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4 Ways CIOs Can Fuel The Future Of Work With Augmented And Virtual Reality

Florian Wagner

When 2016 took off, so did the popularity of augmented reality (AR) and virtual reality (VR). Pokémon Go engaged over 50 million monthly active users with the technology’s entertainment factor and simplicity. Samsung, Verizon, and China’s OnePlus gave away headsets for free to give consumers a hint of the experience. Facebook-owned Oculus Rift pushed the envelope in its virtual capabilities. And Google Cardboard managed to make adoption easier at just a fraction of the price.

AR/VR technology is increasingly reaching mass adoption in the consumer market. But sadly, it has yet to become common in the workplace. Although many AR/VR applications are in use on the production floor and in the warehouse, for example, the vast majority of business technology professionals are unsure whether the benefits of the technology outweigh the risks, according to ISACA’s annual “IT Risk/Reward Barometer.

Is AR/VR in the workplace just hype? Or will CIOs find a way to mainstream it across all business functions to unlock gains in productivity, efficiency, and quality of work?

Augmented and virtual reality: New fuel for business growth

In the report “Augmented and Virtual Reality Go to Work,” Deloitte predicts that enterprises could fast-track mass adoption while fundamentally reinventing business practices. And for the most part, many early adopters are shedding light into the possibilities.

For example, Lockheed Martin and ThyssenKrupp are using AR glasses equipped with cameras, depth sensors, and motion sensors to overlay images onto the actual work environment. Engineers can now access assembly instructions; see rendering to guide the installation of cables, bolts, and parts; and receive risk notifications in real time. This new approach is not only increasing engineers’ accuracy, but also accelerating production and services.

Deloitte believes that such achievements mark the infancy of this technology. The report cites four areas that can be reimagined, enabling IT to forever change the future workplace.

  1. Communication and collaboration: IT can fundamentally transform how employees of all levels – from the C-suite to the shop floor and everywhere in between – report and share information and take action. AR can give marketing managers access to retail shelf inventory and sales data. Engineering teams can collaborate in real time through VR to test and refine product designs. Even simple productivity tools, such as videoconferencing and live chats, can engage colleagues in immersive, face-to-face interactions that replicate facial expressions, physical gestures, and subtle nonverbal cues.
  1. Training and simulation: By retooling high-cost training and simulation, IT can help the business prepare for scenarios without real-world consequences. Manufacturers can virtualize maintenance and repair scenarios, and remote controls and robotics can remove the need for employees in hazardous situations.
  1. Field and customer service: When combined with connected devices, sensing objects, and relational data, AR can provide task-specific information to field reps on demand. Similarly, VR solutions can guide call-center agents with perceptive conversations and potential problem-solving scenarios. Meanwhile, remote experts can see what service reps in the field see and talk them through the process of installing and repairing machines or infrastructure.
  1. Customer experience and interactive marketing: Consumer-oriented businesses are beginning to use AR and VR to innovate new interactions with products and services. Travel, hospitality, and leisure firms are providing such experiences to allow consumers to preview the amenities of a cruise, hotel, or beach resort through their sense of sight, smell, hearing, and touch.

As an extension of a larger digital strategy, AR and VR have the potential to create unmatched efficiency and drive innovation never thought possible. But more important, the CIO has a great opportunity to be regarded as the corporate futurist who is highly knowledgeable in business realities and focused on driving bottom-line outcomes.

Innovate your business through the transformative power of augmented and virtual reality. Check out the Deloitte University Press report “Augmented and Virtual Reality Go to Work” to learn how.

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Florian Wagner

About Florian Wagner

Florian Wagner is marketing director for IT audience messaging at SAP. Together with his team, he is responsible to address the IT audience and to drive relevant thought leadership topics. He writes about technology trends on digital transformation, cloud and platform strategies with a focus on customer experiences.

Four Ways Small Businesses Can Boost Security

Justin Fox

Many small business owners have long felt that they were relatively safe from the threat of cybercrime, assuming that cyber-criminals targeted only large corporations and multinationals. In fact, nothing could be further from the truth: Cyber-criminals are more than happy to prey upon anyone who may have money that can be swindled away. Criminals now see small businesses as soft targets, as they tend to have insufficient staff or resources to properly focus on security and protect themselves from attack. In light of this, small businesses owe it to themselves to improve security and minimize their chances of becoming a cyber-criminal’s next target.

CCTV

Using CCTV is one of the simplest means of deterring crime, as a visible warning to thieves is often enough to make them look elsewhere. If a crime is committed, CCTV can provide crucial evidence and help recover stolen property. The London riots of 2011 serve as a great example of how effective CCTV can be: police watched more than 200,000 hours of footage, which led to the prosecution of approximately 5,000 offenders.

Whilst it isn’t something that most business owners want to contemplate, petty theft by staff is a common occurrence, and CCTV can help tackle that issue. Of course, it’s preferable never to have to use the CCTV footage to trace a crime, but having it in place does provide a level of security and reassurance that your business is protected.

Tracking software

This isn’t a low-budget option, but it does a remarkably efficient job of tracking items that have been stolen. Tracking software can come built into a vehicle or piece of equipment, or it can be attached to an item. The software transmits a constant signal to a central hub, so if the item or vehicle is stolen, the central hub can detect its location, allowing the police to trace and apprehend the thieves. Whilst phones, laptops, and tablets come with this type of system built in, tracking devices can also be fitted to valuable assets such as vehicles and equipment.

Indeed, this technology has proven so effective that police in California have begun to use it to catch thieves swiping packages from doorsteps. Lured by decoy parcels with concealed GPS trackers, numerous criminals were successfully caught.

Cybersecurity

Properly protecting your business’s IT systems and Internet connection is critical, no matter what size the business is. Criminals are constantly looking for ways to steal money, personal data, business records, and even technical documents. It’s estimated that cybercrime costs the UK economy £73 billion per year, and no business can afford to be complacent about security, since we are all potential targets. Ransomware, in which a hacker holds data hostage and releases it only after receiving a payoff, is fast becoming the most common threat businesses face.

Unfortunately, many cyberattacks originate overseas, which makes it incredibly hard for police to successfully track or prosecute those responsible. It also makes it very unlikely that victims will ever recover their stolen money.

Education

The simplest and most effective way to protect your business is by educating staff about security. This education should cover physical security measures, such as being vigilant around the premises, as well as online security training. All employees should be trained to stay safe online and should be able to spot threats and suspected fraudulent activity. In an ideal world, all businesses would have a dedicated team to monitor and protect IT systems, but of course, that isn’t always possible for every business.

While younger generations may be more comfortable online and know the warning signs, those who did not grow up during the digital age may be less aware of potential problems. Various governments have taken measures to ensure that the students of today have at least a working knowledge of cybersecurity, but those outside the education system will have to find alternate sources of education.

It’s vital that businesses take security seriously and invest as much as possible in protecting themselves. Of course, preventative measures are better than reactive ones, but comprehensive plans do need to be in place to deal with security breaches if they actually occur. Even the simplest steps, such as robust password policies, can make a big difference and should not be ignored. Treating digital security as seriously as physical security will go a long way to protecting any business.

For more insight on cybersecurity, see The Future Of Cybersecurity: Trust As Competitive Advantage.

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Justin Fox

About Justin Fox

Justin is a history graduate from the University of Kent, with a keen interest in current affairs and how the events of today are poised to affect the world of tomorrow. As technology continues to permeate virtually every aspect of our lives, Justin seeks to better understand the latest innovations, in the hopes of better understanding us a society as a result.

CFOs And CIOs Making Tech Decisions Together

Daniel Newman

We all know the feeling of dread that comes when waiting for a major project to be approved by the finance department. Some of us might even have a bit of inner dialogue: “Why does the CFO get to choose what’s right for my team? Finance doesn’t know anything about it!” Submitting the request can sometimes feel like throwing a Hail Mary – closing our eyes and hoping for the best. Hopefully the CFO is in a good mood – or not paying too much attention – to let the project slide through.

Fortunately, that type of relationship with the finance team (and the CFO in particular) is falling by the wayside in the digital age. We’ve talked a lot about the importance of breaking down silos in today’s work environment. It’s no longer feasible to be an agile, forward-thinking company without collaborative decision-making. That doesn’t just apply to teams like marketing, customer service, and IT, however. It goes across the board, from your human resources teams to your CFO.

The digital transformation is forcing today’s CFOs to get up close and personal with technology. CFOs are beginning to ask questions about the technology architecture to get a better understanding of the programs and systems in place. They’re learning more about how technology works, how it can save money and boost sales, and how it can improve overall efficiencies – all of which fall under a CFO’s purview. That’s why it is so critical that CIOs and CFOs begin to partner on the road to digital transformation, whether that means modernizing legacy systems or developing a new technology to improve customer engagement. The following are a few ways CIOs can help CFOs better understand the importance of technology as we move ahead in the digital marketplace.

1. Speak his or her language

Your CFO may not have a technology background, and that’s OK. Use your communication skills to strip away the technical names and descriptions, and instead show your CFO the power of what your tech can do. Speak his or her language. Include data details like how much time and money can be saved, how many new customers could be gained, and how many new sales can be added using the software or apps you are recommending. If your CFO is interested, offer a demonstration to help him or her understand how the software works and how it will benefit your team.

2. Focus on benefits, not buzzwords

Things like analytics, Big Data, and machine learning have a real, tangible benefit for your company. Rather than throwing around buzzwords, focus on the true value they offer. Analytics can help you improve targeting for the marketing team; machine learning can help you personalize customer interactions; Big Data can help your company make more-informed investment decisions. These are the kinds of benefits your CFO will care about.

3. Focus on long-term growth

A constant challenge for CFOs is to balance spending and investing without hampering productivity and competitiveness. Know that your CFO will always be weighing the cost and risk with the good you are offering. Explain how the project will benefit the company in the long term. Don’t hide the costs. Just explain how the impact will pay dividends.

4. Share the industry’s story

It can be easy to miss the forest for the trees. Help your CFO understand what’s happening in your industry, not just in your company. Give them a rundown of what your competitors are doing in the technology area and how your company can be (or has been) impacted by falling behind. Show them how your project will not just help your company grow, but also help it get ahead of your competitors.

5. Stay connected

Technology is an ever-changing beast. Share with your CFO news and updates on new technology impacting your industry, and schedule regular meetings to discuss new opportunities to save money, increase sales, and boost productivity. This kind of collaboration will help your entire company work more efficiently, eliminating delays and last-minute budget surprises.

There is no room for silos in the digital economy, even in the world of finance. Although you may never have considered your CFO a member of the tech team, it’s time to start. Doing so will help your company move even further ahead and create an important ally in the digital transformation.

For more on this topic, see:

Photo credit: rajpal14 Flickr via Compfight cc

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Daniel Newman

About Daniel Newman

Daniel Newman serves as the Co-Founder and CEO of EC3, a quickly growing hosted IT and Communication service provider. Prior to this role Daniel has held several prominent leadership roles including serving as CEO of United Visual. Parent company to United Visual Systems, United Visual Productions, and United GlobalComm; a family of companies focused on Visual Communications and Audio Visual Technologies. Daniel is also widely published and active in the Social Media Community. He is the Author of Amazon Best Selling Business Book "The Millennial CEO." Daniel also Co-Founded the Global online Community 12 Most and was recognized by the Huffington Post as one of the 100 Business and Leadership Accounts to Follow on Twitter. Newman is an Adjunct Professor of Management at North Central College. He attained his undergraduate degree in Marketing at Northern Illinois University and an Executive MBA from North Central College in Naperville, IL. Newman currently resides in Aurora, Illinois with his wife (Lisa) and his two daughters (Hailey 9, Avery 5). A Chicago native all of his life, Newman is an avid golfer, a fitness fan, and a classically trained pianist

Primed: Prompting Customers to Buy

Volker Hildebrand, Sam Yen, and Fawn Fitter

When it comes to buying things—even big-ticket items—the way we make decisions makes no sense. One person makes an impulsive offer on a house because of the way the light comes in through the kitchen windows. Another gleefully drives a high-end sports car off the lot even though it will probably never approach the limits it was designed to push.

We can (and usually do) rationalize these decisions after the fact by talking about needing more closet space or wanting to out-accelerate an 18-wheeler as we merge onto the highway, but years of study have arrived at a clear conclusion:

When it comes to the customer experience, human beings are fundamentally irrational.

In the brick-and-mortar past, companies could leverage that irrationality in time-tested ways. They relied heavily on physical context, such as an inviting retail space, to make products and services as psychologically appealing as possible. They used well-trained salespeople and employees to maximize positive interactions and rescue negative ones. They carefully sequenced customer experiences, such as having a captain’s dinner on the final night of a cruise, to play on our hard-wired craving to end experiences on a high note.

Today, though, customer interactions are increasingly moving online. Fortune reports that on 2016’s Black Friday, the day after Thanksgiving that is so crucial to holiday retail results, 108.5 million Americans shopped online, while only 99.1 million visited brick-and-mortar stores. The 9.4% gap between the two was a dramatic change from just one year prior, when on- and offline Black Friday shopping were more or less equal.

When people browse in a store for a few minutes, an astute salesperson can read the telltale signs that they’re losing interest and heading for the exit. The salesperson can then intervene, answering questions and closing the sale.

Replicating that in a digital environment isn’t as easy, however. Despite all the investments companies have made to counteract e-shopping cart abandonment, they lack the data that would let them anticipate when a shopper is on the verge of opting out of a transaction, and the actions they take to lure someone back afterwards can easily come across as less helpful than intrusive.

In a digital environment, companies need to figure out how to use Big Data analysis and digital design to compensate for the absence of persuasive human communication and physical sights, sounds, and sensations. What’s more, a 2014 Gartner survey found that 89% of marketers expected customer experience to be their primary differentiator by 2016, and we’re already well into 2017.

As transactions continue to shift toward the digital and omnichannel, companies need to figure out new ways to gently push customers along the customer journey—and to do so without frustrating, offending, or otherwise alienating them.

The quest to understand online customers better in order to influence them more effectively is built on a decades-old foundation: behavioral psychology, the study of the connections between what people believe and what they actually do. All of marketing and advertising is based on changing people’s thoughts in order to influence their actions. However, it wasn’t until 2001 that a now-famous article in the Harvard Business Review formally introduced the idea of applying behavioral psychology to customer service in particular.

The article’s authors, Richard B. Chase and Sriram Dasu, respectively a professor and assistant professor at the University of Southern California’s Marshall School of Business, describe how companies could apply fundamental tenets of behavioral psychology research to “optimize those extraordinarily important moments when the company touches its customers—for better and for worse.” Their five main points were simple but have proven effective across multiple industries:

  1. Finish strong. People evaluate experiences after the fact based on their high points and their endings, so the way a transaction ends is more important than how it begins.
  2. Front-load the negatives. To ensure a strong positive finish, get bad experiences out of the way early.
  3. Spread out the positives. Break up the pleasurable experiences into segments so they seem to last longer.
  4. Provide choices. People don’t like to be shoved toward an outcome; they prefer to feel in control. Giving them options within the boundaries of your ability to deliver builds their commitment.
  5. Be consistent. People like routine and predictability.

For example, McKinsey cites a major health insurance company that experimented with this framework in 2009 as part of its health management program. A test group of patients received regular coaching phone calls from nurses to help them meet health goals.

The front-loaded negative was inherent: the patients knew they had health problems that needed ongoing intervention, such as weight control or consistent use of medication. Nurses called each patient on a frequent, regular schedule to check their progress (consistency and spread-out positives), suggested next steps to keep them on track (choices), and cheered on their improvements (a strong finish).

McKinsey reports the patients in the test group were more satisfied with the health management program by seven percentage points, more satisfied with the insurance company by eight percentage points, and more likely to say the program motivated them to change their behavior by five percentage points.

The nurses who worked with the test group also reported increased job satisfaction. And these improvements all appeared in the first two weeks of the pilot program, without significantly affecting the company’s costs or tweaking key metrics, like the number and length of the calls.

Indeed, an ongoing body of research shows that positive reinforcements and indirect suggestions influence our decisions better and more subtly than blatant demands. This concept hit popular culture in 2008 with the bestselling book Nudge.

Written by University of Chicago economics professor Richard H. Thaler and Harvard Law School professor Cass R. Sunstein, Nudge first explains this principle, then explores it as a way to help people make decisions in their best interests, such as encouraging people to eat healthier by displaying fruits and vegetables at eye level or combatting credit card debt by placing a prominent notice on every credit card statement informing cardholders how much more they’ll spend over a year if they make only the minimum payment.

Whether they’re altruistic or commercial, nudges work because our decision-making is irrational in a predictable way. The question is how to apply that awareness to the digital economy.

In its early days, digital marketing assumed that online shopping would be purely rational, a tool that customers would use to help them zero in on the best product at the best price. The assumption was logical, but customer behavior remained irrational.

Our society is overloaded with information and short on time, says Brad Berens, Senior Fellow at the Center for the Digital Future at the University of Southern California, Annenberg, so it’s no surprise that the speed of the digital economy exacerbates our desire to make a fast decision rather than a perfect one, as well as increasing our tendency to make choices based on impulse rather than logic.

Buyers want what they want, but they don’t necessarily understand or care why they want it. They just want to get it and move on, with minimal friction, to the next thing. “Most of our decisions aren’t very important, and we only have so much time to interrogate and analyze them,” Berens points out.

But limited time and mental capacity for decision-making is only half the issue. The other half is that while our brains are both logical and emotional, the emotional side—also known as the limbic system or, more casually, the primitive lizard brain—is far older and more developed. It’s strong enough to override logic and drive our decisions, leaving rational thought to, well, rationalize our choices after the fact.

This is as true in the B2B realm as it is for consumers. The business purchasing process, governed as it is by requests for proposals, structured procurement processes, and permission gating, is designed to ensure that the people with spending authority make the most sensible deals possible. However, research shows that even in this supposedly rational process, the relationship with the seller is still more influential than product quality in driving customer commitment and loyalty.

Baba Shiv, a professor of marketing at Stanford University’s Graduate School of Business, studies how the emotional brain shapes decisions and experiences. In a popular TED Talk, he says that people in the process of making decisions fall into one of two mindsets: Type 1, which is stressed and wants to feel comforted and safe, and Type 2, which is bored or eager and wants to explore and take action.

People can move between these two mindsets, he says, but in both cases, the emotional brain is in control. Influencing it means first delivering a message that soothes or motivates, depending on the mindset the person happens to be in at the moment and only then presenting the logical argument to help rationalize the action.

In the digital economy, working with those tendencies means designing digital experiences with the full awareness that people will not evaluate them objectively, says Ravi Dhar, director of the Center for Customer Insights at the Yale School of Management. Since any experience’s greatest subjective impact in retrospect depends on what happens at the beginning, the end, and the peaks in between, companies need to design digital experiences to optimize those moments—to rationally design experiences for limited rationality.

This often involves making multiple small changes in the way options are presented well before the final nudge into making a purchase. A paper that Dhar co-authored for McKinsey offers the example of a media company that puts most of its content behind a paywall but offers free access to a limited number of articles a month as an incentive to drive subscriptions.

Many nonsubscribers reached their limit of free articles in the morning, but they were least likely to respond to a subscription offer generated by the paywall at that hour, because they were reading just before rushing out the door for the day. When the company delayed offers until later in the day, when readers were less distracted, successful subscription conversions increased.

Pre-selecting default options for necessary choices is another way companies can design digital experiences to follow customers’ preference for the path of least resistance. “We know from a decade of research that…defaults are a de facto nudge,” Dhar says.

For example, many online retailers set a default shipping option because customers have to choose a way to receive their packages and are more likely to passively allow the default option than actively choose another one. Similarly, he says, customers are more likely to enroll in a program when the default choice is set to accept it rather than to opt out.

Another intriguing possibility lies in the way customers react differently to on-screen information based on how that information is presented. Even minor tweaks can have a disproportionate impact on the choices people make, as explained in depth by University of California, Los Angeles, behavioral economist Shlomo Benartzi in his 2015 book, The Smarter Screen.

A few of the conclusions Benartzi reached: items at the center of a laptop screen draw more attention than those at the edges. Those on the upper left of a screen split into quadrants attract more attention than those on the lower left. And intriguingly, demographics are important variables.

Benartzi cites research showing that people over 40 prefer more visually complicated, text-heavy screens than younger people, who are drawn to saturated colors and large images. Women like screens that use a lot of different colors, including pastels, while men prefer primary colors on a grey or white background. People in Malaysia like lots of color; people in Germany don’t.

This suggests companies need to design their online experiences very differently for middle-aged women than they do for teenage boys. And, as Benartzi writes, “it’s easy to imagine a future in which each Internet user has his or her own ‘aesthetic algorithm,’ customizing the appearance of every site they see.”

Applying behavioral psychology to the digital experience in more sophisticated ways will require additional formal research into recommendation algorithms, predictions, and other applications of customer data science, says Jim Guszcza, PhD, chief U.S. data scientist for Deloitte Consulting.

In fact, given customers’ tendency to make the fastest decisions, Guszcza believes that in some cases, companies may want to consider making choice environments more difficult to navigate— a process he calls “disfluencing”—in high-stakes situations, like making an important medical decision or an irreversible big-ticket purchase. Choosing a harder-to-read font and a layout that requires more time to navigate forces customers to work harder to process the information, sending a subtle signal that it deserves their close attention.

That said, a company can’t apply behavioral psychology to deliver a digital experience if customers don’t engage with its site or mobile app in the first place. Addressing this often means making the process as convenient as possible, itself a behavioral nudge.

A digital solution that’s easy to use and search, offers a variety of choices pre-screened for relevance, and provides a friction-free transaction process is the equivalent of putting a product at eye level—and that applies far beyond retail. Consider the Global Entry program, which streamlines border crossings into the U.S. for pre-approved international travelers. Members can skip long passport control lines in favor of scanning their passports and answering a few questions at a touchscreen kiosk. To date, 1.8 million people have decided this convenience far outweighs the slow pace of approvals.

The basics of influencing irrational customers are essentially the same whether they’re taking place in a store or on a screen. A business still needs to know who its customers are, understand their needs and motivations, and give them a reason to buy.

And despite the accelerating shift to digital commerce, we still live in a physical world. “There’s no divide between old-style analog retail and new-style digital retail,” Berens says. “Increasingly, the two are overlapping. One of the things we’ve seen for years is that people go into a store with their phones, shop for a better price, and buy online. Or vice versa: they shop online and then go to a store to negotiate for a better deal.”

Still, digital increases the number of touchpoints from which the business can gather, cluster, and filter more types of data to make great suggestions that delight and surprise customers. That’s why the hottest word in marketing today is omnichannel. Bringing behavioral psychology to bear on the right person in the right place in the right way at the right time requires companies to design customer experiences that bridge multiple channels, on- and offline.

Amazon, for example, is known for its friction-free online purchasing. The company’s pilot store in Seattle has no lines or checkout counters, extending the brand experience into the physical world in a way that aligns with what customers already expect of it, Dhar says.

Omnichannel helps counter some people’s tendency to believe their purchasing decision isn’t truly well informed unless they can see, touch, hear, and in some cases taste and smell a product. Until we have ubiquitous access to virtual reality systems with full haptic feedback, the best way to address these concerns is by providing personalized, timely, relevant information and feedback in the moment through whatever channel is appropriate. That could be an automated call center that answers frequently asked questions, a video that shows a product from every angle, or a demonstration wizard built into the product. Any of these channels could also suggest the customer visit the nearest store to receive help from a human.

The omnichannel approach gives businesses plenty of opportunities to apply subtle nudges across physical and digital channels. For example, a supermarket chain could use store-club card data to push personalized offers to customers’ smartphones while they shop. “If the data tells them that your goal is to feed a family while balancing nutrition and cost, they could send you an e-coupon offering a discount on a brand of breakfast cereal that tastes like what you usually buy but contains half the sugar,” Guszcza says.

Similarly, a car insurance company could provide periodic feedback to policyholders through an app or even the digital screens in their cars, he suggests. “Getting a warning that you’re more aggressive than 90% of comparable drivers and three tips to avoid risk and lower your rates would not only incentivize the driver to be more careful for financial reasons but reduce claims and make the road safer for everyone.”

Digital channels can also show shoppers what similar people or organizations are buying, let them solicit feedback from colleagues or friends, and read reviews from other people who have made the same purchases. This leverages one of the most familiar forms of behavioral psychology—reinforcement from peers—and reassures buyers with Shiv’s Type 1 mindset that they’re making a choice that meets their needs or encourages those with the Type 2 mindset to move forward with the purchase. The rational mind only has to ask at the end of the process “Am I getting the best deal?” And as Guszcza points out, “If you can create solutions that use behavioral design and digital technology to turn my personal data into insight to reach my goals, you’ve increased the value of your engagement with me so much that I might even be willing to pay you more.”

Many transactions take place through corporate procurement systems that allow a company to leverage not just its own purchasing patterns but all the data in a marketplace specifically designed to facilitate enterprise purchasing. Machine learning can leverage this vast database of information to provide the necessary nudge to optimize purchasing patterns, when to buy, how best to negotiate, and more. To some extent, this is an attempt to eliminate psychology and make choices more rational.

B2B spending is tied into financial systems and processes, logistics systems, transportation systems, and other operational requirements in a way no consumer spending can be. A B2B decision is less about making a purchase that satisfies a desire than it is about making a purchase that keeps the company functioning.

That said, the decision still isn’t entirely rational, Berens says. When organizations have to choose among vendors offering relatively similar products and services, they generally opt for the vendor whose salespeople they like the best.

This means B2B companies have to make sure they meet or exceed parity with competitors on product quality, pricing, and time to delivery to satisfy all the rational requirements of the decision process. Only then can they bring behavioral psychology to bear by delivering consistently superior customer service, starting as soon as the customer hits their app or website and spreading out positive interactions all the way through post-purchase support. Finishing strong with a satisfied customer reinforces the relationship with a business customer just as much as it does with a consumer.

The best nudges make the customer relationship easy and enjoyable by providing experiences that are effortless and fun to choose, on- or offline, Dhar says. What sets the digital nudge apart in accommodating irrational customers is its ability to turn data about them and their journey into more effective, personalized persuasion even in the absence of the human touch.

Yet the subtle art of influencing customers isn’t just about making a sale, and it certainly shouldn’t be about persuading people to act against their own best interests, as Nudge co-author Thaler reminds audiences by exhorting them to “nudge for good.”

Guszcza, who talks about influencing people to make the choices they would make if only they had unlimited rationality, says companies that leverage behavioral psychology in their digital experiences should do so with an eye to creating positive impact for the customer, the company, and, where appropriate, the society.

In keeping with that ethos, any customer experience designed along behavioral lines has to include the option of letting the customer make a different choice, such as presenting a confirmation screen at the end of the purchase process with the cold, hard numbers and letting them opt out of the transaction altogether.

“A nudge is directing people in a certain direction,” Dhar says. “But for an ethical vendor, the only right direction to nudge is the right direction as judged by the customers themselves.” D!

Read more thought provoking articles in the latest issue of the Digitalist Magazine, Executive Quarterly.


About the Authors:

Volker Hildebrand is Global Vice President for SAP Hybris solutions.

Sam Yen is Chief Design Officer and Managing Director at SAP.

Fawn Fitter is a freelance writer specializing in business and technology.

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Pulling Cities Into The Future With Blockchain

Dan Wellers , Raimund Gross and Ulrich Scholl

The next wave of the digital economy is just over the horizon, and it could be built on the blockchain.

Blockchain technology has been rapidly growing in influence since 2015, when it became apparent that the technology underlying the relatively arcane concept of cryptocurrency could transform the financial system. By the end of 2016, major players like Bank of America and Goldman Sachs were laying claim to promising blockchain technologies, filing patents at roughly twice the pace they had at the start of the year.

Enthusiasm for blockchain is not just accelerating, but spreading beyond financial services, as SAP and other global organizations consider all the ways it could remove friction and risk in business transactions. From traditional vendors like IBM and Microsoft to leading consultancies including Accenture and Deloitte, some of the world’s biggest companies are acknowledging themany possibilities inherent in the ability to maintain distributed, tamper-proof ledgers that permanently and transparently record transactions. Yet as promising as blockchain already is, the business world may still be underestimating how profoundly it could change transactions, organizations, and industries. It could ultimately change the entire economy.

Trustworthy data and interactions are the cornerstone of the digital economy. As the physical world becomes ever more quantified, being able to guarantee the integrity and provenance of digital and physical assets and the transactions in which they’re involved will become a core competitive advantage — and blockchain is deliberately designed to embed that guarantee in every transaction. Distributed ledgers, smart contracts, and other blockchain technologies could form the foundation on which other exponential technologies combine and scale.

The basic idea is simple: IoT sensors in drones, autonomous vehicles, 3D printers, and augmented/virtual reality gear would collect and record data in blockchain-based decentralized ledgers. This data would be immediately verified and could be made instantly available for use by any application. Smart contracts programmed into the blockchain would then execute business processes by drawing on these vast repositories of live data. Everything could be further automated by adding artificial intelligence into blockchain smart contracts to make decisions without human involvement.

Here are just a few of the possibilities that could be someday realized on a blockchain framework:

  • Democratized design and manufacture: A blockchain-enabled design and manufacturing platform would allow individuals and small businesses to play a larger role in the digital economy. Products designed from scratch in virtual reality, as well as copies of existing objects scanned with machine vision, could be easily bought, sold, shared, or even digitally remixed, at an affordable cost while protecting intellectual property rights. This would be true whether the work was complex multi-material physical products made with distributed 3D printers — or text, music, and images.
  • Autonomous logistics: Intelligent, self-driving delivery vehicles could shuttle products and materials to their destinations, or even use onboard 3D printers to create them in the location where they’re needed, while using blockchain technology to execute and verify every transaction. Machine learning apps programmed into smart contracts, which are also embedded in the blockchain, could optimize routing. This could make the current centralized model of warehousing and logistics obsolete.
  • Distributed commerce: Combining blockchain with virtual reality, 3D scanning and printing, artificial intelligence, and autonomous vehicles could create immersive, personalized shopping experiences anywhere consumers want to have them. Shoppers could grant permission for vendors to access their purchase history, preferences, and other data stored on a blockchain ledger. Vendor AIs could then generate more accurate recommendations and interact with ecommerce bots that complete purchases automatically. Customers would receive promotions for new styles, medication refills, or replacement parts without even having to think about it. Critically, blockchain would allow buyers to limit access to their personal or proprietary data to specific organizations over a defined period of time, for example, until the end of their shopping experience or the close of their fiscal year.

This may seem like far-future speculation, but a provocative white paper from consulting firm Outlier Ventures Research claims this shift is both inevitable and already underway.

Envisioning the future city

The more technologies we connect using the blockchain as a framework, the more value we can derive. Imagine that a city has a digital ledger in which every house or apartment has a presence containing all relevant information about the home, from property ownership and mortgage balance to transactional data like utility use, property tax assessment, and past and current contractor relationships. The city could access this “digital twin” to coordinate services and perform administrative tasks related to the property more efficiently and with greater accuracy. The property owner would have a verified, trustworthy way to perform transactions like renting a room, hiring contractors to do lawn work, or selling power generated by solar panels back to the grid. The city utility company could feed power consumption data into an AI to generate energy-saving recommendations, and leverage smart contracts that automatically manage power consumption between smart appliances and the grid to lower costs and improve energy efficiency.

By linking together multiple technologies, this “smart city” could then begin to automate basic city services. For example, IoT sensors could instantly sense a problem (say, a downed electrical cable) and alert the appropriate city agency’s AI to dispatch a technician. The AI might help the technician assess the necessary repair through AR glasses, send templates for parts to the 3D printer in the technician’s truck, reimburse the parts designer through a smart contract, and guide the repair via the AR glasses before finally informing the city agency and property owner when the repair is complete.

Now imagine extending that to the city’s broader infrastructure. A business traveler hops into an autonomous electric taxi at the airport and tells it to take her to a meeting in the city center. Knowing from traffic sensor data that there’s been an accident on the highway, the car automatically chooses an alternate route that ends at the parking lot nearest its destination with an available outlet for charging. As the car parks itself, it connects to an outlet that bills the taxi company in real time for the amount of electricity needed to top up the car battery. As the traveler leaves the parking lot and connects to the city’s public wifi via a social media account, she immediately receives a push notification with a discount at the nearby coffee shop. She stops for coffee and heads for her destination, where the elevator recognizes her phone and automatically takes her to the correct floor for her meeting, right on time.

Meanwhile, city staff can monitor the taxi’s safe operation and ensure the taxi company bills accurately for the ride, check traffic status and push out notifications to all affected drivers, make sure parking is available, confirm the traveler’s opt-in agreement for city wifi, provide the coffee shop’s owner with information on the effectiveness of the day’s coupon, and confirm that the building’s elevators are functioning according to the latest safety codes. Every interaction is transparent, verifiable, and nearly impossible to fake or alter — and just as importantly, it adds to a vast store of data the city can then use machine learning to analyze for future improvements and efficiencies.

A multitude of possibilities

The disruptive potential of already exponential technologies multiplies by orders of magnitude when they can intersect and combine. With blockchain creating the framework for that to happen, it’s not entirely hyperbole to put the potential economic transformation on par with the Industrial Revolution. But companies can’t simply wait until digital transformation is upon us.  Organizations need to start right now to think through the likely impacts in a disciplined and proactive way. Developing scenarios for the multitude of possibilities prepares us to maximize positive outcomes.

Read the executive brief Running Future Cities on Blockchain.


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Dan Wellers

About Dan Wellers

Dan Wellers is the Global Lead of Digital Futures at SAP, which explores how organizations can anticipate the future impact of exponential technologies. Dan has extensive experience in technology marketing and business strategy, plus management, consulting, and sales.

Raimund Gross

About Raimund Gross

Raimund Gross is a solution architect and futurist at SAP Innovation Center Network, where he evaluates emerging technologies and trends to address the challenges of businesses arising from digitization. He is currently evaluating the impact of blockchain for SAP and our enterprise customers.

Ulrich Scholl

About Ulrich Scholl

Ulrich Scholl is Vice President of Industry Cloud and Custom Development at SAP. In this role, Ulrich discovers and implements best practices to help further the understanding and adoption of the SAP portfolio of industry cloud innovations.