How will digitization mark our everyday lives?

In the big picture, we as consumers and service users, will increasingly ask for mobility and connectivity, but digitalisation also leads to dematerialization, demonetization and decentralisation. The need for gadgets and hardware will be reduced, we will have new processes that phase out and distribute currency, and in the future we may not need a central bank. Nonetheless, it is important to take into account two other trends that always have and always will change the world: deflation and chemistry. In a deflated world, ideas are more valuable than products. Ideas that can help people improve their companies are our most important currency. We also know that over thousands of years, significant social changes have occurred largely based on advances made in chemistry, medicine, pharmaceuticals, fertiliser, 3D print etc.

 

The Super Internet addresses the climate challenge

“The new super-internet can help to ensure that global climate change doesn’t produce several billion climate refugees in the coming years. The super-internet occurs when the “communications internet”, the “digitalised energy internet” and the “transport and logistics internet” are seen in the same context. One billion new users will connect to the internet, and this will occur via mobile phones. Fifty million gadgets will be connected to the internet, and we will have more mobiles than there are people on the planet.

 

We can save one million lives in traffic every year

Let me use transport as an example of how digitization can contribute to a better world. Every other minute the Earth receives as much solar energy as the whole world needs for one whole year.

So the supply is not a problem, but making use of it is the challenge. This is exactly the business idea of Elon Musk; To preserve – make use of – solar energy. Then technology, many assert, may ultimately reduce the need for cars by 99%, for instance. We are going to a larger degree consume the car as a service and your grandkids will ask you if you really were allowed to drive your car yourself.

This means trouble for anyone engaged in transportation, selling cars, driving taxis, selling insurance or car loans. Aluminium works and driving instructors; the list is long. Car parks will become parks. Today we have one car accident per 100.000 km driven; with self-driving cars, this decreases to one accident per 10 million kilometres driven. That's how it goes when someone has a revolutionary approach to transportation; rather than the conventional and more evolutionist.

 

Data-driven businesses are changing their business models through a better understanding of user needs and behaviours

Put another way; the data available will help your business identify what to market tomorrow, how to market it and to whom. Information is also being used to determine the relevance and potential of different models, as well as to review the role and location of the various service’s offered in order to maximise the bottom line.

 

Technology erases boundaries between sectors and industries

The music industry was hit early. The media industry too. Google, Apple, Facebook and Amazon, GAFA, produce cars, transportation solutions, energy solutions and financial products. They are involved in grocery, fashion, book publishing and mobile phones. And so on. Today we see that a number of businesses are changing new industries. Because they can. Apple now has a billion gadgets in circulation, as well as the world’s largest database of credit card numbers in connection with iTunes. Naturally, they started with payment processing- ApplePay.

 

The recipe for being "disrupted"

If we look at businesses that have not held on during the ups and downs, we find several characteristics:

 

  • Stable business models over many years
  • Operational focus-long term planning
  • High entrance barriers to their market
  • Weak entrepreneurial competence
  • Listed on the stock exchange; low risk investments; taking few chances
  • Leaders seeking solutions; Little acceptance of problems

 

Common to many who succeed is that they have a digital mindset; they don’t look at this as a technology, but as a way of doing things. They are committed to how digitization can create value for business development, efficiency, positioning and innovation. They ask questions like “Are we a producer, or are we a company that makes it easier for our customers to accomplish their aims?“. If the latter is the case, logistics and service immediately become more important than the production line.

Our challenge to many customers is actually: forget production and distribution; focus on owning the customer relationship. The position “closest to the customer” can only be won by focusing on the customer’s total life situation and the customer’s everyday life – seen from the customer’s perspective. Superb brand and user experience, simplicity, relevance, insight, competitive price and high quality become the criteria for success. In the new ecosystem that evolves, your brand will help determine if you manage to take the “closest to customer position”. And your ability to establish partnerships with, for example, producers and distributors become deciding.

 

New platforms connetct sectors and businesses

The new ecosystems change traditional competition terms. Players across different industries and sectors are appearing as facilitators or collaborators in building new products, services and customer experiences. Some companies are pushing their way into new sectors using existing platforms – others are creating their own. Scaling and value snatching here will be enormous due to the coupling between different platforms.  An example here could be the Uber platform. It can scale geographically and can be coupled to the ecosystem of, for example, AirBnB. Uber is relevant to AirBNB, but not vice versa. AirBNB knows when you land and can offer transport with Uber.

It may be wise to look at their business as part of a business ecosystem, rather than as part of an industry. A common example is Apple that leads an ecosystem across sectors, PCs, consumer electronics, information and communications, payment processing, etc. Such a leadership makes it possible for the rest of the system to invest in the direction of a common future with common value snatching.

Service supplier’s such as banks, insurance, electricity companies and broadband and mobile telephony providers are among the most vulnerable and must change their core activities. They can do this by redefining and adapting their own roles and growth strategies in the new ecosystems that are developing. A good but challenging strategy for companies that currently deliver critical services to the home is to seek the position as a complete provider of services related to the customer's home, housing, family and life situation. Quite simply reposition yourself as the most attractive provider of “all useful everyday services in our busy family life”.

 

The value of the brand becomes more important when the ecosystem matures

Your brand is the sum of what people think about you, every time they experience it. You could call it a ‘gut feeling’. The mechanisms behind influencing this feeling; building and managing a brand, remain the same today as they have always been, but digitalisation and other technology are creating a far more fragmented universe of channels. The value of strategic brand-building becomes more and more important when one is also compared with the best user experiences in the world, thanks to the cloud-based platforms and ecosystems of Google, Amazon, Facebook, Apple and others.

Ask yourself whether GAFA is going to sell insurance, electricity, mobile and payment services in Norway? Do they become a competitor or an aggregator? It is unlikely that all four data giants, Google, Amazon, Facebook and Apple will sell end-user services within the next few years. But it is likely that one or other of the four will do so. We believe that if they do, they will redefine the rules of the game. Amazon is, for example, best known for taking an aggregator position in a new market, that is to say, the consumer can choose between many or all of the suppliers of a service. We now see that Amazon, for example, is doing this in the insurance sector in certain countries.

 

How do Nordic companies meet the new ecosystems?

Nordic companies cut costs and streamline work processes; including robots (RPA and chatbots). They develop self-service solutions and prioritize good digital user experiences. They strengthen their innovation skills and build an innovation culture. For the time being, however, we have not seen so many Nordic enterprises building digital ecosystems based on the collection and interpretation of large amounts of data.

 

The three most important pillars in a strategy for a rapidly changing world

To succeed, we are convinced that you must include the three cornerstones of such a strategy: Differentiation, insight and innovation. At the same time, it’s important to identify areas of improvement that are significant enough to generate speed and momentum, yet manageable enough to be viable.

We're happy to be of service and go into more detail on how differentiation, insight and innovation will help you in a data-driven world.

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