by Dr. Ashok Subramanian
As we usher in 2018, I cannot help but peek ahead and speculate about notable trends in the world of business. It is a foregone conclusion that technology in all its myriad forms will continue to shape and drive businesses. I believe the three most salient ways in which technology has and will continue to shape our future is as follows:
From the very outset, Information Technology has redefined and restructured entire industries by flattening supply and value chain hierarchies and squeezing out “middle-men”. We witnessed this when airline reservation systems restructured the travel industry and put immense pressure on travel agencies and other intermediaries. During the last decade of digital content and media revolution, we saw intermediaries such as music studios, and retail distributors such as Borders and Blockbuster squeezed out of the market. In the near future technologies such as the Blockchain will provide yet another way to eliminate intermediaries between original producers and end consumers. The underlying economics of reduced transaction costs and efficiency gains is an irresistible force that will flatten and reshape multiple industries. Here are a couple of brief examples:
Rise of the Blockchain, Smart Contracts: Blockchain is a technology best known because of its close association with crypto currencies such as Bitcoin and Ethereum. Basically, it is a massively distributed system of ledgers on which transactions are simultaneously recorded, and associated code dubbed as “Smart Contracts” is used to authenticate, enforce and consummate these transactions. This makes trusted intermediaries such as banks, and other authenticating financial entities redundant. Not surprisingly, the financial services industry is investing heavily in this capability in order to stay relevant and even redefine themselves. Blockchain-based financial systems potentially could reshape markets not served by conventional banks and financial services entities. For example, money remittance markets, especially in developing countries, in which intermediaries like Western Union dominate, are likely to undergo a major restructuring.
The Sharing Economy: Given the blockchain’s built-in ability to eliminate intermediaries, it has enormous potential to restructure business models in many industries. One such beneficiary is the ‘sharing economy’. The trend toward asset sharing was jump started due to the penetration of smartphones and the emergence of intermediaries such as AirBnB and Uber, which leverage the Web. As smartphone penetration into emerging markets and developing countries continues to accelerate, the blockchain becomes a feasible alternative to these intermediaries in directly facilitating transactions between asset owners and asset users. Business analysts point out that retail (Amazon), automotive (Uber and Zipcar), and the server market (Google, Amazon) have already been disrupted – and we have had two years without another major industry being disrupted. Given this, financial services and healthcare are ripe for disruption.
Big Data in Marketing
Big Data and Artificial Intelligence (AI) have been widely recognized as the chief driver of innovation in retail and media sectors e.g., Amazon and Netflix. These technologies, however, will not only reshape industries – they have begun to influence, and will redefine the entire field of Marketing. Marketing is increasingly becoming personal. This phenomenon is driven by the unique characteristics of the millennial population.
The millennial market is currently estimated to be $600 billion, and expected to grow to $1.4 trillion by 2020. Millennials, unlike Baby-Boomers, are notoriously cautious and anxious, having experienced multiple economic recessions. For marketing professionals this implies more experiential sales, less reliance on glitz and gimmicks, and more emphasis on connecting with the values of the customer. This is why we see the rise of values-based selling, personal marketing, and customer-brand engagement. Emerging tools such as “Click Segmentation” allow marketers to target specific customers with compact messages that speak to the authenticity of the brand.
As AI tools increase in sophistication, AI-enabled customer service & relationship management can potentially make every customer engagement more effective in terms of satisfaction, engagement and retention. Social media advertising will continue to increase as more small and medium scale businesses (SMBs) begin to leverage this platform. Integrated marketing or cross-channel marketing will become common-place as SMBs begin to gain familiarity and competence with the variety of digital social platforms. All of these efforts at personal marketing and Hyper-local advertising (“Geofencing” coupled with personal info.) must be weighed against the risk of being perceived as overly intrusive and almost “too personal”.
The growing footprint of technology in business models, and the creation and storage of Big Data does create vulnerabilities. Recent well-publicized hacking exploits make cybersecurity a ubiquitous trait of our future. For every security system invented, there will be an exploit. Businesses must accept the fact that they will be hacked. This is especially true in the financial services industry. Mobile banking will continue its recent rapid growth, and as more and more mobile devices enter the ecosystem, the probability of distributed attack and security breach increases non-linearly. As such, cybersecurity strategies must evolve from mechanisms that only rely on preventing unauthorized access to strategies that include a combination of access control, intrusion detection and rapid response.
Once again, AI and Big Data will play an important role in building effective intrusion detection and response systems. App Development, the driver of the mobile revolution is not immune to cybersecurity concerns. Customers will gravitate to apps that store sensitive personal data on their personal mobile device rather than in the cloud. As a result, successful apps will be those that judiciously distribute business logic and data between the cloud and the personal mobile device. Sensitive business logic and data will reside in end devices – a phenomenon known as “edge computing.”
bsavvy spring 2018