Obstacles and Courage in 2018

The emerging technology and market opportunities are relatively clear. The bigger problem technology companies will face in 2018 is overcoming the challenges that prevent them from capitalizing on high-value trends. 

By Larry Walsh

The refreshing of the calendar is usually the time when tech vendors, analyst firms, trade media, and industry pundits roll out their predictions for the coming year. In years past, The 2112 Group issued its prognostications based on the trends we’ve observed in our interactions with hundreds of technology companies and industry experts around the world.

This year, we’re not making predictions. Rather, we’re calling out the problem that will impede predictions and forecasts from materializing.

Let’s start by saying that 2112 doesn’t see 2018 as a breakout year for new technologies or market opportunities. The trend line shows clearly that the technology segment will continue to go through steady, incremental transitions for the next five years, at which point it will look radically different than it does now. So, you could say that 2018 is a stepping stone in a journey that’s already several years old.

These are some of the questions you may ask about what will happen in 2018.

  • Will the Internet of Things (IoT) go mainstream?
  • Will Big Data and AI merge to create pervasive analytics and autonomous systems?
  • Will cloud computing evolve to replace conventional data centers?
  • Will blockchain make data integrity issues a thing of the past?
  • Will marketplaces and e-commerce sites replace conventional resellers?
  • Will managed services obliterate the legacy reseller model?
  • Will independent software vendors (ISVs) gain importance relative to other partners?
  • Will software finish eating the world?
  • Will the services model vanquish the legacy transaction model?
  • Will 5G networks replace cable and bring ubiquitous high-speed connectivity?
  • Will we face new security threats and (miraculously) find new security solutions?

The answers to these questions are “Yes, sort of.” The technology market will see substantial improvements and gains in each of these areas. And there are many more evolving trends that easily could expand this list.

This year won’t be about the next big thing, or megatrend, to take over the world. It’ll be mostly about the challenge all businesses face to evolve or risk fading into irrelevancy. The obstacle facing every company – particularly legacy vendors – is internal organizational inertia.

Let’s be honest: Most people recognize that the world is changing before their eyes. We’re inundated with evidence of change. People already enjoy many benefits that come with existing technology: home delivery of goods ordered online, remote connections to phones and PCs anywhere in the world, and applications that make simple work of communications and analytics. Evolving technology is changing the way we live, work, and play.

The real challenge is acting on those changes, even when there’s no immediate need to change. Some people may question the health of the domestic and global economies, but the reality is that people are working and money is flowing. Many technology companies – emerging and legacy – posted positive, healthy earnings in 2017. The technology industry, by and large, is doing well. And when money flows, goals are met, profits are recorded, and the need for change is suppressed.

And that’s where we hit the inertia obstacle.

We at 2112 have long said the biggest obstacle to change is compensation plans. While the market is changing and disruptive companies abound, decision-makers in many organizations find it difficult to evolve their models and practices because it goes against their immediate short-term interests.

We hear about it all the time. IT managers won’t adopt cloud services because doing so puts their jobs at risk. Sales managers block the adoption of automated routes to market because it means changing sales models and disenfranchising partners. Division and business unit managers resist adopting new models because it means making changes to their organizations as a whole, and to their staffs.

Above all, change – particularly when it applies to business and sales models – requires new compensation plans. Putting the revenue of a business at risk is serious, but putting your own tried-and-true compensation at risk is simply counterintuitive to many executives and managers. If the Magic-8-Ball says the current business and profit model will sustain the same results for 12 to 18 months – or even lead to some growth – management often sees no need to disrupt personal interests.

We could make predictions about what will happen in 2018, but predictions are worthless unless there’s action to execute and capitalize on those opportunities. Instead, we choose to point out this challenge: overcoming internal inertia. Technology vendors can’t afford to just dabble in new routes to market, business models, and profit centers. The change required to advance to the next data-driven economy will take three to five years. Delaying action will put the greater organization at risk and ultimately cost more.

Vendors can do many things to overcome inertia. They can form new business units separate from the legacy models to build new ventures in parallel with the legacy business. They can make incremental changes that put the organization on a path to gradual change. They can establish subsidiaries and separate companies that can operate unencumbered by the legacy models. They can take a top-down leadership approach and impose change by fiat.

One thing is certain: Change will come regardless of action or inaction. As companies such as Google, Lyft, Airbnb, Amazon, and a litany of others have proven, those with the vision and courage to ply new approaches will radically disrupt those that remain stoically focused on legacy models.

So, in short, 2112 predicts that 2018 will be the year of courage. Those organizations with the fortitude to use new models will be in a position to capitalize on unfolding and future market trends. Courage will be the fuel that propels businesses into the future.

Larry Walsh, The 2112 Group

Larry Walsh is the founder, CEO and chief analyst of The 2112 Group. Follow him on social media channels: Twitter, Facebook, LinkedIn.