The Consumer Algorithm Wars
Tomorrow’s competitive landscape will be shaped by which company can develop the best self-learning algorithm to completely control your life.
Customer 4.0 Drives Customer Journeys
“In a modern democracy, he said, people are beset not by a lack of opportunity, but by a dizzying abundance of it.”
― Dan Ariely, Predictably Irrational: The Hidden Forces That Shape Our Decisions
It is hard to make decisions. There are too many choices, and too much information to process. Moreover, we cannot be trusted to make the best decisions. We are not rational in our behavior, and our decision-making is beset with various cognitive biases, most of which we are completely unaware of. Thus, rather than constantly making numerous, incremental decisions, we would like to make broad, goal-based decisions and allow someone else or something else to fill in the blanks to get us there.
Consider the classic package tour: “I want to visit Rome within a certain budget” is transformed into a flight, hotel, and tour guide hitting all the major sites, all within our allotted budget. Or, “I want to relax this evening, but also keep up with everyone else is talking about” is transformed into Netflix viewing recommendations packaged with takeout delivery to your door.
Companies are also increasingly aware of this shift. While initially companies competed on the best product or service, then moved to the best possible customer experiences, the new battleground is Customer 4.0, i.e. helping customers to achieve their goals across a broad platform, independent of a particular product or service at all.
For example, Google Maps want to not only help us figure out the current traffic conditions or public transportation options, but also discover cool eats in the neighborhood or new shopping deals on our route. Airbnb wants to not only help us find accommodation, but help us “experience” that vacation better via cooking classes, surfing lessons, or guided tours of a city’s backstreets.
Just tell me what you need, and we’ll take care of the rest.
Algorithms Integrate Themselves Into Our Decisions
DEFINITION: an algorithm is a finite sequence of well-defined, computer-implementable instructions, typically to solve a class of problems or to perform a computation.
However, with the technological advances of big data and, subsequently, artificial intelligence, machine learning and deep learning to process and give meaning to that data, tomorrow’s algorithms will no longer be “finite” or “well-defined”. They will be “adaptable”, “evolving”, “self-learning” and “self-programming”, and thus bridging on “infinite” and be used to solve not just a class of problems, but an expanding base of human decision-making issues.
Already, algorithmic trading, i.e. executing orders using automated pre-programmed trading instructions accounting for variables such as time, price, and volume, has taking over stock markets, with 80% of the trading value in the US attributed to machines. Human traders simply cannot make informed buy/sell decisions at the speed of algorithms while also taking into account all the information available, past and present.
Although AI-drive algorithms still have plenty of kinks to work out (i.e. issues with fake news and advertising monitoring on platforms such as Facebook and YouTube, Microsoft’s Tay Twitter bot, etc.), progress is given.
Already, numerous online algorithms are seeping into our decision-making processes. When we use fintech services such as Credit Karma to manage our debt and find the best banking products, we are trusting the algorithm to direct our financial lives. When we open up Google Maps to look up directions to our next destination, we are trusting the algorithm to show us the best possible route and manage our transportation. When we use news aggregators like Apple News to keep up to date on today’s happenings, we trust the algorithm to give us the news we want to read and information that we need to know.
Previously we relied on social circles to collect information and guide our decisions; following we began to increasingly trust media coverage to understand new product offerings and differentiate between choices. Now, it will be algorithms that tell us what to buy and when.
The Customer Journey Algorithm
The rise of these two forces means that tomorrow’s competitive landscape among consumer brands will not be shaped by who has the most appealing brand, the most innovative products, the highest quality customer service, or the lowest cost offerings; it will the which company can offer the best algorithm to make all those purchase and usage decision for us.
A Mobility Interface…
will wake you up at just the right time in the morning, and map out your commute for the entire day, buy all your required passes and make sure you are never late to a single appointment. Only occasionally will it ask you for your opinion on a few subjects, i.e. “would you like to take your girlfriend to the movies or the theater this evening?”, so that you still feel included in your life.
A Home Management App…
will help you find the ideal accommodation in your location of choice, then keep your home secure, adjusting lights and temperatures to optimize cost and comfort, while also monitoring any maintenance issues 24/7, immediately notifying the relevant authorities or entities when problems arise. Perhaps it will even make sure your fridge is stocked and your cat fed.
A Digital Travel Companion…
will help you plan your perfect vacation, then automatically make all the required reservations and ticket purchases you need. Then, from the moment you leave your house with your luggage, it will guide you step-by-step, through that perfect vacation to maximize all the places you see, selfies you get to take, and the level of enjoyment and relaxation you receive, while also leaving just a little room for serendipity and self-discovery.
Likewise, the traditional sectors and categories of today will be completely transformed. No longer will be discussing product and service categories, but rather brands will dominate customer journeys, with competition based on those journeys themselves.
For example, who will dominate “mobility”? Will it be car manufacturers, rental car companies, public or private transportation providers, or municipalities? Who will dominate the “home”? Will it be property developers, white good manufacturers, security companies, or insurance companies? Who will dominate “travel”? Will it be airlines, hotels, travel package companies, or tour operators?
Or perhaps someone else entirely?
At the end of the day, we will cede control of our lives to the entity that offers the best algorithm because to do it all on our own is painful, and we are not very good at it. We tend to be late for meetings because we don’t estimate traffic well; we forget to do things around the house because we can’t find the time; we miss seeing those critical sites on our vacations because we don’t plan well. Someone’s algorithm will do it better, and because it does it better than we can, we will happily give it our money, our data, and our control.
Let the Consumer Algorithm Wars begin…
“We usually think of ourselves as sitting the driver’s seat, with ultimate control over the decisions we made and the direction our life takes; but, alas, this perception has more to do with our desires-with how we want to view ourselves-than with reality…”
― Dan Ariely, Predictably Irrational: The Hidden Forces That Shape Our Decisions
