Albert Einstein once said we can't solve our problems of today with the thinking of yesterday. If we want to get different results, we need to think differently.
So said Stephen van Coller, chief executive: Corporate and Investment Banking for Barclays Africa, speaking at the FIS Fintech2020 forum in Johannesburg last week. Van Coller explained the rule of thumb is that in an exponential world business owners must expect to be surprised and plan accordingly.
He pointed out in today's age we are seeing an explosion of society-shaping, exponential technologies which either directly or indirectly challenge a pre-existing idea or business model. He discussed the three factors which drive exponential change.
"The first is the Internet which makes knowledge and information accessible globally. The second is connectivity which is the enabler for the world to grow and help resolve each other's problems.
"Cloud computing is the third factor, which allows businesses to get storage on a pay-as-you-go basis, driving business innovation," he revealed.
Why is exponential an issue, Van Coller asked?
His answer: because change starts slowly and then it accelerates really fast. That is an important point to consider when you are making future plans for your business, he observed.
"One minute you think you are in a normal world, the next minute you're in the next phase - and forced to accelerate at a faster pace," he said.
He explained in an exponential world, if a business misses that first slow phase, it's too late to keep up because they will get left behind and may not recover.
"If you get to a point where the speed of change outside your business is faster than the speed of change inside your business, you are losing," he warned.
The exponential idea, explains Van Coller, came from Gordon E Moore, the co-founder of Intel, when he noticed that the cost per unit of processing power of a chip in a computer was doubling every year since their invention.
Although the pace has slowed, he said, the number of transistors per square inch has since doubled every 18 months. Moore's law predicts that this trend will continue into the foreseeable future, he observed.
Van Coller pointed out this discovery is just one manifestation of the greater trend that all technological change occurs at an exponential rate. Today he said the smart phones we own are not just phones anymore.
"Your phone is now your travel adviser, your torch, your calculator, e-mail, diary etc."
"The iPhone 5 has access to more knowledge and more facts than Bill Clinton had when he was president of the US. That's how much power we have in our hands through smartphones and that is fundamentally changing the world," he explained.
What's interesting about this exponential change, he continued, is we're seeing these billion dollar companies just popping up in a short space of time. Using WhatsApp as an example he said the company has fewer than 100 employees and yet it's worth $19 billion.
The average lifespan of a fortune 500 company has gone from 67 years to 50 today, he elaborated.
This high mortality rate means these companies exist at a primitive stage of evolution - they develop and exploit only a fraction of their potential.
"Google has over 1 000 employees whose sole job is to look at business models with big margins so that they can see how they can disrupt them."
Van Coller advised business owners to know who their competitors are, highlighting the need for company managers to have a regular session of competitor analysis to keep up to date with what their competitors are doing.
"If you look at the taxi industry, they didn't know that Uber was coming, the Four Seasons Hotels didn't know Airbnb was coming," he noted.
He added it's important for business owners to investigate what their industry is going to look like in 10 years' time and once they understand the future of their industry they will know what their business model should look like in the next decade.
You need to look at your business strategy and see that it will get you there, it's a frightening exercise which gives great future perspective, he concluded.
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