How to pick technology winners
Some of today’s innovations will become as
prevalent as smartphones. Others, such as jet packs, won’t take off. Three
factors can help you tell which are likely to succeed.
Google’s
fleet of autonomous cars have logged more
than 10 million miles on public roads. The manufacturing
industry has more than 2
million robots in operation worldwide. And two
out of five people now use voice search daily.
Not so long ago, these technologies were the
stuff of science fiction. Now they're everyday reality. Nonetheless, the likes
of jet packs, anti-aging pills, and warp-speed space travel aren’t coming any time
soon.
As
the Fourth
Industrial Revolution takes hold, how can we predict which
futuristic technologies will become a reality — and have a real impact on our
lives and businesses — and which will become memories from 30-year-old sci-fi
movies?
Welcome
to the world of technology futurists like me. I can’t claim to be 100 percent
accurate with my predictions, but I have had some successes. For example, I
consulted on Minority Report, the 2002 Steven Spielberg film that
was set in a world with gesture-based computing, facial recognition,
personalized advertising, and self-driving cars — years before those
technologies became a reality.
Making accurate predictions is personally
satisfying, to be sure. But on a more pragmatic level, imagine the advantages
you or your company could have enjoyed if you had forecast the mass adoption of
smartphones. Given the disruptive impact of new technologies, a business leader
who can predict tech winners will gain a huge competitive head start.
Three key factors
It’s
not easy to make tech-related predictions. Just as Michael Porter’s Five Forces
Framework involves assessing a handful of forces
to analyze business competition, technology forecasting requires examining
three key factors and how they interrelate:
1. The context in which the technology emerges
2. The viability of the technology
3. The barriers to the technology’s success
The context includes current global political
and economic forces. It’s hard to imagine nuclear power being developed so
quickly without the impetus of World War II, for example, which
spawned the Manhattan Project. Microeconomic factors, such as existing
infrastructure, can also make or break a technology, or delay its success. For
example, an enormous amount of venture capital went into clean energy
technologies in the early 2000s, yet it took a long time for these technologies
to take hold in a significant way. Early investors discovered the hard way that
you can’t just overturn an entrenched power distribution system overnight.
The technology itself also has to be viable.
Jet packs aren’t likely to be feasible in the near future because it’s
impossible to defy the laws of physics.
Finally, the technology’s potential barriers
to success must be considered. Regulations and incumbent competitors are
obvious hurdles. Where businesses dominate a market with their marketing or
distribution power, a new technology has to be extremely good or desirable if
it is to displace them. In some instances — such as Amazon in retail
and ride-sharing companies in transportation — the failure of incumbents
to harness new technologies has allowed startups to disrupt them.
The destiny of digital assistants
With
these fundamentals of technology predictions in mind, let’s examine the
evolution of digital assistants such as Amazon’s Alexa, Apple’s Siri, and
Google Assistant. These devices promise to make our lives easier by using
artificial intelligence (AI) to respond to our voice commands and perform tasks
for us. If tech companies have anything to do with it, digital assistants will
soon be everywhere, including offices, hotel
rooms, and every room of
the house — even in toilets.
Indeed,
smart speakers that incorporate digital assistants are finding their way into
more and more homes. Global shipments reached 19.7 million in the third quarter
of 2018 — an increase of 137 percent from the previous year, according
to technology research firm Canalys. To
figure out how far this technology will spread, let’s look at digital
assistants in light of our three factors:
1.
The context: How do digital
assistants fit our world?
Digital
assistants represent a solution to two modern societal problems. First, daily
life has become highly complex. Every mobile app, online form, ATM, and
self-service kiosk that we use requires multiple interactions. We’ve filled our
lives with more ways to communicate and socialize, and more types of
entertainment. The second problem is time — we just don’t have enough of it, in
part (and somewhat paradoxically) because we’ve filled our lives with so many
activities.
Digital
assistants can help with both these problems. They can help us manage
complexity by making mundane tasks quicker and easier, saving time and enabling
us to become more productive. Google Assistant, for example, can call
restaurants and make reservations, and
it can even have a voice conversation with a restaurant’s employee.
If using these assistants results in our
having fewer tasks and distractions, we’ll be able to focus more on the important
things in our lives and become more effective. And digital assistants also will
help us with many mundane tasks at work, such as scheduling meetings or
automatically relating meeting notes to associated records such as accounts,
contacts, and cases.
Although today’s digital assistants offer
limited functionality, future iterations will be the full-time partner of many
people at work, at home, at school, in the doctor’s office, and elsewhere. The
digital assistant will be one of the primary vehicles for engagement with the
world, and certainly with every digital system.
2.
The technology: Does it
work?
Digital
assistants have come a long way since 2016, when Amazon introduced Alexa. The
company’s underlying technologies — speech recognition, machine learning, and
conversational AI — have made huge strides. However, studies of how people
currently use digital assistants suggest that either the technology or our
understanding of it is still relatively immature. Possibly both.
According
to a U.S.
survey by Adobe, the most popular uses of smart speakers are
playing music (70 percent), providing weather forecasts (64 percent), and
answering “fun questions” (53 percent), hardly the most sophisticated uses for
an AI-driven application.
But the potential is enormous. Even today’s
digital assistants are capable of understanding personal preferences and
triggering a series of actions. For example, you can set up an Alexa, Siri, or
Google Assistant so that when you tell it you are home, it automatically resets
the thermostat, turns on lights and your preferred audio program, plays back
your voicemails, and sends a text message to your spouse.
In the future, your digital assistant could
automatically and seamlessly handle everyday tasks, integrating your connected
appliances, autonomous car, and other devices to do your shopping for you and
get you to your appointments. It could interact with other systems, such as
facial recognition in stores. For example, a retailer’s AI-driven system could
recognize you when you walk in, offering products based on your preferences and
interacting in the background with your digital assistant. And it would
automatically make the payment transaction when you walk out.
A digital assistant could help you by
offering motivating suggestions to help you stay fit and healthy. It could help
you throughout the workday by automatically connecting with colleagues and
finding documents relevant to the task at hand.
3.
The barriers: Will sales
growth continue?
The
AI, voice processing, and other technologies underlying digital assistants are
improving every year, and will need to continue doing so for them to reach
their full potential. Devices that enable voice interaction with users,
including smart speakers, will also need to evolve.
But assuming the technology is only a
temporary hindrance to growth, what are the potential longer-term barriers to
success?
First
is privacy. With smart speakers, consumers are essentially being asked to trust
a device that sends audio from their home to a tech giant’s systems in the
cloud. This is at a time when consumers increasingly
distrust businesses over how they use data.
Second
is inertia. Customers need a certain level of service, convenience, and price
compression before widespread adoption happens. Gartner’s
hype cycle, in which new technologies generally
navigate a long “trough of disillusionment” after early adoption and before
widespread consumer adoption, invokes this phenomenon.
But that inertia is a temporary obstacle. The
third, and most considerable, impact on the future development of digital
assistants is resistance from incumbency — more specifically, the vested
interests of all businesses in owning their relationship with their customers.
The
leaders in providing digital assistants right now are Amazon, Apple, and
Google. But companies that value the direct relationships they’ve built up with
customers will not easily acquiesce to being disintermediated by a technology
company in a world where we’re routinely told that “data is the new oil.” J.P.
Morgan rolled out a digital assistant for
corporate payments recently. Starbucks unveiled its own chatbot in 2017. They’re two of
many.
What will it mean for brands if the tech
giants dominate AI-powered voice-activated search, commerce, entertainment,
home appliances, and office assistants? How will companies adapt if their
customers do everything via digital assistants — including ordering goods and
services — and the businesses lose their ability to interact directly with
customers?
There are three radically different
industry-dynamic models for how this could develop. One model is that the big
players — Amazon, Google, Apple, Alibaba, Baidu, Tencent — will own the
relationship. In this model, if I am an Amazon devotee, I will choose to use
Alexa for everything.
The second model is similar to how people use smartphones today.
They have a work version and a personal version. In this model, perhaps at
home, Alexa is my assistant. But my work assistant might be a different one,
chosen by and provided by my employer.
The third model is more fragmented. In this version of the future,
a number of service enterprises — banks, retailers, long-term healthcare
providers — offer their own particular virtual assistants. Citibank might
introduce a digital financial guide, Kaiser Permanente might put forth an
electronic healthcare aide, and Netflix might provide an entertainment
concierge. Perhaps these specialized assistants would then connect to a
higher-level, general assistant provided by Amazon, Google, or other dominant
players.
It is unclear which of these three models will take hold. At
Salesforce, we’ve tested this question at some length with a variety of
customers and developers, and we get a multitude of answers. Right now, it
appears to be an open game. If history is any guide, it will come down to a few
giants dominating the field, but the power of individual providers — such
as banks and healthcare providers — is also very great. The evolution of the
digital assistant is going to be one of the most interesting developments to
watch in the marketplace for the next five years.
Identifying the tipping point
The holy grail of tech forecasting is predicting the likelihood
and timing of the tipping point between a technology remaining an optional
product for most consumers and it becoming a must-have.
For digital assistants, that could happen as more household
devices become electronically controlled. If that trend continues, it’s likely
that we will soon reach a point when it becomes essential to have a digital
assistant that integrates all these devices. Then, having conquered the home,
digital assistants could evolve to help us control the rest of our world.
By my estimation, today’s digital assistant is probably equivalent
to the BlackBerry in its heyday — cool and useful, but offering only a fraction
of the utility value of the yet-to-be-released iPhone. Based on analysis of the
three key factors, I’m confident that sophisticated, app-enabled digital
assistants will soon exist — and will affect our lives and businesses as much
as, if not more than, today’s smartphones.
Nonetheless, I could be wrong. Picking tech winners early is hard,
even for futurists. However, leaders willing to go through this process and
educate themselves about new technologies using the three key factors detailed
above are likely to spot trends earlier, encounter fewer surprise disruptions,
and take the best course of action at the right time. And isn’t that what
distinguishes the best business leaders?
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