INTRODUCTION
The world's future relationship with technology is likely to be very different to the one we see today. Over the next decade, daily lives and long-established business processes will be transformed as a new wave of digitalisation propels disruption, displacement and innovation. The COVID-19 pandemic has only accelerated this wave as society turned to technology to enable some form of normal life.
It is clear that while not all businesses will be affected by digitalisation in the same way, they will all face some form of technology based disruption. In our report 'Tides of Disruption: How to Navigate Business Transformation', we analysed the forces driving digitalisation and business' readiness for it. In doing so, we identified not only a timeline of digital change, but also an assessment of how prepared different countries are for that change.
Working with the London School of Economics, we identified the emerging business models and new industries which digital disruption is likely to drive to the surface. Familiar to some, unknown to many, they provide an insight into how businesses may transform all or part of their operations in the future.
Combining two key pieces of research and insight, 'Tides of Disruption' provides a snapshot of the effect that digitalisation is currently having on both countries and sectors while forecasting the future impact and its implications on those running international operations in Europe, Asia and North America.
There are many emerging technologies that will propel changes to business processes between now and 2030. Understanding these forces of disruption, their impact and the potential business models of the future is key to any business looking to transform all or parts of their business, disrupt new markets, merge or acquire a new business or develop a new product.
THE FIVE FORCES OF DISRUPTION
Between now and 2030, there are five forces that will transform businesses. Each of these will present challenges and opportunities, with every leap forward offering the chance to consolidate positions of strength or upset the status quo.
- 5G and the Internet of Things (IoT)
- Artificial Intelligence (AI)
- Autonomy
- Hybridity
- Blockchain
These developments are likely to have implications for all businesses - if not in day-to-day operations, then in the lives of their staff and clients. They also present the opportunity for entirely new tasks, roles and ways of doing business.
5G and the Internet of Things (IoT)
5G is the fifth generation of mobile communications and is perhaps the most crucial technological development covered in our report, constituting the 'mesh' of humans, artificial intelligence, devices and connectivity that will come to define the world in which businesses operate.
5G and the IoT underpin many of the other technologies that will drive business digitalisation, facilitating communication between a vast range of devices and the wireless transfer of data produced by these new devices as they communicate with each other. However, the IoT will not reach its business potential if no one knows how to implement it, and so IoT platforms will be crucial to its uptake and efficient use. An IoT system needs hardware and connectivity, and in order to ensure ease and breadth of use, it also requires software and a user interface. This is where IoT platforms come in, acting as the 'face' of a highly complex network of wireless connectivity between potentially thousands of devices each feeding and receiving information from each other.
Artificial Intelligence (AI)
The vast majority of AI concerns algorithms and these are broken into two distinct categories:
- Classic machine learning algorithms - including classification and regression
- Deep learning algorithms - algorithms that learn from mistakes using deep neural nets
Programming automated data analytics or teaching conversational AI to a virtual assistant is incredibly complex and not all employees and businesses will have in-depth knowledge. Luckily, the model of Platform-as-a-Service (PaaS) is already in place.
As a result, the development of Artificial Intelligence-as-a-Service is inevitable. Rather than investing in the infrastructure required to develop their own artificial intelligence platforms, businesses which specialise in Artificial Intelligence-as-a-Service will step in, making the process more efficient.
Between them, the technologies can produce a wide range of services, and as businesses begin to offer these services to other businesses, we will see them spread as barriers to adoption recede.
Many businesses have already experimented with rudimentary forms of customer-facing artificial intelligence. Over the next decade, conversational AI will improve and these interactions will become increasingly 'human', driven in no small part by developments in another area of AI - data analytics and machine learning.
Autonomy
By autonomy, we mean the physical manifestation of artificial intelligence, such as robotics, and automated vehicles such as drones and cars. So, by 2030 we will begin to see the foundations laid for these ideas and small iterations will be transforming retail, transport and manufacturing industries.
In the controlled environment of the warehouse, British grocery delivery business Ocado has a system in place and is experimenting with a robotic arm which will eliminate the human 'picker' from the process, foreshadowing the 'dark warehouse' of the future.
Drones and autonomous vehicles are playing catch-up - the complexity of the world outside warehouses is making automation a more complicated process - and while the technology is unlikely to be fully realised by 2030, the applications are much wider. Automated vehicles in particular face significant barriers to market entry, with the very human space of roads and urban environments posing risks that need to be safely navigated before widespread use becomes a reality.
This does, however, create an opportunity for new business models when it comes to mobility. For example, with autonomous vehicles, access is likely to become more important than ownership as the automated vehicle plays an important role in the sharing economy and new transport networks.
Hybridity
Hybridity refers to the process by which our physical lives are mediated through technology in the form of augmented reality (AR), virtual reality (VR) and mixed reality (MR). In the future, hybridity will have implications for how we interact with the space around us.
At its most basic, advances in hybridity will allow employees to work more flexibly in terms of time and space. While we continue to work in offices, developments in VR, AR and MR will see employees' ability to replicate office or meeting conditions in their homes drastically improve. The 'Death of Distance' is a concept that has been regularly hypothesised as digital communications have advanced. Although this next, immersive wave of hybridity will not result in the 'end of geography', it can revolutionise businesses' day-to-day practices and engineer entirely new models of service and organisation.
As the technology improves and as hybrid technologies can better interact with the bricks and mortar of the real world, applications will spread across industry. In healthcare, hybridity could introduce new methods of training for surgeons, and later - along with 5G, the Internet of Things, and various other elements of technology - could facilitate remote surgery.
Blockchain
Blockchain is a database - or distributed ledger - that is stored, updated and shared either publicly or privately, which nobody can tamper with and everyone can inspect.
In its simplest form, blockchain is a term for the configuration of transactions, agreements or actions into 'blocks' which are added - irreversibly - into a 'chain'. The adding of the block is witnessed by the entire network and stored in the distributed ledger.
Permissioned blockchain - in which access is permitted or denied by administrators - has enormous potential. Public sector agencies in more than a dozen countries are experimenting with the technology, with the most active public sector use cases being digital currency/payments, land registration, voting and identity management. Smart contracts - also known as 'programmable money' - have the capacity to revolutionise payment and insurance processes, by creating conditional blocks which can see transactions executed if certain conditions are met.
Combined with the processes of AI Platform-as-a-Service, we can begin to imagine insurance businesses run by individuals, or small numbers of individuals, who simply co-ordinate the running of multiple automated processes that previously required hundreds of staff.
DISRUPTION TIMELINE AND BEYOND THE HORIZON
Our five forces are set to transform how, where and when we do business. Here we chart the likely impact over the coming decade and the implications these could have on businesses:
The ways in which we interact with the world around us is set to change. Driven by our identified five forces of disruption, the next decade will see the earliest stages of technology fade into the background with an increased reliance on these newer innovations. In addition, some of these forces are being accelerated even further by global events, with COVID-19 driving a mass adoption of remote working several years before data would suggest.
While the opportunities that the five forces bring are profound, it is essential that businesses recognise the risks that they could bring. An increase in autonomy will inevitably have an impact on the global workforce potentially resulting in social unrest. In 'Tides of Disruption' we also outline how by 2026 no business will be able to work offline. Our increasing cyber dependency may become a threat to business survival as we become vulnerable if technology fails.
It is, of course, a balance of risk and reward. Sectors such as manufacturing and agriculture will see a shift from their traditional activities to that of managing and monitoring through IoT and robotics. Retail will evolve from bricks and mortar stores to rely on voice shopping and hybrid customer service. The five forces give businesses the tools they need to evolve in an ever-changing world and there will always be the risks brought by not pursuing these opportunities. Our white paper notes that those not using AI-led analytics in their decision making will fall behind their competitors.
THE GLOBAL WAVE OF READINESS
Our exploration into technological forces, and their projected timeline over the next decade, identified businesses and markets which are not equally ready for the oncoming wave of digitalisation. 'Tides of Disruption' identifies three distinct national groupings, those Ahead of the Wave, those that are Just Keeping Up, and those that are Behind the Wave.
To position countries within these groups, we compared their current readiness, as outlined by the World Economic Forum's Networked Readiness Index, 2016, as well as their capacity for future innovation, as outlined by the Economist Intelligence Unit's Technological Readiness Ranking.
Our analysis revealed the current standing of major global economies - those that have always lagged behind, those with the benefit of years at the forefront of technological advancement and those in the middle - while also indicating the extent to which these nations will continue along their current trajectory.
BEYOND THE HORIZON
While a number of the technologies discussed at length in our white paper - namely artificial intelligence, autonomy and blockchain - will have a significant impact on business digitalisation between now and 2030, it is clear that this is only one chapter in a much larger narrative.
Beyond 2030, we are likely to see further forces causing disruption. The likes of 6G, autonomous vehicles and quantum computing are anticipated to make an impact, yet many of the most pivotal technological developments of our time have relied on previous breakthroughs and the emergence of new forms of medium. It is likely that many of the emerging technologies discussed in 'Tides of Disruption' will spawn new, yet theorised developments that will irreversibly change the way businesses can and do operate.
In each and every case, however, where there is disruption there is opportunity, and every time the picture changes there will be a chance for businesses to consolidate their strength or improve their position.
SUMMARY
Over the next decade, businesses, supply chains and daily life will be transformed by the next wave of digital disruption. As with all disruptions there will be winners and losers.
As our Tech partners Alexandra Brodie and David Brennan note, some businesses operate in markets or sectors that are particularly well placed to take advantage of this transformation.
A number of nations are evidently Ahead of the Wave. Others, however, are Behind the Wave - lacking either the current infrastructure or the digital ambition to exploit the coming opportunities. Those markets best positioned are perhaps the usual suspects - Western European markets like Germany and France alongside the US and technologically advanced city states like Singapore. Behind them are the rapidly growing emerging economies like China and India.
This perhaps presents a counter to the broader global economic trends that see these markets 'catching up' with those usual suspects in Europe and North America. These emerging economies are not far behind - Brazil, Russia, India, China, Poland, Turkey and South Africa are all Just Keeping Up rather than Behind the Wave - and that the gap between these groups narrows with each new wave of digitalisation.
These market factors are important, but so are the individual ambitions and outlooks of businesses. The most future-facing and proactive businesses will find themselves best-positioned to take hold of the opportunities offered by digital disruption over the next decade.
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