29 January 2018
At SparkOptimus, we often talk about the 4th Industrial Revolution and the disruption of industries that will ensue. Last week at the World Economic Forum (WEF) annual meeting, the issue was put to the global elite. Amongst a range of other subjects, the impact of the 4th Industrial Revolution on consumption has been debated under the banner of ‘Creating a Shared Future in a Fractured World’. Although the goal of our discussion (helping our clients prosper) and theirs (developing a shared narrative) may differ, this new revolution is clearly turning heads.
As the WEF eloquently put it: “The 4th Industrial Revolution is transforming entire systems of production, distribution, and consumption providing both opportunities for value-creation through game-changing technologies, as well as challenges on ensuring inclusivity.” The article continues stating that consumer spending drives ~60% of the world’s GDP, whereas we would say consumers are the sole driver. All value created, which is captured in GDP, is to benefit the end user, or consumer. Now, the game-changing technologies provide opportunities for all companies to go directly to the consumer.
The way people consume and interact with businesses is changing, causing the business models and entire value chains to be transformed. Heineken has, with the help of SparkOptimus, started selling directly to consumer, Chinese start up Meicai is enabling farmers going directly to restaurants, Amazon and Alibaba (both online stores) are the new retail behemoths, and Netflix has personalized not only content marketing, but also content creation. Of course these developments impact society as well as incumbent companies: job descriptions change or even disappear entirely. These dynamics are the basis of many discussions in society concerning job losses, rising inequality, or even a universal basic income as a solution to large scale automation.
Successful businesses must deal with the impact of these social, demographic, and technological challenges on their propositions, organization and financials. Due to rising consumer demand for convenience, personalization and access vs. ownership, propositions must change in tandem. Organizations must rapidly become more efficient as margins are slimmed by disruptors that have adopted new and efficient technology as the core of their business. New possibilities are shifting revenue streams towards online and putting the dynamics of e-commerce profit equations in favour of the industry winner. This has, for instance, resulted in the monopoly of technology giants: Google, Facebook, Amazon (more in our Masterclass and Book on this).
We approach these developments with optimism and a renewed drive to help businesses tackle their specific challenges in their ever-evolving value chains. The WEF envisions “a future where benefits of technological advancement are inclusive and firmly embedded in people’s lives, making daily consumption experiences simpler, accessible, highly personal and more enjoyable while also imbued with trust and in harmony with nature.” We couldn’t agree more.