8 Trends in Technology & Business
There is a very important change happening today that is impacting the whole world: the rapid growth of technology and its fast pace of adoption by businesses and people. It is happening really fast and, as Singularity University describes it, we are quickly moving from a “linear and local” world to an “exponential and global” world. The new reality requires a drastic change in the way we see the world and in the way we think and react.
Technology already changed the way people interact, both in their personal lives, among family and friends, and in their professional lives, on how they do business and behave in the workplace. Companies not only need to be prepared to invite and keep talents that are very comfortable with those new technologies, but they also need to learn how their businesses can benefit from the advances of technology.
This post explores some of the trends both in technology and business, providing examples of how companies are leading the digital transformation and the context in which they appear.
Trends in Technology
· Exponential Growth of Technology
In 1965, Intel’s co-founder Gordon Moore observed an emerging trend: “computing would dramatically increase in power, and decrease in relative cost, at an exponential pace”. This insight, known as the “Moore’s Law”, became the foundation for the digital transformation and the technology development in the last 100 years has proven the prediction right.
What does exponential growth mean in practice? It means that very quickly over time, powerful technology will become increasingly available for people at a very low cost.
Businesses then take advantage of that by building better products at lower costs. And all those products and services powered by high quality and inexpensive technology change the way people interact. The price and power evolution of chips or semiconductors, that are today one of the main pieces of technology on modern electronic devices (computers, cellphones, tablets etc), has been huge.
Although it is already expected that, within the next 5 years, it will be too expensive to further miniaturize chips or transistors, innovation will come in different ways. Singularity University estimates that some other technologies will keep doubling their growth year after year in the next decades, they are the Exponential Technologies. All of them are already a reality: you can find them running on your mobile phones, computers, systems and homes. There are no questions about the power they will bring to new products and we already see disruption they have brought to many industries. The combination of Computation / Networks / Sensors with Artificial Intelligence will be the one leading the innovation and adoption of technologies in the next few years.
Computation power has been doubling and is still going strong. By 2023, the average computer is expected to mimic the power of a human brain and do calculations at the same rate as our brain thinks. By 2050, computer power will run at the rate of the thinking power of the entire human race put together.
The extent to which we have progressed technologically over the past 50 years is far more than the rest of the history of humans put together. Fifty years ago, it would have been inconceivable to have foreseen how much we would have advanced today. Similarly, we should expect that in the next 50 years the world would be a radically different place.
· Worldwide Access to The Internet
The internet has drastically changed how people get access to information and services. In 1995, less than 1% of the world population had access to the internet. In 2016, the percentage has increased to more than 40%, meaning more than 3 billion people now access the internet.
The growth has also been accelerating rapidly. it took 20 years to get to the first billion users, 5 years to get to the second billion, and just 4 years to get to the third. By 2020, 3 billion new users will be connected online for the first time. They never used the internet before, never made an online purchase and they will bring their new ideas and needs to the online world.
Developing regions are leading the move. Between 2000 and 2016, the number of internet users in Africa grew by an astonishing rate of 7,415.6%. During the same period, the growth was 2,029.40% in Latin America and 196.1% in North America. A few companies, among them Facebook and Google, are investing heavily to bring free internet to remote areas. Facebook started the Internet.org initiative and the drones’ project through its Connectivity Lab. Google is using balloons to deliver access to the internet with the Project Loon — one of its first experiments was done in 2014 and provided access to remote areas of Piaui, Brazil.
For the first time in Brazil, from 2013 to 2014, internet access through mobile devices surpassed desktop: 80.4% of the homes that accessed the web used mobile devices, while access via desktop totaled 76.6%. That trend is already present worldwide. In Africa, we find the first “mobile first” or even “mobile only” generation, that skipped the PC Market. With smartphones that cost as low as $26, the african market is rapidly embracing mobile as the preferred platform to make use of services available online.
· Connectivity
In the 1960s, computers were a scarce resource, too expensive for a single person to own. The concept of time-sharing emerged, so a group of people would take turns using the same system, as a way to democratize access to computers. That was the prominent model of computing until the invention of the personal computer. But now, there has been a continual, and fundamental shift in the ease of access to connected devices: smart devices today are connected to the internet and to each other, opening multiple opportunities ahead.
By 2020, Cisco estimates that smartphones and phablets (a class of mobile computing devices designed to combine the size and format of smartphones and tablets) will represent about 50% of the total mobile devices available, and dominate 81% of the global network traffic. The next largest category is M2M, or machine-to-machine, that accounts for 26% of the devices in 2020, and 7% of all network traffic.
The number of devices connected to internet will be more than three times the global population by 2020. There will be 3.4 networked devices per capita by 2020, up from 2.2 networked devices per capita in 2015. There will be 26.3 billion networked devices in 2020, up from 16.3 billion in 2015. That is mainly possible due to an explosion of the growth of sensors in the last 50 years.
Apple, for a long time, has been the reference for tech consumer products, but now other companies are ready to take the lead and challenge this status. In 2016, Google released a new family of connected devices, including a smartphone and other products for consumers’ homes. This initiative represents a relevant step towards the goal of offering a seamless interaction between people and devices and among devices themselves. But Google is not the only one. Amazon also reached homes by launching Amazon Echo, a home automation hub, that does voice recognition, plays music, makes to-do lists and provides weather, traffic and other real time information.
· Artificial Intelligence
Until now, the most prominent evolution on the software application market was the move from “on premises setups”, where applications run on mainframes, local servers or desktops, to the “cloud”, where all infrastructure needed to run any application (including machines, database, operational system and others) is running on the internet. To think about cloud applications is a requirement for companies to succeed — whether they develop applications or whether they decide which applications to use.
The combination of both stronger computing power and large connectivity among devices now running on the cloud provides the background for new applications to access and consume data in a whole different way. Systems are open and accessible from anywhere to any type of application that runs on laptops, smartphones, tablets, phablets, wearables or any other devices under the IOT (Internet of Things) umbrella. Providing mobility to people and users means providing applications that access and consume data on any of those devices, at any time, from anywhere, guaranteeing all of them share the same online database.
The next big wave for application software is definitely the incorporation of Artificial Intelligence (AI). All efforts now are in training technology to identify behavior patterns in structured and unstructured data. As Google’s CEO Sundar Pichai mentioned, they are positioning the company differently: “We are heading from a mobile first to an AI first world”. Identifying patterns is just the tip of the iceberg for AI applications. Very soon, application will be cognitive and replace human decisions on very complex routine tasks. IBM’s Watson initiative in the health care industry is translating the trend: it can interpret medical images, diagnose and treat diseases where doctors are scarce, understand a person’s genetic profile and offer personalized treatment options.
Trends in Business
· Industry Disruption
About 15 years ago, buying an entire music album was the way you could own and listen to songs you liked, even if you had to purchase an entire album just for that one song. Music albums came in CDs and had about 70–80 minutes of music, which was as much as it could hold. They were a physical asset that you had to carry about with you, and you could only listen to them if you had a discman or desktop computer. Sharing music with friends used to mean letting them bring your CDs home for the weekend.
Every aspect of that experience has changed. With Napster, music became detached from a physical form and instead became digital files that you could distribute to thousands of people around the world. With iTunes, you could buy individual tracks for 99 cents instead of spending much more on an album filled with songs you weren’t interested in. In the latest shift toward music streaming services, music has become so accessible, across all devices, that there are not many reasons to own albums anymore. Sharing is now a matter of sending over a link, and it is instantly accessible to the other party.
Such drastic changes are not unique to the music industry. Exponential advancements in technology and their business applications have disrupted user experience in different industries and upended the way we think and interact with products and services in essentially all of them.
· Shifts in Business Models
Easy access to technology is enabling ideas and business models to be tested quickly and cheaply. Major innovations are happening in the scale of years, rather than decades. A billion dollar business can be built in just a few months.
We see increasing investments made in technology by non-tech companies: amounts invested totaled $28 billion in 2015, a growth of 263% from 2012. Walmart, Monsanto and General Motors added technology pieces to their business portfolio to become more competitive and improve products and services. When different business models merge, technology becomes part of the overall strategy, and companies are required to rethink core competences and reinvent themselves.
Companies should find the new unit economics that translates the value of the business and then start implementing changes in the way they sell and charge for their products. But adapting their business models to a completely new reality may not be an easy move. A great example, that helps illustrate the challenges in it, is Kodak’s history. For more than 100 years, Kodak’s core business was to produce and sell photograph cameras. It grew to over 100,000 employees and reached value of U$28 billion in 1996.
By 2012, the company was bankrupt and had only 17,000 employees. Even though the first digital camera (“Eastman Kodak”) was actually invented inside Kodak’s laboratory by one of its employees, Steven Sasson, in 1975, it never became their business. Maybe the digital photography business was too much of a different thing than Kodak’s traditional chemical film paper business, and leadership was not able to translate changes to the core business.
Also on the photograph business, but with a completely different approach than Kodak’s, we find Instagram: a company founded in 2010, by two university students. They offered the world a new way to take pictures and share them online, through a mobile app. The platform grew quickly, became a worldwide success and, 18 months later, it was acquired by Facebook for U$1 billion when they had only 13 employees.
· Digital Experience
The way people interact to each other and with businesses is different today. In our personal lives, we share information with Waze and Uber to benefit from better transportation services. The workplace is also different now that message and video applications allow an easier interaction among teams from different departments and locations. With platforms that allow new interactions, the process of creating and sharing knowledge is much faster.
At Zendesk, teams use Jira as the portal to share information about projects, goals and performance with the whole company, so people from different areas are aware of what is going on and can contribute and interact together. Github also brought increasing interaction among development teams, providing more visibility of the work of tech teams to the company.
With the data gathered from applications in the new sharing economy, both inside and outside the business, companies are able to better understand customers behavior and preferences, improve their services and ultimately find value in new places. The chatbot platforms combine all that and aims to radicaly improve the communication channels available today between companies and their customers. The goal is to build intelligent robots that can easily interact with customers and are able to quickly serve and redirect customers’ demand. As technology improves (voice recognition, natural language processing, artificial intelligence), interactions become seamless and bots assist people in tasks like scheduling meetings, solving problems or searching for information. Chatbots create the new “conversational economy”.
· Change in Value Proposition
There has been a relevant shift in companies’ value proposition. New and different sources are bringing value to businesses now. Data, an intangible asset, is the driving force of the next big wave: it is the way companies are making use of technology to leverage the power of the network, the unlimited connectivity, and the computing power to collect, aggregate, correlate and interpret data and make incredible enhancement to people’s lives.
Data generators are everywhere, and everything is now translated to data: voice, image, behaviors, transactions, emotions etc. Running data through AI technology brings new knowledge to the surface. Leaders have better information for their decision making processes, and it translates to better services to customers:
· Lead generation: if bank managers know that people who use fitbit have better financial planning practices, they can build a better approach when those customers enter a branch
· Inventory management: a restaurant that knows one sandwich sells more on the weekends and also increases sale of a specific dessert, can make better decisions when building the menu and keeping items in stock
· Health treatments: an intelligent device can alert people at home when they make mistakes in the timing of taking daily medications, so they can correct it without affecting the overall treatment
In October 2016, Viacom, an American media conglomerate specialized in cable, satellite television networks and cinema, was valued around U$15 billion. On the same period, Netflix, it’s competitor that delivers TV shows and movies 100% online on smart TVs, gaming consoles, desktops (PCs or Macs), and mobile devices (smartphones and tablets) is valued around U$45 billion. Netflix is worth 3 times Viacom’s value. It does not carry inventory, cash represents 18% of its total assets and physical assets only 2%. Viacom carries 21% of its total assets in physical assets and only 2% in cash. Clearly, requirements for building billion dollar businesses today are different.
The main challenge ahead is in adapting the mindset and the decision making processes to this new changing world, since innovation and disruption will come from anywhere, at anytime. In addition to focusing on their core competencies, companies need to learn how to use technology to add to their team’s current knowledge.
Sources:
· Internet Trends Report 2016 (Mary Meeker) — http://www.kpcb.com/internet-trends
· Singularity University links — “Exponential Thinking (Peter Diamandis) — Exponential Finance 2014” — https://www.youtube.com/watch?v=HvLFoMNzD_k, www.SingularityU.org, www.singularityhub.com
· Constellation Research — Disrupting Digital Business — http://www.slideshare.net/rwang0/disrupting-digital-business-ready-for-the-postsale-ondemand-attention-economy
· Moore’s Law — “50 Years of Moore’s Law” — http://www.intel.com/content/www/us/en/silicon-innovations/moores-law-technology.html, https://en.wikipedia.org/wiki/Moore%27s_law
· Transistors and Moore’s Law — https://www.technologyreview.com/s/602592/worlds-smallest-transistor-is-cool-but-wont-save-moores-law/ and https://www.technologyreview.com/s/601962/chip-makers-admit-transistors-are-about-to-stop-shrinking/
· Internet Users — http://www.internetlivestats.com/internet-users/, http://www.internetworldstats.com/stats.htm
· Facebook Internet.org and Drone projects — https://www.facebook.com/zuck/posts/10101322049893211
· Amazon Echo description — https://en.wikipedia.org/wiki/Amazon_Echo
· Google Project Loon — https://en.wikipedia.org/wiki/Project_Loon, https://www.solveforx.com/loon/
· Google’s new products — http://www.forbes.com/sites/carminegallo/2016/10/06/google-ceo-launches-new-products-with-remarkably-simple-words-and-slides/#70ea4203409b, http://www.businessinsider.com/new-google-hardware-products-announced-2016-10
· Brazil’s access to the internet — http://www.comunicacoes.gov.br/sala-de-imprensa/todas-as-noticias/institucionais/39679-pela-primeira-vez-celulares-superaram-microcomputadores-no-acesso-domiciliar-a-internet
· Cisco VNI report — https://www.ciscoknowledgenetwork.com/files/573_02-23-16-Documents2016_VNI_Mobile_CKN_Final.pdf and http://www.cisco.com/c/en/us/solutions/collateral/service-provider/visual-networking-index-vni/vni-hyperconnectivity-wp.html
· Phablets — https://en.wikipedia.org/wiki/Phablet
· Artificial Intelligence description — https://www.thedisruptory.com/2016/02/future-artificial-intelligence-theophile-gonos-ceo-a-i-mergence/
· IBM Watson applications — http://www.medicaldaily.com/5-ways-ibm-watson-changing-health-care-diagnosing-disease-treating-it-364394 and https://www.wired.com/2012/10/watson-for-medicine/
· Steve Sasson and the first digital câmera — https://en.wikipedia.org/wiki/Steven_Sasson
· Walmart: Tech acquisitions — https://www.crunchbase.com/organization/walmart-labs/acquisitions, Jet.com acquisition — http://www.wsj.com/articles/wal-mart-to-acquire-jet-com-for-3-3-billion-in-cash-stock-1470659763
· Annual Study of Intangible Asset Market Value from Ocean Tomo, LLC — http://www.oceantomo.com/2015/03/04/2015-intangible-asset-market-value-study/
