WHAT CAME FIRST AT MUNICH’S LEGENDARY OKTOBERFEST? THE FAIRGROUNDS OR THE BEER TENTS?
When my Bavarian host started to describe what I should expect during a visit to the Munich Oktoberfest a few days ago, I carelessly remarked “oh yes, we also have an Oktoberfest in Cincinnati.” Big mistake. After a 15 minute remedial learning session it became crystal clear why comparing Munich’s Oktoberfest to any other city’s version was a bit insulting. You don’t compare a three star Michelin restaurant to a McDonald’s. It is after all the largest festival in the world. The size is staggering. 7.5 million liters of beer (from local Munich breweries and only) are consumed by 6 million people. There are 14 large tents among several smaller ones. Wait, did I just say large? My fault. I should have said humongous. To call a 10,000 person dining tent just “large” would again be insulting. And all that’s just one part of the show. Then you have the stalls and the entertainment rides over the vast grounds. And, a lost and found area just for lost children. Among the thousands of other more traditional lost and found items each year, there’s apparently at least one pair of dentures! I’d love to hear the back stories behind those.
So, yes it’s HUGE! But if Cincinnati or any other town wanted to replicate this annual economic boom, where would they start? What came first in Munich - the fairgrounds or the beer tents?
How about neither. What came first was a wedding and horse racing. Yes, the origins of the world’s most famous beer fest had nothing to with beer. In 1810 Crown Prince Ludwig married Princess Therese and the palace graciously invited the citizens of Munich to celebrate. The fields in front of the city gates were thrown open for the festivities, which included some real serious horse racing. That should have been it for the event, except for the decision to hold the horse races and festivities again the next year. That launched what is now an annual Oktoberfest tradition. In 1882 booths selling bratwurst and beer in glass mugs were introduced. And a century later most of what the world remembers is a beer tradition rather than poor Prince Ludwig’s wedding.
THE CHICKEN AND THE EGG
The question of where to start when trying to replicate a successful model is universally hard. In the case of local Oktoberfests, do you first build the fairgrounds infrastructure? Or just start with the beer sales? And, should you start big-bang with a large scale event? Or start small and iterate rapidly? This is the same issue for organizations struggling to figure out how to compete with digitally native competitors who have immense digital capabilities. Where do you start? Do you start by building basic infrastructure including cloud, data quality and standard ERP(Enterprise Resource Planning like SAP) before brining in algorithms and AI? Or get going with the algorithms and build the foundation as you go?
INTERESTING DIFFERENCES BETWEEN THE HISTORICAL IT APPROACH AND A DIGITAL NATIVE’S
Many Silicon Valley tech giants have enviable customer systems (I.e. think Amazon website), but surprisingly unsophisticated back-office systems (I.e. like Financial or HR systems of record). On the other hand traditional enterprises have the approach of “get the ERP and data foundation right, before going into the fancy AI stuff”. In today’s world, the latter approach is a mistake. Here’s why.
THE FIVE DIGITAL BUSINESS PLATFORMS
A digital business model is supported by at least five technology platforms.
- Information systems platform — This includes among other things the core ERP system - which supports business operations.
- Customer experience platform — This has all customer and user facing items including e-commerce and all customer apps.
- Data and analytics platform — This is the data source powering Business Intelligence and Analytics.
- Internet of things (IoT) platform — This connects all the physical assets digitally.
- Ecosystems platform — This is an Application Programming Interface (API) driven system for external ecosystems, marketplaces and communities.
The thing is - each of these have different characteristics and must be developed differently. The mistake traditional organizations make is to make the latter four just an extension and build them sequentially after the first (I.e. Information Systems Platform). That’s archaic. As mentioned early in some tech giants the latter four may actually be stronger than the first.
Traditional IT and digital approaches that still follow the approach of “foundation first” before “new disruptive solutions” are outdated. That thinking and possibly the leaders who subscribe to it dogmatically are likely a hindrance to competing with best-in-class digital models. Instead, start small and iteratively build all five areas of digital foundation. The virtuous cycle will power digital transformation more reliably. After all, the Munich Oktoberfest success story wasn’t built on focusing on just one foundational element of beer, or amusement rides, or food or traditional dress. Munich built it by evolving and growing a great concept, and focusing relentlessly on customers and economics. Don’t get trapped by the chicken or egg dilemma. Start with a micro-chicken and a micro-egg and iteratively grow them together.
Go forth and transform.