Recently Rebecca Nash from ABC’s The Business asked me to consider the future of business over the next decade. Here’s some thoughts from that conversation.
The future of business has always been driven by developments in technology, and the digital revolution is of equivalent substance to the previous industrial revolution. This has important implications for the future of business.
Manufacturing will not die but it will change
Manufacturing used to be about employing large numbers of people in relatively low skilled jobs. However, this has been declining for many years with the introduction of robotics and automated production lines. Automation of production lines is already highly advanced, but now we will see new approaches to how things are constructed. This trend in manufacturing employment will continue with the introduction of technologies such as 3D printing.
One of the possibilities arising from 3D printing is enabling mass customization. A good example of this is shoe production via 3D printing, Australian startup Shoes of Prey is already using this technology. Another compelling application of 3D printing is in medical solutions like this: 3D printer gives disabled girl “magic arms” exoskeleton. Although it is important to note that the technology can be used for other purposes too for example, the ability to create a weapon.
Changed competitive landscape
The digital revolution is also leveling the playing field between competitors, and being large is less advantageous than previously. Smaller competitors can form loose coalitions that provide similar scale to a larger organization without the need for capital intensive setup.
We are likely to see a reduction in the market power of big players. Some traditional businesses will fail to scan the environment and detect shifts in the consumer environment. A good example of this is the differences in adoption of new technology and business models and its impact on the performance of competitors Kogan and Harvey Norman.
Another game changer is the internet of things – things knowing information about themselves and talking to each other, and enabling us to interact with them. Thus metadata becomes increasingly important and enables the continued development of augmented reality applications such as those made possible by technologies such as Google Glass.
The internet of things will be enabled by wirelessly connected sensor technology. An interesting example of this is DNA tags as used by ethical Australian timber company Simmonds Lumber to help stamp out illegal logging. Yet this technology will have important ramifications for our personal privacy too – we will be asked to trade-off convenience for privacy.
Cost shifting to lower cost regions will continue – but those regions may change as economic shifts happen in the developed world. That is, due to economic shifts, developed countries may evolve as lower labour cost regions.
Changing customer landscape
Power relations between business and consumers are shifting, and the shift is toward empowerment of consumers. This requires new attitudes and responses from business, and this requires customer insight which is provided by good data. Data will increasingly drive decision making and the making of meaning within businesses.
New approaches – loose coupling
Innovation will be powered by loosely coupled technical components that are joined up with loosely coupled business components. Even large businesses will need to find ways of being nimble and agile, to develop the ability to pivot rapidly in response to environmental changes.
Change cycles will increase in rapidity so businesses will need to constantly scan the external environment to assess and adapt.
Organizations will need to develop skills in entrepreneurship as an internal capability to drive innovation. If access to credit or capital becomes constrained then organic growth capability will be critical for business. Further, the ability to partner effectively with other organizations will also be critical to growth.
Effective use of resources becomes critical
Sustainability will continue to grow in importance, not just to save the environment. Sustainability will be important from both a cost control and environmental perspective.
Access to natural resources that we take for granted – such as water or petrochemicals – will become increasingly competitive. And access to other resources needed to grow a business are also likely to be problematic. A good example is access to credit.
New ways of doing traditional things like eduction and work
Schools and universities will not need to look like they do now. The need for large places enormous investments in physical infrastructure are no longer necessary to perform the task of eduction. Online education and collaboration technologies mean that we do not necessarily need to ‘go’ to school in the way we do now.
This has implications for society and business. We currently use schools as a holding bay for children while their parents are working at the office 9-5. If young people no longer need to attend school in a physical sense then how will their parents manage, and what impact will this have on the traditional workplace?
Also the need for workers to be physically present at an office to do their work will reduce. Better communications and presence technology means that adults will also be able to work from other locations than the traditional office. Some good examples of the evolution of co-working in Australia are Hub Melbourne, or Vibewire and Fishburners in Sydney.
This will drive changes in the ways that organisations design and define their physical footprint. It also means significant changes for currently viable business models such as building and renting commercial real estate.
Yet human beings still need interaction with others. Our young people need to interact with each other physically to evolve as human beings. Adults need to connect with each other in the work context. We have a strong social drive and these needs still need to be met.
It is likely that localised co-working spaces will continue to evolve as solutions to this need for human contact and affiliation. No longer will we head, lemming-like, to a corporate office in the city, instead we will head to the local co-working space where we can connect virtually with our colleagues.
Rise of collaborative models – leisure, work, competition
This does not mean that competition will disappear, however it will change. Due to increasingly scarce resources collaboration will become more important for business. Further, the question of why a business needs to do everything for itself will become important. With cloud and ubiquitous connections to the network partnering with best-of-breed service providers will be easier.
In the personal sphere collaboration is likely to increase too. And the change will be driven by similar considerations to business. For example, why own a car when you don’t need one all the time, especially if you can get access to one whenever you need it?
Shared resources – cars, tools, etc – will make increasing sense to people and shift the consumer culture from one of product acquisition to service adoption. Some good examples of existing collaborative consumption models include Open Shed and 99 Dresses.
The future is a distant country*
Some of my prognostications will be wrong in their particulars. But the technology trends are clear. The next decade will see the rise of new businesses fuelled by technologies that don’t exist yet. The job I do for a living did not exist when I left school. The industry I work in did not exist at the start of my career. I can see no reason why those trends will change in future. We need to be open to the new opportunities and accept that things move faster now.
* with apologies to L.P. Hartley