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Digital Divide

Companies innovating with "pull" technologies are on the edge of a broad shift in business design, says a co-author of a new book, The Power of Pull.

What could bring Bill Clinton and Newt Gingrich into harmony? Not much, at least politically. But the former president and ex-House speaker are among a host of luminaries who are offering high praise for a new book that describes how the concept of “pull” presents companies with unprecedented opportunities.

John Hagel III, co-author of The Power of Pull: How Small Moves, Smartly Made, Can Set Big Things in Motion, says pull is about designing platforms that allow knowledge resources to be drawn on as needed. By contrast, the “push” mode that has been common to virtually all organizations, whether corporate, educational, or governmental, involves trying to forecast demand and mobilizing in advance the resources that would be necessary to meet it.

Clinton told publisher Basic Books that the book highlights “passionate thinking, creative solutions, and committed action that can and will make it possible to seize opportunities and remain in step with change.” Gingrich said it provides “a body of learnable principles that will revolutionize our ability to access and work with knowledge flows.” And from Google CEO Eric Schmidt: “If you want to meet the challenges of working and living in the 21st century, this book should be your guide.”

Hagel is co-chairman of Deloitte’s Center for the Edge, a three-year-old research group devoted to identifying business opportunities that should be on CEOs’ agendas but aren’t. He wrote the book along with the center’s other co-chair, John Seely Brown, and Lang Davison, a longtime leader in the professional services industry. The following is an edited transcript of CFO‘s interview with Hagel.

The revolution in digital architecture seems to be at the heart of your argument. Is that a fair statement?

Yes, but one way of thinking about that is that it’s a key part of both the problem and the solution. The technology infrastructure that is concentrated around the Internet and digital technology is dramatically intensifying competition on a global scale. Last year we looked at return on assets for all public companies in the United States back to 1965. It has come down 75%, and there’s no sign of it leveling off, much less turning around. Digital technology reduces barriers to entry and barriers to movement on a global scale.

At the same time, larger enterprises have built up a very rich technology infrastructure, but it’s a very hard-wired one that is relatively inflexible and makes it hard to change and adopt new business practices.

That’s the problem. What’s the solution?

The opposite side of it is that technology is creating the potential for platforms that allow us to connect much more richly and broadly, not just within enterprises but across enterprises. A key theme in the book is that increasingly, economic value depends on the relationships we build beyond our individual enterprises. Digital technology has a key role to play in supporting that and making it scalable in ways that we couldn’t before.

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