What Electricity 1.0 Can Teach Us About Electricity 2.0

David Jonker

With The Current War premiering at Toronto International Film Festival on September 9 as part of Our Digital Future film series presented by SAP, it’s the perfect time to consider what the original race to bring electricity to the common citizen can teach us about today’s evolving power industry.

The Current War tells the story of Thomas Edison (played by Benedict Cumberbatch) and George Westinghouse (Tom Holland) competing to create and market the dominant electrical system in the United States during the late 1880s and early 1890s. Now known as the War of Currents, the battle between Edison’s direct current (DC) system and Westinghouse’s alternating current (AC) system was one of the defining moments of the Second Industrial Revolution.

Following ruthless propaganda campaigns led by Edison, debates over electrical safety, and a race to show the American people whose system was the most sustainable, the War of Currents settled down when the key players merged and consolidated in the early 1890s. AC power distribution from plants to homes ultimately triumphed, largely because it was cheaper, but DC would still prove very handy, eventually powering our smartphones, computers, cars, and more.

The second war of currents

The Current War feels especially relevant in a time when the Edisons and Westinghouses of today are competing to bring Electricity 2.0 to the mainstream. It’s a key component of the Fourth Industrial Revolution, which has been called a $364 billion opportunity. There will be winners, and there will be losers.

Unlike Electricity 1.0, however, the Second War of Currents has a third major player: the consumer, or perhaps more accurately, the prosumer. The electricity system is going through the biggest shakeup since its introduction 130 years ago. Digitization and decentralization of the grid, the rise of renewable sources like solar and wind, the impact of the Internet of Things, and more are coming together to totally reshape the utilities space, and it could give electricity-generating citizens the upper hand.

Electricity 1.0 was built around large, centralized systems, with the utility owning everything from the plant to the meter. Economies of scale worked to keep costs reasonable – a system that encouraged monopolies and fixed rates. Electricity 2.0 promises to remove the need for such centralization. As more easily decentralized sources like wind and solar become cheaper to generate and subsequently larger sources of electricity generation, power is shifting to the little guy.

Signs that democratization of the grid is really happening are already emerging, not least in the promise of blockchain technology. The cryptocurrency Solarcoin pays people in Solarcoin for generating solar power, and Transactive Grid has created a solar power microgrid for residents to buy and sell energy from each other using a blockchain. On the other hand, we are seeing moves from some of the biggest utilities to gain some influence and control over how blockchain is used in the industry, perhaps most notably from the Energy Web Foundation.

Electricity 2.0 isn’t the death knell for traditional utilities, rather an opportunity for them to facilitate the inevitable transition to new sources and usher in a more efficient, environmentally friendly, and flexible grid.

Utilities – though they might not yet admit it – realize that being slow or resistant to change will render them irrelevant in this new era of power generation and distribution. Some are already acting, reimagining themselves as systems that can work harmoniously alongside clean, decentralized power, storage, and consumer-controlled digital management. Others are suffering at the hands of their own inertia or stagnant government regulations that don’t fit with the looming market reality.

As SAP IoT futurist Tom Raftery writes in The Digitalist, “with the cost of generation dropping with no end in sight, and the cost of storage similarly falling…there is a strong possibility that utilities will have to switch to broadband-like “all-you-can-eat” business models, with the utilities differentiating and making their revenue on added services.”

Imagining a new era of peace in utilities

It all sounds very congenial and utopian, but if the War of Currents (or any free market competition, for that matter) taught us anything, it’s that the power-hungry will inevitably go to great lengths to turn it into a battle for dominance and money.

Human nature dictates that, while many will strive for collaboration in creating an Electricity 2.0 that benefits everyone, there will also be those seeking ways to manipulate and control the system for their own gains. As the devious visionary Edison showed us, however, even the most unsavory tactics can still inspire world-changing innovation.

The Second War of Currents is playing out before our eyes. Time will tell how much power falls into the hands of the prosumer, how much of the new infrastructure utilities own and control, and how governments choose to regulate the new system.

Though it’s partly a race to create and market the best technology, it will most likely be the cheapest energy system that prevails – just like the AC system did in the 1890s. Much of the smart money is on solar and wind power ultimately becoming the dominant sources, but the level of complexity we are capable of managing today means a diverse mix of sources could reduce the risk of price spikes. Whatever happens, it’s a thrilling time for the electricity industry – a time that would make Edison and Westinghouse proud.

Find out more about Our Digital Future film series presented by SAP at TIFF 17.

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David Jonker

About David Jonker

David Jonker is Senior Director of SAP Leonardo and predictive analytic solutions at SAP. He drives go-to-market and co-innovation initiatives across the SAP solution portfolio for Big Data and predictive analytics.

The Promise And The Peril Of Blockchain

Andre Smith

This past year has seen the integration of blockchain technologies into businesses around the globe. Serious technology professionals regard the technology as a great leap forward for distributed computing, transparency, and security. The blockchain may well be the panacea that they envision it to be, but that doesn’t mean that it is without its share of risk.

The overwhelming hype about blockchain-based services (aided by the explosive rise in the value of Bitcoin and other cryptocurrencies) has created an investing frenzy that calls to mind the dotcom bubble of the late 1990’s or the more recent derivative-fueled financial crisis of 2008. The problem is that the level of excitement far exceeds the tech sector’s ability to bring meaningful and innovative blockchain products to market. This reality has resulted in a speculative vacuum.

Hype breeds fraud

As is usually the case, the first people to notice the overwhelming potential of blockchain technology as a moneymaker were those who would use it for nefarious purposes. As investors clamored to pour money into any ICO they could find, crypto pioneers and financial moguls sounded alarms that were mostly ignored. There have already been some notable red flags.

In November, the team behind a startup called Confido disappeared, taking $375,000 of investor funds with them. The company had claimed to be creating a blockchain-based escrow platform. Investors, in their rush to get involved, were duped by their false promises. In December, the U.S. SEC intervened in the ICO of a company known as PlexCoin, putting a stop to what they identified as a plot by long-time fraudsters to cash in on the ICO craze.

Secure reputation, insecure products

Defrauding investors isn’t the only trend associated with blockchain technologies that should be cause for concern. There is also the potential for the technology to be misused by criminal enterprises to hide illicit transactions, and by startups relying on the public perception of the blockchain as inherently secure as a means of selling products that are anything but. Both have already become a problem.

There are a number of ways that cryptocurrencies, underpinned by the blockchain, may be used as a conduit for illegal activity. There are already real-world examples of the technology being utilized to funnel money to terrorist organizations. Then there are companies like Privatix. Once a consumer VPN service, similar to wink-and-nod offerings like the VPN Hidemyass, Privatix suddenly rebranded itself as a blockchain VPN bandwidth marketplace. In practice, this has the same inherent risks as the Tor network, and they seem to be conflating “blockchain” with “secure” in an effort to mislead consumers.

Guilt by association

What’s at stake in these early days of the blockchain story may be the fate of the technology itself. As large financial institutions and consulting firms seek to position the blockchain in the public consciousness as the ultimate trust platform, there are no shortage of damaging incidents and examples working to undermine them. It also isn’t reasonable to expect that the public at large will draw a distinction between public and private blockchains, nor that they will even comprehend the difference.

It’s far too early to know if big business will be able to co-opt the blockchain and disassociate it from an external market that has been likened to the Wild West. The only thing that is certain is that they have great incentives to do so, since the blockchain could, at least internally, be as transformative as advertised. For now, all we can do is to stay tuned to see what comes next.

To learn more about the blockchain as a trusted platform see Blockchain: Pharma’s Answer to Restoring Trust in Healthcare.

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Andre Smith

About Andre Smith

An Internet, Marketing and E-Commerce specialist with several years of experience in the industry. He has watched as the world of online business has grown and adapted to new technologies, and he has made it his mission to help keep businesses informed and up to date.

2018 Mobile Industry Predictions

William Dudley

In my 11th edition of mobile industry predictions, 2018 is already starting off with technological bombshells, thanks to the U.S. FCC repealing network neutrality regulations in 2017. However, this debate is far from over.

Blockchain is gold: Any company mentioning blockchain suddenly rises to the top, and public companies discussing blockchain see stock valuations sometimes rise dramatically. Those results are primarily based on the hype that bitcoin and other cryptocurrencies experienced in December. Mobile networks continue to flourish, and 5G will likely become reality this year.

2017 predictions: How they fared

First, I’d like to review 2017 predictions to see how they fared against the reality of this dynamic, ever-changing industry. For each 2017 prediction, I will rate the correctness.

2017 prediction: Mobile messaging

Messaging through SMS will continue to grow and become the dominant worldwide channel for customer interactions. SMS will show resilience and staying power. RCS-type deployments will continue to disappoint. There will be no Android equivalent of Apple Messaging. Some IP messaging platforms will become legitimate alternative channels to A2P SMS.

2017 realityA2P messaging and messaging channels grew and our A2P messaging statistics reflected growth with double-digit percentage increases over 2016. Ovum indicates “A2P messaging is projected to grow at 8% CAGR from 2015 to 2018.”

I was wrong about RCS. A2P RCS is making a resurgence thanks to the catalyst of Google Jibe’s RCS Business Messaging. Other RCS hubs including Samsung, Mavenir, and ecrio, are providing solutions around the GSMA Universal Profile 1.0 and 2.0 standards, reducing RCS fragmentation. RCS is poised to become an important engagement channel.

2017 mobile messaging prediction score: 75% correct, because I thankfully I got the RCS part wrong.

2017 prediction: Chatbots 

Chatbots will be heavily hyped, but won’t gain significant prominence, barring a few customer-service solutions, which will ultimately lead to human interaction. Chatbots will replace the voice-call menu tree or request needed information for the human responder.

2017 Reality: Strongly hyped, chatbots are being used more, especially around customer service; however, their prominence is still questionable. Bots are mostly used in non-SMS social chat apps. For some platforms, the ability to discover new bots is a factor. A few SMS-based are being deployed and will play an increasing role in A2P RCS as a core element of conversational messaging on that channel. AI enhancement of chatbots has become commonplace, leveraging solutions like Google’s api.ai (now called Dialogflow) and Microsoft’s Bot Framework, among several.

2017 chatbot prediction score: 100% correct

2017 prediction: 5G

We will see a start of production 5G deployments by mobile carriers, initially targeting IoT applications; however, some will target consumer devices.

2017 reality: Almost a complete, but close, miss. GSA noted that 103 operators in 49 countries are “investing in 5G technology in the form of demos, lab trials, or field tests.” As of December 2017, 32 operators have made public commitments to deploy 5G in 23 countries, including Verizon Wireless, who has committed to roll-out 5G in 3-5 cities. Huawei indicated that Vodafone Italy had achieved the first 5G data connection in Milan, Italy, marking the start of their planned network rollout.

2017 5G prediction score: 20% correct

2017 prediction: LTE

By the end of 2017, there will be at least 650 LTE networks and 200 LTE-Advanced Networks launched worldwide.

2017 reality: At the end of 2017, there were 647 commercially-launched LTE networks with 680-700 anticipated networks. Per GSA, there are 216 LTE-Advanced networks in 105 countries.

2017 LTE prediction score: 100% correct

2017 prediction: Apple

Apple will launch a new iPhone 8 and iOS 11 featuring innovations, including an OLED screen, no hardware buttons, wireless charging, enhanced camera capabilities, and better support for LTE-Advanced. This will lead to record iPhone sales with Apple iOS gaining market share, but not dominating Android.

2017 reality: Apple launched the iPhone 8 and iOS 11; however, also announced and shipped the iPhone X, which included the OLED screen, no home button, and the other features. Wireless charging is available for the iPhone 8 and iPhone X. LTE-Advanced support is mostly unchanged in the new devices. Android-iOS market share varies worldwide, but Android remains in the 80-85% share with iOS at 15-20% share.

2017 Apple prediction score: 85% correct

2017 prediction: Two-factor authentication (2FA)

2FA will continue to be the dominant authentication and security mechanism, especially with increasing account breach reports. 2FA will be the dominant channel over SMS, although 2FA through TOTP solutions will gain prominence.

2017 reality: Breaches continued in 2017, resulting in hundreds of millions, if not over 1 billion subscribers’ data compromised. Deloitte was specifically determined to lack 2FA in place. The FIDO/Javelin State of Authentication 2017 report cited that SMS OTP for mobile was second only to password usage. It was 4th for online, with static and dynamic Knowledge Based Authentication (KBA or “secret” questions) coming in 2nd and 3rd. Software OTP (such as TOTP solutions) followed SMS OTP.

2017 two-factor authentication score: 100% correct

2017 prediction: Wearables

Wearables will grow, but lacking killer applications or functionality, will slowly track upward. Fitness/health continue to be the predominant applications. Apple and Fitbit continue to lead the pack. One or more existing platforms will shut down.

2017 reality: Jawbone, once worth over $3 billion, is said to be in liquidation, and TomTom cut jobs as they began restructuring toward their mapping and navigation. Apple re-took the lead in Q-3 with 23% share, with Xiaomi (21%) and Fitbit (20%) behind. In terms of predominant functionality, health and fitness lead the market; however, with LTE-enabled Apple’s Series 3, applications like messaging, alerts, and communications are gaining usage.

2017 wearables prediction score: 100% correct

2017 prediction: IoT

The most dominant IoT applications will be in transportation, especially vehicle automation, followed by logistics and smart home devices. Few vehicle manufacturers will provide capabilities of Tesla (e.g. downloadable software, self-driving capabilities, etc.), but more car manufacturers will provide mobile apps and remote vehicle management.

2017 reality: According to IoT Institute, asset tracking and monitoring was the most popular use case, followed by automation of manual processes and predictive maintenance. 2017 predictions were a little too specific; however, “automation of manual processes” can cover some consumer-focused IoT implementations. Huge changes in vehicle IoT were not realized, although there has been plenty of press around fundamental changes. The most innovative IoT solutions were in the industrial space.

2017 IoT prediction score: 30% correct

2017 prediction: Mobile operators

Expect some mobile operator consolidation in the U.S., with Sprint or T-Mobile USA being acquired. US Cellular could be acquired with some smaller tier 3 operators, leading to questions of competition and market dominance among remaining operators.

2017 reality: Sprint and T-Mobile again flirted with merging, and again called it off. US Cellular remains independent. Due to the FCC-imposed “quiet period,” there was little M&A among mobile operators in the United States.

2017 mobile operator score: 0% correct

2017 prediction: Mobile point of sale

POS will continue to grow in usage and acceptance by consumers. Apple Pay will top double-digit monthly usage. Consumers will begin to accept mobile payment solutions as more secure than credit cards. More sites will support Apple Pay and Android Pay.

2017 reality: Mobile contactless payment solutions increased. A November Bank Innovation report indicated that Apple Pay should reach 86 million users in 2017. Apple Pay is in 20 markets, representing 70% of the world’s card transaction volume, and in the US at more than 50% of all retail locations. Android Pay and Samsung Pay increased, but sort of split up the Android world. Apple Pay Cash launched in late Q4, enabling users to transfer money through iMessage and other channels, setting up iMessage to become a more comprehensive communications app.

2017 mobile point of sale score: 100% correct

2017 was a tough year for predictions. I was 61% correct, compared to  83% in 2016 and 82% in 2015.

2018 mobile industry predictions

2017 has set the table for new technologies to come to commercial fruition this year. In no particular order, here are my ten mobile industry predictions for 2018:

Mobile messaging continues dominance as the primary engagement tool for consumer interactions. SMS will continue to lead and surpass 2017 volumes. Messaging media usage will increase, including Facebook Messenger, WeChat, and others. For the first time, A2P RCS will launch commercial services with key brands and businesses interacting with consumers through RCS.

2018 will be the year that RCS returns, specifically optimized for A2P (or enterprise/business/brand engagement). While person-to-person or P2P RCS will grow, the biggest impact will be consumer interaction. Most will be through AI-assisted chatbots. By the end of 2018, there will be between 500 -700 million MAUs using RCS globally, starting to rival non-SMS messaging apps. This number will be higher if Apple iMessage supports RCS Universal Profile. 2018 may be the beginning of the end for many mobile apps as users discover that conversation interfaces work as well as, or better than, mobile apps with similar functionality.

Apple will grow its worldwide iOS market share, building on the success of the iPhone X. New iPhones in 2018 will leverage the new technology and capabilities introduced in iPhone X. Expect more enhancements to iMessage and improved LTE Advanced capabilities for more networks globally. 2017 revelations around battery slow-down issues ultimately won’t have much effect. Apple Watch will continue dominance in wearables, increasing its share to almost 30%.

Apple HomePod will launch with innovative capabilities, enabling close integration with Apple mobile devices that Amazon Echo and Google Home will not have. HomePod won’t overtake Amazon or Google, but will become the genesis of a new class of personal digital assistant that will grow in influence.

Authentication leveraging mobile solutions will gain more visibility and usage by global consumers. Two-factor authentication (2FA) over SMS will continue as the most-used solution by consumers, followed by 2FA via mobile apps. Mobile operators will close security vulnerabilities around SMS. Biometric authentication will grow in prominence.

Developer-centric API solutions for mobile channels will increase usage – especially in messaging engagement, fueling mobile messaging as a medium for customer engagement. Self-service by developers and non-developers in messaging – and even chatbot solutions – will bring mobile channels to more businesses, quicker and easier.

Expect over 750 commercially deployed LTE networks, over 300 LTE-Advanced commercially deployed networks, and over 50 5G commercially deployed networks. The GSA noted that 2018 should see over 3 billion LTE subscriptions. At the end of 2017, there were 116 mobile operators “investing in pre-standards 5G networks.” Many will provide fixed-wireless solutions and some specialty solutions. I doubt that we’ll see many mobile handsets supporting 5G; that will likely come to fruition in 2019 and beyond.

The U.S. network neutrality debate is not over. There will be legal and legislative challenges to the December 2017 repeal of various FCC regulations around network neutrality. This is a politically charged issue. Most Americans, as well as technology giants, supported the network neutrality provisions, but many mobile operators wanted them repealed. Expect confusion, but little negative consumer-facing activity by mobile operators and ISPs because of less regulation. Most people won’t notice accessibility changes.

Mobile-network connected IoT devices will continue to dominate the IoT space as industries rush to provide mobile-connected sensors. This will be especially important to asset-tracking across industries, especially those where movable assets must be tracked and maintained. Interestingly, these mobile-network connected sensors will primarily use existing networks. Companies providing IoT solutions will benefit by providing big-data mining, tracking, and maintenance capabilities to manage and process asset data from millions of connected sensors. IoT activities across industrial and consumer-focused solutions will increase substantially.

Blockchain (per Gartner, still in the Peak of Inflated Expectations) will be coupled with mobile platforms and applications to provide innovative solutions for finance, security, and mobile wallet/loyalty programs. Going beyond mobile-based cryptocurrency wallets and apps, mobile devices can be used as blockchain nodes that can store a variety of secure transactions. Innovations will demonstrate that mobile devices can be excellent for blockchain-based solutions, which can be as easy as downloading a specific app for consumers.

Last word

2018 mobile industry predictions cover a wide swath: Mobile messaging (SMS, RCS, messaging chat apps), authentication and blockchain as they relate to mobile, IoT, Apple, network neutrality and much more. This year, I’ve decided to stay away from mergers and acquisitions, though I think we’ll see some, but not as many, as previous years.

A variety of new businesses will emerge and become noteworthy in areas such as chatbots, IoT, 5G, and AI, but don’t rule out existing technology leaders. They, too, are working on innovative and amazing technology. Without doubt, 2018 will be another exciting year in the mobile industry.

For more insight on the future of mobile technology, see Digital Transformation Through Mobile Analytics.

This article originally appeared on The Future of Customer Engagement and Commerce.

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William Dudley

About William Dudley

William Dudley is group director, mobile evangelist, and strategist of the Industry & LoB Products at SAP Digital Interconnect (formerly known as SAP Mobile Services). He has many years of experience building and managing telecommunications network infrastructures. He defines global strategy and solutions for SAP Digital Interconnect, a business unit of SAP, within the mobile ecosystem, focusing on solutions for messaging, mobile-enabled online security, next-generation networks (5G, LTE, IPX), and consumer engagement through mobile channels. As mobile evangelist, Mr. Dudley communicates through both internal and external publications, social media and is active in industry groups. You may follow him on Twitter at @wdudley2009. His primary blog site is https://blogs.sap.com/author/william.dudley/.

Why Strategic Plans Need Multiple Futures

By Dan Wellers, Kai Goerlich, and Stephanie Overby , Kai Goerlich and Stephanie Overby

When members of Lowe’s Innovation Labs first began talking with the home improvement retailer’s senior executives about how disruptive technologies would affect the future, the presentations were well received but nothing stuck.

“We’d give a really great presentation and everyone would say, ‘Great job,’ but nothing would really happen,” says Amanda Manna, head of narratives and partnerships for the lab.

The team realized that it needed to ditch the PowerPoints and try something radical. The team’s leader, Kyle Nel, is a behavioral scientist by training. He knows people are wired to receive new information best through stories. Sharing far-future concepts through narrative, he surmised, could unlock hidden potential to drive meaningful change.

So Nel hired science fiction writers to pen the future in comic book format, with characters and a narrative arc revealed pane by pane.

The first storyline, written several years before Oculus Rift became a household name, told the tale of a couple envisioning their kitchen renovation using virtual reality headsets. The comic might have been fun and fanciful, but its intent was deadly serious. It was a vision of a future in which Lowe’s might solve one of its long-standing struggles: the approximately US$70 billion left on the table when people are unable to start a home improvement project because they can’t envision what it will look like.

When the lab presented leaders with the first comic, “it was like a light bulb went on,” says Manna. “Not only did they immediately understand the value of the concept, they were convinced that if we didn’t build it, someone else would.”

Today, Lowe’s customers in select stores can use the HoloRoom How To virtual reality tool to learn basic DIY skills in an interactive and immersive environment.

Other comics followed and were greeted with similar enthusiasm—and investment, where possible. One tells the story of robots that help customers navigate stores. That comic spawned the LoweBot, which roamed the aisles of several Lowe’s stores during a pilot program in California and is being evaluated to determine next steps.

And the comic about tools that can be 3D-printed in space? Last year, Lowe’s partnered with Made in Space, which specializes in making 3D printers that can operate in zero gravity, to install the first commercial 3D printer in the International Space Station, where it was used to make tools and parts for astronauts.

The comics are the result of sending writers out on an open-ended assignment, armed with trends, market research, and other input, to envision what home improvement planning might look like in the future or what the experience of shopping will be in 10 years. The writers come back with several potential story ideas in a given area and work collaboratively with lab team members to refine it over time.

The process of working with writers and business partners to develop the comics helps the future strategy team at Lowe’s, working under chief development officer Richard D. Maltsbarger, to inhabit that future. They can imagine how it might play out, what obstacles might surface, and what steps the company would need to take to bring that future to life.

Once the final vision hits the page, the lab team can clearly envision how to work backward to enable the innovation. Importantly, the narrative is shared not only within the company but also out in the world. It serves as a kind of “bat signal” to potential technology partners with capabilities that might be required to make it happen, says Manna. “It’s all part of our strategy for staking a claim in the future.”

Planning must become completely oriented toward—and sourced from—the future.

Companies like Lowe’s are realizing that standard ways of planning for the future won’t get them where they need to go. The problem with traditional strategic planning is that the approach, which dates back to the 1950s and has remained largely unchanged since then, is based on the company’s existing mission, resources, core competencies, and competitors.

Yet the future rarely looks like the past. What’s more, digital technology is now driving change at exponential rates. Companies must be able to analyze and assess the potential impacts of the many variables at play, determine the possible futures they want to pursue, and develop the agility to pivot as conditions change along the way.

This is why planning must become completely oriented toward—and sourced from—the future, rather than from the past or the present. “Every winning strategy is based on a compelling insight, but most strategic planning originates in today’s marketplace, which means the resulting plans are constrained to incremental innovation,” says Bob Johansen, distinguished fellow at the Institute for the Future. “Most corporate strategists and CEOs are just inching their way to the future.” (Read more from Bob Johansen in the Thinkers story, “Fear Factor.”)

Inching forward won’t cut it anymore. Half of the S&P 500 organizations will be replaced over the next decade, according to research company Innosight. The reason? They can’t see the portfolio of possible futures, they can’t act on them, or both. Indeed, when SAP conducts future planning workshops with clients, we find that they usually struggle to look beyond current models and assumptions and lack clear ideas about how to work toward radically different futures.

Companies that want to increase their chances of long-term survival are incorporating three steps: envisioning, planning for, and executing on possible futures. And doing so all while the actual future is unfolding in expected and unexpected ways.

Those that pull it off are rewarded. A 2017 benchmarking report from the Strategic Foresight Research Network (SFRN) revealed that vigilant companies (those with the most mature processes for identifying, interpreting, and responding to factors that induce change) achieved 200% greater market capitalization growth and 33% higher profitability than the average, while the least mature companies experienced negative market-cap growth and had 44% lower profitability.

Looking Outside the Margins

“Most organizations lack sufficient capacity to detect, interpret, and act on the critically important but weak and ambiguous signals of fresh threats or new opportunities that emerge on the periphery of their usual business environment,” write George S. Day and Paul J. H. Schoemaker in their book Peripheral Vision.

But that’s exactly where effective future planning begins: examining what is happening outside the margins of day-to-day business as usual in order to peer into the future.

Business leaders who take this approach understand that despite the uncertainties of the future there are drivers of change that can be identified and studied and actions that can be taken to better prepare for—and influence—how events unfold.

That starts with developing foresight, typically a decade out. Ten years, most future planners agree, is the sweet spot. “It is far enough out that it gives you a bit more latitude to come up with a broader way to the future, allowing for disruption and innovation,” says Brian David Johnson, former chief futurist for Intel and current futurist in residence at Arizona State University’s Center for Science and the Imagination. “But you can still see the light from it.”

The process involves gathering information about the factors and forces—technological, business, sociological, and industry or ecosystem trends—that are effecting change to envision a range of potential impacts.

Seeing New Worlds

Intel, for example, looks beyond its own industry boundaries to envision possible future developments in adjacent businesses in the larger ecosystem it operates in. In 2008, the Intel Labs team, led by anthropologist Genevieve Bell, determined that the introduction of flexible glass displays would open up a whole new category of foldable consumer electronic devices.

To take advantage of that advance, Intel would need to be able to make silicon small enough to fit into some imagined device of the future. By the time glass manufacturer Corning unveiled its ultra-slim, flexible glass surface for mobile devices, laptops, televisions, and other displays of the future in 2012, Intel had already created design prototypes and kicked its development into higher gear. “Because we had done the future casting, we were already imagining how people might use flexible glass to create consumer devices,” says Johnson.

Because future planning relies so heavily on the quality of the input it receives, bringing in experts can elevate the practice. They can come from inside an organization, but the most influential insight may come from the outside and span a wide range of disciplines, says Steve Brown, a futurist, consultant, and CEO of BaldFuturist.com who worked for Intel Labs from 2007 to 2016.

Companies may look to sociologists or behaviorists who have insight into the needs and wants of people and how that influences their actions. Some organizations bring in an applied futurist, skilled at scanning many different forces and factors likely to coalesce in important ways (see Do You Need a Futurist?).

Do You Need a Futurist?

Most organizations need an outsider to help envision their future. Futurists are good at looking beyond the big picture to the biggest picture.

Business leaders who want to be better prepared for an uncertain and disruptive future will build future planning as a strategic capability into their organizations and create an organizational culture that embraces the approach. But working with credible futurists, at least in the beginning, can jump-start the process.

“The present can be so noisy and business leaders are so close to it that it’s helpful to provide a fresh outside-in point of view,” says veteran futurist Bob Johansen.

To put it simply, futurists like Johansen are good at connecting dots—lots of them. They look beyond the boundaries of a single company or even an industry, incorporating into their work social science, technical research, cultural movements, economic data, trends, and the input of other experts.

They can also factor in the cultural history of the specific company with whom they’re working, says Brian David Johnson, futurist in residence at Arizona State University’s Center for Science and the Imagination. “These large corporations have processes and procedures in place—typically for good reasons,” Johnson explains. “But all of those reasons have everything to do with the past and nothing to do with the future. Looking at that is important so you can understand the inertia that you need to overcome.”

One thing the best futurists will say they can’t do: predict the future. That’s not the point. “The future punishes certainty,” Johansen says, “but it rewards clarity.” The methods futurists employ are designed to trigger discussions and considerations of possibilities corporate leaders might not otherwise consider.

You don’t even necessarily have to buy into all the foresight that results, says Johansen. Many leaders don’t. “Every forecast is debatable,” Johansen says. “Foresight is a way to provoke insight, even if you don’t believe it. The value is in letting yourself be provoked.”

External expert input serves several purposes. It brings everyone up to a common level of knowledge. It can stimulate and shift the thinking of participants by introducing them to new information or ideas. And it can challenge the status quo by illustrating how people and organizations in different sectors are harnessing emerging trends.

The goal is not to come up with one definitive future but multiple possibilities—positive and negative—along with a list of the likely obstacles or accelerants that could surface on the road ahead. The result: increased clarity—rather than certainty—in the face of the unknown that enables business decision makers to execute and refine business plans and strategy over time.

Plotting the Steps Along the Way

Coming up with potential trends is an important first step in futuring, but even more critical is figuring out what steps need to be taken along the way: eight years from now, four years from now, two years from now, and now. Considerations include technologies to develop, infrastructure to deploy, talent to hire, partnerships to forge, and acquisitions to make. Without this vital step, says Brown, everybody goes back to their day jobs and the new thinking generated by future planning is wasted. To work, the future steps must be tangible, concrete, and actionable.

Organizations must build a roadmap for the desired future state that anticipates both developments and detours, complete with signals that will let them know if they’re headed in the right direction. Brown works with corporate leaders to set indicator flags to look out for on the way to the anticipated future. “If we see these flagged events occurring in the ecosystem, they help to confirm the strength of our hypothesis that a particular imagined future is likely to occur,” he explains.

For example, one of Brown’s clients envisioned two potential futures: one in which gestural interfaces took hold and another in which voice control dominated. The team set a flag to look out for early examples of the interfaces that emerged in areas such as home appliances and automobiles. “Once you saw not just Amazon Echo but also Google Home and other copycat speakers, it would increase your confidence that you were moving more towards a voice-first era rather than a gesture-first era,” Brown says. “It doesn’t mean that gesture won’t happen, but it’s less likely to be the predominant modality for communication.”

How to Keep Experiments from Being Stifled

Once organizations have a vision for the future, making it a reality requires testing ideas in the marketplace and then scaling them across the enterprise. “There’s a huge change piece involved,”
says Frank Diana, futurist and global consultant with Tata Consultancy Services, “and that’s the place where most
businesses will fall down.”

Many large firms have forgotten what it’s like to experiment in several new markets on a small scale to determine what will stick and what won’t, says René Rohrbeck, professor of strategy at the Aarhus School of Business and Social Sciences. Companies must be able to fail quickly, bring the lessons learned back in, adapt, and try again.

Lowe’s increases its chances of success by creating master narratives across a number of different areas at once, such as robotics, mixed-reality tools, on-demand manufacturing, sustainability, and startup acceleration. The lab maps components of each by expected timelines: short, medium, and long term. “From there, we’ll try to build as many of them as quickly as we can,” says Manna. “And we’re always looking for that next suite of things that we should be working on.” Along the way certain innovations, like the HoloRoom How-To, become developed enough to integrate into the larger business as part of the core strategy.

One way Lowe’s accelerates the process of deciding what is ready to scale is by being open about its nascent plans with the world. “In the past, Lowe’s would never talk about projects that weren’t at scale,” says Manna. Now the company is sharing its future plans with the media and, as a result, attracting partners that can jump-start their realization.

Seeing a Lowe’s comic about employee exoskeletons, for example, led Virginia Tech engineering professor Alan Asbeck to the retailer. He helped develop a prototype for a three-month pilot with stock employees at a Christiansburg, Virginia, store.

The high-tech suit makes it easier to move heavy objects. Employees trying out the suits are also fitted with an EEG headset that the lab incorporates into all its pilots to gauge unstated, subconscious reactions. That direct feedback on the user experience helps the company refine its innovations over time.

Make the Future Part of the Culture

Regardless of whether all the elements of its master narratives come to pass, Lowe’s has already accomplished something important: It has embedded future thinking into the culture of the company.

Companies like Lowe’s constantly scan the environment for meaningful economic, technology, and cultural changes that could impact its future assessments and plans. “They can regularly draw on future planning to answer challenges,” says Rohrbeck. “This intensive, ongoing, agile strategizing is only possible because they’ve done their homework up front and they keep it updated.”

It’s impossible to predict what’s going to happen in the future, but companies can help to shape it, says Manna of Lowe’s. “It’s really about painting a picture of a preferred future state that we can try to achieve while being flexible and capable of change as we learn things along the way.” D!


About the Authors

Dan Wellers is Global Lead, Digital Futures, at SAP.

Kai Goerlich is Chief Futurist at SAP’s Innovation Center Network.

Stephanie Overby is a Boston-based business and technology journalist.


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

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Dan Wellers

About Dan Wellers

Dan Wellers is founder and leader of Digital Futures at SAP, a strategic insights and thought leadership discipline that explores how digital technologies drive exponential change in business and society.

Kai Goerlich

About Kai Goerlich

Kai Goerlich is the Chief Futurist at SAP Innovation Center network His specialties include Competitive Intelligence, Market Intelligence, Corporate Foresight, Trends, Futuring and ideation. Share your thoughts with Kai on Twitter @KaiGoe.heif Futu

About Stephanie Overby

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Retail Tomorrow: How Today’s Technology Is Shaping Retail’s Future

Stephen Sparrow

Do you ever think about tomorrow? Many retailers don’t. They’re too concerned with what’s happening in the moment. They’re too wrapped up in managing their daily business operations or maintaining profit margins.

Don’t get me wrong – those things are important. But tomorrow matters more than they know.

With game-changing technologies like the Internet of Things (IoT), virtual reality, and machine learning reshaping the retail landscape, tomorrow can no longer be ignored. If your company wants to stay ahead of the competition – both now and in the future – you need to begin experimenting with these innovations today.

Beer, there, and everywhere: Create an immersive customer experience

Imagine you’re a Brooklyn-based brewery. You craft the most delicious beer anyone’s ever tasted, and Brooklynites are absolutely gaga over your product. But how do you spread the word? How can you make people in Seattle or San Francisco thirst for your beverage?

Virtual reality and IoT tools can help you create a more immersive customer experience – one that gives people an in-depth view into your brewery – so folks across the country can get excited about sampling your suds.

By setting up a 360-degree video camera and implementing virtual reality capabilities, you can invite people all over the world to tour your facility. They can visit the tasting room, check out the outdoor patio, and watch the kettles work their magic in the production area.

IoT sensors, meanwhile, can provide prospective customers with insight around your brewing processes. Attached to the brew kettles, these sensors enable you to share real-time data about each batch of beer, from when the hops reach a boil to when fermentation is complete.

If viewers like what they see, they can order a case of your beer online.

Creating an immersive customer experience, where people get a glance behind the curtain to see how your company operates and how your product is made, is a surefire recipe for retail success.

A passion for fashion: Predict trends so your customers are always dressed to kill

Instagram, the popular image-sharing app, has a global community of more than 800 million users. These users share upwards of 95 million photos and videos per day.

If a woman from the United States is traveling to Tokyo for an upcoming vacation and wants to make sure she looks fashionable while visiting Japan’s capital city, where can she turn?

Instagram, of course.

With a simple keyword search for “fashion” and “Tokyo,” this woman could be knee-deep in results highlighting the top trends from this chic metropolitan hotspot. Now, with a better idea of what the locals are wearing, she can pick up a few new outfits before her trip, and she won’t feel so out of place in her American attire when she visits.

Retailers, particularly fashion brands, can benefit from how consumers are using apps like Instagram. By analyzing what people are wearing in photos taken in fashion meccas like London, Paris, Tokyo, Milan, or New York, your business can have its finger firmly on the pulse.

Pairing your analysis with machine learning capabilities can enable your retailer to detect and predict the hottest fashion trends. This will help your designers tailor the clothing they create to what’s happening – or what will be happening – in the market.

If more people are wearing floral-print miniskirts, you can design matching leggings. If more people are dressing in denim, you can ramp up production on jean jackets.

Staying up to date on the latest fashion trends can keep your retailer at the top of its game. Predicting the next big thing in fashion using machine learning? That will have your business declaring “game over” to all your competitors.

Not your grandma’s kitchen: Increase customer convenience through greater connectivity

Connected products are invading our homes. We have smart TVs in our living rooms. We have showerheads equipped with Bluetooth speakers in our bathrooms. We have lights that brighten or dim based on our sleeping schedules in our bedrooms.

In the kitchen, though, things are getting really intelligent. From precision cookers that alert you when dinner’s ready to coffee makers you can operate with your smartphone, kitchen appliances are creating a whole new level of convenience for customers.

With a smart refrigerator, customers can create shopping lists using a touch screen on the door. IoT capabilities enable people to add or remove items from their lists using a mobile device. Customers can even submit their grocery orders to a nearby store through their smart fridge, a convenient click-and-collect shopping scenario.

Augmented reality, meanwhile, allows people to peek inside their refrigerators without even opening them. If a woman at work wants to see if she has enough milk for a bowl of cereal tomorrow, she can check using a tablet or smartphone.

Retailers and consumer products companies can leverage this technology to deliver a more engaging product experience. The packaging of a stick of butter, for instance, might have a code on it. When a man peers into his refrigerator using his smartphone, he could click on the code and find out the product’s expiration date. Or perhaps he can learn a few new recipes he could bake using the butter.

By creating a hassle-free shopping experience and enhancing how your buyers engage with your products, you can increase sales and earn your customers’ loyalty.

Home sweet home: Modernize retail like real-estate agents have revolutionized homebuying

Think of how the realty business has changed over the past 25 years. In the early ‘90s, prospective homebuyers had to schedule an appointment with a Realtor or attend an open house to see a home they liked.

In the mid-2000s, house hunting went online, with sites like Trulia and Zillow springing up. Today, homebuyers can snap a photo of an on-the-market house they like using a mobile app and see pictures of the home’s interior, learn the price, find out the square footage, and discover how many bathrooms it has.

Retailers should strive to modernize their industry like the realty business has revolutionized homebuying. Barcode scanning and sensor tracking are just a couple technologies that could help.

If a customer is walking through the aisles of your store, you could offer them the opportunity to scan a tag on a shirt with their mobile device and instantly give them access to outfit ideas or show them accessories that match the top.

Sensors, meanwhile, could track where a shopper is in a store, allowing your retailer to send timely and relevant offers based on their location.

Adding value to your customer experience is the name of the game in retail. And there’s no better way to create a more valuable in-store customer experience than with the latest technology.

Innovation experimentation: Forge your path to a brighter future with revolutionary tech tools

Innovations like IoT, virtual reality, and machine learning are shaping what retail’s future will look like.

Your company’s success – both today and tomorrow – will depend on your willingness to embrace these technologies and experiment with new ways to engage and satisfy your customers.

Join us at the National Retail Forum’s 2018 conference and EXPO at the Jacob K. Javits Convention Center in New York City on January 14–16 to learn how the SAP Leonardo digital innovation system can help your organization bring these exciting technologies to life.

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Stephen Sparrow

About Stephen Sparrow

Stephen Sparrow is the Director of Retail Marketing at SAP. He defines, champions and executes marketing strategies to increase penetration and capture of revenue opportunities across SAP's retail enterprise accounts. He also develops industry advancing and perception enhancing programs to drive brand preference for SAP in the retail community.