Smarter by the Minute: The Rapid Rise of a Bespoke Economy
If you’re still on the sidelines waiting to see how IoT and AI unfold, your time is running out.
The Consumer Electronics Show in 1968 stunned its audience with a Portable Executive Telephone that weighed 19 pounds and required an FCC license to operate. At last week’s CES 2019 I sat in the cockpit of a flying Uber, unrolled a 65-inch OLED TV screen, and ate fresh bread made from scratch by a robot. My experiences were just a fraction of the future on display, and it’s a future that’s coming fast, hemmed in only by the limits of our collective imagination. If you’re still on the sidelines waiting to see how the Internet of Things (IoT) and Artificial Intelligence (AI) unfold, your time is running out: the exponential power of technology is giving rise to an insatiable consumer base, lending fresh urgency to the adoption of IoT and AI as strategic imperatives for new and legacy brands alike.
Beyond the Buzz: Exponential Technology is an Unstoppable Force
While futuristic products at CES fuel the imagination and fill the public’s news feeds, a deeper current was evident in conversations among business leaders at this year’s show. Organizations are experimenting, generating success and growing more confident in their ability to implement transformative business approaches that scale IoT, AI, and blockchain into the enterprise. As their confidence grows so too do their investments. Worldwide IoT spending will reach $745 billion in 2019 and will continue growing at a double-digit clip to surpass $1 trillion in 20221, and global spending on AI is expected to triple during that same timeframe as companies create new and bespoke experiences to compete for customers’ attention, spend, and loyalty.
Skeptics and laggards can argue about AI’s immaturity, but their objections will soon be moot. AI’s exponential growth trajectory is leading us into the future much faster than any of us thought it would, and in ways that challenge our inherently limited, linear thinking. Pascal Finette’s research highlights the dramatic impact that exponential technology has had on business and on the world at large over the past few decades, presenting compelling assertions about our future as the costs of energy creation, computing power, and connected products all rapidly fall to mere pennies. Consider that next year, one computer will be as powerful as one human brain; and by 2040—when today’s newborns are graduating from college—one computer will have the collective brain power of all nine billion human brains on earth.
DNA sequencing is another capability that has and will continue to be revolutionized by the advent of exponential technologies. In 1999, the cost of sequencing the full human genome was a staggering $2.7 billion. In 2007, it dropped to $350,000. By 2014 it had plummeted to $1,000. And in November 2018, one lab temporarily lowered prices under $100 to “send a clear signal to the medical research community that the $99 genome will be here in three to five years.” If this trend continues, we can predict nearly zero costs to map the human genome within the next decade, creating a world where consumers could easily screen for pre-cancerous cells during their morning routines. Exponential growth in embedded controllers could also transform our everyday lives. Today, less than 15% of devices are connected2; but embedded controller costs have now fallen so low that any device can be turned into a “smart” device for less than a dollar. With the cost of delivery also in free-fall, we can predict a future where virtually every device will be smart by default. And the consequences of that shift are already rewriting the customer experience of tomorrow.
The Rise of the Insatiable Consumer
It’s a self-propelling cycle: as organizations leverage technology to deliver more innovative products and services, they stoke consumers’ appetites for more innovation, which in turn requires additional investments in IoT and AI just to keep up with customer expectations. Consumers can already have groceries delivered, manage their home energy usage, see who’s at the front door, play music, order their favorite take-out, and turn on their washing machine all without leaving the couch (or the car). Their smart appliances can notice when they’re running low on favorite purchases and automatically replenish the supply. As the innovative becomes the everyday, these well-informed, always-connected consumers expect to not only be impressed by innovative plans for the future, but also catered to today through an array of smart products tailored to their preferences and lifestyle.
In the vehicles they drive, the retailers they buy from, the homes they live in, and the services they receive, consumers demand a dynamic product offering that adapts to their needs and wants – in other words, they demand a product experience. And that experience increasingly drives their decisions about where to spend their considerable purchasing power. While 80% of consumers say they are more likely to do business with a company if it offers personalized experiences, the quality of those experiences matters. Consumers who believe companies are doing very well at offering those personalized experiences shop three times more frequently than those who are merely satisfied3. The flip side is also true: 78% of U.S. consumers say they retract their loyalty and switch brands faster today than they did three years ago4, pointing to an increasingly demanding and fickle consumer base.
It’s a tall order for brands of all sizes. How do you satisfy an insatiable consumer? The answer lies in creating a relationship that delivers frictionless, anticipatory experiences that connect with customers on their terms.Jason Vazzano, CEO and Co-Founder, Vectorform
The desire for an experience that lasts past the point of sale is currently most evident among Millennials, but Gen Z and other digital natives are sure to ratchet up expectations further. They’re growing up in households where smart speakers and connected objects are part of daily conversations, and you’re just as likely to see a toddler navigating an iPad or smartphone as playing with Legos or dolls. Odds are, if they can imagine it, they will expect brands to find a way to provide it to them when, where, and how they want to experience it. That might mean creating luggage-free vacations that allow future travelers to fly from Iceland to Maui with all the right clothing and gear awaiting them at each stop; or enabling last-minute changes to a product as it’s being 3-D printed in the shipping container; or delivering an autonomous vehicle that senses and seamlessly adapts to each passenger’s preferences for music, commerce, and climate. The possibilities are endless, and the only certainty is that each wave of future customers will bring fresh demands for what constitutes a compelling experience.
It’s a tall order for brands of all sizes. How do you satisfy an insatiable consumer? The answer lies in creating a relationship that delivers frictionless, anticipatory experiences that connect with customers on their terms. And for that, you need IoT and AI. The risk for companies who try to opt out of these future forces will be just that – the future will go on without them. They will find themselves slow to adapt, unable to scale, and delivering sub-par customer experiences from which consumers quickly flee.
But is this truly a one-sided equation? Will exponential customer demands hold companies hostage, or will those demands unleash organizations to pursue growth beyond what they’ve imagined possible? I’ll explore that topic in Part Two of this series, which looks at how adopting IoT and AI is not only a business imperative, but also a business opportunity with the power to yield significant returns.
Are you ready to leverage IoT and AI to disrupt your company and create customer experiences that win in the market? That’s the question Vectorform is answering with clients like Jeep, DTE Energy, SharkNinja, and more. If you’d like to be part of the conversation, connect with me on LinkedIn or contact our team of experts.
Interested in learning more? Let’s start a conversation.