Discusses the concept of a digital nervous system, in which a well-integrated flow of information is provided to the right part of an organization at the right time, and shows how this approach can radically improve processes and results.
Business @ Speed of Thought Abridged
By Bill GatesTime Warner AudioBooks
Copyright © 1999 Bill Gates
All right reserved.ISBN: 9781570427527
Introduction
Business is going to change more in the next ten years than it has in the lastfifty.
As I was preparing my speech for our first CEO summit in the spring of 1997, Iwas pondering how the digital age will fundamentally alter business. I wanted togo beyond a speech on dazzling technology advances and address questions thatbusiness leaders wrestle with all the time. How can technology help you run yourbusiness better? How will technology transform business? How can technology helpmake you a winner five or ten years from now?
If the 1980s were about quality and the 1990s were about reengineering, then the2000s will be about velocity. About how quickly the nature of business willchange. About how quickly business itself will be transacted. About howinformation access will alter the lifestyle of consumers and their expectationsof business. Quality improvements and business process improvements will occurfar faster. When the increase in velocity of business is great enough, the verynature of business changes. A manufacturer or retailer that responds to changesin sales in hours instead of weeks is no longer at heart a product company, buta service company that has a product offering.
These changes will occur because of a disarmingly simple idea: the flow ofdigital information. We've been in the Information Age for about thirty years,but because most of the information moving among businesses has remained inpaper form, the process of buyers finding sellers remains unchanged. Mostcompanies are using digital tools to monitor their basic operations: to runtheir production systems; to generate customer invoices; to handle theiraccounting; to do their tax work. But these uses just automate old processes.
Very few companies are using digital technology for new processes that radicallyimprove how they function, that give them the full benefit of all theiremployees' capabilities, and that give them the speed of response they will needto compete in the emerging high-speed business world. Most companies don'trealize that the tools to accomplish these changes are now available toeveryone. Though at heart most business problems are information problems,almost no one is using information well.
Too many senior managers seem to take the absence of timely information as agiven. People have lived for so long without information at their fingertipsthat they don't realize what they're missing. One of the goals in my speech tothe CEOs was to raise their expectations. I wanted them to be appalled by howlittle they got in the way of actionable information from their current ITinvestments. I wanted CEOs to demand a flow of information that would give themquick, tangible knowledge about what was really happening with their customers.
Even companies that have made significant investments in information technologyare not getting the results they could be. What's interesting is that the gap isnot the result of a lack of technology spending. In fact, most companies haveinvested in the basic building blocks: PCs for productivity applications;networks and electronic mail (e-mail) for communications; basic businessapplications. The typical company has made 80 percent of the investment in thetechnology that can give it a healthy flow of information yet is typicallygetting only 20 percent of the benefits that are now possible. The gap betweenwhat companies are spending and what they're getting stems from the combinationof not understanding what is possible and not seeing the potential when you usetechnology to move the right information quickly to everyone in the company.
CHANGING TECHNOLOGY AND EXPECTATIONS
The job that most companies are doing with information today would have beenfine several years ago. Getting rich information was prohibitively expensive,and the tools for analyzing and disseminating it weren't available in the 1980sand even the early 1990s. But here on the edge of the twenty-first century, thetools and connectivity of the digital age now give us a way to easily obtain,share, and act on information in new and remarkable ways.
For the first time, all kinds of information—numbers, text, sound,video—can be put into a digital form that any computer can store, process,and forward. For the first time, standard hardware combined with a standardsoftware platform has created economies of scale that make powerful computingsolutions available inexpensively to companies of all sizes. And the "personal"in personal computer means that individual knowledge workers have a powerfultool for analyzing and using the information delivered by these solutions. Themicroprocessor revolution not only is giving PCs an exponential rise in power,but is on the verge of creating a whole new generation of personal digitalcompanions—handhelds, Auto PCs, smart cards, and others on the way—thatwill make the use of digital information pervasive. A key to this pervasivenessis the improvement in Internet technologies that are giving us worldwideconnectivity.
In the digital age, "connectivity" takes on a broader meaning than simplyputting two or more people in touch. The Internet creates a new universal spacefor information sharing, collaboration, and commerce. It provides a new mediumthat takes the immediacy and spontaneity of technologies such as the TV and thephone and combines them with the depth and breadth inherent in papercommunications. In addition, the ability to find information and match peoplewith common interests is completely new.
These emerging hardware, software, and communications standards will reshapebusiness and consumer behavior. Within a decade most people will regularly usePCs at work and at home, they'll use e-mail routinely, they'll be connected tothe Internet, they'll carry digital devices containing their personal andbusiness information. New consumer devices will emerge that handle almost everykind of data—text, numbers, voice, photos, videos—in digital form. I usethe phrases "Web workstyle" and "Web lifestyle" to emphasize the impact ofemployees and consumers taking advantage of these digital connections. Today,we're usually linked to information only when we are at our desks, connected tothe Internet by a physical wire. In the future, portable digital devices willkeep us constantly in touch with other systems and other people. And everydaydevices such as water and electrical meters, security systems, and automobileswill be connected as well, reporting on their usage and status. Each of theseapplications of digital information is approaching an inflection point—themoment at which change in consumer use becomes sudden and massive. Together theywill radically transform our lifestyles and the world of business.
Already, the Web workstyle is changing business processes at Microsoft and othercompanies. Replacing paper processes with collaborative digital processes hascut weeks out of our budgeting and other operational processes. Groups of peopleare using electronic tools to act together almost as fast as a single personcould act, but with the insights of the entire team. Highly motivated teams aregetting the benefit of everyone's thinking. With faster access to informationabout our sales, our partner activities, and, most important, our customers, weare able to react faster to problems and opportunities. Other pioneeringcompanies going digital are achieving similar breakthroughs.
We have infused our organization with a new level of electronic-basedintelligence. I'm not talking about anything metaphysical or about some weirdcyborg episode out of Star Trek. But it is something new and important.To function in the digital age, we have developed a new digital infrastructure.It's like the human nervous system. The biological nervous system triggers yourreflexes so that you can react quickly to danger or need. It gives you theinformation you need as you ponder issues and make choices. You're alert to themost important things, and your nervous system blocks out the information thatisn't important to you. Companies need to have that same kind of nervoussystem—the ability to run smoothly and efficiently, to respond quickly toemergencies and opportunities, to quickly get valuable information to the peoplein the company who need it, the ability to quickly make decisions and interactwith customers.
As I was considering these issues and putting the final touches on my speech forthe CEO summit, a new concept popped into my head: "the digital nervous system."A digital nervous system is the corporate, digital equivalent of the humannervous system, providing a well-integrated flow of information to the rightpart of the organization at the right time. A digital nervous system consists ofthe digital processes that enable a company to perceive and react to itsenvironment, to sense competitor challenges and customer needs, and to organizetimely responses. A digital nervous system requires a combination of hardwareand software; it's distinguished from a mere network of computers by theaccuracy, immediacy, and richness of the information it brings to knowledgeworkers and the insight and collaboration made possible by theinformation.
I made the digital nervous system the theme of my talk. My goal was to excitethe CEOs about the potential of technology to drive the flow of information andhelp them run their businesses better. To let them see that if they did a goodjob on information flow, individual business solutions would come more easily.And because a digital nervous system benefits every department and individual inthe company, I wanted to make them see that only they, the CEOs, could step upto the change in mind-set and culture necessary to reorient a company's behavioraround digital information flow and the Web workstyle. Stepping up to such adecision meant that they had to become comfortable enough with digitaltechnology to understand how it could fundamentally change their businessprocesses.
Afterward a lot of the CEOs asked me for more information on the digital nervoussystem. As I've continued to flesh out my ideas and to speak on the topic, manyother CEOs, business managers, and information technology professionals haveapproached me for details. Thousands of customers come to our campus every yearto see our internal business solutions, and they've asked for more informationabout why and how we've built our digital nervous system and about how theycould do the same. This book is my response to those requests.
I've written this book for CEOs, other organizational leaders, and managers atall levels. I describe how a digital nervous system can transform businesses andmake public entities more responsive by energizing the three major elements ofany business: customer/partner relationships, employees, and process. I'veorganized the book around the three corporate functions that embody these threeelements: commerce, knowledge management, and businessoperations. I begin with commerce because the Web lifestyle is changingeverything about commerce, and these changes will drive companies to restructuretheir knowledge management and business operations in order to keep up. Othersections cover the importance of information flow and special enterprises thatoffer general lessons to other organizations. Since the goal of a digitalnervous system is to stimulate a concerted response by employees to develop andimplement a business strategy, you will see repeatedly that a tight digitalfeedback loop enables a company to adapt quickly and constantly to change. Thisis a fundamental benefit to a company embracing the Web workstyle.
Business @ the Speed of Thought is not a technical book. It explains thebusiness reasons for and practical uses of digital processes that solve realbusiness problems. One CEO who read a late draft of the manuscript said theexamples served as a template for helping him understand how to use a digitalnervous system at his company. He was kind enough to say, "I was making one listof comments to give to you, and another list of things to take back to implementin my company." I hope other business readers discover the same "how to" value.For the more technically inclined, a companion Web site atwww.Speed-of-Thought.com provides more background information on some of theexamples, techniques for evaluating the capabilities of existing informationsystems, and an architectural approach and development methodologies forbuilding a digital nervous system. The book site also has links to other Websites I reference along the way.
To make digital information flow an intrinsic part of your company, here aretwelve key steps:
For knowledge work:
1. Insist that communication flow through the organization over e-mail so thatyou can act on news with reflexlike speed.
2. Study sales data online to find patterns and share insights easily.Understand overall trends and personalize service for individual customers.
3. Use PCs for business analysis, and shift knowledge workers into high-levelthinking work about products, services, and profitability.
4. Use digital tools to create cross-departmental virtual teams that can shareknowledge and build on each other's ideas in real time, worldwide. Use digitalsystems to capture corporate history for use by anyone.
5. Convert every paper process to a digital process, eliminating administrativebottlenecks and freeing knowledge workers for more important tasks.
For business operations:
6. Use digital tools to eliminate single-task jobs or change them intovalue-added jobs that use the skills of a knowledge worker.
7. Create a digital feedback loop to improve the efficiency of physicalprocesses and improve the quality of the products and services created. Everyemployee should be able to easily track all the key metrics.
8. Use digital systems to route customer complaints immediately to the peoplewho can improve a product or service.
9. Use digital communications to redefine the nature of your business and theboundaries around your business. Become larger and more substantial or smallerand more intimate as the customer situation warrants.
For commerce:
10. Trade information for time. Decrease cycle time by using digitaltransactions with all suppliers and partners, and transform every businessprocess into just-in-time delivery.
11. Use digital delivery of sales and service to eliminate the middleman fromcustomer transactions. If you're a middleman, use digital tools to add value totransactions.
12. Use digital tools to help customers solve problems for themselves, andreserve personal contact to respond to complex, high-value customer needs.
Each chapter will cover one or more points—good information flow enables youto do several of these things at once. A key element of a digital nervoussystem, in fact, is linking these different systems—knowledge management,business operations, and commerce—together.
Several examples, particularly in the area of business operations: focus onMicrosoft. There are two reasons. First, customers want to know how Microsoft, aproponent of information technology, is using technology to run our business. Dowe practice what we preach? Second, I can talk in depth about the rationale forapplying digital systems to operational problems that my company actually faces.At the same time, I've gone to dozens of pioneering companies to find the bestpractices across all industries. I want to show the broad applicability of adigital nervous system. And, in some areas, other companies have gone beyond usin digital collaboration.
The successful companies of the next decade will be the ones that use digitaltools to reinvent the way they work. These companies will make decisionsquickly, act efficiently, and directly touch their customers in positive ways. Ihope you'll come away excited by the possibilities of positive change in thenext ten years. Going digital will put you on the leading edge of a shock waveof change that will shatter the old way of doing business. A digital nervoussystem will let you do business at the speed of thought—the key to successin the twenty-first century.
Continues...
Excerpted from Business @ Speed of Thought Abridgedby Bill Gates Copyright © 1999 by Bill Gates. Excerpted by permission.
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