Why do we feel the need to talk so much about the future?
Some might argue that we are obsessed with it here at SMITH. We proudly call ourselves THE ARCHITECTS OF FUTURE COMMERCE™ and of course you can challenge us on that claim, but what isn’t debatable is the future is imminent and what works today, won’t work tomorrow.
With that said, we will use this post to finally add some context and definition to what we mean by Future Commerce.
Staying relevant and profitable requires continuous innovation and change. The companies that succeed will be the ones that champion change even when the status quo is working well today. They will foster a culture of experimentation and constantly iterate to find what works best and quickly move on from what doesn’t. But remember, ideation is not innovation. The future will require companies to establish a long-term vision and a strategy that helps align experimentation back to the business to drive key outcomes. The challenge is, how do you establish a future vision when digital forces continue to create unprecedented levels of industry disruption and change? The short answer is, embrace digital and embrace change. The companies that succeed in the future will be the ones that stop seeking linear improvements and strive to attain exponential growth through the digitization of all business, people, and processes.
Did you know?
The average lifespan of an S&P company has dropped from 67 years in the 1920s to 15 years today; meaning 75 percent of the S&P 500 firms will be replaced by new firms by 2027 1
Since the advent of the computer and rise of the internet, commerce has evolved from handshake deals, paper invoices and gut instinct decisions toward eCommerce, data and analytics. These new digitally enabled services have altered how people and businesses interact, which has required companies blend the art and science of commerce. The benefits realized from these technologies will continue to pave the way for the next era of commerce, one that is fully digital.
Therefore, the journey toward Future Commerce starts with becoming “digitally fit”. In other words, what operational characteristics or attributes will companies need to attain to be successful in the future? At SMITH, we believe our clients will need to:
Of course, every brand and business are different, but these targets were inspired first by Amazon, who is undeniably setting the new standard and the pace for digital commerce moving forward. These numbers also reflect the current impact emerging technologies, like Artificial Intelligence (AI), The Internet of Things (IoT), and Augmented & Virtual Reality (AR/VR), are already having across the manufacturing, retail, and travel industries.
By defining what success looks like in the future, we worked backwards and mapped out the three overarching principles that would characterize commerce today, tomorrow, and into the future. Referred to as The Pillars of Future Commerce, we like to consider them the traits companies will need to possess in the future to survive and be successful.
Future Commerce will be Intimate, where traditional interfaces will disappear, and customer experiences will be intuitive, imaginative, and responsive to both a customer’s intrinsic needs and extrinsic wants. Interactions, whether in person or online, will be grounded in empathy, where loyalty is not fostered by a transaction, but built by the value exchanged or outcomes realized.
Future Commerce will be Intelligent, meaning both customer experiences and core business processes will be automated, augmented, or governed by intelligent systems. Routine manual and routine cognitive tasks will be displaced by technologies that do not fall victim to human error or bias. Those same technologies will enhance our creativity and expand our capacity to discover new insights in text, images, video, and audio. Products and equipment will also become living things connected to the world around them, creating a constant influx of information that will transform how businesses align products and processes to customer needs.
Future Commerce will require companies to be Open organizationally, operationally, and technically. The idea of channels will be eliminated as the customer will become the node of commerce. Customers will move seamlessly from one experience to the next as companies orchestrate frictionless buying with and through partners and marketplaces. Inventory will be completely visible and fulfillment flexible. Transparency will exist between a business and its customers, vendors, and partners. And most importantly, within the four walls of its organization, because to become customer-centric requires a holistic redesign of strategy and leadership, business processes, information monetization, and technology.
It is important to understand that these pillars – Intimate, Intelligent, and Open – cannot exist in isolation. For example, 89% of digital businesses are investing in personalization, but many still struggle to gather data, understand their customers, and deliver value adding experiences 2. Personalization initiatives fall short not because of the lack of technology, but because marketing teams fail to transform their processes and practices away from broadcasting to customers and toward listening to customers instead. Analytics must be central to the marketing function in order to effectively listen and translate customer needs, preferences, and desires, but in too many cases, analytics is isolated from the core business. Therefore, designing an Intimate personalized experience requires an organization be Open to transform and collaborate.
We believe technologies like AI, IoT, and AR/VR will help spark Future Commerce, but becoming digitally-fit also requires a company evolve with digitally-enabled business models. Uber and Netflix reinvented old service models, because they realized it’s not about selling tangible products, it’s about selling intangible items, like services and experiences. At SMITH we refer to this development as, “it’s not what you sell, but how you sell it”. Uber, Netflix, and even Amazon didn’t win because they used technology; they have been successful because they quickly shifted their business toward outcome-based value propositions. They reshaped their customers’ value perception by focusing less on trying to control the customer journey and made it a priority to make it easier for people to get what they want on their own terms. Future Commerce is not about creating journeys, it’s about enabling them.
With that, let’s close with a quick story of a business we believe is embracing Future Commerce – Babylon Health.
Much like the United States, the United Kingdom is facing an aging population. In the past decade, doctor’s visits have increased 2X; patient lists have grown and the number of contacts in-person and over the phone have increased 15.4%. Having to wait weeks for an appointment, people are increasingly showing up at emergency rooms seeking non-urgent consultation 3. So what needs to happen?
Is the answer to increase the supply of physicians, doctors, and medical staff in the UK to accommodate for increased patient contacts and visits?
No. Babylon Health, a London-based digital-first health-care provider, has stepped in and launched an AI chat and digital consultation service to help self-treat patients who were feeling unwell. Rather than calling a doctor’s office or waiting weeks for an appointment, patients can now receive immediate advice on self-treatment. What has happened? Of the 40,000 people that opted to use the chat service over an eight-month period, about half stopped asking for an appointment, realizing they didn’t need one. But the solution doesn’t stop there! When self-treatment isn’t the best option, Babylon Health extends their chat service to its human doctors, who can consult with patients via a video link. Together, the AI chat service and video consultation channel are helping Babylon Health reduce appointment wait times and free up overworked doctors, who can now spend their time with patients in need of more urgent care or complex treatments.
Babylon Health embodies everything Future Commerce and being digitally fit. They’ve reinvented an old service model by breaking down the channels that limited their touch with patients. Their adoption of intuitive conversational interfaces shows how AI can help preserve the traditional doctor-patient interaction paradigm, and their embrace of intelligent systems demonstrates how automation can mutually benefit doctors and patients. Babylon Health’s new patient experience perfectly illustrates our Future Commerce pillars; Intimate, Intelligent, and Open, but their success is a great case study to show how running a business more digitally will allow you to reach more customers and reduce your cost to serve, all at the same time.
[Note: Babylon Health is not a SMITH client]
In our next post, we will start to really unpack Future Commerce and the Pillars by:
- Exploring the role emerging technologies like AI, IoT, and AR/VR will play in accelerating Future Commerce experiences and innovation.
- Providing more examples of companies and experiences today that are influencing Future Commerce.
- Translating our Pillars by putting them in the context of select industries, including Manufacturing, Retail, and Travel.
 MIT Technology Review: Your next doctor’s appointment might be with an AI, MIT Technology Review, October 16, 2018