BY @MIKEARAUZ, PARTNER AT ON THE NATURE OF DIGITAL TRANSFORMATION 10 OBSERVATIONS

1. TECHNOLOGY IS A SCIENCE, BUT GETTING PEOPLE TO USE IT IS AN ART. BY @MIKEARAUZ, PARTNER AT 2

According to Margaret Gould Stewart, Director of Product Design at Facebook, it took the designer over 280 hours to perfect the redesign of the Facebook like button, a small but vital element of the social web that is seen on average 22 billion times a day across over 7.5 million websites. Source: http://blog.ted.com/2014/03/19/three-lessons-for-designing-for-the-whole- world-margaret-gould-stewart-at-ted2014/ BY @MIKEARAUZ, PARTNER AT 3

THE DIFFERENCE BETWEEN PROMISING AND LEGENDARY DEPENDS ON INTUITION, CREATIVITY, AND TASTE. THE BEST TECHNOLOGY COMPANIES IN THE WORLD FIND WAYS TO BALANCE THESE FORCES. BY @MIKEARAUZ, PARTNER AT 4

2. OUR INABILITY TO PREDICT THE FUTURE DOESNT MAKE IT ANY LESS INEVITABLE. BY @MIKEARAUZ, PARTNER AT 5

In 2004 it was difficult to predict whether Friendster, MySpace, or Facebook would be most successful. Looking back, it turns out that the true measure of your wisdom wasnt whether or not you bet correctly, but rather whether or not you bet at all. BY @MIKEARAUZ, PARTNER AT 6

EMBRACING POSSIBILITY INSPIRES EXPLORATION AND ACTION. QUESTIONING POSSIBILITY OFFERS THE SKEPTICS A CHEAP AND DANGEROUS EXCUSE FOR DOING NOTHING AT ALL. BY @MIKEARAUZ, PARTNER AT 7

3. EVERYTHING CAN BE DISRUPTED. BY @MIKEARAUZ, PARTNER AT 8

Tesla barely made it out of their start-up phase, but now theyve got the safest car ever tested, the best rated car ever by Consumer Reports, and theyre blowing other auto stocks out of the water. Just because the car business is hard, doesnt mean it cant be completely transformed by a former software engineer. BY @MIKEARAUZ, PARTNER AT 9

DIGITAL DOESNT RESPECT BOUNDARIES. REGARDLESS OF THE INDUSTRY, DIGITIZATION WILL UNCOVER INEFFICIENCIES AND CREATE VALUE. BY @MIKEARAUZ, PARTNER AT 10

4. ARE PEOPLE USING IT? IS THE ONLY QUESTION THAT REALLY MATTERS. BY @MIKEARAUZ, PARTNER AT 11

WhatsApp was acquired by Facebook for $19 billion (thats roughly 1/3 the market cap of Ford Motor Company). For those who are baffled by the size of the deal, look at the number that matters: as of December 2013, WhatsApp had over 400 million active users per month (the population of the United States is roughly 313 million). BY @MIKEARAUZ, PARTNER AT 12

WELL-INTENTIONED EXECUTIVES BUILD A GAUNTLET OF QUESTIONS, INTENDED TO ENSURE SUCCESS, THAT END UP KILLING INNOVATION. YOUR JOB AS A BUSINESS LEADER IS TO ANSWER THIS QUESTION FIRST, AND FAST: ARE PEOPLE USING IT? BY @MIKEARAUZ, PARTNER AT 13

5. TRYING SOMETHING COSTS LESS THAN NOT TRYING ANYTHING. BY @MIKEARAUZ, PARTNER AT 14

In 2009, Jack Dorseys friend James McKelvey, a artisan glass-blower, went to their local Techshop and a month later had a working prototype of what would eventually become Square, the disruptive payments company now valued at over $8 billion. BY @MIKEARAUZ, PARTNER AT 15

THE COST OF INACTION IS HIGHER THAN YOU THINK. ITS ONLY A MATTER OF TIME UNTIL SOMEONE DISCOVERS THE BREAKTHROUGH SOLUTION THAT WILL DISRUPT YOUR BUSINESS. BY @MIKEARAUZ, PARTNER AT 16

6. YOU CANT CHANGE WHAT YOU DO WITHOUT CHANGING HOW YOU DO IT. BY @MIKEARAUZ, PARTNER AT 17

We had to think about if were going to be in a business thats changing that quickly, how do we avoid institutionalizing one set of production methods in such a way that we cant adapt to whats going to be coming next. because as useful as they are in the short- term in the long-term they really end up hurting you a lot. Gabe Newell, co-founder and CEO at Valve, in an interview with the Washington Post, January 2014: BY @MIKEARAUZ, PARTNER AT 18

YOU CANT USE YESTERDAYS WAY OF WORKING TO BUILD TOMORROWS SOLUTIONS. BY @MIKEARAUZ, PARTNER AT 19

The companies that are leading our economy and shaping our future are working in a completely new way. At Undercurrent, we call these companies responsive organizations, defined by a new set of operating values: BY @MIKEARAUZ, PARTNER AT 20

7. IF YOURE NOT DESIGNING FOR NETWORKS, YOURE MISSING THE POINT. BY @MIKEARAUZ, PARTNER AT 21

When Google bought the car navigation app Waze for $966 million, they framed the acquisition in terms of users, not technology: This fast-growing community of traffic-obsessed drivers is working together to find the best routes from home to work, every day. Source: http://googleblog.blogspot.com/2013/06/google-maps-and-waze- outsmarting.html BY @MIKEARAUZ, PARTNER AT 22

DIGITAL THINGS DONT GET USED UP WHEN THEY GET USED. THIS IS WHY FIGURING OUT HOW USERS CAN CREATE VALUE FOR EACH OTHER IS NOW FUNDAMENTAL FOR CREATORS OF DIGITAL PRODUCTS AND SERVICES. BY @MIKEARAUZ, PARTNER AT 23

8. INNOVATION IS RECOMBINANT, AND SPEED IS THE NEW IP. BY @MIKEARAUZ, PARTNER AT 24

Sir Tim Berners-Lee: When I say I invented the web, I really just put together the last few pieces out of a construction kit, which had already been made. BY @MIKEARAUZ, PARTNER AT 25

HUMANITY HAS NEVER HAD MORE WORTHWHILE IDEAS. ITS NEVER BEEN EASIER TO FIND THEM. AND ITS NEVER BEEN EASIER TO BRING THEM TO LIFE. THE CHALLENGE IS WHO CAN GET THOSE GOOD IDEAS IN FRONT OF REAL USERS FASTEST. BY @MIKEARAUZ, PARTNER AT 26

9. YOU CANT ESCAPE COMPLEXITY. BY @MIKEARAUZ, PARTNER AT 27

The open-source operating system Linux has evolved into one of the worlds most popular operating systems with a large, diverse and disorganized collection of contributors, free and open access to its source code, and constant iteration and variation of the product. Mostly the exact opposite of Microsoft. BY @MIKEARAUZ, PARTNER AT 28

LIKE A 21ST CENTURY MIDAS, DIGITAL TECHNOLOGY MAKES EVERYTHING IT TOUCHES COMPLEX. SEEKING SIMPLICITY IN THE FACE OF COMPLEXITY IS SIMPLY A FASTER ROUTE TO OBSOLESCENCE. BY @MIKEARAUZ, PARTNER AT 29

AS THE INDUSTRIAL REVOLUTION WAS DEFINED BY RADICAL EFFICIENCY IN PRODUCTION, THE DIGITAL REVOLUTION IS DEFINED BY RADICAL EFFICIENCY IN INFORMATION TRANSMISSION. 10. BY @MIKEARAUZ, PARTNER AT 30

Andrew McAfee and Erik Brynjolfsson, The Second Machine Age: Computers and other digital advances are doing for mental power the ability to use our brains to understand and shape our environments what the steam engine and its descendants did for muscle power. BY @MIKEARAUZ, PARTNER AT 31

IF YOURE RESPONSIBLE FOR A BUSINESS OR INDUSTRY, AND WONDERING WHERE THE WEAKNESSES OR OPPORTUNITIES LIE, LOOK CLOSELY AT THE CRACKS AND CREVICES WHERE INFORMATION IS CURRENTLY TRAPPED, AND HELP IT TO FLOW MORE FREELY. BY @MIKEARAUZ, PARTNER AT 32

TO LEARN MORE READ THE FULL ARTICLE HERE: HTTP://MEDIUM.COM/P/9A889AA170D1 BY @MIKEARAUZ, PARTNER AT 33

CREDITS None of these ideas are mine alone. They are built upon the work and great thinking of many other people who are all infinitely more brilliant than I am. In addition to my inspiring colleagues at Undercurrent (including Aaron Dignan, Clay Parker Jones, Bud Caddell, Jordan Husney, and others) here are some books that I consider to be seminal: ! Understanding Media by Marshall McLuhan The Innovators Dilemma by Clayton M. Christensen The Cluetrain Manifesto by Rick Levine, Christopher Locke, Doc Searls, and David Weinberger Emergence by Steven Johnson The Wealth of Networks by Yochai Benkler Here Comes Everybody by Clay Shirky Complexity: A Guided Tour by Melanie Mitchell Getting Real by 37Signals The Second Machine Age by Erik Brynjolfsson and Andrew McAfee BY @MIKEARAUZ, PARTNER AT 34

MIKE ARAUZ Mike is a Partner at Undercurrent, a strategy firm for the 21st century. Mike has helped leaders of global organizations, including GE, PepsiCo, Ford, American Express, and The Bill & Melinda Gates Foundation, understand how technology is disrupting their world and what to do about it. Mike is available for speaking at summits and conferences, as a workshop facilitator, and as a guest writer for print and online business publications. Get in touch: http://www.mikearauz.com/