What Autonomous Cars Mean For Insurance Companies

Robert Cordray

Silicon Valley thrives on being disruptive. So far, these startups have taken down the music industry, the movie rental business, and the print news industry. Now, they are in the process of speeding carchanging countless other bastions that were once considered traditional workplaces.

So what’s next? One of the big ideas being explored – and taken more seriously – is the concept of the driverless or autonomous vehicle. The implications for this technology are staggering, possibly even more so than the other revolutionary changes we’ve seen in tech over the past 10 to 20 years.

Now more than ever, executives in the insurance industry are the ones who need to be cautiously looking over their shoulders. When the technology completely matures for an autonomous vehicle that allows you take a nap on the way to work every day, insurance companies better have a new business model in place if they want to stay alive.

How the advent of the autonomous car will impact insurers

There will always be a need for insurance, no matter how advanced technology becomes. The possibility of an act of nature occurring and damaging property will always be present. But, these kinds of accidents are usually outliers when it comes to the insurance business for automobiles. The problem of human error on the roads is what inspired the concept of an autonomous car from the start, but this is also the very same thing insurance companies rely on to stay profitable.

Insurance premiums are charged based on the individual, their propensity for safe driving along with their driving history, and the vehicle they wish to insure. A car insurance comparison will show that these premiums differ slightly, but each of these premiums will incorporate this human element as a big factor for the final cost. So what happens when that element ceases to be present? This is a point of contention now among car manufacturers, regulators, and, especially, insurance companies. And opinions largely differ across these groups.

Why insurers should care now

Some insurance executives aren’t worried about this rise in automated driving, asserting that this change isn’t going to happen for years or possibly even decades. And they do have a point.

Driverless technologies are still only in their infancy, and it can be presumed that we’ll see iterations of them introduced in a piecemeal fashion. For example, in the past five years, some cars have introduced features like automated parallel parking and assisted cruise control options. So how long is it before the full package arrives? It could be years until something like Google’s driverless car is on sale at your local dealership. And even then there would be a huge amount of red tape, bureaucracy, and safety testing that would need to be done to help ensure these vehicles are actually safe for consumers.

Then, on top of everything already mentioned, the technology must be accepted by the public. It could reasonably take at least a decade for driverless cars to constitute a majority of cars on the road from the time they’re introduced in the marketplace. The adoption cycle for new technologies represents a bell curve, with only a few early adopters at first who are then followed by a constantly rising number of people until a majority is reached. Know any adults who don’t own a cell phone? These are the late adopters, and they’ll be the same people are the last to phase out their non-autonomous vehicles.

However, it would be a mistake for these same executives to dismiss this innovation so quickly, especially with the radical changes that technology has introduced to topple previously successful businesses virtually overnight. While this could take multiple decades, it’s still something that must be considered now so insurance companies can minimize future risk to profits, especially if it ends up happening sooner rather than later. Some thoughts on where profit could be made up include insuring the new components on these cars. Driverless cars will have a host of new sensors, cameras, and software to give them these new capabilities. A more expensive vehicle with more specialized parts inherently means a greater premium cost.

But, does this make up for the cost of losing out on the mistakes of human drivers? Probably not. Driverless cars mean fewer accidents by orders of magnitude less than the current statistics on automobile accidents. Undoubtedly, there will be bugs in the software and hardware with some of the first iterations of these vehicles, and there might even be the occasional bug even after driverless cars have been around for years. While this could mean big trouble and liability for automakers, filling the insurance gap by selling to automakers in place of consumers is still likely to yield less of an overall profit. For this dilemma, these companies are going to have to get a little more creative with the products and services they offer people.

Finally, it should be noted that driverless cars raise new issues that we likely haven’t even contemplated yet. There will be unforeseen circumstances that begin to appear as implementation begins. These are the areas insurance companies will likely be forced to focus on in order to maintain their current sizes. Otherwise, they’ll risk drawdowns that will most likely end up happening.


Empowering Your Vehicles With the Internet of Things

Stefan Weisenberger

Regardless of your industry, how you manage vehicles presents a wide range of challenges that even seasoned veterans have a hard time grappling with. This could include a company that owns its own fleet of delivery trucks, or one that uses heavy equipment like excavators, or even mining companies with haul trucks. When you manage vehicles across a global network, you’ve got a seemingly infinite number of rules and regulations (that change on a regular basis) to worry about. You have drivers taking inefficient routes or operating under less-than-safe conditions, but you don’t know where they are. You don’t know the specifics of how. You don’t know why.

The Internet of Things offers many opportunities for industry professionals to address all of these challenges and more. As a concept, the IoT involves a series of “smart” devices that are all creating, collecting, and sharing data with one another at all times. This doesn’t just mean smartphones or smartwatches, either. Ericsson predicts that by 2018 there will be more IoT-connected devices in the world than there will be mobile phones. Business Insider predicts that by 2020 global manufacturers will invest an incredible $70 billion on IoT-powered solutions.

There’s a reason why manufacturing is expected to be the biggest IoT platform segment, with a total value of $438 million, by 2021. The IoT promises tremendous benefits to companies with moving assets – particularly for those in the mill products and mining industries. Mill products includes paper, metals, packaging, building products, cement, concrete, furniture, plastic products, and textiles.

Going beneath the data

Building your connected fleet or assets on the IoT is about more than seeing where your vehicles are at any given time. It’s about going deep into the data you’re collecting to uncover an essential narrative about your business as a whole.

This is particularly valuable in the mill products and mining industries. Knowledge of where products are in the transportation process can keep the supply chain running efficiently and customers satisfied by delivering on time – even with changes in schedules or project delays.

In the steel and paper industry, steel coils or paper rolls are easily damaged and require delicate handling, expert packaging, and proper storage. Using IoT technologies to track real-time location, process, and product characteristics throughout production and delivery offers tremendous value. This intelligence can support end-to-end root-cause analysis, including how often a coil was lifted, the acceleration and force applied to move it and put it down, and the temperature and humidity where it was stored and transported.

For most companies in these industries, fleet and transportation is a huge cost driver and often represents a large percentage of the cost of goods sold. Deeper analysis into transportation patterns can identify factors that improve speed or reduce maintenance (by predicting tire wear, for example) and generate direct, bottom-line benefits. Data on pedal position, speed, and velocity can give valuable insight on drivers’ safety and the types of decisions they’re making on the road. Patterns and trends that would have otherwise been undiscovered are now clear, allowing you to dramatically increase the safety of your drivers, reward drivers who are doing good work, and invest in training in those who aren’t. You can even make hiring or firing decisions based on this data, using an objective analysis to determine who is an appropriate fit for your fleet and who isn’t.

If drivers and their trucks are tracked in this way, each one can be assigned a score based on factors like safety and ability. You can identify, based on historical data, what conditions are more likely to be associated with increased accident risk; when taken in the context of an individual driver, you can make decisions that reduce accidents altogether.

In mining, many companies are already tracking tire pressure, wear, breaking, and other factors related to haul truck tires, which cost upwards of $20,000 each. Companies have reported millions of dollars in annual savings by predicting failure ahead of time, enabling companies to schedule maintenance or replacement and reduce downtime.

Even information like the total weight of a particular load or the G forces while in transit can all feed back into your business, maximizing your logistics strategy to allow your team to work “smarter, not harder” in the future. In industries that produce wood or building products, this type of information can be used to identify and reduce fraud. For example, a company hauling logs or other types of building materials can weigh a truck’s contents at pickup and again at delivery to ensure no theft has occurred.

Smart boundaries: Geofencing

Geofencing is another way to use data to track and improve your fleet or assets. Geofencing uses mobile devices to set up virtual boundaries, or “fences,” around designated areas. Vehicles collect and transmit location information over wireless networks to the company, enabling it to live-track fleet vehicles when they enter a physical job site or other designated or secure area. When a fleet truck or mobile worker crosses one of these geofences, the time and location is logged and sent as an email or pop-up alert to specified recipients. Geofencing can also be used to interact with a driver. For example, an alert can tell the driver exactly where to dock and when to enter, once the truck is close to its destination.

Creating the 21st century fleet with the IoT

In many ways, the advantage that the IoT brings to the mill products and mining industries is more than just creating and storing data. It’s about having access to that data in real time. It’s about empowering decision makers with accurate, actionable, and instant information they need to take the perfect step at the perfect time.

Mill products companies can collect, map, store, and analyze fleet and vehicle data at a moment’s notice. This can be used for everything from performing a driver safety analysis to reducing accidents. It can help organizations keep track of ever-changing rules and regulations, minimizing compliance issues.

However, the most important benefit of all is connecting your entire fleet together in a rich and meaningful way. At that point, a fleet becomes less the sum of a series of disparate parts spread out across the globe and more a living, breathing whole.

Learn how to bring new technologies and services together to power digital transformation by downloading The IoT Imperative for Energy and Natural Resource Companies. Explore how to bring Industry 4.0 insights into your business today by reading Industry 4.0: What’s Next?


About Stefan Weisenberger

Stefan Weisenberger is a Director at SAP, responsible for the Industry Strategy, Industry Solution Definition & Portfolio Management for the Mill Products & Mining Business Unit.

Technologies That Will Propel India In 2018

Reema Jose

Convenience, affordability, and inclusivity will become the mainstay of innovations that take center stage in India in 2018, according to experts.

2017 saw the Indian economy make significant headway in technology deployment. Cloud-based transactions, artificial intelligence (AI), the Internet of Things (IoT), Big Data analytics, augmented and virtual reality (AR and VR), and blockchain became buzzwords across the country, thanks to the digital push by the Indian government, a flourishing startup ecosystem, and automation in the commercial space. India’s thrust in building a robust broadband infrastructure, coupled with its high mobile penetration, will boost technology adoption further. Sector-wise, game changers vary, and 2018 promises further disruptions.

Which technologies are likely to take the spotlight in 2018?

We reached out to 10 prominent leaders from across key sectors to assess contemporary technologies and predict the likely digital disruptions that await India in the coming year. Below is Digitalist Magazine’s projection for emerging technologies in 2018 and the key determinants of their adoption, based on these conversations.

Public sector

“Aadhaar, IndiaStack, and GST all coming together will make a big difference to the country, provided we play our cards right.” -Pramod Varma, chief architect of Aadhaar, architect of IndiaStack, and a Digitalist 2017 award winner

The Government of India’s efforts, such as Aadhaar, Jan Dhan Yojana or “banking for all,” demonetization, Digital India, and the rollout of the goods and services tax (GST) regime, fueled technology adoption in the nation in 2017. The country made a start toward a Unified Payments Interface (UPI) for payments and digital lockers. 2018 is likely to see a broader adoption and impact of these initiatives. Two areas that will receive focus in the public space are education and healthcare.

Pramod Varma, chief architect of Aadhaar, the largest project of its kind to build a verifiable identity system in the country, architect of IndiaStack, and a Digitalist 2017 award winner, says, “The impact of Aadhaar, IndiaStack, and GST all coming together will make a big difference to the country, provided we play our cards right. Some of the technologies that were in the early or experimental phases in 2016 and 2017 will become mainstream in 2018.” Varma is bullish on the use of blockchain and a significant upgrade in cybersecurity in 2018 by India Inc. and the government alike.

Big Data and analytics are other key areas where the government has begun efforts. One instance is its reliance on geospatial analytics, which draws insights from satellite data using ML and remote sensing technology. Other scenarios where Big Data analytics can be applied are monitoring urbanization, authenticating income tax assessments, and even tracking internal migrations within the country. The technology is expected to evolve further and find deployments in governance at the grassroots level, such as in village and district-level administrations.

“Opportunity is in digitalizing physical assets and leveraging blockchain to ensure that transactions against those assets are done in a very secure manner.” -Ramanathan Ramanan, mission director, Atal Innovation Mission

The Digital India drive will open more opportunities for blockchain. Ramanathan Ramanan, mission director of Atal Innovation Mission, a Government of India initiative to promote innovation and entrepreneurship, prophesies, “Blockchain will be a big opportunity in India. The opportunity is in digitalizing physical assets and leveraging blockchain to ensure that transactions against those assets are done in a very secure manner. Whatever you can think of regarding assets can be digitalized today. For example, take land records and Aadhaar: How do you securely digitalize them?”

Is there a prescription for a winner technology in the public space?

“The key criteria for technologies is that they should belong to what I would call ASSURED inclusive innovation – where A stands for affordable, S for scalable, S for sustainable, U for user-friendly, E for excellence and D for distinctive or disruptive.” -Dr. Raghunath A. Mashelkar, research scientist and corporate consultant

Inclusive innovation is the need of the hour. Says Dr. Raghunath A. Mashelkar, a research scientist and corporate consultant who was formerly the director general of the Council of Scientific & Industrial Research (CSIR), “The key criteria for technologies is that they should belong to what I would call ASSURED inclusive innovation – where A stands for affordable, S for scalable, S for sustainable, U for user friendly, E for excellence, and D for distinctive or disruptive.”


“We are building the largest innovation center in the world. Of the eight pilots we prioritized, at least two will get into beta production this year.” -Sudin Baraokar, head of innovation, State Bank of India

2017 saw digitalization take the banking sector closer to the consumer with disruptive technologies such as Big Data, blockchain, AI, and the IoT leveraging cloud computing to change the face of business. In 2018, the industry will further reimagine processes by harnessing these technologies in the digital payments arena.

Blockchain, which thrives on collaboration and transparency, will emerge as the most disruptive technology for financial transactions in 2018. It is likely to find deployments across areas such as peer-to-peer lending and crowdsourcing. It can also help manage and enhance the economic inclusion index with minimal investments.

The successful start of the BankChain project in India, a Mumbai-headquartered collaborative banking initiative involving Indian and international banks, is a clear sign that blockchain technology is here to stay. BankChain aims at building banking solutions for a network of 22 banks in India and overseas and is widely acknowledged as a landmark project in the space. “We are building the largest innovation center in the world. Of the eight pilots we prioritized, at least two will get into beta production this year. Some of the areas we want to work on may not require a regulatory view,” says Sudin Baraokar, head of innovation at India’s largest public sector bank, State Bank of India.

Biometrics that allow recognition by iris, voice, and face, and enable wallet-free shopping with authenticated payments will be increasingly deployed with cloud and mobile technologies to widen the net of financial inclusion. Several startups are working with banks as well as independently to unlock the opportunity that this presents. E-commerce and healthcare providers will do well to piggyback on these efforts.

The hugely successful launch of the HDFC Bank’s chatbot EVA earlier this year (featured in the Digitalist Sept–Oct 2017 issue) is just the beginning for chatbots in India. Applications of AI and ML are reckoned to find more complex applications in chatbots to meet a broader spectrum of customized customer needs, including payments in 2018.


“Sharpening analytics will help us calculate the efficacy of certain chemotherapy regimens and the chances of exact matching of a drug with the patient.” -J. P. Dwivedi, CIO, Rajiv Gandhi Cancer Institute and Research Center

Technology in healthcare in India translates to deployments at both the back end and front end. Automation at the hospital and service-provider level is evident in hospital data centers, enterprise resource planning (ERP) implementations, disaster recovery centers, and backup facilities, as well as device-monitoring dashboards that ensure the smooth functioning of healthcare infrastructure and seamless tracking of patients.

In the area of patient services, electronic health records systems and improved queue management have enabled smoother service access. There have been exciting experiments with blockchain to enhance accessibility, convenience, and patient-centric medical care. Blockchain technology is being employed to allow hospitals to collaborate and make hassle-free health information exchange a reality. For instance, patient medical records will be accessible on a standard health information grid, enabling the patient to be mobile and access the records at any hospital or city.

J. P. Dwivedi, chief information officer at the Rajiv Gandhi Cancer Institute & Research Centre, one of Asia’s premier cancer care centers, confidently says, “Sharpening analytics will help us calculate the efficacy of certain chemotherapy regimens and the chances of exact matching of a drug with the patient.”

Wearable devices have been growing in adoption, with awareness levels increasing on fitness and health. The IoT will play a role in the evolution of wearable tools that will be more user friendly. In medicine, IoT and AI will also benefit remote delivery of health services and preventive care. Telemedicine, teleradiology, and teleconsultation, which are currently in primitive forms, will become more sophisticated in 2018.

Research in medicine will witness exciting advances, one instance being the arrival of Nano sensors capable of circulating inside the human body. The “Internet of Nano Things” is another area to look forward to, where connected nano things are able to store and transmit information from inside the human body, for research purposes.


“Connected shop floor or smart manufacturing will become a reality in at least some automobile companies.” -Vijay Sethi, CIO and head of CSR, Hero MotoCorp Limited, and a Digitalist 2017 award winner

Indian manufacturers are already using applications in AR and VR, AI, and robotics to provide better customer experiences and for process optimization. Chatbots used in the front end; industrial IoT and the digital twin concept used in driving operational efficiencies; and predictive analytics used in preventive maintenance and supply-chain innovation are a few examples of the massive digital disruption in the manufacturing sector.

2018 will see further maturing of these technologies as cloud-based technologies permeate into more areas. Blockchain could also find applications in manufacturing, such as vendors collaborating to serve customers better. The Tata Group and the Mahindra Group, among others, are actively exploring opportunities in blockchain.

Experiments in India spotlight on affordability and customization for the Indian environment to provide bottom-of-the-pyramid solutions and efficiencies in the supply chain all around. The Tata Group has an exciting innovation in this space. The salt-to-software solutions conglomerate has developed a technology to create a fuel cell with a low-platinum catalyst to power vehicles in the future.

Automobile industry insiders are looking toward AI to disrupt the sector further. Automobile manufacturing has been a mainstay in India, with the primary manufacturing companies taking pride in pioneering technology and process innovations in this industry. The digital twin project of Hero MotoCorp was a global first in the two-wheeler manufacturing segment. The availability of cost-effective IoT sensors is expected to further fuel the adoption of the digital twin concept with applications in smart asset management, as well as improving operational efficiencies for projects. Further explorations are underway at the Indian auto majors for driverless cars and bikes, e-cars, and even biofuel cars. However, some of these experiments may not translate to actual products on the road in 2018. Trials in electro mobility will lay the foundation for deployments in the next three to four years.

“Connected, smart vehicles and accessories will be in India next year, which means there will be data collected on the automobile, processed in real time, and feedback offered to users. In automobile manufacturing, a connected shop floor or smart manufacturing will become a reality in at least some companies,” says Vijay Sethi, CIO and head of corporate social responsibility at Hero MotoCorp Limited, the world’s largest two-wheeler motorcycle manufacturer based in India.

“AI and IoT will dictate trends in the paints industry in 2018.” -Manish Choksi, president, International, IT, HR and Chemicals at Asian Paints Limited and a Digitalist 2017 award winner

In manufacturing retail, AR and VR will become more disruptive, and more retailers will embrace these technologies to enhance customer adoption and experience. AI and the IoT will dictate trends in the paints industry, according to Manish Choksi, president, International, IT, HR, and Chemicals at Asian Paints Limited, a leading Indian paints manufacturer.

“In 2018, chatbots will become more user-friendly and will have the ability to respond to questions that are not necessarily framed for a machine.” -Dr. Gopichand Katragadda, Group CTO, Tata Sons Limited

In another case of technology serving the grassroots, unmanned aerial vehicles (drones) are increasingly employed in areas such as agriculture for spraying pesticides as well as in industry inspection. Voice recognition, image recognition, and natural language processing have all come of age to service needs at the bottom of the pyramid.

“AI will evolve into chatbots, which are smarter. In 2018, chatbots will become more user friendly and will have the ability to respond to questions that are not necessarily framed for a machine,” says Dr. Gopichand Katragadda, group CTO of Tata Sons Limited, the principal holding company and promoter of the Tata companies. Katragadda, tasked with driving technology innovations across 120 companies of the Tata Group, is leveraging design thinking apart from betting on AI and deep learning to drive business models and impact enterprise technology.

Smart city

“90% of the technologies powering GIFT City have been sourced from Indian companies, a lot of them startups.” -Ajay Pandey, managing director and group CEO, Gujarat International Finance Tec-City Company Limited and a Digitalist 2017 award winner

This year, the government announced a list of 30 additional cities for development as smart cities, taking the count to 90, under its Smart City Mission. The government-backed project is implementing multiple technologies to bring the towns up to global standards in terms of improved quality of living and sustainable management. Smart cities call for an ecosystem of applications and technology to enable “smart” features such as intelligent lighting, smart water, power management, smart traffic management parking mechanisms, and many more.

Digital solutions based on AI, the IoT, blockchain, and robotics, as well as a combination of these technologies, are slated to fuel smart city projects. For instance, devices with intelligence and the power to communicate will help smart waste management, smart parking, and traffic management, and track the distribution and consumption of water and power supply.

AI and deep learning can power features like face recognition and be used to help study the consumer behavior within the cities. Companies like Bangalore-based eMudhra are also exploring ways to use blockchain in urban planning and governance, with potential implications for smart cities.

An innovative smart city in the works, Gujarat International Finance Tec-City Company Limited (GIFT City) will pioneer features such as an automated waste collection system (AWCS) and segregation plant and a single IoT-based Command Control and Communication Centre (C4) to monitor and manage city infrastructure. The district cooling system is the first implementation for commercial use in India. Features under trial include geofencing, which uses GPS to define geographical boundaries.

According to Ajay Pandey, managing director and group CEO of GIFT City, and a Digitalist 2017 award winner, 90% of the technologies powering the project have been sourced from Indian companies, many of them startups.


“There is activity across apps using data, automation, and AI. Voice-assisted apps will see an upgrade in 2018.” -Kapil Bharati, co-founder and CTO of Delhivery

The logistics industry has been on a technology adoption spree, combining the strengths of cloud computing, the IoT, and robotics to manage warehouse operations and track shipments and deliveries in real time. Automated storage and retrieval systems (ASRSs), radio frequency identification (RFID), GPS, cloud, and mobile are heavily in use to streamline operations. In 2017, the GST rollout led to an unprecedented increase in digitalization and faster transportation of goods for sectors across the board, and understandably in the logistics sector.

Expectations are rife for greater adoption of essential ML for higher automation and to assist in simplifying delivery mechanisms in 2018. Growth in the sector has also led to an upward spiral in applications using Big Data, automation, and AI. “There is a lot of activity across applications using data, automation, and AI. Voice-assisted applications will see an upgrade in 2018,” says Kapil Bharati, co-founder and CTO of Delhivery. For instance, you may not have to look at the screen to make decisions; instead you may be able to use your Bluetooth handset and give commands. This is an area where much work has been done by companies such as Google and Amazon.

Big Data and cognitive computing will be vital in laying the foundation for futuristic logistics systems. Interestingly, employers are increasingly looking at robots to protect against labor shortages during high demand. That robots improve the speed, accuracy, and productivity per square foot of warehouse space when e-commerce giants are reeling under rising rental prices is clearly in their favor.

The rise of e-commerce and demand from Tier 2 cities will lead to further collaborations between logistics players, and such models will be increasingly enabled by technology. Use of sensor technology that measures traffic flow, area-specific volume, and movement of people will grow in 2018.

Predictions: The top three technologies in India in 2018

  • Blockchain technology has several experts betting on it for collaboration and trust-based ecosystems across industries and government systems.
  • Artificial intelligence will find newer applications across sectors and in combination with digital twin technology among others.
  • Further evolution of AR and VR is expected to ensure increased use of mixed reality for more immersive experiences.

How is digital disruption impacting the Asian economy? See Rise Of The Digital Conglomerate In Asia.


Reema Jose

About Reema Jose

Reema Jose has over 15 years of experience writing on business and technology.

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.


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


Human Is The Next Big Thing

Traci Maddox

One of my favorite movies of 2016 was Hidden Figures. The main character, Katherine Johnson, and her team of colleagues had an interesting job title: Computer. Here’s what Katherine said about her job: “On any given day, I analyze the binomial levels of air displacement, friction, and velocity. And compute over 10 thousand calculations by cosine, square root, and lately analytic geometry. By hand.”

That was the 1960s. It was amazing work, but work that took hours to complete – and something an in-memory computer could do in a fraction of a second today.

Just as in-memory computing transformed calculating by hand (and made jobs like Katherine’s much easier), digital technologies are transforming the way we work today – and making our day-to-day activities more efficient.

What’s the real impact of technology in today’s workplace?

We are surrounded by technology, both at home and at work. Machine learning and robotics are making their way into everyday life and are affecting the way we expect to engage with technology at work. That has a big impact on organizations: If a machine can do a job safely and more efficiently, a company, nonprofit, or government – and its employees – will benefit. Digital technologies are becoming increasingly more feasible, affordable, and desirable. The challenge for organizations now is effectively merging human talent and digital business to harness new capabilities.

How will jobs change?

What does this mean for humans in the workplace? In a previous blog, Kerry Brown showed that as enterprises continue to learn, human/machine collaboration increases. People will direct technology and hand over work that can be done more efficiently by machine. Does that mean people will go away? No – but they will need to leverage different skills than they have today.

Although we don’t know exactly how jobs will change, one thing is for sure: Becoming more digitally proficient will help every employee stay relevant (and prepare them to move forward in their careers). Today’s workforce demographic complicates how people embrace technology – with up to five generations in the workforce, there is a wide variety in digital fluency (i.e., the ability to understand which technology is available and what tools will best achieve desired outcomes).

What is digital fluency and how can organizations embrace it?

Digital fluency is the combination of several capabilities related to technology:

  • Foundation skills: The ability to use technology tools that enhance your productivity and effectiveness
  • Information skills: The ability to research and develop your own perspective on topics using technology
  • Collaboration skills: The ability to share knowledge and collaborate with others using technology
  • Transformation skills: The ability to assess your own skills and take action toward building your digital fluency

No matter how proficient you are today, you can continue to build your digital IQ by building new habits and skills. This is something that both the organization and employee will have to own to be successful.

So, what skills are needed?

In a Technical University of Munich study released in July 2017, 64% of respondents said they do not have the skills necessary for digital transformation.

Today's workplace reality

These skills will be applied not only to the jobs of today, but also to the top jobs of the future, which haven’t been imagined yet! A recent article in Fast Company mentions a few, which include Digital Death Manager, Corporate Disorganizer, and 3D Printing Handyman.

And today’s skills will be used differently in 2025, as reported by another Fast Company article:

  • Tech skills, especially analytical skills, will increase in importance. Demand for software developers, market analysts, and computer analysts will increase significantly between now and 2025.
  • Retail and sales skills, or any job related to soft skills that are hard for computers to learn, will continue to grow. Customer service representatives, marketing specialists, and sales reps must continue to collaborate and understand how to use social media effectively to communicate worldwide.
  • Lifelong learning will be necessary to keep up with the changes in technology and adapt to our fast-moving lives. Teachers and trainers will continue to be hot jobs in the future, but the style of teaching will change to adapt to a “sound bite” world.
  • Contract workers who understand how businesses and projects work will thrive in the “gig economy.” Management analysts and auditors will continue to be in high demand.

What’s next?

How do companies address a shortage of digital skills and build digital fluency? Here are some steps you can take to increase your digital fluency – and that of your organization:

  • Assess where you are today. Either personally or organizationally, knowing what skills you have is the first step toward identifying where you need to go.
  • Identify one of each of the skill sets to focus on. What foundational skills do you or your organization need? How can you promote collaboration? What thought leadership can your team share – and how can they connect with the right information to stay relevant?
  • Start practicing! Choose just one thing – and use that technology every day for a month. Use it within your organization so others can practice too.

And up next for this blog series – a look at the workplace of the future!

The computer made its debut in Hidden Figures. Did it replace jobs? Yes, for some of the computer team. But members of that team did not leave quietly and continue manual calculations elsewhere. They learned how to use that new mainframe computer and became programmers. I believe humans will always be the next big thing.

If we want to retain humanity’s value in an increasingly automated world, we need to start recognizing and nurturing Human Skills for the Digital Future.


Traci Maddox

About Traci Maddox

Traci Maddox is the Director of the North America Customer Transformation Office at SAP, where she is elevating customer success through innovation and digital transformation. Traci is also part of the Digital Workforce Taskforce, a team of SAP leaders whose mission is to help companies succeed by understanding and addressing workforce implications of digital technology.