

Learning Objective

  1. Appreciate how in recent years, technology has helped bring about radical changes across industries and throughout societies.

This book is written for a world that has changed radically in the most recent years of your lifetime.

At the start of the prior decade, Google barely existed and well-known strategists dismissed Internet advertising models.M. Porter, “Strategy and the Internet,” Harvard Business Review 79, no. 3 (March 2001): 62–78. By decade’s end, Google brought in more advertising revenue than any firm, online or off, and had risen to become the most profitable media company on the planet. Today billions in advertising dollars flee old media and are pouring into digital efforts, and this shift is reshaping industries and redefining skills needed to reach today’s consumers.

A decade ago the iPod also didn’t exist, and Apple was widely considered a tech industry has-been. Within ten years Apple had grown to be the most valuable tech firm in the United States, selling more music and generating more profits from mobile device sales than any firm in the world.

Moore’s Law and other factors that make technology faster and cheaper have thrust computing and telecommunications into the hands of billions in ways that are both empowering the poor and poisoning the planet.

Social media barely warranted a mention a decade ago, but today, Facebook’s user base is larger than any nation, save for China and India. Firms are harnessing social media for new product ideas and for millions in sales. But with promise comes peril. When mobile phones are cameras just a short hop from YouTube, Flickr, and Twitter, every ethical lapse can be captured, every customer service flaw graffiti-tagged on the permanent record that is the Internet. The service and ethics bar for today’s manager has never been higher. Social media has also emerged as a catalyst for global change, with Facebook and Twitter playing key organizing roles in uprisings worldwide. While a status update alone won’t depose a dictator, technology can capture injustice, broadcast it to the world, disseminate ideas, and rally the far-reaching.

Speaking of globalization, China started the prior decade largely as a nation unplugged and offline. But today China has more Internet users than any other country and has spectacularly launched several publicly traded Internet firms including Baidu, Tencent, and Alibaba. By 2009, China Mobile was more valuable than any firm in the United States except for Exxon Mobil and Wal-Mart. Think the United States holds the number one ranking in home broadband access? Not even close—the United States is ranked fifteenth.S. Shankland, “Google to Test Ultrafast Broadband to the Home,” CNET, February 10, 2010.

The world’s second most populous nation, India, has ridden technology to become a global IT powerhouse. In two decades, India’s tech sector has grown from “almost nothing” to a $73 billion industry, expanding even during the recent global recession. Technology has enabled the once almost-exclusively-agrarian nation to become a go-to destination for R&D and engineering across sectors as far-flung as aircraft engine design, medical devices, telecom equipment, and microprocessors.V. Wadhwa, “Indian Technology’s Fourth Wave,” BusinessWeek, December 8, 2010.

The way we conceive of software and the software industry is also changing radically. IBM, HP, and Oracle are among the firms that collectively pay thousands of programmers to write code that is then given away for free. Today, open source software powers most of the Web sites you visit. And the rise of open source has rewritten the revenue models for the computing industry and lowered computing costs for start-ups to blue chips worldwide.

Cloud computing and software as a service are turning sophisticated, high-powered computing into a utility available to even the smallest businesses and nonprofits.

Data analytics and business intelligence are driving discovery and innovation, redefining modern marketing, and creating a shifting knife-edge of privacy concerns that can shred corporate reputations if mishandled.

And the pervasiveness of computing has created a set of security and espionage threats unimaginable to the prior generation.

As recent years have shown, tech creates both treasure and tumult. These disruptions aren’t going away and will almost certainly accelerate, impacting organizations, careers, and job functions throughout your lifetime. It’s time to place tech at the center of the managerial playbook.

Key Takeaways

  • In the prior decade, firms like Google and Facebook have created profound shifts in the way firms advertise and individuals and organizations communicate.
  • New technologies have fueled globalization, redefined our concepts of software and computing, crushed costs, fueled data-driven decision making, and raised privacy and security concerns.

Questions and Exercises

  1. Visit a finance Web site such as Compare Google’s profits to those of other major media companies. How have Google’s profits changed over the past few years? Why have the profits changed? How do these compare with changes in the firm you chose?
  2. How is social media impacting firms, individuals, and society?
  3. How do recent changes in computing impact consumers? Are these changes good or bad? Explain. How do they impact businesses?
  4. What kinds of skills do today’s managers need that weren’t required a decade ago?
  5. Work with your instructor to decide ways in which your class can use social media. For example, you might create a Facebook group where you can share ideas with your classmates, join Twitter and create a hash tag for your class, or create a course wiki. (See Chapter 7 "Social Media, Peer Production, and Web 2.0" for more on these and other services.)