Digital transformation: “Companies need a vision and need to take on the advantage of technologies”

European Business: The term “digital transformation” can mean different things to people. What does digital transformation mean to you?

Thomas M. Siebel: Digital transformation is synonymous with the term that is used very frequently in Europe and especially Germany when we talk about Industry 4.0. It is about the application of a new step function in information technology. The step function includes cloud computing, big data, the Internet of Things (IoT) and artificial intelligence (AI). I think that, early on in the cycle, people used to think that the most important factor was the internet of things. I don’t think that’s true. When we look back, cloud computing, big data and the internet of things are simply enabling technologies. They enable us to build a new class of applications that changes the way we manufacture products, the way we deliver products and the way we serve customers. That class of products generally falls under the category of artificial intelligence and predictive analytics.

European Business: We live in a digital age, and nobody can imagine living without technology and digitalization, but somehow companies seem to be ignoring it. Why do many managers not address this subject as being urgent?

Thomas M. Siebel: It is just the way the world is. There are many people who don’t recognize if something is important or simply ignore it. Every time we have the innovation of highly disruptive technologies there is a group of people that pretends these are not important. They are scared, they don’t know what to do and they think it threatens their jobs.

When we think about people who didn’t adopt the production line for manufacturing, they might run small businesses, and that’s okay, but they are not able to compete a a global scale. They are really not there to innovate, they are not there to create value for their shareholders or employees. They don’t have any interest in innovation and just want to stay in their jobs. It is just the way people are.

European Business: In your book, you state “Companies that will survive through the era of digital transformation are those that recognize that survival is survival.” What does it take for companies to survive?

Thomas M. Siebel: In the 21st century we face a mass extinction in the corporate world. Over the last 18 years 52% of the Fortune 500 companies have disappeared from the list. This is a rate greater at any other time in history. These companies went bankrupt, were merged or were acquired. They used to be the greatest companies in the world, like Kodak. We read every day about new companies with their new DNAs. These companies with new DNA are filling the void in the economic ecosystem that is being left. Take Airbnb, Uber and Amazon. Amazon, for example, uses a lot of cloud computing, big data and AI to change retail in a big way. Organisations like Uber change the face of transportation using big data, AI and IoT. Companies need a vision and need to take on the advantage of technologies.

European Business: You write about the ten-step CEO action plan for digital transformation. What do you think, is the most difficult step to implement?

Thomas M. Siebel: I think the most difficult step is the first step: becoming personally conversant with the technology. People feel comfortable with who they are and what they know. It takes somebody who is naturally curious, somebody who is brave to step out of their comfort zone and make the decision to become familiar with something new.

As an adult, it is difficult to make the decision to learn about an entirely new technology. People are scared about AI, big data or IoT. The first step is something leaders do alone. They have to become familiar with the language of big data or cloud computing. Take the initiative to read two or three books to start learning.

European Business: Changes in big technology are taking place in our daily lives. In the book “Brave New World,” Aldous Huxley predicts genetically modified people and an intelligence-based social hierarchy. Do you think that digital transformation will develop so far that this is likely to happen in the future?

Thomas M. Siebel: That’s a very scary idea. We will certainly have people with embedded microprocessors. We will have embeddable devices with which we can compute. That’s pretty scary but not that far off. By the way, there is another disturbing book, called “Neuromancer” by William Gibson from the 1980s. The book is about this concept: People have embeddable microprocessors, and they are caught in this web and live in this parallel, surreal world. There is no question that we will have embeddable devices in future.

Aldous Huxley was talking about making performing genetic changes like gene editing, which we see going on today. Will we have gene editing? Yes. But even absent gene editing, we will see epigenetic changes in response to social media. There are 2.2 billion people in the world who live a large part of their lives with their smartphone in their hand, checking it every two minutes. It is a form of addiction. The younger population especially in India, the United States and Asia is affected. Will we have epigenetic changes in response to this? I´m sure we will. I think it is conceivable that when history is written social media might go down as the most destructive event in civilization. And I think Europe is leading the world now regarding personal privacy. The United States, on the other hand, talks about it, but doesn’t do anything. China has no interest in personal privacy at all. They use social media to control people.

When I think about the future: Will the genome change in response to this huge important environmental change associated with the Post-Industrial society? We can expect the genome sequence to modify itself and where that goes, I don’t know, but it is scary stuff.

Interview: Vera Gaidies | Photos: Harvard Business Review Press