The repair economy

Current consumption habits and accepted obsolescence are fundamentally problematic for the environment and as several studies suggest, our humanity itself. The Economist Intelligence Unit has noted that 80 percent of customers demand new consumption models including subscribing, leasing and sharing.

Since 3D fabricating a broad array of products will create a new industry, it is likely a new ‘economy’ could also emerge. If built in obsolescence becomes questionable, the need for distribution centres, and indeed their very nature, will change. Repair components would ‘exist,’ only in cyberspace until required. As a step this is not far beyond current manufacturers (71% of the top 100 manufacturers) using 3D printing, some for rapid prototyping and others for production or custom parts.

3D printed products sell the license, not the copy (or distribution), creating a whole new business model, notes Futurist Gerd Leonhard. Indeed, the repair economy could ultimately blend some industries together and alter models as high-end design becomes mass market. Ultimately, and on a global scale, billions of people are emerging as first-time consumers, and leapfrog tech in emerging economies could mean different consumer evolution there versus mature economies.

4D printing meanwhile could evolve into an interesting recycling concept. ‘The elements for creating a “cradle-to-cradle” economy are here (one where there is no ‘grave’ or throw-away of items.). It is the killer app for 3D printing,’ suggests one MIT Sloan paper.

Thanks in part to the nature of this killer app, and the removal of the need to manufacture globally, some experts have suggested that 50 percent of manufactured goods could be printed by 2050 (or even 2040 under some scenarios)[i].

This could wipe out almost one-quarter of world trade by 2060 (or two-fifths by 2040 under another scenario). For sure, the economics for 3D-printing-based mass manufacturing don’t yet work out and it is true that 3D-printing remains but one useful enabler to respond to customer needs and wants. However, the future direction and potential of 3D printing in simplifying some structural economic and environmental factors would seem set.

[i] https://think.ing.com/reports/3d-printing-a-threat-to-global-trade/

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Poisonous data

There is little doubt as to the primacy of data in today’s and future business models. Effective analysis allows us to do things more efficiently, as well as enabling completely new services. The risks in not creating data-centric business processes clearly outweigh those evident in utilising data driven strategies. There are a few reasons to suggest this calculus will shift dramatically, and potentially a lot sooner than many realise.

From 1 zettabyte in 2016 to 500 within the next three years, what to do about data in terms of volume, handling, authenticity and beyond, is central to future prospects. The sheer size of increase will lead to an average quadrupling of data storage demand, which in conjunction with a shift of data genesis towards companies (by 2025 60% of new data will be created by companies[i]) creates real structural issues for companies.

Organisations also need to examine their current data use model. Many industries and apps lack explicit consumer consent in how their data is used. Very few apps contain an equivalent of key facts as with financial service products, raising important questions of legality. When accepting terms on an app, no one reads the terms and this creates an unspoken legal risk that could upend all data reliant businesses unless proactively dealt with. This means many data models are open to huge disruption when, not if, it they are challenged in court.

Consumer awareness of what value their data carries will likely prompt this change, as opposed to privacy reasons. The WEF has already proposed the concept of a data bank account. A person’s data, it suggested, should ‘…reside in an account where it would be controlled, managed, exchanged and accounted for[ii].’ In addition, researchers at Microsoft have proposed that ‘…by 2027 a significant proportion of personal income is likely to be derived from the data people generate[iii].’

What data we hold and how we use it will be the life and death of our companies; the very data we use today could prove poisonous if misselling or similar can be proven using situal and contextual data. The risk of retroactive judgement for misusing data, whether reputational or legally, allied to sheer volume will likely create a need for regulated third party data aggregation, dissemination and marketplace formation. Proactively crafting consumer-centric data models and partnerships will not only mitigate the worst of any impending litigation or legislation but could act as an important pivot towards creating greater levels of trust by demonstrating to consumers that you are ahead of zero-sum legislation.

[i] http://www.business-standard.com/article/international/data-storage-demand-to-multiply-four-fold-by-2025-117070500271_1.html

[ii] https://www.economist.com/news/briefing/21721634-how-it-shaping-up-data-giving-rise-new-economy

[iii] https://www.forbes.com/sites/kevinmurnane/2016/12/07/future-tech-seventeen-microsoft-researchers-on-the-technology-of-2017-and-2027/#72c9a27a2bf8

A new retail paradigm

The evolution of mobile commerce, driven by consumer expectations, is set to upend several orthodoxies within the retail industry. Deep-seated change is now on the horizon.

This change will not only require a redesign of processes and organisation; it will require a new mindset that differs from even the recent past. Forrester has stated that businesses should look beyond serving customers in apps, toward a world in which boundaries between services break down to allow better experiences[i]. Customers, first and foremost, want problems solved – something that may go beyond an app. ‘Forrester expects the future will bring more openness, so that businesses can utilize real-time, multi-directional data sharing to deliver contextual experiences beyond specific apps.’ Despite this, only 4 percent of organisations say it is ‘very easy’ for their customer service operatives to access information they need and provide rapid service[ii].

As online and physical models increasingly blur, the need for all retailers to provide better customer experiences will rise. The response should include at least partial inclusion of drivers otherwise perceived as threats or challenges. Take the sharing economy, for example. In some cases, retailers are partnering with a range of sharing-economy services, driven by the desire to meet consumers’ changing expectations. Many examples are in-store but some exist online too. Nordstrom, for example, has begun utilising UberRUSH to provide same-day delivery in certain cities[iii]. This is important since 42 percent of consumers think three- to four-day shipping as fast – down 21 points in 1 year[iv]. Instant or quicker (i.e. anticipatory or predictive) could feature within a decade. Importantly, 42 percent of mobile shoppers have abandoned a purchase in the past year because shipping would take too long[v].

The evolution of existing technologies will also challenge incumbents and shape new business models. For example, social media influences 63 percent of electronic purchases[vi]. With the addition of VR (as Facebook is planning) and haptics, today’s social media could become tomorrow’s retail portals. Distributed social video, especially if linked to VR could form the basis of future mobile commerce. By 2019, 85 percent of net traffic could be via video and 50 percent of commerce via mobile[vii]. Unless incumbents adapt quickly to these opportunities and challenges, start-ups and tech companies will increasingly shape customer expectations and behaviours and provide them an outlet too.

[i] http://www.informationweek.com/mobile/mobile-applications/mobile-revolution-will-kill-siloed-apps-forrester-says/d/d-id/1324974

[ii] https://hbr.org/2016/05/tracking-the-trends-in-bringing-our-own-devices-to-work

[iii] http://www.bain.com/publications/articles/retail-holiday-newsletter-2016-2017-5.aspx

[iv] http://www.cnbc.com/2016/10/25/online-orders-must-be-delivered-in-two-days-to-be-considered-fast.html

[v] http://bit.ly/2ribzsf 

[vi] https://latestthinking.cognizant.com/perspectives/hearing-consumers-through-the-social-media-din

[vii] https://www.forbes.com/sites/steveolenski/2017/05/15/with-mikmak-latest-move-brands-can-expedite-path-to-purchase-instagram-snapchat/#44611fa445eegm

Silver wall or silver lining?

Of the megatrends set to profoundly shape the future of work and life, automation gathers the most column space and, arguably, acknowledgment at the C-Suite and boardrooms. The logic is clear enough – it will transform companies, jobs, skills and the labour market in significant ways. However, it is not the only driver of change with such transformational impact. Longevity will also induce the sort of profound changes that some analysts still argue over regarding automation.

There is a general ignorance as to the opportunities and challenges inherent in ageing. According to BNP Paribas, people over 65 will represent more than 40 percent of total global consumption by 2020. By this date their global spending power could reach $12Trillion, or 54 percent larger than Latin America’s GDP[i]. The American baby boomer generation currently outspend other generations by $400bn each year, and in twenty years, some 70 percent of US disposable income is forecast to be in the hands of those 60 and older.

If this multi trillion dollar market represents the potential silver lining for companies, the tsunami or wall is hit in terms of designing organisations for these people to work in. Indeed, the advancement of medical technology now means living past 100 is now the normal expectation for babies born in Japan and similar countries. What this means, in conjunction with precarious fiscal positions of many governments, is that today’s twenty-somethings could well be working into their 80s’. The temptation for companies to kick the can down the road is clear; it is after all decades before significant changes will occur. This would be a mistake however, since individuals are already cognizant of the shifts in the world of work, including longevity. If it’s on their radar, it should be on yours.

The half-life of knowledge is decreasing at an increasing rate, in part thanks to cognitive technologies and automation. Learning has become a life-long pursuit and will increasingly become so as careers lengthen. This will upend orthodoxies, primarily the notion of a three-stage life consisting of education, work and retirement. The implications for companies are huge, and the impacts will be felt imminently – primarily in the demand for ever expanding learning opportunities.

Lynda Gratton suggests that ‘…without changes in corporate policies, employees will struggle to build working lives that have resilience over an extended period of time. In response, companies need to initiate a top-to-bottom redesign of their human resource practices and processes[ii].’ The notion of learning as well as recruitment and retention will likely undergo significant change. Overcoming this silver wall will enable companies to better compete for the silver lining of ageing.

[i] http://bruegel.org/2017/04/embracing-the-silver-economy/

[ii] http://sloanreview.mit.edu/article/the-corporate-implications-of-longer-lives/

The future of retirement

The notion of retirement is a relatively recent one, and a range of coalescing drivers might make it a transient one in human history. The world is ageing at an unprecedented rate; some 15 minutes are believed to be added every hour to a life expectancy that now exceeds one hundred years at birth in the UK[i]. This growth, it should be noted is independent of some of the truly revolutionary therapies and innovations that some suggest are on the horizon.

Coupled with a less certain investment outlook and in some cases, cultural predisposition against pensions savings, and the outlook for pensions deficits is gloomy at best. The World Economic Forum, for example, suggests that by 2050, there will be a global shortfall of some $400 trillion. To put the figure into perspective, this is five times the global economy[ii]. New policies extending the retirement age, innovative quantitative methods for planning purposes and other measures could help, but the scale of the problem would appear too significant to be met solely by reactive policies. Were the pensions problem resolvable by simple legislation it would have already been done.

Many working age people have not yet started saving for retirement or received any retirement advice. Looking at tomorrow’s over 65s reveals a complexity of financial issues; student debt, expensive housing, anaemic wage growth and the rise of the gig-economy. As a result, globally, a third of Millennials expect to work well into their 70’s and one in eight expect to work until they die[iii]. There is a temptation to view this as a problem, yet this ignores the wider changes impacting work. The move away from the traditional four stages model of life is significant; in its place could emerge a model that encapsulates learning, work and leisure episodically and as needed. The framework is not yet in place to guarantee access to continuous learning or accruing benefits from working in the gig-economy but social change is already happening. Patterns of working among older people have changed rapidly in the past couple of decades and the situation is likely to continue to evolve, not least with the expected waves of automation that will impact the economy.   We are already seeing a higher proportion of over 65’s working, not out of monetary need, but rather for the enjoyment – socially and professionally – that work can provide.

Ultimately, we must ask what role retirement plays in society, whether or not retirement is beneficial to individuals or society, and imagine new models for framing our life stages. Other questions abound; what would retirement look like under a societal system of guaranteed income? Perhaps most importantly and imminently, business leaders and policymakers need to be thinking now about how to integrate 75 and even 80 year olds in the workplace.

[i] http://www.dailymail.co.uk/health/article-4556948/Fifteen-minutes-added-life-expectancy-hour.html

[ii] https://www.bloomberg.com/news/articles/2017-05-26/retirement-savings-gap-is-seen-climbing-to-400-trillion-by-2050

[iii] http://www.cnbc.com/2016/05/31/many-millennials-expect-to-work-until-they-die.html

The future of CRE

Technological advances are infusing digital into the fabric of society, economies and the organisations and businesses that inhabit them. Indeed, it has been estimated that the advent of disruptive digital models account for the disappearance of half of Fortune 500 since 2000.

architecture-2175925_960_720

Commercial real estate is no different; providing players in this space as well as the companies they serve with some key strategic choices to make. Technology and the rise of the gig economy and use of teams comprising internal and external talent all call into question the current levels of CRE use. What’s more, it is estimated that by 2030, 30 percent of corporate real estate portfolios will comprise flexible space, including co-working, incubator and accelerator space[i]. This implies both a need for technological change as well as cultural change – the where, how and by whom work is done could change radically even without the prospect of widespread automation.

For CRE providers, technology could clearly become the key driver of value for the entire real estate ecosystem as well as the catalyst for change. Offering a new definition of value and a sense of partnership may be crucial for CRE businesses to survive and thrive. They will also require a new technical foundation. For example, automated facility management will demand new technical expertise and model reorganisation. This will extend to beyond what may be considered traditional CRE technologies – blockchain for example could rapidly lead to disintermediation and promote CRE transparency as information asymmetry ends.

Predictive analytics, sustainability metrics and other key drivers of value are also likely to impart change on the organisational structures of industry players, whilst consumer facing technologies – whether in the masses of data based ReTech players or via virtual reality are likely to be considered standard within five years or so. Demanding consumers and the risk of disruption via emerging ReTech players may, in some instances, force change on incumbents faster than their ability to change sustainably.

Cybersecurity is one of the chief reasons for this concern. Risk-governance frameworks and policies that account for emerging technologies such as the IoT are needed which suggests the need for collaboration with both internal and external stakeholders to improve system security. Several key aspects of dealing with the cybersecurity challenge appear in other aspects of CRE’s digital transformation. A shift to platforms emphasises orchestration and a focus on ecosystem value, perhaps suggesting wider and deeper change to corporate practices, internal silos, mindsets and data-ownership.

[i] http://www.nreionline.com/office/what-new-technologies-mean-future-office-space

Beyond Millennials: the rise of Gen Z

As the most digitally native cohort in human history, Gen Z is already the driving force behind a wave of digital business models. Centennials (Gen Z) are even more digitally oriented than Millennials and are set to impart this impact onto the wider business world. 2017 will see the first Gen Z graduates enter the workforce and by 2020 Gen Z will experience a surge of spending power as they comprise roughly 25 percent of the global workforce[i].

gen z work

For organisations struggling to connect with Gen Y workers, the rise of Gen Z will complicate matters. Research from INSEAD suggests some key differences with Gen Y; there is less of a need for constant feedback for example, but their emergence in the workplace highlights three major issues confronting business. Like Gen Y , purpose at work is cited as a key motivator, but beyond that, the state of back-end technology and the provision of learning opportunities stand out. Such changes require organisational change that will require different thinking from business-as-usual or applying veneers.

Gen Z are not only digitally comfortable, there is an argument suggesting they are digitally dependent.  Thanks to technology, 76 percent of them believe they can turn their hobbies into a full-time career. Many consider becoming a social media influencer – something still not fully understood by many companies – to be ‘…a career path as realistic as going to college and working for a big company[ii].’ Crafting technological structures capable of attracting Gen Z talent could led to integration issues, requiring a clear development and integration strategy for both technology and employees. This is perhaps especially important for Generation Z which INSEAD notes is likely to be more helpless than previous generations in a non-digital world[iii]. Aligning corporate provision with expectations is key. For example, while ‘…only three percent of working professionals currently use any kind of virtual reality (VR) applications in their workplaces, 42 percent of Gen Z expect it to make a big impact on their working lives when they enter the workforce[iv].’ Their expectations would not appear unrealistic since Goldman Sachs forecasts the combined VR and AR market to be worth some $80 billion by 2025 as the segment expands beyond entertainment and into the wider world of work[v]. How many companies have a strategic vision of how to use such technologies?

Not only must technological infrastructures modernise, so too must management and the processes undertaken internally. Millennials and Generation Z more readily grasp the reality of rapid and discontinuous change in products, services and ways of working making life-long learning is a critical element of the workplace. Deloitte notes that for millennial professionals, ongoing development support trumps all other benefits[vi], a position likely to be strengthened by the incoming Gen Z. Without strategically aligning tech and internal processes like learning to their offerings, companies may struggle to reach the best Gen Z has to offer.

[i] Source: Ernst & Young, 2016 https://betterworkingworld.ey.com/better-questions/generation-z-millennial

[ii] https://www.forbes.com/sites/deeppatel/2017/04/18/how-gen-z-will-shape-the-future-of-business/2/#236bc9635037

[iii] https://knowledge.insead.edu/leadership-organisations/what-generations-x-y-and-z-want-from-work-technology-5356

[iv] https://knowledge.insead.edu/leadership-organisations/what-generations-x-y-and-z-want-from-work-technology-5356

[v] https://knowledge.insead.edu/leadership-organisations/what-generations-x-y-and-z-want-from-work-technology-5356

[vi] https://hbr.org/2016/10/how-learning-and-development-are-becoming-more-agile?webSyncID=39938744-e905-949b-a952-32a1edc72745&sessionGUID=814bb317-0e57-55a4-29ba-1d040a08c07b