Daily Archives: June 28, 2017

About six weeks ago I received an email from somebody called Amy Ingram. It was a friendly, professional email to schedule a meeting with the CEO of an exciting new start-up I was writing about for my Future Proof column in Inc.

Not Who I Thought She Was.

After a couple of email exchanges the meeting was confirmed and I thanked Amy for her time. When I got to meet with the CEO in person later that week, he looked at me with a glint in his eye and asked, in a rather curious tone, "What did you think of Amy Ingram?" A little confused, I replied that she was very professional and efficient at her job. The CEO smiled again, paused and said that he had a confession to make: Amy was not a human being. She was in fact A.I and the clue was in her initials (Amy Ingram). 'Will you forgive me?" he asked with a grin.

A New Age.

Of course I did, because everywhere around me I am seeing that science fiction is fast becoming science fact. The take-home message is that we've entered a new age of AI, automation and algorithms, where the speed and scale of change create tremendous risk but also tremendous opportunity. I call it 'exponential change' and it's happening now. It took 75 years for the telephone to reach 100 million users, WhatsApp 3 years and the game Pokmon Go just 3 weeks. This new age is the Fourth Industrial revolution, and it's one where data is the new oil and information is the new currency.

Fast Eats Slow.

In this new reality, it's no longer about big or small. It's about fast or slow. According to a recent McKinsey study, 80% of CEOs believe that in this new reality, their current business model is at risk and only 6% are satisfied with their innovation performance. Now more than ever, we need to use brains, guts and an action-oriented growth mindset to ensure our businesses don't become a footnote in corporate history. The twin forces of cloud computing and mobile connectivity are creating massive yet hard-to-predict opportunities, and as ever in business, there will be winners and losers.

Here are three shortcuts for how to not just survive but thrive in the age of AI, automation and algorithms.

1. Intelligent Failure.

Stop worrying about the rate of failure because as long as those failures are cheap, you can afford a lot of them. As the saying goes, "fail fast, fail cheap and move on". To fail intelligently, you need to focus on three simple rules. First, know what success looks like and doesn't look like. I'm always surprised at the lack of focus on a clear outcome. Deciding what not to focus on can also limit any uncertainty. Second, convert assumptions into knowledge and learning. This is a much smarter use of time than trying to prove how right you are. Finally, codify and share what's been learned via a process known as 'After Action Review' (AAR). Pioneered by the military to ensure continuous learning, the AAR process involves asking three key questions.

1. What did you intend to happen?

2. What actually happened?

3. What are the lessons learned?

2. Embrace "Ripple Intelligence".

Can you navigate the myriad different trends, changes, and contexts that can disrupt an industry or business, for better or worse? It may be, that in order to do this well, you need to develop something that entrepreneur Elon Musk possesses in abundance - a quality called ripple intelligence: the ability to see the interactions of business contexts play out like ripples moving across a pond. Musk has a vivid imagination, obsessive focus, and a deep curiosity about the world and business in particular. He is brave not just in his words but also in his actions, and he uses ripple intelligence in a systematic way for moving fast.

One of the best ways to develop this intelligence is to step outside your normal orbit and develop a point of view about not just the ideas, trends and issues that excite you, but also about the ones that that keep you awake at night. Done well, this can help you anticipate hidden opportunities and catch the next big wave before others do. Early adoption will ensure you stay agile and ahead of the pack.

3. Think 10[x], Not 10%.

When was the last time you set a challenge for yourself that pushed you to deliver more than you thought was humanly possible? Most people think about how they can grow by 10% or 20%, not by a factor of 10. 10[x] thinkers are hardwired to think bigger and bolder, whether it's wiping out malaria in the next ten years or making space tourism a reality. They have an eye on the future and can spot an unmet opportunity quickly before others.

You don't have to be a CEO or run a startup to think 10[x]. This is a mindset that involves taking control of your vision rather than having someone else hire you to do theirs. Get started, have a clear destination, fail fast, test ideas lightly and often, and know that those who think 10[x] hold two beliefs: 1. problems can't be solved with yesterday's thinking, and 2. you have the resources to achieve your goals.

The Last Word.

Next time you receive an email, don't assume it's from a human being. The future has already arrived. To lead in this brave new world, you will have to find the courage to upgrade your business model and your mindset multiple times in order to remain viable. The bad news is, you're probably not going to learn this at business school.

As a CEO said to me recently, "if it's not broke, break it."

Link:

3 Smart Ways to Win In the Age of AI, Automation, and Algorithms - Inc.com

When organizations automate IT tasks, the ability to do one thing over and over again is a starting point -- not the finish line. This technology is getting smarter and more flexible.

This complimentary guide helps readers determine the pros, cons and key considerations of DevOps by offering up 5 important questions you should be asking in order to create a realistic DevOps assessment.

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Computers repeat a task with the same output every time, but it's a human who tells them what to do. This was shown in spectacularly negative light when Amazon Web Services suffered an outage in February 2017. A systems administrator accidently took down more servers than intended, starting a domino effect that then brought a large part of AWS' infrastructure offline.

The problem started when a human did something wrong, but a lack of intelligent IT automation technology exacerbated it. The platform did not recognize an issue and replicated it as programmed to. If it can happen to Amazon, it can happen to you. One of the biggest IT automation trends is technology with checks and balances in place to prevent bad decisions from spreading out of control.

IT teams can program a system to automate a single task for a single iteration -- but why would they? It starts with handcrafting the script or code to carry out the task anyway; automation accomplishes nothing more than what any sys admin pressing Go would. IT systems automation shows its strength where a task is carried out repeatedly, either at different times against a single system or against multiple ones.

Systems patches and updates provide a prime example of IT automation benefits. An OS patch is brought into a system for initial test. The sys admin puts the patch onto a test system manually, looking for any bad consequences before it rolls out across the live environment.

From the start, IT should use the same tools in test that will be used in operations. This helps prevent the sys admin and IT automation platform from diverging -- if the sys admin takes the same actions that then become a scripted flow, it prevents unforeseen problems.

In addition, this uniformity lets the admin proof any further actions that the IT automation platform will take. For example, the tool deploys a patch, and the patch does not work, which requires a corrective action that can be programmed in as well.

Intelligence tops IT automation trends now. Dumb automation, as used in many basic script systems, can bring everything down.

Remediation should be a capability in any IT automation platform. It can take the form of rollback, wherein the platform identifies a problem that it cannot deal with directly and therefore returns the whole system or any specific parts of it back to a working, known state. The rollback process then alerts people, who use logs and other data to identify what caused the problem and take actions to fix it.

Remediation can alternatively occur when the automation tool identifies why a system did not take the patch and changes it so that it can. This kind of remediation should be preemptive: An IT automation platform should examine all the target systems before attempting to roll out the patch and single out which ones cannot take it. The system must then take direct remediation or raise an alert. In some circumstances, the fix requires a hardware change or complete replacement that is outside of IT automation technology's capabilities.

Another IT automation trend is reusability as a platform feature. Whether a step or task can be reused depends on the path to automation that an organization chooses. For example, if a script provisions one certain workload on N number of virtual servers, it only saves manual work when the user wants that specific workload to spin up. However, if the tool creates a workload container, the script can say to provision workload A on N virtual servers. The same script also works with workload B, C, D and so on.

The organization can change the contents of workload A, B and others as needed and adjust the way in which the specified workload is provisioned. The abstraction layer between the provisioning and package automations creates an object hierarchy that gives the platform user greater flexibility. The sys admin selects script A from the workload creation side and wraps it in script B from the provisioning side to achieve a desired result.

Organizations can automate IT tasks beyond the OS level. The same approach applies to application stacks, containers, end-point devices and firmware -- any system that currently requires a highly paid, yet fallible person to administer.

IT automation has entered the realm of necessity. It's impossible to provide a steady and stable platform that combines physical, virtual and cloud resources across a range of public, private and hybrid models if you don't automate IT tasks.

IT teams must investigate which automation technologies make sense now -- before a lack of repeatability becomes a major concern about IT performance.

Automation is happening beyond the IT level, across the whole organization. Business process automation should also be a strong point for IT, which must provide the necessary technology for smooth and effective BPA use. As the internet of things weaves its way into the organization, many thousands of devices will require ongoing security and maintenance. Expect to invest in extra automation capabilities to serve them.

Visit link:

IT automation trends point to smarter machines -- not just faster - TechTarget

Sometimes it's difficult to change the way you think about a stock. In the case of Rockwell Automation (NYSE:ROK) the company has always been seen as an all-purpose way to play trends in the industrial sector. However, given the importance of the company's sensors, controls, software architecture, and automation solutions to the Industrial Internet of Things (IIOT), it's time to start thinking about the company as a long-term way to play the growth of IIOT -- something that might encourage a positive rerating in the stock. Let's take a closer look.

In a world where moderate economic growth is restricting the ability of industrial companies to aggressively grow revenue, it's becoming increasingly important to make productivity improvements. It's also essential to wring every bit of growth that can be wrung out of existing customers, and offer new solutions to those existing customers.

This is where IIOT comes in. In a nutshell, embedding internet-enabled devices into hardware and then monitoring and analyzing the data that comes out of their actions -- think the functioning of a General Electric Company (NYSE:GE) gas turbine or aircraft engine -- helps the end user utilize that asset in a more productive way. In this way, industrial companies like GE and Honeywell International (NYSE:HON) can offer IIOT solutions to their hardware customers.

Image source: Getty Images.

Around half of Honeywell's engineering force is employed in developing software as its aerospace and building solutions (both industries that require constant monitoring and service),while Jeff Immelt has aggressively invested in order to ensure GE is the leading player in IIOT. In addition, the incorporation of GE's digital offerings is an integral part of the rationale for GE's acquisition of Alstom's energy assets and the Baker Hughes merger.

Both companies, and others, are urgently developing IIOT solutions and creating market awareness. In truth, it's somewhat of a symbiotic process. For example, the more GE promotes its Predix Cloud offering, a platform-as-a-service solution that helps companies capture and analyze data, the more developers will create applications for industrial customers to use on the platform. Ultimately, more and more companies will likely see the benefits of adopting IIOT solutions.

The potential for growth is significant. For example, Honeywell cites an Accenture survey stating that 84% of business leaders believe IIOT can benefit them, but only 7% have a working IIOT strategy.

Clearly, as market adoption of IIOT increases, it will be good news for Rockwell, although it's fair to say that the stock's 22% appreciation in 2017 to date isn't necessarily a consequence of investors recognizing the long-term potential of its IIOT-based solutions. It probably has more to do with the cyclical uptick in U.S. industrial production and its impact on the willingness of Rockwell's customers to make capital investments.

ROK data by YCharts.

The improvement in the macro-outlook is evident in Rockwell's revised full-year 2017 guidance. For reference, Rockwell's financial year finishes at the end of September. As you can see below, the increase in guidance has been significant -- the increase in the midpoint of EPS guidance is 7.3% higher.

Full-Year Guidance

April

January

Organic sales growth

4.5% to 7.5%

1% to 5%

Segment operating margin

20.5%

20%

Adjusted EPS

$6.45 to $6.75

$5.95 to $6.35

Free cash flow as a % of adjusted income

>105%

>100%

Data source: Rockwell Automation presentations.

If the argument holds that the stock price increase in 2017 is due to the near-term guidance hike, then it's good news, because it means there is an opportunity for investors to buy into Rockwell's long-term potential for IIOT-led growth. The best case for buying stock in Rockwell is based on the idea that growth prospects inherent in its IIOT-based solutions will mean its organic sales growth will be in excess of industry capital spending growth in the future.

Dara source: Rockwell Automation presentations.

Moreover, Rockwell is an asset-light business that tends to convert income to free-cash flow at a rate in excess of 100%. As such, on an enterprise value (market cap plus net debt) to free-cash-flow basis, the stock trades toward the bottom end of its peer group.

PH EV to Free Cash Flow (TTM) data by YCharts.

As mega-cap companies like General Electric and Honeywell continue to invest in order to create market awareness and adoption of IIOT solutions, it will increase investment in the kind of connected automation solutions offered by Rockwell. It's a compelling investment proposition and makes Rockwell attractive for long-term investors looking to catch a favorable industry trend.

Lee Samaha has no position in any stocks mentioned. The Motley Fool owns shares of General Electric. The Motley Fool has a disclosure policy.

See the original post:

The Long-Term Trend That Makes Rockwell Automation an Awesome Buy - Motley Fool