Managing director and co-founder, Hummer Winblad Venture Partners
You’ve witnessed tremendous upheaval and great progress in the business world over the past three-plus decades. What’s the biggest change you’re seeing in the companies you follow?
I started in the software industry in 1976, the year Apple started. Microsoft was a year old; Oracle was founded a year later. At the time, we were selling to anybody with an understanding of software. That was a pretty small group. The most overarching change now is that every company is digital. But a company has no competitive advantage unless it can use all of this digital technology effectively. This affects more than the CIO. I’m talking about all key decision makers, not just the technologists. It’s not just the data scientists either. It’s the CFOs, the CMOs, the chief revenue officers, anyone who makes a critical decision for the business. This is particularly true in the case of analytics.
What skills do you consider necessary?
You see a basic skills requirement in all marketing departments, or in the office of the CFO. And that is the ability to write SQL scripts. This doesn’t mean you need to be a full-fledged programmer, but you do have to be familiar with programming. You and your team are programming your company – no small feat when you have 30 years of legacy software to consider.
Really? That sounds pretty intimidating.
But wait, there’s more. We’re in a bridge point right now. Tom Davenport of Harvard Business School calls it Analytics 3.0. Key decision makers need proficiency in big data, in analytics, in application program interfaces or APIs. They also need to understand the Internet of things, the ability to embed sensors in business operations. Decision makers are on a big on-ramp right now to learn and develop these skills to stay ahead of competitors. These are the skills that will aid them with supply- chain matters, and with managing employees and customer needs. Every single part of the company must take part in this new digital mastery.
What are the consequences of not mastering digital?
It’s a matter of holding onto our jobs. I think it is imperative for a contemporary CFO or CMO to ask, “How can I use information? And how do I accomplish that through information technology?” Remember, every firm is now a tech company.
The iPad. Remember how, not so long ago, executives would have their assistants print out their e-mails? We would laugh about this. But after the iPad launch, I noticed something startling. C-level executives would show up to meetings with an iPad so they could stay on top of the information flow. The iPad changed the mindset among the executive ranks. The same thing is happening in regards to data. Executives are learning that they need to be making decisions with data independent of data analysts. Key leaders – key CFOs and CMOs – are emerging who themselves have this skill. You can’t expect your supporting cast members to be doing this work for you.
So we’re all becoming data analysts? Or, at least you feel that we’d better?
Right. This is important because data analytics must drive strategy. To do so, businesses have to adopt a decentralized structure. IT will play a core role every time that complicated implementation decisions are made. But the real work must start with the decision makers across the organization. They must be the ones to work with the data scientists. They must make the move to new information architectures, to introduce newer products and to play a role in adopting a broader integration strategy across information systems. You cannot survive with the thinking, ‘We’ll make our move as soon as our CIO or our IT department gets around to it.’
Decentralization might be even scarier than the thought of learning programming. How do you make it work?
It requires opening the internal organizational silos built over the last 30 years. Closed, proprietary systems create hardened information flows in which ideas only transfer at artificial midpoints where people have established programmed connections. But if we empower decision makers with new tools, we can break down these silos. The good news is the decision makers see this coming, and the technology vendors are building the bridges. We will see this whole pervasive computing infrastructure where all the pieces are connected.
What excites you about the future?
Machine learning. It’s vital to our future digital mastery. Much of the work is happening in algorithm labs, in university computational labs across the country, and within research groups. So it’s going to come, and it will change the way we do business. The idea of connecting everything with a sensor and interpreting the signals we can pull from the marketplace and then matching the patterns—that’s very powerful. But the question remains: can the marketplace really absorb all that data? Or, will there be gaps in the information flow that are too big to overcome? That’s the on-ramp we’re on now to this predictive analytics world. We’re not quite there yet, but the skilled and innovative CFOs, CMOs will get us there. Everybody will get there over the next 10 years, but who will be first?