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Why digital transformation is now on the CEO’s shoulders

Source |  |  BY:McKinsey Quarterly


Big data, the Internet of Things, and artificial intelligence hold such disruptive power that they have inverted the dynamics of technology leadership.

When science and technology meet social and economic systems, you tend to see something akin to what the late Stephen Jay Gould called “punctuated equilibrium” in his description of evolutionary biology. Something that has been stable for a long period is suddenly disrupted radically—and then settles into a new equilibrium.1Analogues across social and economic history include the discovery of fire, the domestication of dogs, the emergence of agricultural techniques, and, in more recent times, the Gutenberg printing press, the Jacquard loom, urban electrification, the automobile, the microprocessor, and the Internet. Each of these innovations collided with a society that had been in a period of relative stasis—followed by massive disruption.

Punctuated equilibrium is useful as a framework for thinking about disruption in today’s economy. US auto technology has been relatively static since the passage of the Federal interstate-highway act, in 1956. Now the synchronous arrival of Tesla, Uber, and autonomous vehicles is creating chaos. When it’s over, a new equilibrium will emerge. Landline operators were massively disrupted by cell phones, which in turn were upended by the introduction of the iPhone, in 2007—which, in the following decade, has settled into a new stasis, with handheld computing changing the very nature of interpersonal communication.

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