Author: Nedžad Junuzović
Shortly after World War II, William Shockley, John Bardeen, and Walter Brattain published the results of their discoveries regarding a semiconductor circuit that amplified signals. This invention, called the transistor, earned them the Nobel Prize in Physics in 1956 and had arguably the greatest impact on the further progress of the already burgeoning digital revolution. Interestingly, these scientists presented their invention to all the leading electronic device manufacturers of the time. And every single one of them rejected it.
The rejections were largely for the same reason: these companies already had established production lines for televisions, radios, and other devices based on proven vacuum tube technology. They also enjoyed a secure market and substantial revenues. Furthermore, the performance of transistors at the time was significantly inferior to that of vacuum tubes. They had every reason not to venture into an unproven technology and the changes it entailed.
All of them said no—except for the co-owner of a recently founded and globally insignificant company. This company, with about 120 employees, a third of whom were engineers from various disciplines and former soldiers of the Japanese army from a war-torn and devastated country, was determined to take a risk. In 1952, driven by a bold vision for growth, Masaru Ibuka embarked on a journey to the far-off United States without even knowing the English language. In one sleepless night, he thought that the new transistor technology might help his company develop, if given the chance. He believed his engineers could create innovative products based on this technology. His knowledge of transistors was limited to what he had read in technical journals published a few years earlier. He also knew that transistors were not yet used for high-frequency applications and that their amplified signals had more noise than vacuum tubes.
Still, in 1953, the Tokyo Telecommunications Engineering Company, later renamed SONY, requested and obtained the rights to use patented transistor technology. Ibuka’s engineers enhanced the transistor and, two years later, successfully produced the first transistor radio, the popular TR-55. Of course, all the companies that initially rejected transistor technology eventually adopted it. However, some could not maintain their market positions due to delays, and very few managed to match SONY.
Just as in the mid-20th century, we now stand at the threshold of a new technological revolution. Similarly, different companies respond differently to the changes unfolding in front of our eyes. Predictions established in the mid-20th century were formulated into three key laws critical for understanding digital transformation:
Moore’s Law, formulated by Gordon Moore in 1965, predicts that the number of transistors on integrated circuits doubles approximately every two years, resulting in exponential growth in computing power. Data on transistor counts and growth is based on semiconductor industry research and chip manufacturers’ reports documenting technological advances.
Butter’s Law refers to data transmission speed, predicting that it increases exponentially over time, with the cost of transmitting one bit of data halving every 18 months. This enables faster internet access and greater network bandwidth. In the 1990s, data transmission speeds over dial-up internet ranged from approximately 56 Kbps to 1 Mbps, which was standard for most home users at the time.
Kryder’s Law, concerning data storage, estimates that hard disk storage capacity doubles approximately every year while the cost per gigabyte decreases. In 2005, the storage capacity of commercial hard drives and other storage devices increased significantly, with many offering 100 GB or more, and some models exceeding this capacity.
While these laws illustrate exponential technological development, the adoption and implementation of new digital solutions by companies today certainly do not follow an exponential curve. Therefore, there is tremendous potential to be harnessed. The critical question is how to do it. Naturally, the topic is extensive and will be explored in future articles. For now, it is essential to start on the right track:
- Prepare your organization for digital transformation. Allocate resources. Define your digital strategy. Ensure an environment that fosters good team collaboration and innovation. Engage teams and define the projects and initiatives that will kickstart your transformation journey.
- Begin with gradual implementation and one project from the portfolio defined by the digital strategy. Keep in mind that software is not the same as a digital solution; it is just one component of it. A digital solution consists of three components: software, processes, and educated people. These need to be balanced and aligned. An external company can provide the software, but not the digital solution. Therefore, it is crucial to form your own internal team with your project manager. During the project execution, you will need to develop an appropriate digital solution for your company.
- Monitor the achieved results and, based on them, update your digital strategy. A digital strategy considers a timeframe of one to, at most, two years. Such agility at the strategic level is only possible with agility at the operational level, i.e., the implementation level of individual projects. In this sense, we can say that agile and digital transformation of the company are “two sides of the same coin.”
Throughout business history, as we can clearly see in Mr. Ibuka’s example, the most important factor for changing the direction of a company is bold, decisive, and informed leadership. So, move forward bravely. Don’t hesitate to reach out if you’d like to discuss further.