Lenny Mendonca: How Can You Make The Most Of Technological Revolution?

The chairman of McKinsey Global Institute analyzes how technology is catalyzing business successes—and failures.
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TRANSCRIPT

Question: How have the rules of business changed?

Mendonca: It’s actually more possible to move market share than it might be in a normal environment and so being able to have better awareness and being able to more quickly respond competitively is of more importance. 

Question: How can technology help?

Mendonca:    Real time monitoring is a process by which companies are building business intelligence to understand in the way that a national intelligence agency would, what is actually going on in the ground, on the ground in different parts of the world [and] in different parts of their business, which allows them to more quickly respond to changes in the external economic environment [as well as] to competitive moves, to changes in the financial markets, to changes in prices and reactions of different moves that they are making so that they can have an awareness of how each of those changes may influence what their business response should be and more quickly adapt to them.

Question: How can companies best leverage tech investments?

Mendonca:    Even before the crisis the internet and other related communications and information technologies enabled a level of transparency inside of institutions not just businesses but government and social sector institutions that was not possible before, whether it’s Yelp for restaurants, whether it’s YouTube for social movements, whether it’s the ability to create a movement on the internet that creates a new president.  Those are environments that would not have been possible without the ubiquitousness, the capability and the low cost of technology.  We’ve not yet seen what that means for how companies and large organizations actually operate in that new environment -- it’s going to force a level of transparency, it’s going to force a level of ability to respond quickly to things that is going to challenge many traditionally organized institutions.  I think in the intermediate term that is actually going to be good.  It creates a kind of competitive pressure, a kind of necessity to deliver in the light of day that in general will be good.  It will particularly be challenging but in some ways will be very good for the most opaque institutions particularly in the government— creating visibility into how money is spent,  creating visibility into what the real returns on invest are, creating visibility into the actual activities that occur and how well they are done or not, creating visibility into how customers and tax payers and employees think about institutions -- [all this is] challenging but it forces institutions to be better and that’s good for the economy.

Question: Can technology heighten risk?

Mendonca:    It requires that technology be thoughtfully invested against processes and activities that actually make a difference for the organization, and that you adapt how you do business to reflect that technology.  I think that’s going to be true in the next generation of web 2.0 technologies as well.  They can be important enablers of allowing particularly complex transactions and interactions between individuals and groups within a company and between organizations to happen much more effectively, but they need to be done in a way which are effectively implemented and processes that are changed to take advantage of that.  I personally find that quite exciting and the opportunities for knowledge sharing, for real collaboration, for opening up ways to interact with people half way across the globe in a real time way interactively is just quite exciting. And for someone who spends half their life on an airplane, being able to do that in video conference in video conference rather than getting on an airplane for a one hour meeting I find quite compelling as well. 

Question: Has virtual technology changed business forever?

Mendonca:    I think the availability of some technologies that allow for virtual interactions whether it’s really high quality video conference or web presence, don’t diminish the need for personal interaction, they just change the nature of it.  And what it means is that you can use the time when you’re together for the kind of social interactions and getting to know people and really creating trust and the relationships that then enable you to operate effectively, virtually, going forward.  It doesn’t diminish the importance of being together it just changes the purpose of that and allows you to be more effectively using your time in different ways given the availability of personal interaction and technology in mediated interactions and other setting.