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Business lessons from the Pokémon Go phenomenon

Savio NgHong Kong appears to be invaded by Pokémon Go players. We’ll no doubt be bumping into avid players all over the place. In case you’ve been entirely cut off from news this month, Pokémon Go is a mobile game app, in which players move around in the real world looking for digital creatures overlaid on the streets around them.

Less than two weeks after the initial release, Pokémon Go has become the most successful mobile game ever. It is also generating newspaper headlines about users and their experiences on a daily basis. The share price of Nintendo – which originated the Pokémon characters back in the ‘90s but is just a part owner of the app – was doubled. But it has fallen back as in reality, its profits from the game will be limited.

Beyond augmented reality

There is much more in this groundbreaking game. Such application and massive acceptance in augmented reality is expected to trigger a wave of adoption in other areas. Meanwhile, however, Pokémon Go’s massive adoption has been accompanied by reports of server overloads, players being locked out and rumors of security issues.

While details have not been disclosed, it seems pretty clear that such issues have delayed the game’s rollout, especially to Japan and other game-crazy Asian markets, slowing down revenue generation. Simply put, it appears that the operation team was unprepared for the success of Pokémon Go.

This is strong proof that digital businesses required a scalable IT infrastructure – across the dimensions of compute, network and security capacity – that is in line with demand, no matter how fast it grows. The logic of hybrid cloud operations – where cloud service providers have the scale and ability to fulfil the spikes of demand without burdening a business’s core IT operations – seems inescapable.

The edge for growth and transformation

The benefits of the hybrid cloud model go well beyond capacity-on-demand however. A recent study by the IBM Center for Applied Insights called Growing up hybrid, found that frontrunners in hybrid cloud adoption see this cloud model is helping it to build competitive advantage and to accelerate digital transformation of their organizations.

Why do they think hybrid cloud is giving them an edge? First, they are achieving foundational outcomes with hybrid cloud – efficiency and productivity gains, including cutting costs and maximizing the value of existing infrastructure – at a higher rate than other organizations. Beyond their efficiency advantage, frontrunners are also more effectively using hybrid cloud to drive digital business growth, including product and service innovation and expansion into new markets.

But these frontrunners are ahead of the others mainly because they are using hybrid cloud to pioneer next-generation initiatives, such as cognitive computing and IoT, which have the potential to shape new digital markets and business models. It is at this cutting edge where the greatest potential business value is being created.

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Lessons for Nintendo

Related to this, one lesson from the Pokémon Go story for Nintendo is the pressure it has created to transform. Avowedly still strongly wedded to the games console business, Nintendo is now marching along the path of digital transformation.

Of course, that is easier said than done. The Growing up hybrid study also found that the hybrid cloud frontrunners, although scoring impressive benefits, their journeys to this cloud model had not been easy. Integrating legacy IT and cloud environments was a major challenge, internal skills were not always available and security and management complexity were also top concerns.

How did these leaders overcoming these challenges and take advantage of these hybrid environments to achieve competitive advantage?

They didn’t just wait for the hybrid cloud model to happen to them. They took a very intentional and holistic approach to implement and manage their cloud environments. They knew that a focus on strategy can increase the value they can get from hybrid cloud investments, which are intimately linked with their mobile development and delivery initiatives. They also understood that the complexity of hybrid environments is best tackled through a collaborative effort between IT and business leaders.

Lessons for local business leaders

Hybrid cloud is not a magical cure for all business problems. Experiences suggested that the strongest practitioners are both maximizing value of their existing IT investments and leapfrogging to disruptive business and technology initiatives.

Hong Kong business leaders – who want to get ahead of the game – should take note: Hybrid cloud is a strong foundation to unleash their potentials to develop a digital market hit.

Savio Ng is the executive of Global Technology Services at IBM Hong Kong.



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