Enrique Lores, chief executive officer of HP pictures the future.
Things are going to be different a year from where we are today and even different from what we are projecting. This is why agility and ability to pivot is going to be so important. To be a successful company 20 years from now, we need to be digital….”
The only point of disagreement I have with these points is that I believe 20 years is too far in the future.
I would, personally, go no further out than ten years and that may be too far into the future.
Everything is going to become digital, but, as we are finding out, in going digital, everything happens faster than we originally anticipated.
But, and this may be where Mr. Lores finds the completion of this task so far in the future, Mr. Lores is talking about connecting everything and everyone together.
In the interview where these quotes come from, Mr. Lores talks about connections everywhere, connections connecting everyone included in a product or service space.
And, these connections will include geopolitical changes resulting in a whole new phase of globalization.
Everyone is connected, and everyone is functioning in the shortest time horizon imaginable. And, this includes production and regulation.
Rather than outright ownership of “things” the focus may be on leases and subscriptions.
The result will be longer-term relationships.
The Past
In one real sense, Mr. Lores is just extrapolating from the past. This is the way things have been moving for many years.
And, it has changed how people and businesses are connected, it has changed how people and businesses deal with one another and it changes the way people pay for things.
For one thing, innovation used to take place as businesses built “new” models or new ways of exchanging. But, the “new” innovation or the new ways of relating to one another depended upon “new” models being completed or new ways of transmitting.
Now, one of the biggest drivers of “new” innovation is “time pacing.” The “new” innovation does not have to be complete with all the loose ends tied together.
Today, more and more innovation is coming to market based on “time pacing.” That is, the “next generation” of a product comes to market in, say, three years, even if the engineers on the job would not consider that the innovation was “complete” at the time the new model was brought to market.
The objective of this new way of doing things was to force the newest technology on the market so that advances were always taking place.
And, sales were always taking place.
But, this brings up another point.
If the next generation of a product comes out every three years, why should I buy it. Why not just lease it so that my technological change also occurs every three years?
This is what I did with the organizations I was running, even in the late 1980s and early 1990s. I wanted organizations to keep up with technology. So, I supported this change in technology by leasing so that I would have to keep up with all the “new stuff” and stay current in the marketplace.
I had to prepare for this in advance, so that as the firms I dealt with were continuously changing the market, I, too, was changing with the market in building in ways to conform to the new pace of the marketplace.
But, this changes a lot of things.
And, we see these changes in one place in the market, impacting other places in the market.
Times change.
The Future
Looking at the world in this way causes me to change how I look at other markets in the world.
One place that I believe that another change is… or has… taken place is in the stock market.
Take a look at the recent article titled “The Bull Market Is Just Getting Started, Traders Bet,” in the Wall Street Journal.
Reading this article gives us an indication of how this change in the way business is being done gets translated to other markets in the economy. For most of this year, an economic recession has been expected.
Yet, the S&P 500 Stock Index is up by 13 percent. The NASDAQ Composite has soared 29 percent.
There is money floating around in the economy, almost more than can be imagined.
And, there is a feeling that the Federal Reserve is going to “pivot” away from its “tight money” policy stance. “Fear of missing out is back,” said Stephen Solake, a managing partner at Belmont Capital Group.
But, analysts are claiming, this fear of missing out “has created a wide gap between the market’s winners and losers…”
The Wall Street Journal goes on:
By one measure, the current stock-market rally has been its most narrow since the dot-com bubble in 20090, with a handful of tech stocks driving the returns.”
The source of this quote is Goldman Sachs Group.
“The enthusiasm (for the tech stocks) has started spreading to other corners of the market, as sign some traders are positioning for this year’s laggards to catch up to hot tech stocks.”
“For example, there has been a jump in call demand tied to small-caps, which have underperformed in recent months.”
“Investors are also pouring money into small cap funds….”
In other words, tech companies perform differently from major manufacturing companies. Tech companies, because of time pacing, do not suffer the business swings major manufacturing companies do because their time pacing activities continue to keep their markets hot and keep profits rising.
Even with all that has been going on in the economy over the past three or four years, tech has performed. And, tech is performing now.
And, added to this is all the “buzz” about artificial intelligence.
“Bullish bets on artificial intelligence have boomed. More than 1.3 million call contracts on chip makers Nvidia, Intel and Advanced Micro Devices changed hands on an average day in June, on track for the highest monthly total on record.”
The times have changed.
Going Forward
The world is becoming digital.
Consequently, economic relationships that have been experienced before may not take place in the same way in the future.
Recently, we have had several very volatile and confusing years of economic data and we have had several years of very confusing efforts to narrate what precisely went on over that time. This recent past is pointing to the fact that we may have to interpret the future differently from how it was interpreted in the past.
The movement to this digital future can be seen in almost every explanation of why things are now progressing as they are.
And, this seems to include the stock market.
The current performance of the stock market rests heavily upon the performance of tech stocks. Tech stocks do not swing in the same way that manufacturing and other stocks perform
Tech stocks dominate the market. Becoming a more digital world is going to impact how the stock market acts.
Investors take notice.
Read the full article here