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A Hard Hat Is Not Enough: IoT Is Saving Lives In Qatar

Judith Magyar

Standing on a roadside in Qatar where camel once passed, I watch hundreds of trucks roll by.

I am with Philippe Garnier, corporate plant manager for QDVC, a thriving local construction company. Philippe is responsible for all the machines and vehicles needed to build the new 14-lane orbital highway that will circle the city of Doha. Ten years ago there was nothing here but sand. Building this particular 40 kilometer stretch will take four years, he tells me.

“When people drive down this highway,” he says, “it will be just another road. No one will be thinking of the thousands of lives touched by these roadworks – the men working under the desert sun and their families far away.”

Philippe thinks about those lives every day. Besides the machinery, he is also responsible for the safety and welfare of the thousands of workers and all the visitors on every one of QDVC’s projects around the country.

Massive construction cranes dot the skyline around us. These behemoths are notoriously dangerous if they fall over or crash into one another. But there is not the slightest danger of that happening on any QDVC site, thanks to a 3D anti-collision software designed specifically to save human lives.

“We’ve been using the solution for seven years and have not had a single accident or injury in all that time,” says Philippe.

Saving human lives

Powered by in-memory computing technology, the innovation is the brainchild of Dr. Severin Kezeu, one of the world’s first IoT pioneers. Back in 1991 he realized that all equipment could be controlled through IP addresses on the Internet, and that all things could communicate with each other in that way.

“It’s a matter of tagging everything – machines and equipment – and giving people wearable devices or smartphones. You just need an IP address,” he says, making it sound very simple indeed.

Severin met with lots of resistance along the way. At that time, only the military was interested in anti-collision solutions. There was also the question of financing. Just one network card cost $100,000. Twenty-five years later, every industry has been transformed by the Internet of Everything.

“My goal is to save lives. It was really unacceptable for me to see how many people were dying every day on construction sites. That gave me the inspiration to build a solution to avoid accidents and fatalities. Besides safety, the software provides a critical layer of security and helps speed up construction schedules.”

Severin’s biggest project ever was a construction site in Saudi Arabia involving 250 cranes and 30,000 workers. It proceeded without a hitch.

Treating people right

Human habitation in Qatar dates back 50,000 years. Today, 88% of Qatar’s 2.6 million inhabitants consists of expats and migrant workers.

The country is gearing up for the FIFA World Cup 2022 – the first Arab country ever to host the event, raising plenty of controversy in the process. One of the issues has been the treatment of workers on construction sites. According to Amnesty International and other organizations, conditions are appalling.

I mention this topic to Philippe, and ask if we can have a look at the workers’ camp. To my surprise, he says yes. “I can’t speak for other companies,” he says, “but our workers live in the  Club Med of camps.”

We drive the 30 kilometers from the construction site to the QDVC Campus City. Four thousand workers live in rooms for two or four men.  Air-conditioned buses are lined up ready to drive them back and forth to their shifts.

“The men work eight-hour shifts and get paid overtime if necessary. We work around the clock. If temperatures rise over 38° Celsius, we stop,” says Philippe.

The campus is as sustainable as possible: it generates its own power, bores its own wells for water, and subsidizes local vegetable and livestock farmers. The canteen caters to culinary tastes from India, Africa, Thailand, the Philippines, and Arab countries. There is a mosque on site. The men have access to WiFi in recreation rooms and plenty of sports facilities.

Diversifying the economy

Many countries made their fortunes in the oil and gas era, but those that invested in the welfare of their people and diversified their economy over the years reaped the most benefits. According to the World Happiness Report 2017, published by the UN Sustainable Solutions Network, Norway, for example, is the happiest country is the world, in spite of the drop in oil prices. Qatar, with the highest income per capita in the world, ranks 37 out of 150 countries measured.

For the past few decades, economic diversification has been high on the agenda of all the countries in the Gulf Cooperation Council (GCC). Economic transformation is not a simple undertaking. It requires a holistic approach incorporating a variety of measures. Saudi Arabia, for example, has announced its Vision 2030 plan, which aims to reduce the kingdom’s reliance on oil. One of the goals is to generate 35% of economic output from small and medium enterprises.

Experts advise countries on the diversification path to consider three things: upgrade local enterprises so they can become world-class competitors, use digitization to leapfrog economic development, and finally, build a skilled labor force capable of continuous learning.

Training the next generation

Besides providing humane living conditions, QDVC invests heavily in training.

“Recruitment is always a challenge,” says Philippe. “The turnover rate is high; we fluctuate from 15,000 to 9,000 workers as some projects end and new ones begin. Twenty percent of our people are highly skilled engineers, the others are operators and laborers. Using sophisticated software and systems requires continuous training and workshops for the operators, so that is a big part of our program.”

I look at the hundreds of people manning the construction cranes and machines and trucks as we drive down the road on our way to the airport. They may not know there are people like Philippe and Severin who are looking out their safety and welfare, but their lives are certainly changing with each new effort to improve their conditions or teach them new skills.

That is the way of progress.

For more on how the IoT is changing business, see The Internet of Things and Digital Transformation: A Tale of Four Industries.

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The Next Three Years: A Critical Inflection Point For Digital Transformation [VIDEO]

Shelly Dutton

The next three years will more critical to business survival than the last 50. Why? According to the 2016 Global CEO Outlook from Forbes Insights, “the force and speed with which technological innovation are moving through the economy is creating an inflection point for the business sector.” And with only 5% of organizations mastering their digital strategies to the point of differentiation from their competitors, there is much work to be done.

At the heart of this shift resides embedded technologies such as artificial intelligence, machine learning, Big Data analytics, the Internet of Things, and blockchain. In their MIT Sloan Management Review article, “Thriving in an Increasingly Digital Ecosystem,” Peter Weill and Stephanie L. Woerner shared that businesses with 50% or more of their revenues from digital ecosystems achieve 32% higher revenue growth and 27% higher profit margins.

For example, Trenitalia announced last year that they improved their customer experience by proactively and detecting machine failures with predictive maintenance. By using real-time insights from sensors and advanced analytics, Italy’s primary rail transportation company completely transformed their asset management, extended efficiencies and equipment lifecycles, and reduced maintenance costs by as much as 10%.

Organizations that embrace digital transformation and system-enabled intelligence are setting the foundation for unprecedented data-driven value. They are unlocking completely new business models and completely transforming their business processes across their supply chain, customer channels, and workforce experience.

Are you ready to reap the same advantages? Watch this replay of the SAPPHIRE NOW session, “Advance Your Digital Transformation Journey with SAP Leonardo” to get started.

Explore how SAP Leonardo can help you integrate breakthrough technologies and run them seamlessly in the cloud.

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IoT And Connected Markets

Pushkar Ranjan

The Internet of Things (IoT) involves connected products, assets, fleets, infrastructures, markets, and people. In this series of blogs, we’ll address each of these connected aspects in turn.

We’ve grown accustomed to the idea of IoT in retail environments – for example, beacons that can recognize participants in frequent-shopper programs and automatically deliver personalized offers to their cellphones. But IoT can transform other kinds of markets, as well.

In rural settings, IoT can augment physical infrastructure to enable new connectivity and capabilities for agribusiness and related supply networks. In urban landscapes, IoT can connect traffic, buildings, and public spaces for greater efficiency and more effective services.

In both cases, IoT can empower new insights, innovations, and business models. It can also optimize the use of assets and natural resources; reduce energy usage, emissions, and congestion; and improve efficiency and quality of life.

But it’s still early days for connected markets. To see return on their IoT investments, organizations operating in these contexts will need to identify opportunities for quick wins – while understanding that the most significant payoffs will be achieved over time.

Connecting for transformation

Connected markets can enable transformations in three key contexts:

Market insights: Consumers and citizens increasingly demand consistent and seamless experiences across time, space, and geography. IoT enables retail and other public spaces to respond. Connected markets leverage beacons, mobile connectivity, and identity solutions to understand behaviors and preferences and then deliver hyper-personalized experiences.

For instance, a leading provider of sports apparel and equipment created a customer-activity repository to achieve a 360-degree view of customers. In one initiative, the company is leveraging a customer fitness app to track running, cycling, and other sports activities to serve up personalized offers.

Rural areas: Agriculture is big business, and modern farms and ranches can be large enough that they need to be managed by aircraft and other extensive physical infrastructure. And in both developed and emerging economies, agribusiness increasingly must do more with less to feed growing populations.

Connected markets augment and transform physical infrastructure to deliver new insights and capabilities. You can capture data from agricultural equipment to improve efficiency and operation. You can connect partners up and down the supply network to create transparent and sustainable food supply chains and better manage price volatility. Satellite, GPS, cloud, and related technologies are connecting even the most remote operations, from food producers through to wholesalers, retailers, and consumers.

Urban areas: As the global population grows, it is becoming more urbanized. Today, 50% of people live in cities, and by 2050, 75% will. To manage this growth and deliver services effectively, cities will need to become more connected.

IoT enables cities to respond as the work and personal lives of citizens become more mobile and automated. It can optimize traffic, energy usage, public spaces, ports, and other physical infrastructure.

The trend has already started with simple applications like smart parking. Smart parking combines sensors, cameras, and apps to help citizens quickly find parking spaces, help cities predict parking needs, and measurably ease traffic congestion. It will continue with autonomous living choices. One example is laundry. When designing high-density housing, rather than include laundry space in every apartment, urban developers might centralize laundry, using connected technologies to optimize the experience.

In both rural and urban markets, governments have a vested interest in driving IoT deployments. But governments often lack budgets for new IT initiatives. As a result, public-private partnerships will be key to the development of connected markets.

The potential upsides of connected markets are compelling. Once a market is virtualized, the opportunities for reaching new customers, partners, and even industries grow exponentially. The organizations that figure out connected markets will gain significant first-mover advantages – and position themselves for longer-term industry leadership.

Effective IoT connectedness requires a unifying foundation. SAP has addressed this need by introducing SAP Leonardo, an innovative IoT solution portfolio designed to help organizations digitally transform existing processes and evolve to new digital models. Learn more by downloading an SAP Leonardo brochure, reading about real-world use cases, attending our flagship event Leonardo Live this summer, visiting sap.com/iot, and following us on Twitter at @SAPLeonardo.

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Pushkar Ranjan

About Pushkar Ranjan

Pushkar Ranjan is part of the global Internet of Things (IoT) Go-To-Market team at SAP, where he is responsible for business development, sales enablement, and community engagement with prospects, customers, partners, and developer ecosystems in and around the topic of the IoT. Pushkar has worked with SAP for more than 15 years across disciplines of product management, strategy consulting, and operations management in the areas of customer engagement and enterprise performance management. He has academic degrees of a Master’s in Business Administration from the Indian Institute of Management with a focus in the areas of Information Systems, Strategy, and Marketing.

Primed: Prompting Customers to Buy

Volker Hildebrand, Sam Yen, and Fawn Fitter

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


About the Authors:

Volker Hildebrand is Global Vice President for SAP Hybris solutions.

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

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

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Pulling Cities Into The Future With Blockchain

Dan Wellers , Raimund Gross and Ulrich Scholl

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

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

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

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

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

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

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

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

Envisioning the future city

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

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

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

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

A multitude of possibilities

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

Read the executive brief Running Future Cities on Blockchain.


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About Dan Wellers

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

Raimund Gross

About Raimund Gross

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

Ulrich Scholl

About Ulrich Scholl

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