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-: We've been talking a lot about the bionic company,
and today we're going to dive in to the drivers of change.
What makes the company of the future, the bionic company,
so different from the company of today?
And there are three things we're going to explore.
The first is that in the bionic company,
processes are operated by humans and technology.
Today, processes are operated by humans.
And the truth is that the economics of humans
and the economics of humans plus technology
are very different.
Humans are flexible,
but not replicable.
Technology is very replicable, but not nearly as flexible.
And so, what does that mean?
Why does it change the organizational structure?
Well if you think about humans,
the organizational structure of today,
with leaders who cascade their ideas to middle managers
and then move them down into the frontline
makes a lot of sense.
You put smart people near the customer, near the operation,
and they coach the people in that organization.
And that's actually what's driven the BU
and the organizational structures
that you see in many organizations;
lots of BU's geographically located,
whether those are sales territories
or full operating units or operational units.
But think about it for a second.
When we move to the bionic company
and you start to say,
now processes are a mix of technology and people,
would you want your CRM process
to be designed and implemented
in 20 different geographic units?
You wouldn't.
And why wouldn't you?
Well, first, because it's too expensive.
Having 20 different systems is just really expensive
from the technology point of view.
But the second piece is actually also really important;
and that is, in order to make AI work,
you need data at scale to train,
and you can't train AI on just the data
that you get from your CRM system in Central Florida.
And so, technology plus human processes
are the fundamental driver
of why platform organizational structures
emerge in the bionic company.
The second major driver of change
and why bionic companies are different
has to do with advances
in how technology platforms and stacks are constructed,
and in particular,
it has to do with a concept called APIs.
APIs are the interfaces
that allow technology to talk to each other,
and they allow technology to be modular.
But the important part to understand is that with APIs,
the transaction costs
of interacting, one group of human beings to another,
go down dramatically.
Let me give you an example of this.
You all know about Uber.
In the old days, think about the transaction costs
or how hard it was to actually order a cab.
You had to find something in the yellow pages,
pick up a phone, call someone;
they had to call the driver, give them their address,
maybe they got it right, maybe they got it wrong;
and eventually, the driver came to you,
but if they got lost along the way,
well, all of that meant they called back to their dispatcher
who called you;
and eventually, finally, they reached you at the address.
But that took a lot of work.
There were a lot of human transaction costs
in making that interaction happen.
Today, with a platform of Uber or Lyft,
those transaction costs are almost zero.
And so, the fact that technology
allows transaction costs to drop radically,
means many things.
It means that organizational structures can become modular.
You can design small groups of people
who interact with other small groups of people
around your organization in a very fluid way.
It means that ecosystems can be created
so that you can actually interact with other companies.
Think Salesforce as your CRM platform,
or AWS as your cloud platform.
You can interact with those companies
in a much lower-cost way,
or your customers can interact with you
in a much lower-cost way.
It changes the fundamental organizational structure,
from one with high transaction costs,
and thus a rigid structure,
to a much more modular one where ecosystems are embedded.
And then the final piece
has to do with how data and technology
learn differently than humans.
So, as humans, and you can probably all relate to this,
we learn pretty quickly, but we forget just as fast.
And it's hard, as I was talking about before,
for humans to replicate their knowledge to other humans.
Technology is actually different.
Technology isn't quite as flexible
in how it thinks over time,
but if you think about how AI learns,
it builds and builds and builds its knowledge over time.
And the best companies,
the Alibabas, the Amazons of this world,
actually put defined experimentation into their algorithms
so that they're continuously learning.
And every day, they get a little bit better.
And so what that means
is, learning becomes a profound advantage,
a competitive advantage, for the companies of the future:
the bionic companies.
And it's actually a first-mover advantage.
Sometimes people think,
"Okay, we should just be a fast follower.
We'll figure out where other companies are going
on data and AI,
and then we'll catch up."
But the truth is, because of the way machines learn,
you want to get there first,
you want to build that knowledge quickly,
and it will become
a greater and greater advantage over time.
I hope this gives you some food for thought
about the fundamental reasons
as to why the bionic company of tomorrow
is going to be so different
from many of the traditional companies today.
And if you take those into account
and build your own bionic company,
you'll be well on your way to competitive advantage.
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