Introduction
The Value of the Virtual

You probably have a few questions as you check out the title and dive into this book: What is it really about? Is it any good? Is it relevant to me? Will it help me succeed? Who else is reading it? Who are these three authors, and why should I take them seriously?

In the past, you would have had to do some due diligence in order to answer those questions: read some reviews, leaf through the book, and also talk to your friends and colleagues to discover their views: What did you think of the book? Has it helped you? Do you think I should invest my time in reading it?

Traditionally, that’s what you would have had to do. But what if you could answer those questions in less than a minute? Better yet, what if you could get the answers before you even asked?

You could, if you harnessed the power of the fields of information that we call Code Halos. They surround you, this book, your friends and colleagues, the publisher, and other books in the genre. The book is a physical object of paper and ink and glue (or contained within a physical product such as a tablet or e-reader) that has a Code Halo of virtual information surrounding it: reviews, sales information, the number of your peers who are reading it, LinkedIn profiles of the authors, and more. Similarly, you—the reader—have your own rich and unique digital fingerprint made up of your personal likes and dislikes, your tastes in literature and other forms of entertainment, your current job responsibilities, your network of friends and work colleagues, and your personal preferences for consuming business ideas. If you could connect the information about yourself and this book, you would know—before you even started reading—whether you’d enjoy it and if the content has meaning to you.

The “halo” in the term Code Halo refers to the data that accumulates around people, devices, and organizations—data that’s robust, powerful, and continually growing in richness and complexity. The halos contain the code that companies, brands, employers, and partners can use to enhance their understanding of people or objects more deeply. Decoding the information within that invisible field, teasing out the insights, and creating new commercial models does not happen automatically or easily. But every employee, product, building, and organization should have a Code Halo, and this book is going to explain how and why.

The halos contain the code that companies, brands, employers, and partners can use to enhance their understanding of people or objects.

While technology makes Code Halos possible, they transcend constructs like IT or Big Data or analytics. Code Halos make meaningful connections between people, organizations, and devices in a business context. Extracting meaning from Code Halos—and applying that understanding to business strategies and practices—is a new and essential yet not clearly or widely understood management skill. This book’s purpose is to provide a fact-based understanding of the Code Halo phenomenon and outline a practical approach to improving performance by harnessing their power.

The Emerging Code Halo Economy

We find ourselves in a unique period in the history of commerce, more significant than any we have experienced in our careers. Traditional methods of production have stagnated, while virtual means are growing exponentially. We have already seen Code Halo ideas operating at the heart of the rapid rise of eBusiness superstars such as Google, Amazon, Facebook, and Twitter.

Today’s Code Halo leaders go far beyond transactional relationships; they forge deep human connections and even create moments of magic. It can occasionally feel as if these companies are reading your mind as they anticipate needs and fulfill desires you may not have even recognized yourself. That was my favorite song in college! I’ve never heard of this author, but she sounds fantastic!

Nowadays, a growing number of more traditional companies are joining Silicon Valley eBusiness leaders in harnessing the power of Code Halos. General Electric is creating tremendous economic value and richer customer connections by harnessing Code Halos to build what it calls Brilliant Machines. Nike is embracing Code Halos through its Nike+ FuelBand initiative. Disney has introduced the MagicBand to transform the amusement park experience. Allstate is remaking auto insurance with its Drivewise initiative.

You can join the competition or, like another group of companies in industries that have already been disrupted—including Borders, Blockbuster, and Kodak—you can take the risk of suffering what we call an Extinction Event—where a company goes out of business altogether—by ignoring the significance of this transition.

The Crossroads Model of Competition

To compete in this new world, it is necessary for managers to understand how the Code Halo economy works. To that end, we at Cognizant’s Center for the Future of Work have researched and consulted to hundreds of the 2,000 largest global companies across dozens of industries, probing their leaders’ views. Our findings are fascinating: once Code Halos mature, they impact industry structures in a consistent and violent pattern that we call the Crossroads Model. There are four phases of the model, and what companies do—or do not do—with Code Halos in each phase determines their fortunes when they inevitably reach a crossroads. While one route can lead to new levels of market prosperity, the other can take them down a path toward extinction.

Once you recognize the pattern, you see clearly that Amazon eliminating Borders was not a “book thing,” nor was Apple outrunning Nokia and BlackBerry a “mobile phone thing,” nor was Netflix knocking off Blockbuster a “movie rental thing.” Rather, every one of these industries’ disruptions was a “Code Halo thing.”

Know the Rules

In Part I of this book (Chapters 1 through 7), we’ll provide detail on what Code Halos are, the anatomy of an optimal solution, the business models they follow, and the real-world economics of information.

Defining the Crossroads Model is vital to recognizing what’s going on within your company and industry. But it’s even more important to gain an understanding of the management skills required to master the model. To that end, Part II (Chapters 8 through 11) offers a set of four principles that lie at the heart of success. We’ll explain each principle and provide tactical, action-oriented guidance on how your organization can embrace Code Halos.

In Part III (Chapters 12 through 14), we’ll provide specific recommendations on how your organization can successfully navigate the Crossroads Model.

Why We Wrote Code Halos

We didn’t initially set out to write a book on Code Halos. In our roles running Cognizant’s Center for the Future of Work, we have the privilege of helping hundreds of clients create business advantage with the new technologies available. While doing this work, we saw a pattern emerge. The more we looked at it, the more obvious it became that it was simply too significant to ignore. So we committed to the nontrivial process of writing this book to share our data and conclusions.

Over the past five years, we’ve been helping clients manage two sea changes in parallel:

• First, in a post-credit crisis, fully globalized world, it became clear our clients were facing significant secular business shifts in their industries. Whether in banking, manufacturing, retail, media, insurance, healthcare, or government, they’ve recognized quite clearly—albeit with some resulting confusion—that the old rules of business no longer apply.
• Second, as if that wasn’t difficult enough, there was a similar secular shift in technology under way, as well. The consumer technology experience—of mobility and social computing—has entered the corporation at a rapid rate, fundamentally changing customers’ and employees’ technology expectations—and the role of the IT organization itself.

These dual secular shifts created a lot of confusion and noise in the market from around 2008 until now. While many organizations were attempting to harness the power of new consumer technologies like social, mobile, and cloud-enabled solutions in a business setting, only a few were truly succeeding. When we took a closer look at the ones that were succeeding, we noticed how they leveraged these new technology capabilities to power through the new business challenges. It was as if the constraints of a tough economy didn’t apply to them.

As we investigated this further, two patterns started to emerge.

• First, we saw that the Code Halo acted as the atomic building block for the successful commercialization of consumer technologies.
• Second, companies that implemented Code Halos at scale were driving outsized performance in a very consistent manner, regardless of industry.

We eventually concluded—based on years of experience and a mountain of data—that something immense is happening. Companies that had been successful in the past were either adapting quickly or getting into real trouble.

The three of us have decades of combined experience helping some of the world’s leading consulting, advisory, and technology product companies generate...