As everyone is discussing and touting the importance of Web3, I thought it would be helpful for us to see what reality is as of now: Is it starting to go mainstream or is it market noise?
First of all, what exactly is Web3? Let’s look at the history and evolution of the internet.
Web 1.0: In the early days of the internet, it was static and text heavy (think “read only”). Users were not actively contributing to the internet but rather just passively taking in information, and displaying it like online catalogues.
Web 2.0: This is the current era where the internet as a space for social connection/interaction really took off and users became active contributors and participants (think rise of social media, i.e. Facebook, YouTube). The invention and mainstream adoption of smartphones brought this social connection into the palm of everyone’s hands and made it an integral part of how we communicate, interact, work, shop, etc. The internet becomes dominated by platforms like Facebook, GoogleGOOG +0.9%, Instagram and users lose control of identity and privacy.
Web 3.0: This is the next step in the evolution of the internet that is unfolding and metamorphosing in real time. There is no clear definition of what Web3 will be; right now it can be loosely defined as the next generation of internet services for sites and applications driven by AI and machine based learning with the goal to provide a more intelligent and interconnected web experience. The key difference is the return to true peer to peer usage with no centralized platform or central governance/control mechanism; this gives privacy and control back to users.
One of the most talked about facets of Web3 is the concept of “the metaverse”; an internet based virtual world that runs parallel to the physical world. While this is still a future based vision of what the internet can be, there are tools being used today to bring us closer to a true blending of physical and virtual reality; some of these tools include virtual reality and augmented reality.
When thinking about concepts such as Web3 and Metaverse, the initial reaction may be to think that these are mainly used today for gaming and that business use cases and applications are still a long way from being reality.
However, this is not the case.
There are many ways in which leading companies are leaning into Web3 / the metaverse and boards would be well served to speak with management about how the company can lean in and apply these forward-facing innovations.
Let’s look at present day use cases:
Digital Twins: The concept of a digital twin is to create a virtual replica of a real-world element whether that be a warehouse, a physical product, a factory floor etc.
This digital replica (digital twin) has many real worlds uses and applications. For example, you can leverage digital humans to simulate different scenarios and see what the outcomes are, you can test environments such as factory floor layouts and simulate the flow and interactions of various machines, supply chains, etc.
This concept of creating digital twins is already gaining a lot of traction with various companies leaning into the idea:
– Lockheed MartinLMT -0.8% used NVIDIVIDI -0.5%NVDA +0.3%DIA +0.6%A’s Omniverse platform to create a digital twin of wildfires impacting some areas in California. This helped analysts better model their predictions and helped firefighters better combat the flames in the physical world.
– BMW has also partnered with NVIDIA’s Omniverse and the result is a digital twin of the BMW factory floor to better optimize production time and cost. BMW is able to virtually simulate what the best paths around a floor are during peak production and what is safer for employees.
Corporate Training: Another important real time way companies can lean into Web3 and the metaverse is to look at taking corporate training, development, and upskilling into the metaverse.
With companies moving towards hybrid / remote having a platform for virtual remote learning can be a strong differentiator to weave together a cohesive company culture. This is an opportunity to engage a millennial and Gen Zero workforce and improve employee experiences.
One study has showed that employees who trained in VR simulations learned four times faster than classroom learners.
Adoption of virtual training for employees allows them to gain real world experience in a relatively risk-free environment that allows for practice of multiple scenarios and outcomes.
– AccentureACN -2% has purchased 60,000 virtual reality headsets for training; Accenture CEO Julie Sweet said the headsets were a way for new hires to “learn about Accenture in a more engaging fashion and to have an experience with people you don’t get to be in a room with going through your new joiner training.”
– Bank of AmericaBAC -1.7% has also announced that they are rolling out VR training across nearly 4,300 locations in the US, giving approximately 50,000 employees access to immersive learning and development opportunities.
Training in the metaverse is incredibly effective as it allows for the flexibility and convenience of eLearning without the previous drawbacks that made in person learning more attractive.
Entertainment: Covid-19 accelerated the popularity of virtual concerts. Virtual concerts allows creators to reach a much greater fanbase (there is practically no limit to the size of the audience on a digital platform vs the space limitations of an in person venue). This expanded reach is not only valuable from an earnings perspective, but also from an audience building perspective. Virtual concerts allow artist to engage in a new way with fans and also tap into a whole new fanbase.
Epic Games Fortnite has been an early pioneer / winner when it comes to virtual concerts:
– Travis Scott had a 5 concert global tour in Fortnite which enabled him to reach a global audience of 27.7 million viewers (compared with 800K fans who attended his in person Astroworld Tour in 2018-2019).
– Ariana Grande also joined Fortnite and her metaverse concert experience had an estimated 78 million users in attendance.
Roblox has also seen great success from virtual collaborations with top artists:
– Artist Lil Nas X held a two day concert experience on the platform that consisted of 4 virtual concerts and garnered 33 million views.
– Swedish singer Zara Larsson teamed up with Roblox to hold a virtual dance party to promote her latest album “Poster Girl”. Fans were able to join in on this virtual dance party and even purchase her virtual merchandise which brought in an estimated $1M in revenue. This is incredibly impressive when you factor in that the price of each item was around $1 – this signals a huge activation of a virtual fan base that is willing to spend physical money for merchandise such as virtual hats and skins for their avatars.
SOUTH PASADENA, – APRIL 23: 11-year-old Ansel, the photographer’s son, plays Fortnite
Fashion: The fashion industry has been making headlines as it enters the digital world. Brands such as Gucci, Ralph Lauren, NikeNKE +0.8%, and many others embracing the metaverse through partnerships across various platforms.
There is a huge opportunity to monetize “in-game” fashion through skins (customizable clothing / accessories that allow you to change the look of your avatar). The market for skins is estimated to be as much as $40Bn a year.
– Gucci’s virtual Dionysus Bag with Bee sold for more than its IRL (in real life) version in an online event on Roblox called Gucci Garden which ran concurrently with the unveiling of House’s Gucci Garden Archetypes – an immersive multimedia experience in Florence, Italy. The Gucci Garden experience on Roblox was open for 14 days and visitors were able to purchase exclusive limited edition items for their avatars.
– In 2021 popular retailer Ted Baker joined the virtual clothing market by creating a virtual space in the popular Nintendo game Animal Crossing called “Ted Baker Island” which enabled Animal Crossing players to experience five different virtual realities – players are able to customize their avatars and try on 20 items from the new Ted Baker collection.
Corporate Real Estate: Covid-19 accelerated digital transformation and was the catalyst for the shift from primarily in person work to work from home or a hybrid set up being the new norm.
For many top companies, their physical headquarters are a representation of their company culture and are a central hub for employees to come together, work, ideate, and problem solve.
As we shift to a remote work mindset corporations are beginning to create virtual headquarters in the metaverse:
– ConsenSys Software (creators of the popular digital wallet MetaMask) has a virtual headquarters in the metaverse platform DecentralandMANA +0.4% which is equipped with a floating bar and an amphitheater and has already been used as a venue to host corporate parties. According to its website the company plans to use the digital HQ to “meet for virtual drinks, host talks, NFT exhibits, team and client meetings.”
For many mainstream directors who are from the Gen X or baby boomer generations, Web3 / the metaverse may not be an obvious area to focus corporate resources, but here are a few fun facts that help frame the magnitude of the opportunity:
– Here is the metaverse’s market size:
· 2021 – $63.83 billion
· 2022 – $100.27 billion
· 2029 (expected) – $1.5 trillion
– There are 350 million global Fortnite players who have collectively played the popular game for 10.4 million years—that means that people have spent 91 billion hours as avatars within Fortnite’s virtual world.
– Let’s remind ourselves that in the US today Gen Zero and Millennials comprise 42.28% of the population. These are the generations that are native users of avatars and digital currency thanks to popular games they played such as Webkinz and Club Penguin.
– Roughly 59.1 million Americans have digital assets in some form.
– NFTs saw a $2.5 billion increase during the peak of the pandemic.
Call to action: If we learn from the lessons of the past, we now know that companies that were early adopters of tech cycles like the internet, mobile, AI, etc. clearly outperformed their peers and were the top decile performers whose embrace of technology allowed them to accelerate growth while legacy companies who were laggards in each cycle adoption performed in the bottom half.
Given this as we look at Web3 it’s important to be proactive and ask the management team to put this on the agenda to identify where it may be possible for your company (depending on its industry) to lean in to the expansion of the metaverse and see what use cases may apply to your business.
Companies are in need of leaders who are truly digital and tech savvy; boards, CEO’s, and the C suite need to be ready to tackle the challenge of how to drive this compressed digital transformation in a shorter window of time. What should businesses do to be current in tech? The new contemporary digitally forward companies all develop, cultivate, and select partners and create an ecosystem approach. Many companies are now realizing perhaps their leadership team is not equipped with the skills needed to compete in a modern and rapidly shifting environment.
Here are topics to consider to future proof your company:
1. Companies must create new software architectures that are designed for future change and agility.
2. The old approach was to create a software architecture that was the “end state” architecture. Today’s environment is ever changing. There will not be an end state. There will be continuous change and innovation and the SW architecture must be designed with this in mind. For example, the future Web 3.0 is truly a radical departure from the current way we use the web.
3. We are now in a moment of questioning “trust” in the marketplace. For example, how would you feel about having a microphone in your house? Do you trust that your devices are not listening to you? Do you believe there is bias in algorithms? These are concepts boards need to ask management to proactively consider. Deliberately plan your philosophy around trust.
4. We are in the era of exploitation of consumer information. In both B2C and B2B businesses, our stakeholders: customers, investors, employees, all expect a D2C consumerization, easy, fluid interface to all our interactions. BOD’s may want to ask your management teams what more can you do to take steps / friction out.
5. Trust is the ultimate consumer currency, and we must think about how important this is into our products and services and our company’s culture. Consciously consider this as part of your BOD’s overall ESG approach.
Many areas of digital transformation focus on back-office supply chain optimization and on the front office digital workplace tools such as MicrosoftMSFT Teams, knowledge sharing capabilities such as Microsoft Power Platform, etc. Apply equal focus on digitally transforming both back and front office.
All companies are worried about employee engagement/retention. This is an opportunity to provide a great working experience with the best tools. BOD’s may want to ask management to address the future where all companies that produce products will need to be able to have full traceability and visibility of their supply chain for ESG reporting in the future.
One of the emerging ways to achieve this supply chain traceability/visibility at hyper scale is in Web 3.0 using blockchain which is considered as one of the best ways for traceability.
Conclusion: BOD’s that want to be relevant and impactful are embracing this 4th era of the industrial revolution and future proofing a new approach to corporate governance. In the 4th era of corporate governance the defining difference is to be actively focused on future proofing our companies. The biggest risk we can mitigate for our stakeholders is to anticipate this exponential velocity of change. Encourage your companies look to accelerate their agility to be competitive.
These ideas hopefully help as you break down the concept of digital transformation and tech enablement. Perhaps request management create a roadmap for a range of topics that can be broken into potential management actions. These concepts should be discussed by the board as a whole, potentially as part of a newly established Tech / ESG strategy committee.
One of the most effective ways to bring attention here is to create a dedicated Tech committee to work through these thematic subjects on a quarterly basis to help drive engagement, focus and prioritization of this critical tech-enabled transformation to keep your company in the top 10% performer category.
The CES Trade Show dubbed “The Global Stage for Innovation” takes place every January in Las Vegas and sets the tone for what consumers can expect in the new year.
For more than 50 years this has been the high-profile event of choice for many companies to launch their latest high tech, innovative products.
In 2020 we saw many futuristic products on display such as massive, curved monitors, concept cars, folding tablets and even a Segway S Pod.
This year, due to COVID-19, CES hosted its first ever all-digital event; not only was there a shift in the format of the conference, but there was also a shift in the types of products put on display.
Board members would be well served to look for emerging trends and examine how the innovative products and services at this year’s CES event reflect shifting consumer sentiments.
CES 2021 had a lot of home products that have clearly been designed with a pandemic-influenced user in mind. Products include a touchless video doorbell system, a refrigerator fitted with a UV light water sanitization system, touchless toilets as well as air purifiers and home gym equipment. There is a macro trend here on health and wellness that can be mindfully applied to product and services offerings across many corporations. Both the positioning and messaging around wellness as well as identifying follow on products /services that your company can develop in its future roadmap.
Consumers are now spending more time than ever at home and are looking for ways to make their time at home as comfortable, frictionless (and touchless) as possible.
As Scott Galloway notes, 2021 will be the year where we see an even greater dispersion of products and services. There will be more friction taken out of the customer journey than ever before as companies continue to leapfrog over traditional distribution outlets such as retail stores, movie theaters, gyms, etc.
Consumers are now getting everything faster and more directly than ever before with contactless delivery and curbside pick up being the new normal. AmazonAMZN Prime 2 Day delivery was once extraordinarily fast – now with curbside pick up ready in 2 hours or less, consumers are not as willing to wait a full 48 hours for their products.
The second clear macro trend is the enormous value in taking steps out of a process. Removing extra steps drives huge loyalty. This has been reinforced by Amazon. We showroom on other sites but transact on Amazon because there are fewer steps to checkout. Ask your company’s to explicitly see what steps can be removed from using their products or services. This is a very high impact goal.
As Mary Meeker pointed out in her Coronavirus Trends Report, “Covid-19 has upended our modern lives in ways we’re just starting to understand”. Digital transformation has been accelerated at unprecedented rates due to the fact that many are working from home and companies have had to quickly meet that demand for a seamless at home continuation of work.
Companies should take note of this accelerating trend and examine how it applies to their own business. Perhaps there is a way to make your product or service more geared towards home use or perhaps you may want to consider how your product can be more “touchless” as that is now a top priority for consumers. Perhaps it is time to look at the marketing budget and have a larger percent allocated to social media marketing as consumers are spending more time than ever on social media sites.
The pandemic has expedited a shift in consumer sentiment; there is now a greater demand for more open airspaces as well as the desire for brands to offer more digital services geared towards achieving mental and physical wellness.
Products that help consumers achieve a more seamless multi use experience in their homes will thrive; consumers are now working from home, teaching children from home and using their homes for exercise and wellness purposes as well.
Products such as the Samsung Smart Trainer shared at CES that allows users to connect a webcam and app on your TV screen to track workouts and offer guided home training, are an example of a company meeting the evolving needs of consumers. The rapid rise of consumers purchasing at home exercise equipment is another example of the dispersion taking place in 2021 – consumers are now realizing they don’t need to have a pricy gym membership to exercise. Those in the exercise software and product space would be wise to re-evaluate their offerings and see how they can be modified to better serve the at-home user.
The need for community and connectivity is a key trend; note how Peloton has embedded this community aspect as a foundational element of their subscription model. Boards can ask management teams how this concept of community can be applied to their products / services.
Meeker notes in her report that the companies that will fare the best in this pandemic are the ones that use cloud technologies, have products that can easily be found online and are always needed, and have a good social media presence.
Meeker argues that these trends have been emerging for some time now and have just been accelerated by the crises.
Perhaps these unprecedented times and rapidly emerging shifts in how consumers operate can be a catalyst for a company refresh. Bringing in new outside leadership can help a company reinvent quickly. For example, at Bose the iconic audio company, they have just brought in their first outside CEO, Lila Snyder, who is leveraging their unique audio domain expertise to accelerate the market impact of their differentiated, break through products like Sleep Buds and Audio Frames.
Companies and boards would be well served to evaluate the products shared at CES 2021 to better gauge how consumer sentiments can influence your company’s product innovation efforts as well as your company’s marketing strategy. There is a lot to learn here as consumer trends are rapidly influencing all businesses: the company’s who adopt these consumer trends will be leaders in 2021!
As directors look to the future, we know one of the most important initiatives is the need to tech-enable and digitize our company’s products and service offerings. An important lesson of the 2020 global pandemic is that companies across most sectors of the economy that offered a competitive product with a good digital experience survived and, in many cases, thrived while their competitors simply underperformed or failed. This, for many of us, is a call to action to strategically review how our respective companies are positioned for digitizing offerings around the customer experience.
At the heart of digital transformation is software and our understanding of modern software needs to be clear if we are to truly provide thoughtful advice and governance to our respective companies as they embrace inherent changes to the way people work, live, buy, and experience products and services.
The software industry has changed significantly over the past decade in 3 important ways-
1. Embedded: software is making wholesale changes and reinventing how traditional industries like financial services worked. Arguably, most modern successful businesses like TeslaTSLA, Peloton, AmazonAMZN, and Chipotle are examples where software is at the core part of the business and has fundamentally shifted the customer experience.
2. Velocity: The speed at which new software and capabilities can be introduced into the mainstream have accelerated at an incredible pace. Gone are the days of waiting years or months for the next version of software where old methodologies like “waterfall” once prevailed. Today, net new features can drop in weeks or days in modern “agile” systems for creating software.
3. Cost: the cost to develop software has shrunk dramatically as quantity supplied in terms of software developers globally have reduced the marginal cost of code at a incredible pace supported by innovations in the cloud where new software can be deployed in minutes from anywhere in the world (due to new capabilities like no code / low code).
The current really important key trend that I believe is here now and will significantly change the product development landscape is a new paradigm called the “no code / low code” era.
The essence of low code and no code software is the emergence of a new class of software ‘assemblers’ not traditional software ‘developers’. The software assembler is a “citizen developer” which essentially means that with minimum to no coding training a technically astute person can create new software capabilities which can help speed-up the overall digital transformation initiatives.
So, what exactly is enabling low code or no code capability in the market today? It has to do with a concept called “abstraction” which in plain terms is the movement of low-level code taking it up a level such that they can be assembled as opposed being written from scratch. Think of abstraction as Lego blocks that are connected to make an object versus fabricating everything from scratch. Some relatable examples of low code and no code software are:
· a user, not a developer, might add a new screen with custom fields in Salesforce without writing code that helps with qualifying leads
· a customer service manager who wants to add a new priority for service tickets called “urgent” can do so without writing code
· an HR/IT user can create a new app for employees to view their benefits election without writing new code
· a marketer might click on a link in Constant Contact to create a new segment of customers to target with a product, message, and offer
Abstraction has permeated across a plethora of new and existing tools and platforms. This has also resulted in enabling the citizen developer by abstracting away the need to write intensive code. Today, implementing creative solutions with software for every employee is easier than ever before as abstraction has fundamentally unlocked the need to write traditional low level code. The fundamental notion of abstraction is an accepted constant in the evolution of software development.
The unique thing about these no code/low code platforms is that they take the place of a significant amount of the hand coding that consumes an engineer’s time.
The promise of no code enables the so called “citizen developers” or in-house employees to innovate and develop software products in weeks not months. Equally important is that citizen engineers can rapidly refine the product as it is introduced into the market, to more accurately meet the end users desired functionality.
No code allows an automation layer to compress the time and accelerate the ability to build software up to 100x faster than currently available.
These platforms are based on the newest architecture with autoscaling resilience containerization like Kubernetes, Docker, Linux and run on standard cloud platforms AWS and MicrosoftMSFT Azure similar to what any large enterprise software development team would be using as its architecture.
Some examples of leading no code / low code platform companies include OutSystems, Unqork, AirTable, Mendix, and Quickbase.
Last year at Microsoft’s Ignite conference CEO Satya Nadella acknowledged that companies will be developing software in house. Ten years ago, Microsoft would be expecting to sell companies their software and not publicly embrace a corporations internal software development at scale.
These no code / low code capabilities are the pre curser to the fact that in 3-5 years as much as 65% of development will be done in house using no code low code which are complimented by AI software bots (robots), per GartnerIT.
We have seen various accelerants to product development in the area of artificial intelligence and machine learning and software analytics targeting companies at the functional or developmental level i.e. a sales team working with analytic software to drive insights on their prospective customer base.
Currently, no code/low code platforms/systems are already using AI bots for validating software code and automating testing functions freeing up corporate R&D teams to have more developers available for key functional requirements.
As your boards’ discuss the tech enablement of your company’s product or service it will be increasingly important for the Board to understand in layman’s terms about these critical capabilities that will speed up software development using techniques with no code / low code development as the “next generation” after agile.
In addition, I suggest ensuring your board’s understanding of digital transformation and how low code / now code, along with AI/ML, and modern analytics like Data Lakes to drive actionable business insights will be key to your company staying contemporary and competitive. One approach is to add new tech savvy digital directors or bring in external presenters to educate the board. This is an important trend I suggest boards take a look at going forward in the coming year.
As a Silicon Valley tech entrepreneur and digital director I often fall in love with the latest, greatest, geekiest new piece of technology. I’m always eager to get my hands on the latest gadgets and I’m fascinated by the work that goes on behind the scenes that enables our lives to be enriched by technology.
However, it can be easy to get lost in the technology vortex and lose site of the bigger picture. It’s important to pull yourself up by your eyebrows and remember what you’re trying to use technology for and what its purpose and place in our lives truly is.
Perhaps, it is time to stop and consider the far reaching implications of some of the tech companies that are most dominant today.
As a firm believer in the free market and of the importance of invention cycles to nurture a competitive landscape that promotes innovation and growth, I am concerned by the unchecked power and dominance of mega-tech giants such as Facebook, Google, Amazon, etc.
These tech behemoths are operating outside of the regulatory framework that is meant to stop a company from reaching monopoly status. These dominant tech platforms impede fair and healthy competition by prioritizing their own services and having the ability to tweak algorithms to stomp out competition whenever they see fit. This goes against the meritocracy system in America where anyone from anywhere can start a company and rise to the top.
From the consumer point of view, it can be concerning how much data and info these tech giants are collecting. 95% of Americans are concerned about businesses collecting and selling their personal information without permission.
Technology should aim to enhance the human experience. This is done by delighting the customer, the employee, creating a cohesive community among your colleagues through work group enablement technology, taking steps and friction out of the customer journey using technology like voice enablement.
It is a fine line that the business owners in each line of business need to be careful not to cross and they must ask themselves, “Are we becoming creepy digital stalkers when we segment too deeply and invade the customer’s privacy in the name of tech enablement?” Board members should challenge management to reflect and evaluate the purpose and positioning of new digital tools to ensure that they are not inadvertently causing brand damage.
Everybody understands it’s important to AB test any new product or service iteration. One of the things that you ought to consider specifically testing for is not just do they like the new offering and is it effective, but to actually try to capture the insight of “are we over the line and are we becoming creepy or are we truly enhancing the customer experience?”
We live in the blended world between electronic bits and atoms and when in doubt over index for the analogue real world human experience over the machine driven.
Be sure to focus first on the human experience and it will yield better long term success.
According to the Mary Meeker internet trends report, 51% of the world (3.8 billion people) are internet users, an increase from 49% (3.6 billion) in 2017. Smartphones are the primary internet access point for many people across the globe; emerging markets in remote geographies are a mostly untapped market for tech companies.
New trends are emerging that are closely tied with the growing number of internet users. Some of these major trends were described by Hans Tung of GGV Capital at the 2019 Fortune Brainstorm Tech Conference.
Here are my learnings and takeaways:
For the past 20 years the model coming out of Silicon Valley has been the “single purpose” app. As the name suggests, these apps are single purpose and focus on solving one consumer pain point and have a clear, easy to use interface. These apps are built to be scalable at the global level with architecture that enable them to expand globally without changing much.
However, over the last 5 years there has been a new trend of “Super Apps” coming out of China. China has a rapidly growing, high density, urban middle class population that has enabled tech companies to capitalize on a “leap frog” effect.
Consumers embrace companies that are able to provide a service with a clear and intuitive interface; that service is then augmented by adding other services/functions. This encourages other merchants to want to partner with the app and provide their services on the app as well. Chinese users are accustomed to seeing a busier interface and appreciate the “one stop shop”. Users will be very loyal to an app that is easy to use, friction free, functional, provides good services and allows for a multifaceted experience. An example of a Super App would be an app where you can order your groceries, book travel, and buy a concert ticket all in one place.
This “Super App” creates an ecosystem where the user’s time is monopolized and there is no need for them to use a variety of apps. The Super App model is rapidly growing in emerging markets such as India, South America and Southeast Asia. The US/Silicon Valley model is to grow vertically and go global. The focus of these super app companies is to aggressively expanding horizontally and dominate a specific geography.
The emerging markets present the opportunity for digitally born companies to thrive. There is no outdated infrastructure to overcome in these markets – everything can be built and tailored to a new generation of internet users.
Many of these emerging markets (i.e. China) are densely populated areas which has spurred another new trend: the “group purchase model”. This has the potential to be a major macro trend and is worth looking into and understanding.
In developing urban areas (often in China in the 2nd and 3rd tier cities) there is an eruption of urbanization. You will see 20-30 buildings in a cluster, each building with 30-60 floors, each floors with 6-12 units per floors. This is an instant community of about 10,000 people. It becomes much easier to efficiently deliver goods to this one cluster (where there may be several thousand people receiving the same good). A dominant Super App enables the “group purchasing” model in these highly dense areas. Hans Tung from GGV articulates these trends in this video.
The developing super apps and “group purchasing” model trends are also spurring a new era in the payments space. In China it is nearly impossible to pay for anything with a credit card, everything is done through mobile payments. Anecdotally it has been said that beggars on the street in China will have a mobile payment QR code so donors can give charity via a mobile phone. Every mom and pop shop will have a mobile payments account set up. It is difficult to find anyone who wants to accept a credit card as payments as they do not want to incur the transaction fees. Legacy credit card companies such as AmEx, Visa, and MasterCard would be well served to consider how mobile payments may disintermediate their user base across all geographies. More smart mobile payment apps will continue to emerge with much lower transactional fees.
The world is becoming a smaller place as more and more people are becoming internet users. These developing geographies are untapped markets – digitally born companies who understand the needs of these consumers are racing to become to become category winners as larger legacy companies are too slow to meet the rapidly increasing demands of these markets.
As you consider your boards’ products, it would be very valuable to ask management to explain their plans to participate in these rapidly dominating new trends of group purchasing, digital payments, and emerging market Super App dominance.
One of the less often thought about components of the digital and retail revolution is how exactly customers and businesses will receive products.
Amazon has set the new standard and many consumers expect to receive products ordered online within 48 hours. Other big players such as Target and Walmart are now trying to compete with Amazon by integrating a two day shipping model as a standard part of their platform.
To keep up with increasing demand from e-commerce channels and meet the expectations of consumers, organizations will need to invest in their warehouses and distribution centers and increase the development and implementation of advanced supply chain and logistics processes.
New technologies such as augmented reality, drones, advanced robotics, and smart glasses for hands free pick, pack, ship, are the key to reducing costs and ensuring the competitiveness of the company and satisfaction of the customer.
Companies that fail to keep up with logistics trends risk losing competitive advantage and falling out of favor with consumers.
The continued rapid growth in e-commerce markets will demand an equally rapid and innovative response from transport and logistics businesses.
To stay competitive in the modern market organizations will have to purchase predictive software based on inventory sensing tied all the way back to customer browsing and product interest to manage and streamline warehouse processes. Software-driven changes through the implementation of AI/ML, drones, autonomous machines and analytics will increase the speed of order fulfillment, reduce inefficiencies and dramatically accelerate productivity and effectiveness. The linkage of “add tech” software companies to track browsing will be very valuable to predicting purchasing trends. Using analytics and deep learning to customize the shopping experience by learning customer browsing habits and serving up likeliest products and recommendations is key to driving customer satisfaction and repeat orders. Developing a holistic ecosystem for maximizing all channels; including online, in-store pick up, e-commerce, partners, resellers, distributors, global manufacturers will drive net new customers, profitable repeat transactions and net new sales and loyalty. Taking steps out of the customer journey and streamlining the fulfillment process will allow organizations to increase their output with less inefficiencies and a smaller human workforce.
The supply chain is no longer linear but rather circular. Suppliers are now finding ways to reuse and reclaim materials to keep prices low and competitive while simultaneously appealing to millennials who value and support brands with a strong ESG (environmental, social, and governance) focus. This mindset shift will help to create resiliency within the supply chain and in turn create more sustainable and long-term value and growth for businesses. A key strategy for any logistics and supply chain management business is to be agile in resource allocation. In geographically diverse sectors companies that are better prepared to flexibly reallocate resources are best positioned to seize new opportunities and gain market share. Allocating resources to initiate a supply chain transformation is a smart investment that will yield long term positive business impacts. One of the best ways to improve your organizations supply chain strategy is through the implementation of advanced ERP (Enterprise Resource Planning) software. New ERP systems inventory sensing with supply chain management and warehouse management capabilities can automatically place orders with vendors when inventory levels drop below a certain level. Standardizing this process will increase efficiency, provide real time inventory management, raise cost awareness and help the organization gain data insight into purchasing trends and customer preferences.
Technology and the digital revolution will continue to disrupt every business and as the world becomes a smaller place more companies will have to embrace the digitization of logistics or risk being left behind. Every company today is facing pressure from digitally enabled change resulting in new competitors and higher expectations from customers. The modern consumer wants a global marketplace with access to products from Asia, Europe, etc. Companies will have to reduce the cost associated with shipment and fulfillment of orders in order to remain profitable. Advanced inventory sensing systems capabilities allow for predicative insights to be able to move materials forward and closer to the customers via pop up warehouses etc., to enable quick delivery.
With the advancement of technology such as autonomous delivery trucks and robotic warehouse ecosystems it is clear there is a “blurring of silos” between logistics companies and technology services companies. As 3PLs and 4PLSs continue to leverage their technology platforms as a major selling point it will become increasingly harder to differentiate a logistics company from a technology and software company. This will lead to more agile solutions used for purchasing, warehouse management and other operational facets in the logistics and supply chain.
When taking advantage of such solutions it is important to analyze whether or not a using a new service/platform will increase or limit your company’s flexibility in the supply chain and if you can ensure that your company will be able to live up to its customer service policies when using 3rd party services. Companies will need to invest in their back office digital strategy that is linked to their value drivers of customer satisfaction by building on their existing assets, customer relationships and partnerships and carefully implementing new technology.
As more and more organizations purchase software to manage and control warehouses and streamline the fulfillment and distribution process it will become mission critical for organizations to stay abreast of the latest advancements in the logistics and supply chain industries in order to stay relevant and competitive in the rapidly expanding e-commerce market.
To truly delight customers, companies will want to build on their expertise in customer acquisition and ensure their back office supply chain and logistics stay as up to date as their front office customer journey.
Directors of public companies would serve their shareholders well by leaning into change and embracing macro trends. Everyone has heard of AI and ML but the bigger opportunity is harnessing the company’s data to drive “time to insights” of decisions. One of the best investments a company can make is in the new enterprise software capabilities companies like Palantir and Datalogue have brought to market.
As a board member, you probably shouldn’t fear AI, automation or the rise of the robots. You should, however, have a healthy fear of falling behind. Falling behind by failing to see that there’s a revolution happening right now. A revolution that will be as transformative as the digitization of our businesses. If you are still catching up to digitize, you should probably learn from the scars left by being late on key trends like mobile enablement. You may want to consider how to lay the foundation for this next revolution. This next AI enabled revolution is the cognitive revolution. The cognitive revolution is about using your company’s data.
Economists define a prediction as the process of filling in missing information by taking information you have, often called data, and using it to create information you don’t have. By filling in the information that we don’t have, we can all make better, more informed decisions. Predictions are an important input to decisions. Less costly, tech enabled predictions lead to better decisions.
Prediction powered decisions are the foundation for the cognitive revolution. Decisions where predictions are the only inputs are oftentimes completely automatable while those where predictions are a major input can be augmented by better, cheaper predictions. For example, deciding whether a credit card transaction is fraudulent is almost entirely dependent on our ability to predict fraudulent transactions based on historical data. Today, most fraudulent transactions get resolved completely autonomously through predictive analytics. On the other hand, diagnosing a patient with a complex disease requires having a nuanced conversation to extract the right information which is then fed to diagnostic aid systems which rely on the data provided by a care provider to augment a diagnostic decision.
Data, computational capabilities and algorithms are the building blocks of predictions and therefore the elements of the toolkit for the cognitive revolution. Data is a by-product of digital systems which means that boards and business leaders need to catch up on digitization efforts if they are falling behind. These efforts could be prioritized according to the importance of the function to the core business.
The digital native companies have shown us that adding predictions to a properly digitized business, allows us to repurpose cognitive talents of the employees away from automatable decisions and towards higher value activities such as new product development and customer support to drive satisfaction. This can lead to completely new markets (i.e. AWS).
The opportunity of creating more data through the digitization of core functionalities can enable the company to outperform peers. The digital transformation is underway, we’ve got digital transformation officers accelerating and prioritizing efforts but what can we do about the cognitive transformation? Should we sit back and wait for those things to be completed before getting started?
Companies that forward invest in the cognitive transformation will jump ahead. An example of cognitive transformation can be seen at Charter Communications, featured in Nvidia’s AI focused conference, GTC showing how they get ahead of the curve to offer unprecedented service for their customers by leveraging predictions to understand their network operations more quickly.
The visionaries who decided to embrace the cognitive revolution now at Charter aren’t alone. We’re seeing the same thing at Airbus where Adam Bonnefield leads the charge to find ways to transform the business by leveraging low cost predictions and at Johnson and Johnson where the enterprise data grid sets the foundation for low cost, agile predictions that can be applied to develop more innovative products.
Here are a few lessons that business leaders may wish to consider to lead the cognitive revolution:
A transformation as fundamental as one that’s changing the way we make decisions as humans is nothing to take lightly. We should feel fear. The digital revolution has dislocated entire industries and eliminated jobs. The broad strokes of history may repeat themselves as we move forward with change. As we keep studying the leaders of the cognitive revolution—the undaunted— we’ll keep posting the observations we see.
Companies need to invest to maximize the data they have and harness this for insights. The “time to insight” metric is one boards should ask management to measure. It will be a key driver for competitive differentiation.
Boards that embrace innovation will help to “future proof” the companies where they serve. The biggest threat to corporations is obsolescence. The rate of change is geometric and change will be as slow as it is today!
Note: This article was written with Tim Delisle, CEO of Datalogue
I have taken a close look at these key tech trends and have noted how they may impact the strategies your board should be looking at.
Board Action: If you reach your customers via smartphones factor in maximum penetration in developed markets, smartphone growth will be in emerging markets.
Board Action: Consider shifting strategies toward content being mobile enabled as the primary channel.
Board Action: How do mobile payments fit into your company’s strategy? Are you doing business with China?
Board Action: Is there a way to add voice enablement to your product or service?
Board Action: The focus of your sales strategy should be e-commerce.
Board Action: Review healthcare under two lenses as a benefit that may need changing for your employees, and whether or not it will impact your business strategy for your products or services.
Board Action: Seek futurists to determine the trajectory of tech disruption for your company.
Board Action: Consider new models of employment, such as gigs and remote workers.
Board Action: Determine how AI can help you transform and embrace digital more quickly.