In recent months, Warren Buffett signaled what many saw as the death knell for the future of retail by selling off his company’s position in Wal-Mart, which Berkshire Hathaway had held for ten years. Simultaneously, ten national restaurant chains with more than 1,000 locations in total have filed for bankruptcy protection since 2015, and others are reporting disappointing sales. In contrast to all of that, however, Amazon reports growing sales this year in their home delivery service for groceries, trumpeting the growing trend that many people are beginning to embrace of ordering anything and everything online.
Welcome to the Digital Age.
We now live in a time when a hefty 74% of customers rely on their social networks to guide their buying decisions, and 92% of customers feel that online information is more trustworthy than other sources. Digital technology is becoming omnipresent, and it’s doing nothing less than rewiring human society. The critical inflection point at which technological innovation and human experience converge is called Digital Singularity.
There is profound uncertainty in all this, but more importantly, there is profound, unparalleled opportunity. Up until recently, technology was simply a physical tool, like a phone or typewriter, that was used to supplement our lives. Today, however, our relationship with technology has become much more cohesive. Technology is becoming part of how we live, work and play. In fact, it is becoming an extension of us.
Take the Nest Thermostat as a simple example. The traditional thermostat can be set to turn on and off at a set temperature, and that’s about as smart as it gets. The Nest Thermostat, in comparison, is wi-fi connected. It gives you advice on how to best reduce or increase your temperature for energy efficiency. It learns about your house and your preferences. With this technological advancement, the thermostat has been transformed into a device that actually helps us regulate and manage our lifestyles.
Though the Nest Thermostat as an example of integrated technology is relatively non-intimidating, many people fear the collective end outcome of rapidly advancing digital technologies. If you take the concept of digital singularity to its logical conclusion, there is a question about whether there will be a need for a human workforce at all. Will humans ultimately be eliminated from the workforce because of automation and artificial intelligence?
Well, while it is certainly true that automation will eliminate millions of jobs in industries that depend on manual labor, it is also the case that new jobs in new sectors – which rely on new technologies – will spring into existence. Technology adoption will result in fewer physical and process-oriented jobs, but it will also open the door for a higher level of thinking, innovation and dreaming.
There is a clear case for humanity, and it is that humanity will adapt. Even today, jobs are changing as a result of technology. We are now becoming both the employer and the employee. Today’s workforce is dynamic, changing and not necessarily managed through a traditional employment model. For example, a young person today might be going to college, working a day job and simultaneously running an eBay, YouTube or other online business. In some cases, these young people may not be able to earn as much as their predecessors, but they certainly have more flexibility in how they work and have more control over their schedules. As technology advances, humanity will have increasing opportunities to find new ways to economically create value from the work that we do. The question becomes what do we want to be and how are we using technology to create value in our lives?
Corporate America has everything to gain by embracing this new era, and the key to success will be to simply get out of technology’s way. Embrace the power of technological solutions and use it to your advantage. Procurement can sometimes stand in the way because many technology solutions today do not abide by traditional pricing models. Many software applications today can be bought without authorization and cannot be negotiated, which is against the DNA of traditional procurement sourcing. Procurement can become a detraction from business transformation. Understanding the business requirements and making recommendations on other more flexible options is a way for the traditional procurement organization to add value. Procurement will need to think creatively about what the right solutions are for the organization.
To be sure, the cost of not embracing technology is steep. Just fifteen years ago, the top Fortune 50 companies were completely different than they are today; even the top ten companies have changed. Companies that used to make headlines all the time, like Shell and Exxon, aren’t in the news as frequently anymore. Instead, the companies to watch are Google, Amazon and Facebook. Even as you read this, new companies that you’ve never heard of are blinking into existence that within a handful of years will change the way we live. Meanwhile, older companies that relied on a brick-and-mortar model will disappear. This is unless they transform. The key to staying competitive and remaining relevant in the next decade will be to embrace the possibilities of technology which have the potential to drive business further than ever thought possible.
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