Although there are moments in history "where decades happen" as Lenin once wrote, most of the time change is something that creeps up on society. To paraphrase Bill Gates (and others), we're often disappointed how little seems to have changed after a year, yet underestimate how much the world will have changed after ten years. All the change that's happening now during the COVID-19 lockdown may start to feel overdone next year as everyone attempts to get back to normal. Ten years later, it will have crept back up on us and the world will feel very different.
Why does disruptive change take so long? It's because society has to adapt — not just people and our habits, but also the organizations around us and the underlying infrastructure on which everything runs. I was recently reminded of this phenomenon when recalling the early years of the SaaS industry in a podcast interview. It's easy to forget how much needed to be put in place to enable everything we take for granted in cloud computing today. The early pioneers had to doggedly stick to their trajectory in the face of an incumbent tech industry that believed the cloud was just a passing fad.
Expect to hear similar in the next year or two as lockdown starts to lift and people gradually return to old, if somewhat modified, patterns of office-based work, city-center shopping and mass entertainment. Companies that in recent weeks have made a long-term commitment to remote working, such as Twitter, Facebook and Shopify, will face criticism for having acted in haste. A small minority may even abandon their plans. But that won't reverse the long-term trend towards digitally connected working and a redistribution of economic activity away from city centers.
Business has barely begun to adapt
The lessons of SaaS and cloud computing are that change on this scale requires time to evolve the technology (containers, APIs and smartphones), build out the infrastructure (broadband, networking and datacenters) and learn new ways of working (DevOps, distributed teamwork and the gig economy). It took up to twenty years to lay down all of these necessary foundations and bring cloud computing as we now know it — and the digital economy that it powers — to maturity.
Even now, it has taken the advent of COVID-19 to demonstrate the advantages all of this brings — many businesses that had already embraced cloud computing and digital working were able to take the lockdown in their stride. Those who had not yet completed the shift away from on-premise computing were left scrambling to ramp up VPN access, source laptops, and navigate the unfamiliar etiquette of distributed teamwork. And that was just to get back in operation.
The point here is that, while cloud computing has evolved and become mainstream, business cultures, organization and working practices have barely begun to adapt to what the technology now allows. The COVID-19 lockdown has given us all a jolt in the right direction, but we are still at the very beginning of this new wave of change. Suddenly it's become clear that embracing distributed working practices founded on cloud computing makes businesses far more agile and resilient than those still stuck in the old ways. But it still feels hard to adapt to these new ways of working, because many of the necessary tools and skills are unfamiliar. It will still take time for everyone to fully grasp what's really involved.
The businesses that have already adapted are therefore like those early pioneers of SaaS twenty years ago who understood the importance of being truly cloud-native, while the majority are still imagining that the way they've always done things just needs a few small tweaks. Remember that although the first SaaS vendors got started in 1998, it was not until after the 2008 financial crisis that SaaS and cloud computing began to be accepted into the mainstream. Today's COVID-19 crisis is the beginning of a similar decade-long journey to round out the technology, infrastructure and organizational culture needed to support truly effective connected digital working.
Scale vs agility and resilience
That new world will look very different than we're used to — and it's likely to keep on evolving, for decades to come. My hunch is that putting in the tools and the culture to fully support digitally connected working will in turn lead to a rethinking of how organizations recruit and marshall their workforces. That will reverse the long-term trend towards agglomeration in cities, prompting a reconfiguration of most enterprises to operate across many more distributed and far smaller locations.
This will be true even for industries such as manufacturing that for almost two centuries have sought to concentrate their operations for reasons of scale. In this new world, the cost efficiencies of scale have to be balanced against the advantages of agility and resilience. Businesses are already starting to reconfigure their supply chains to include more alternative sources, preferably onshore.
In the early stages of taking these steps, the new way of operating is more costly than the established processes. But as time goes on the processes improve and they begin to yield unexpected new advantages that had not been obvious at the beginning. In the case of SaaS, one of the most important advantages was the continuous digital connection to customers.
As digital technology proliferates, every industry is now feeling the impact of this XaaS effect, in which connected digital operations produce highly adaptive output that responds to customer needs. We are already seeing digital technology in manufacturing that allows more flexibility to customize products or to switch production faster. These trends are just getting started.
While many of these changes will become established by the end of the coming decade, some will take much longer to ripple through society. Changing bricks-and-mortar investments, such as where people live and congregate and where businesses locate their operations, is a huge shift that can't happen overnight.
Time to dig our heels in
For now, the pioneers will have to dig their heels in and persevere. Look back at the past decade of cloud computing to see how much can change. Just ten years ago, most people still regarded Salesforce CEO Marc Benioff as a maverick with all his talk of 'false cloud'. Workday was still struggling to persuade Fortune 500 customers to sign up. Most enterprises refused to put production workloads on AWS, saving it for dev and test. G-Suite had few enterprise customers to showcase, while Microsoft was still three years away from offering full-function Office apps in the cloud. A decade later, these companies are now mainstream providers of cloud computing to the enterprise.
Now it falls to a new generation of stubborn innovators to trust their instincts and stand their ground against a conventional wisdom that believes the rise of distributed teamwork is just a Coronavirus-induced blip. As I observed during that recent podcast about the history of SaaS:
The establishment always believes that what they're doing is the right way to do it, and are always dismissive of new things coming along. If you're doing a new thing — which is actually going to end up being better — then you just have to stick to it. Because it's going to be really tough for the first 10, 15, 20 years, until eventually the whole world comes around to your point of view.
I was reminded of this when reading Slack CEO Stewart Butterfield's wide-ranging interview with The Verge a few weeks ago. In the midst of a passage discussing the competition Slack is seeing from Microsoft Teams and the history of newcomers competing with established vendors, he makes this point:
The lesson of that is the small, focused startup that has real traction with customers sometimes has an advantage versus the large incumbent that has multiple lines of business.
There is a new generation of innovative entrepreneurs that recognizes how different the future of work is going to be — while the incumbent giants remain wedded to the old ways of working. The history of SaaS tells us that not all of these emerging companies and their evangelist CEOs will still be in the race in ten years' time. But we must listen carefully to what they have to say, because today they are the ones that have their fingers on the pulse of how the world is changing.