A lot of attention has been paid lately to big tech companies buying up smaller firms in billion-dollar deals: In January, Google acquired Nest for $3.2 billion, Facebook purchased mobile message service, WhatsApp, the following month for $19 billion; last week, it acquired virtual reality gaming company, Oculus VR, for $2 billion. There is a lot of discussion about the motives behind these large deals. Some say they are attempts to block competition, while others maintain they are efforts to stay relevant.
I see these deals as a reflection of the uncertainty companies face as they try to identify the next big thing. This is especially true for successful companies like Facebook (FB) and Google (GOOG), which are known for doing what they do tremendously well. They’ve seen similarly successful companies like Kodak struggle as technology moves on, rendering its product obsolete. As a result, companies today are eternally motivated to look outside their current business.
George Westerman (MIT Center for Digital Business), interviewed by Michael Fitzgerald
October 29, 2012
Big traditional companies get overlooked when it comes to digital transformation. But companies across all industry sectors are remaking their operations, their customer interactions, and even their business models. George Westerman tells us how they’re doing it, whether they are technology champions or beginners.
There is a fundamental change underway in the way that companies make decisions. Instead of relying on a leader’s gut instincts, an increasing number of companies are embracing a new method that involves data-based analytics. This ‘Big Data’ revolution is occurring mainly because technology enables firms to gather extremely detailed information from and propagate knowledge to their consumers, suppliers, alliance partners, and competitors.
Companies that use this type of ‘data driven decision making’ actually show higher performance. Working with Lorin Hitt and Heekyung Kim, I analyzed 179 large publicly-traded firms and found that the ones that adopted this method are about 5% more productive and profitable than their competitors. Furthermore, the study found a relationship between this method and other performance measures such as asset utilization, return on equity and market value. There is a lot of low-hanging fruit for companies that are able to use Big Data to their advantage. Read More »
An MBA on Becoming Relevant to an Industry “That’s Doing Fine Without You”
‘Tis the season for MBA students to begin looking for summer internships, and students at the MIT Sloan School of Management are no exception. In fact, just last week they took their annual “tech trek” to Silicon Valley to shake hands, flash smiles, and otherwise engage with executives at companies like Facebook, Intel, and eBay.
Andy McAfee and I have just released a short e-book, Race Against the Machine. In it, we try to reconcile two important facts. 1) Technology continues to progress rapidly. In fact, the past decade has seen the fastest productivity growth since the 1960s, but 2) median wages and employment have both stagnated, leaving millions of people worse off than before. This presents a paradox: if technology and productivity are improving so much why are millions being left behind?
In the book, we document remarkable advances in digital technologies in particular. Innovations like IBM’s Watson, Google’s self-driving car, Apple’s Siri are turning science fiction into reality. Machines are doing more and more tasks that once only humans could do.