Digital Economy Dispatch #120 -- A Digital Revolution in a Single Glass of Water

Digital Economy Dispatch #120 -- A Digital Revolution in a Single Glass of Water
26th February 2023

I’m always surprised at how often I need to relearn the same lessons. Faced with a new situation, you would think that I have had enough time to realize that the best starting point is to draw on previous experiences as a basis for moving forward. Yet, too often I seem to jump in without taking the time to step back and draw on hard won knowledge.

This reflection was in the forefront of my mind when I was asked recently to explain in a short video why I often use the phrase “we’re living through a digital revolution”. What did I mean by this statement, and how can it be justified?

My first thought was to analyze the components of a “revolution” with details of incredible technology advances of the last 30 years that have recently come together to allow massive shifts in capability, quality, and speed across many domains. Or perhaps I should highlight social changes, adjustments to value systems, and the reconceptualizing of everyday tasks that allow us to see the world in new ways. These could be surrounded with masses of data to provide evidence and robustness to the argument.

But at the last minute I changed my mind. Over the years, I have found limited success describing a complex situation with an even more complex set of reasons, analysis, and data. Of course, these have their place. However, if you want to inspire and provoke people into new ways of thinking outside their traditional boundaries, I have found that simple analogies can work best.

So, here is a short video of how to take a fresh look at today’s “digital revolution” through a single glass of water. The 5 minute video was recorded and produced at The Financial Times studio by my good friends at Headspring Executive and used with their permission. It is followed by a transcript of the video that I created with some simple edits to improve the flow. Enjoy!

I'd like to talk about what we're doing today as we think about the application and use of digital technologies. I'd like to give you an illustration of why I think we're going through a disruptive phase. And why I think about digital technology as a revolution. It's easy for us to say yes, we've been through lots of changes. Digital technology is just another one. I'd like to give you an illustration of why I think we're living through a digital revolution.

Introducing the Digital Glass

Let me take an example. I have in front of me a glass of glass of water. I'd like to argue that what we can do today is significant because any analogue device such as a glass can now be wrapped in a digital wrapper.

What do I mean by that? What can we do with this glass? Of course, we can put some technology in the base of this glass column. What could that do? Well, it could be GPS that could tell us where this glass is? Simple technology that says that this this glass is in this room or on this table? So, I might have my favourite app on my phone, which tells me where this glass is, and tells me how I find it if I've lost it.

For a glass that might not be so important, but it is for a resource that perhaps is in demand, or is expensive, or that must be shared. These sorts of apps are very common, trying to find out where things are such as key assets in your organisation, looking around a campus or a building to find the assets that you need to do some tasks, or to do some job. But also, we can do more with this glass. We could maybe have something to tell tells you the weight of this what's in your glass. Is it full? Is it empty? Is it hot? Is it cold? Are the contents new on fresh? Or have they become stale? Could it tell us that this is now something you shouldn't drink? Maybe we can learn about who drinks it, who holds it, how often they drink.

Why is this important? Why is wrapping analogue devices in a digital wrapper significant? Why is that interesting and important and why am I saying it's revolutionary?

Because what we can begin to learn is the context in which this glass is used. So, I'm going to tell you that when I created this glass in a factory, when I manufactured it, I didn't create any value when I sell it to you. I got your five pounds and you got the glass. I didn't create any value. I create value when you use it.

So, my interest is not whether I optimise what goes on in the factory to make it cheaper, to make it with a different material, to reduce my marketing costs or my distribution costs. I'm more interested in asking if I can I find out how you use it. Can I understand if you use it more in the mornings than in the evenings? Do you use it for hot or cold drinks? Do you use it in different ways when you are with different people? I'm interested in the context of your usage.

Why? Because then I can provide better service to you. I can understand how I should design it for different uses. I can begin to change the payment models: Maybe I give you the glass and you pay for its use. Different uses may involve different payments.

From Here to Eternity

This is the kind of revolution changing our ways of thinking that we're seeing in many kinds of things that we use today. From the way in which you use transportation, the way in which aircraft engines are bought and sold, the way in which factories are managed, the way in which goods and services are used. We're moving to a world which asks how do we understand value in use? How do we begin to manage value in use? How do we gather data about usage? How do I learn about your behaviours so they can serve you better with new products and services differentiate pricing?

But importantly, let's think about the impact of this radical thinking on sustainability. When I create glasses, I want to sell you as many as possible. I make more money if you buy five than if you buy two. If you store them in the cupboard and never use them I don't care. If you throw them in landfilled, it doesn't bother me. I got my money when you bought them.

But the difference with this digital glass is that I only get paid when you use it. Why would I want to create or manufacture glasses that aren't used? Why would I want it to be sitting in your cupboard unused? Why would I want you to have five of them?

Talkin’ Bout a Revolution

So, I get to a different point of view. I can now ask; how can I make more money selling less glasses? Now that's a revolutionary thought. How can I reduce the effect on the environment by selling less glasses by making them used more? I understand the management of the glass by servicing and repairing it, and making it available more often. And I get value whenever you use it. When applied more broadly, that changes the dynamic of many different things in many different organisations. We start to ask different questions. We start to organise differently. We start to consider use of digital technologies that changes the way our organisation provides products and services, manages the value that's created, and creates a business model that's much more inclusive, much more open, and much more sensitive to sustainability needs in the environment.

That's a digital revolution.