4YFN: 7 Subtle Shifts That Will Change the Shape of Business
“The future is already here: it’s just not very evenly distributed.” – William Gibson, American-Canadian writer who has been called the “noir prophet” of the cyberpunk subgenre of science fiction
Attending the GSMA 2015 conference in Barcelona illustrates William Gibson’s observation in rather dramatic fashion: in Fira Gran Via, the main event, dominated by guys in suits, walking around 500sqm exhibits of large global brands, presenting in slick, full-on fashion the future of telecoms: Apps! Internet of Things! Wearables! Big Data! Smartphones/watches/kitchens! Amongst the big brand exhibitors, hundreds of millions of dollars in revenue, marketing budgets, and market capitalization. All very much in the mainstream future.
In another part of the city, in Fira Montjuic, a rather different and no less exciting GSMA event – 4 Years from Now (4YFN), the segment of the MWC devoted startup innovation ecosystems, i.e. founders and investors. Significantly smaller in scale and much lower key, its attendees walked around in jeans, t-shirts, and sneakers (socks optional). Wearables were very much on display: not in exhibition booths, but on people’s wrists. The booths themselves were similarly low-key: standard-issue two-by-three metre spaces manned by startup founders and team members, eagerly pitching to the attending investors, corporate executives, and to each other. Here, everyone was similarly enthralled by thoughts of the future – but a future not yet defined by devices, products and software. In 4YFN, the future was something coming in waves: tangible and unrelenting, but not something one could hold in the palm of one’s hand.
Some of these waves:
1. We are evolving into “Homo Digitalis.” – John Lunn, Senior Director of Developer and Startup Relations, PayPal / Braintree
a. Current notions of usability are that tech is designed around intuitive user experience and real-world usage habits (eg food delivery apps built upon the traditional food delivery business). But these habits are changing, too, as the use of tech modifies the way we do certain processes (reading a book, getting directions). We are building new habits as technology allows us to do more and different things (selfies; obsessive checking of email and social media).
b. Beyond our behaviour, technology is being developed around human physiology and psychology. Many of us would’ve heard of Google’s contact lens, developed with Novartis, that has a built-in blood sugar meter. Perhaps less popularly known are developments around identity authentication using heartbeat patterns (Bionym’s Nymi), brainwaves (UC Berkeley) and arterial/vein configuration, or in-ear and subcutaneous magnets to bring hearing to deaf people, and possibly deliver music in the future.
c. Much has been written about how the present and future generations use technology for self-expression. At the fringes, we are seeing how hardware + software + biology “splices” can be used for auto-identification, as well as to address a number of other health-related issues.
2. Technology is ambient. And it needs to be magical.
a. The broad base of the current generation in both developed and emerging markets are no longer impressed by tech; it’s just the way things are.
b. Corporations cannot keep up, or claim to be innovative, simply by “going digital” (ie being present in online/social media). To truly engage their customers where they are, companies need to rethink workflows and re-design product and service offers around their customers’ evolving habits.
c. Tech needs to be invisible. And even as an invisible underlying layer, it is expected to…
i. offer a broad range of options for users (who want to express themselves, discover solutions, etc);
ii. and protect their interests (privacy, security, trustworthiness built through experience rather than conferred by authority);
iii. whilst creating magical experiences (high usability and reliable delivery on promises).
d. Beyond reliability and efficiency: there is a return to purpose, meaning, beauty, design. Notegraphy, a Barcelona-based startup styles itself as the “Instagram of words,” i.e. an app providing a range of striking original graphics and typography to add beauty to the words that people post on their social media, or save to their personal galleries. A proposition built upon beauty. And they have raised a total of €575,000 based on this proposition.
3. Access is the new Ownership. Contribution is the new Conversion.
a. Our beliefs about how we derive utility and benefit from things – our relationships to objects and service providers – is changing.
b. Services delivered by companies are now being delivered by networks of individuals and organisations. Similarly, the way we used to rely upon financial institutions is shifting to FinTech (algorithms used in everything from stock purchase recommendations to credit ratings and loan qualification).
c. Platforms and companies are shifting from being merchants to enabling marketplaces. Like typical marketplaces, the motivations are a combination of economic and non-economic factors. There is value beyond pricing; and community standing is a valued attribute.
d. Community standing and reputation are gained not necessarily through purchasing the most goods or flashing the most prestigious brands. In many marketplaces, individuals strive to be recognized for how they support other people’s goals (crowdfunding), or how they serve the community in general (reporting potholes and bribes).
4. Data is the new oil.
a. Data is a high-value commodity: many people sitting on large sets of data, but not everyone realizes it’s there, or knows how to extract/use it. Over the long run, however, data could hold the same value for everyone once everyone starts to use it well – however, until then, those who control the data and the tools for extracting analyses have a distinct competitive advantage.
b. Having said that, in some respects, there is a shift from Big Data Hype to Big Data Hangover: having bought into the proposition, some companies are learning that the hockey stick is not about the increasing income they derive from analytics, but the increasing investments they have to make in order to remain competitive!
c. So why is it so valuable? Because everyone needs data to fuel better management strategies and tactics, to engineer operating efficiencies, to deliver customer delight. Going into the future, companies will stay relevant through intelligent use of data, or they will overlook their customers’ early warning signals, and slowly make themselves irrelevant.
5. There are serious constraints in the Internet of Things (and humans are a necessary part of the solution).
a. The Internet of Things was on everyone’s mind: sensors, meters, wearables, devices and networks that are auto-managed through pre-set parameters and algorithms.
b. However, far from being utopian and Jetson-esque, there is a maturing view that this exists within a universe that is resource-constrained (eg size, power, in situ durability), dynamic and distributed, making security more necessary but also more difficult.
c. Operating in the real world is unpredictable: hence choosing which conditions to monitor, and creating the decision framework for automatic (ie non-human) triggers, are necessarily more probabilistic rather than deterministic.
d. A key insight regarding data: the intelligence and security in the Internet of Things will need to be self-configuring. Hence, the architecture and hierarchy of decision processes will need to be deeply thought-through from the beginning. By humans, of course.
6. The world is my backyard. “Global is the new Local.”
a. There is an emerging broader understanding of how inter-connected our markets, and our lives, are. For more evolved societies, this results in a greater sense of responsibility for the impact that we have on the planet, and for other countries and people around the globe.
b. In parallel, there is a sense of a bigger opportunity for corporations, startups and investors – geographic boundaries are not the constraints to create value through collaboration; other factors – economics, culture, regulations, etc. – are. Both of the above underscore the importance of connectors to link problems and solutions; innovators and innovation investors; inventions and go-to-market; agility and scale.
c. “Global is the new Local” is an acknowledgement that we operate in a more complex environment, with risks as well as opportunities. Not just “the world is my oyster” but also “the world hosts my competitor.”
7. Corporations and Emerging Markets: Not your typical VC.
a. Aside from the usual suspects (ie startup founders and investors), an atypical and prominent presence in 4YFN consisted of large established global corporations: Banco Sabandell, Bayer, Telefonica, Ooredoo, El Pais, Audi. Unsurprisingly, a common thread is that their traditional business models – retail banking, branded pharmaceutical, telecommunications, newspaper, automobile manufacturing — are under threat from their customers’ changing views about the utility of their products and services, and the emergence of non-traditional competitors.
b. Emerging market public players (cities and national governments) and educational institutions are also surfacing as stakeholders in driving the innovation ecosystem forward. With no legacy interests, and the prospect of leapfrogging long-established markets and players, these unconventional investors are turning the fast-changing environment to their advantage. Whilst they understand that the entry ticket is usually via discount pricing, they recognize that pure price plays are a race to the bottom. Innovation, on the other hand, creates customer value beyond price.
c. How can these non-traditional players compete? They recognize that the Big Business’ inertia is not apace with a fast-changing world and a fickle consumer. Boards of directors, project management teams and decision committees will be too slow and too conservative, and “this is the way we’ve always done it” is a death knell for innovation and attracting innovators. Recognising that speed confers competitive advantage, large corporations are building new capability – usually through hiring external talent, creating new processes, and respecting the differences in skills, metrics and culture that these new teams require to operate effectively within the systemic shifts, even before these shifts are obvious to mainstream business.