The end of the golden age for companies?

The underpinnings that have sustained corporate growth for many of the previous decades are eroding, and many truths are starting to unravel. The emerging business environment is both increasingly uncertain and ever more competitive, and coupled with the emerging competition from new markets it would be easy to form a narrative of decline for western companies. The rules of business are changing and those failing to notice will perish.

goldenage

For those not wedded to previous, and perhaps current, ways of doing things, the future holds great promise. The rise of the global consuming class is set to undergo a rapid expansion by 1.8 billion by 2025, by which time global consumption is expected nearly to double, to $64 trillion and global revenue could increase by more than 40%, to $185 trillion[i]. New industries, new markets and new sources of consumption – as well as changes within the type of consumption in core markets all offer opportunities to innovate and carve new value propositions.

Cynics would be correct in pointing out that much of this growth will go to emerging market competitors and that emerging market competitors will increasingly pose a challenge in many western companies’ home markets. The blurring of industry boundaries, and corrosive power of technology companies that allows quick implementation of data rich sets and cost structures onto a range of industries add an additional dimension to competition, as well as providing new opportunities for those agile enough in thought and action. The opportunities for entrepreneurship, partnering, collaboration and disruption are all significant.

Through both emerging market competition and digital vectors the challenge is clear – the relative decline of the large western corporation will exert even greater pressure to innovate and increase productivity just to survive, let alone thrive. Any relative decline could also lead to a fundamental rethink on some long standing assumptions of what factors make for a successful business. In fact, new business processes and models will be needed in conjunction with root and branch cultural renewal for success to be achieved en-masse. Board-level technology competency and direction is a matter of urgency (and one that will be addressed in a future GFF blog) and the platforming of key business processes could help create increasingly competitive companies more capable of success in the global digital economy. It also likely that the forces convulsing labour markets could someday lead to a rethink on the role of business and its place in society.

The combination of demographic, geopolitical and stage of consumer development that helped propel steady economic growth in western economies can never be repeated, and neither should the organisation models that emerged as a result of these conditions. New models are not a ‘nice to have,’ they are essential. This means actively disrupting your own model before a data rich competitor or emerging market competitor (from within or outside your vertical) does it for you. Bleeding edge may not be desirable but neither is disruption and in some cases, the comfort zone between the two is decreasing. Those agile enough to inhabit this evolving ground could well post revenue and profits that help redefine the ‘golden age.’

[i] https://hbr.org/2015/10/the-future-and-how-to-survive-it

The emerging T&T data platform economy

Accenture notes that ‘…digital offers a once in a generation opportunity to embrace the future and gain sustainable advantage in the marketplace by shifting to new, more sustainable economic models, while simultaneously stepping up to better satisfy real consumer demand[i].’ This is the crux of where branding strategies need to shift to. Effective digital transformation should include tools and processes display and enable transparency. This is a powerful point from which to launch predictive analytics and other potentially powerful consumer-centric strategies. Data will enable ever greater micro segmentation of customers, increased personalisation for customers and a more effective search for new customers.

data

As a result of the emerging digital revolution, considerable business model change is underway. In 2013, 14 of the top 30 global brands by market capitalization were platform-oriented companies[ii]. MIT Sloan notes that as these companies can get closer to their customers, they often develop ‘…a competitive advantage based on new insights into pricing, network effects, supply chains, and strategy.’ In short, branding is moving from simply selling a product and towards ‘…adding value and engaging the customer[iii].’

Data, its analysis and applied insights should stand at the centre of future ecosystem applications, since companies that succeed in both demonstrating trust and applying data driven yield productivity rates and profitability that are 5-to-6 percent higher than those of their peers. Furthermore, McKinsey research shows that those that embed data in the DNA of their marketing and sales decisions improve their marketing return on investment (MROI) by 15-to-20 percent[iv]. This is, of course, nothing new for many individual components of the travel industry. Travel retailers, hotels and airlines form some leading examples of how to run data driven campaigns. The challenge remains however, for the industry to create common platforms that provide single points of access for consumers.

The Internet of Things (IoT) offers one possible medium for both unifying disparate standards (although it will require a common standard/platform itself) and gathering exponentially more data, and more valuable data. Thanks to IoT growth, the turn of the decade could also see consumers interacting with over 150 sensor-enabled devices every day, with 60 percent of device interactions proving ‘passive’, allowing people to use information from intelligent systems and machine learning[v].

It is only through more granular data, ostensibly including IoT sources, and providing consumers with easy to use and manage technology interfaces that personalised service will ever be realised.  This presents the great possibility of crafting seamless travel propositions, new value for consumers as well as industry stakeholders; the time to start developing platforms that span these stakeholders is now.

 

[i] http://insuranceblog.accenture.com/wp-content/uploads/2013/07/Accenture_The_Digital_insurer_PC_Insurance.pdf

[ii] http://executive.mit.edu/blogpost/why-platforms-beat-products-every-time#.VumTi-IrLIU

[iii] http://executive.mit.edu/blogpost/why-platforms-beat-products-every-time#.VumTi-IrLIU

[iv] http://www.sas.com/content/dam/SAS/en_us/doc/whitepaper1/using-big-smart-data-107003.pdf

[v] https://agenda.weforum.org/2015/02/5-predictions-for-technology-in-2020/

The next frontiers in travel and tourism

Space hotels, floating cities, underwater hotels and adventure travel via submarine all feature as some of the more extreme destinations and experiences soon to be available. Cruise ships weighing 500,000 tonnes, larger than today’s aircraft carriers and with their own flight decks[i] form another. The desire for something new would seem inherent in human beings, yet in a world saturated by curated travel and social media it would seem increasingly difficult to push the envelope out yet further – especially for the vast majority of travellers not able to afford space travel or submersible adventure.

Travel and tourism 2

Perhaps then, the next frontier lies in technology? Virtual travel, at present, acts more as a way of planning a trip as opposed to an alternative to taking one even as Samsung warns that ‘…travel agents must embrace digital and virtual reality to survive[ii].’ Whilst holodeck style travel is highly unlikely to feature as a direct replacement for travel any time soon, there is considerable scope for a deepening of tourist experiences and even forms of time travel.

Years ago, an augmented reality app appeared in Berlin, allowing tourists to follow the path of the Berlin Wall as if it were still standing. As this technology matures, and in conjunction with virtual reality, we will be able to recreate past scenes with more visual, tactile and sensory feedback than ever before. Staid recreations of past battles or historical events could be replaced with mixed reality –  interactive, participatory events that enable greater learning and potentially open up a whole new array of tourism destinations currently idle or under-utilised. The potential for raising local tourism levels is considerable – whilst bringing the Roman Coliseum or Beijing’s Forbidden City to life has obvious attractions, recreating local attractions and history will also have a place for consumers increasingly conscious of constricted planetary resources.

In these examples, it is not the destination that represents the frontier but rather the enhancement of the environment around us. If the travel and tourism industry is to start to grapple with the complex question of sustainability and its various economic and environmental facets, inducing more domestic and regional tourism would appear to be a good place at least to start. This would, in many cases, require new forms of collaboration, partnerships and industry ecosystems to form.

 

[i]  Source: Lupyled, retrieved 2016 http://www.lupyled.com/en/the-future-of-travel-2050/

[ii] Source: Marketing Week, 2015 http://www.marketingweek.com/2015/07/07/the-future-of-the-travel-agent-virtual-reality-digital-screens-and-smell-generators/

Customer-centric travel and tourism

All travel companies should be in the midst of a transformation to becoming technology companies. The role of digital in both back-end and consumer facing processes is simply too important for companies to consider themselves as anything else.

Travel and tourism 1

Consumer loyalty – or lack thereof – would suggest that stakeholders reorient themselves towards becoming platforms for experiences. A number of relevant and interesting technologies, such as augmented reality (AR) and virtual reality (VR) are the more obvious examples, with Thomas Cook’s ‘Try Before You Fly’ scheme featuring Samsung Gear VR headsets generating flights and hotel bookings of over $17,000 and instigating a 190 percent increase in the number of New York excursions booked[i].

In able to provide the personal touch craved by many travellers though, the need for a substantial data architecture capable of capturing information accurately at any points of contact is pressing. In addition, such a system must be capable of effectively combining sources of external data – such as from social media or else other ecosystem stakeholders – since the data on file for a given traveller may not be complete enough to offer a true glimpse into their lifestyle, interests, aspirations or personality. Such information is likely contained within the industry ecosystem but dispersed and siloed between the many different stakeholders; hotels may have insights that airlines don’t or vice-versa. Whilst great care needs to be taken to protect the security of such data, the attraction of some sort of data ecosystem – whether controlled by the individual consumer (in a sort of data profile) or stakeholders putting their pieces of data together – is clear. It is also possible of course that some next gen apps, based on deep learning and algorithms will be able to learn these things without the need for wider partnerships and formulate push messages and offers to consumers based on their specific circumstances.

It could even be argued that a highly segmented, market of one mentality is the only way that the majority of industry stakeholders will be able to pursue the future successfully. Whilst niches will always exist -some highly profitable – a culturally diversifying global consumer base and fragmenting mass market will mean more focus is needed on the individual than ever.

The promise of such individual data is that through digital technologies, analytics and innovation provide much more seamless experiences for consumers[ii]. The outside-in perspective provided by customers and their data will become a key lever in shifting to a truly customer-centric future.

 

[i] http://www.inc.com/neil-c-hughes/how-virtual-reality-is-ab-transform-the-travel-industry.html

[ii] https://www.bcgperspectives.com/content/articles/transportation-travel-tourism-innovation-travel-innovated-who-will-own-customer/