by Yev Galper, Director, Technology Solutions, EPAM
March 9, 2017
In this blog we will explore seven Global Innovation Trends that span across different sectors and will be important in defining business and technology strategy in 2017. We will discuss the logic behind these trends, how they redefine industries and how you could use them to create breakthroughs for your company.
In my position as Head of the Innovation Practice for a global company like EPAM as well as my experiences working with dozens of companies from various domains, not only do I clearly see where these trends are headed, but also where opportunities exist for clients to gain a competitive edge in their space.
Without further ado, here are seven Global Innovation Trends, some of which are emerging business models while others are technological. All of them contain opportunities to create tremendous value for end users, which inevitably leads to higher revenue and bigger market share.
The ability to understand each user and provide them with personalized experiences is what everybody is talking about. Companies that successfully make the transition from legacy to digital and omnichannel, which are enablers of customer-centricity, are going to succeed by disrupting and will dominate their industries. Those who lag behind with customer centricity will eventually become extinct.
It is easier said than done, though, because customer centricity touches not only technology, but also organizational structure and most importantly the organization’s mindset. Now the focus is not the company, not even its products and services, but rather the customer and users! This philosophy requires a shift from product silos to omnichannel solutions. The new technologies need to be put in place to create a 360-degree view of the customer across all touch points, both in physical and digital worlds. This is a prerequisite to truly understanding users and building an intimate relationship with them to move from old school segmentation to hyper-personalization – providing customers what they want, when they want it through an effortless experience and before the customer is even aware of the need. To do that, new capabilities such as Design Thinking, Service Design and User Experience Design need to be developed in order to create meaningful cross-channel User Journeys and Predictive Analytics to understand the intention of each specific user and predict what they might want or need in the immediate future.
Companies like Uber, Google and Amazon double-down on this investment and create frictionless experiences. They are considered to be leaders in the Digital Economy era, and are the reason why many of the trends discussed below are relevant.
Micro Economy solutions come in two main flavors – “Micro-X,” like micro-payments or micro donations, and “Pay-by-X,” like pay-per-mile insurance or pay-per-hour rental.
A major driver of this trend is the affordability of technology and democratization of resources which in turn leads to a raised standard of living for those unable to afford these products and services.
Besides making the world a better place through bringing products and services to underprivileged, Micro Economy solutions can be very lucrative endeavors due to exponential technologies like Blockchain that drastically drop the cost per transaction. So even with the small margins companies can generate considerable revenue due to the sheer number of transactions.
“The sharing economy is about owning the customer-supply interface. Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content. And Airbnb, the world’s largest accommodation provider, owns no real estate.” (Source: TechCrunch, The Battle Is For The Customer Interface)
The Sharing Economy business model encourages more openness, less privacy and heavy use of social interaction while shifting customer trust from large institutions to distributed social networks. This shift creates a more humanized experience for customers.
One of the major reasons for the rise of sharing economy apps, like AirBNB and Uber, is the ability to generate additional income for people. For many, making extra money is a strong incentive to take advantage of a sharing economy app.
Another finding from the sharing economy business model is that tapping into the wisdom of the crowd through crowdfunding, crowdsourcing, and peer-to-peer fundraising applications results in the generation of ideas and solutions that bypass traditional methods.
The Direct-to-Consumer trend, also referred to as “disintermediation”, redefines the distribution model by removing the middleman and going directly to end users.
Take two highly successful Direct-to-Consumer pioneers as an example: Tesla removes car dealers from the equation by selling directly to customers. Netflix bypasses cable companies by delivering content straight to their users.
By going direct, companies remove costly middlemen and most importantly have a chance to build a more intimate relationship with end users. Customers embrace this model because they benefit from higher-quality, more personalized products and experiences.
“The future today: Empowered customers, anticipatory experiences and effortless self-service.” (Source: whatsnext.nuance.com)
Self-Service empowers customers to do or find what they need using automated systems without the assistance of experts.
The benefits are obvious – companies can save a ton of money by replacing costly experts and customer support personnel with technology and users can resolve their issues in the comfort of their own home, in a matter of minutes, and for free.
This paradigm has been available for ages in some industries like shopping or travel. But now it is seeping into less likely verticals like banking, with the ability to deposit checks using mobile devices; and healthcare, by letting patients do some lab work at home. And of course, the recent rise of chatbots is taking this trend to a different level. Some even claim that “bots are new apps”.
Smart Machines are just as smart as the algorithms that are used to dictate their behavior. We are entering the era of advanced algorithms that give birth to Internet of Things (IoT) solutions powered by Artificial Intelligence (AI), resulting in innovations such as autonomous cars.
“$50 trillion of value to be created by AI and Robotics through 2025”
The rise of Conversational User Experience solutions, like Amazon’s Alexa and Chatbots, is leading to more natural screen-less communication channels with the customers. This trend will only continue to grow in 2017 and beyond.
Through the use of technologies like Neural Networks, Machine Learning, and Predictive Analytics, machines are getting more intelligent the longer they operate.
The greatest value will be generated by connecting smart devices into ecosystems like a Smart Home. We are still in the early days of building such robust systems, but the Smart Machine revolution is inevitable.
Application Programming Interface (API) is a technical term that has migrated into the business domain. I am seeing new words like “API-fication” emerge from senior executives across many industries. This trend signifies the shift from stand-alone products and services to open ecosystems of integrated solutions.
APIs have become a cornerstone and a prerequisite to innovation and digital transformation, because it enables agile product development, quick introduction of new features, integration with third parties, and innovation through crowdsourced events like hackathons and virtual challenges.
Companies like Citi open up their APIs with the intent to become the global hub of FinTech innovation. You can integrate Uber into any app due to the APIs that Uber made publicly available. Business models for companies such as Stripe, Twilio, PayPal and many others depend on the API economy and without this technology they would not even exist.
Whether it’s business model innovation through the Sharing Economy, Micro-Economy, and Direct-to-Consumer or technology enablers like API-fictation, Self-Service, Smart Machines, and Intelligent Algorithms, it all comes down to a key concept: Customer Centricity. This strategy requires a re-alignment of products and services and an internal organizational structure and technology overhaul. It might feel like an insurmountable task, but my experiences assisting companies through these digital transformations has revealed that global innovation trends are here to stay. Therefore, digital transformation is no longer a “nice to have” - it is a matter of survival.