Tim Frank Andersen
The 10 most important digital themes for 2018
What to expect for your business in the year to come
Cash will disappear and the robots are coming. The digital development is moving at lightning speed and digital upgrades are on the strategic agenda of more and more companies. And for a good reason.
Now, that the calendar tells us we are in 2018, an increasing number of digital themes are emerging and they demand insight, decision, and action. But what is most important to focus on in the coming year? Chief Digital Officer, Tim Frank Andersen, has gathered the 10 themes, he believes to be the most pressing and important for company managers to respond to.
Note that this is written from a Danish point-of-view.
1. Data provides higher digital customer satisfaction
Now, more than ever, it is crucial for all companies to focus on creating better and more unique customer experiences. We live in a time where customers, partners, and citizens have become used to great service, the possibility to change supplier easily and quickly and where the number of global opportunities has never been bigger.
More than half of Danish CEOs say that their main focus is customer satisfaction — closely followed by the ability to understand and work with new technologies and digitalization. And that shouldn’t come as a surprise because these two themes are closely linked.
For years, we have tried to use the data we have gathered about our customers in order to provide them with better and more proactive services closer to their needs and challenges. But, for many companies, their data has been all over the place. Therefore, it has been close to useless.
2018 will be the year where most large companies will finish cleaning up their data and will start using it to create new competitive advantages. And it is about time because international competition will undoubtedly pick up speed. If you are not already working on this, you need to start now!
2. New data laws and expensive consequences
On May 25th, the EU General Data Protection Regulation (GDPR) becomes effective and it will have huge consequences.
Because all the while we are becoming better at using our data to create better customer experiences and new business opportunities, we also need to significantly improve the handling of our data and data processes.
GDPR will take up a lot of our time because the consequences of not sticking to the regulations are enormous: Companies can risk fines of up to 4% of their global revenue.
In other words, it very important to set up processes and routines related to personal data — especially if they are private. Ask yourself these questions:
- Are you on top of your data management contracts with cloud companies, service agencies, and other data suppliers?
- Are you on top of the entire chain of subcontractors?
- Can you document your data flows and track the source of all of your data?
- Can your customers request all the data you have gathered from them?
- Can your customers have all their data deleted or transferred to another supplier?
- Do you know what to do, in case of a data security breach? When the new regulations become effective, companies must report a safety breach to the data protection supervisory authority within 72 hours.
These are just some of the highlights of GDPR. The Danish Department of Justice’s white paper on the subject is 1.000 pages.
Companies and public authorities have worked for a long time on implementing it all, but still, we are going to see several incidents where things were not under control and that will make headline news.
3. The fight against digital friction
Digital friction is everything that stands between us as users and the task we want to solve digitally. No matter if you want to register, buy, ask or just consume, every extra click, extra page, extra transaction step, extra space to fill out and extra time loading will lead to bad customer experience and poor customer satisfaction — the exact opposite of what we are trying to achieve.
Earlier, we focused on the customer experience from the point where a user decided to solve a task digitally and landed on our website or in our app. But in 2018 we will see more and more how we can meet this challenge way earlier and in new ways.
Data and artificial intelligence will make companies capable of predicting needs or problems and provide the uses with a solution — almost before they have thought about it.
New digital solutions will proactively meet the users with suggestions for upcoming situations that can respond to or optimized. This will lead to a whole new level of improved, individual customer service.
At the same time, we will see physical products that eliminate the need to find your phone, open it, find the right app and log in before we can solve our tasks. In the next generation of products, we will be able to simply talk to them and thereby solving our tasks:
“Buy coffee, see if my clothes are still wet, lower the temperature and close the window if it starts to rain!”
We will also see physical products that can solve our tasks online without even involving us. All with the with the purpose of minimizing friction in order to create better customer experiences, increase customer satisfaction and deliver better business results.
Those who make the most user-friendly solutions will wind and the race is beginning in 2018.
4. Closer to a cash-free society
Denmark is one the most cash-free societies on the planet — 23% according to Denmark’s Central Bank. Our money becomes increasingly digital and more than half of youth up to the age of 39 does not think it would be a problem if our society became cash-free.
From this year, Danish stores can now choose to not accept cash at night. This move is supported by the plethora of new, digital payment solutions from Danish players such as Dankort app and MobilePay.
But international players such as ApplePay, PayPal and Alipay are also gaining market shares here in Denmark. This development will grow drastically in 2018.
Danish banks have come together to support and further develop MobilePay while payment giant Nets has established a new business unit called SmartPayments. They are in charge of developing tomorrows easy solutions — and that will benefit us as consumers because we are very much adapting to these new ways of paying.
5. Blockchain vs. Bitcoin
If you bought a bitcoin on January 3rd, 2017, the price was $756. One year later it cost $15,556. That is a 2000% increase!
It is no coincidence Bitcoins are everywhere in the media. Many still do not know what it is and who would not like to make that amount of money?
People are now discussing whether Bitcoins can be compared to the Tulip Mania in The Netherlands in 1637, where one single tulip bulb sold for the equivalent of 10 annual salaries at the time — until the bubble burst.
But Bitcoin is just one of approximately 1,500 registered cryptocurrencies. And Bitcoin is about much more than just the opportunity to transfer money globally virtually free.
The technology behind cryptocurrencies — Blockchain — enables a safe and broadly distributed method of hand down everything from deeds to documents, contracts, journals and rights without the need for a third-party notary or trust provider.
The opportunities are enormous and 2018 will be the year where we will see the first commercial breakthrough with the Blockchain technology in the energy sector, financial industry and probably also in shipping.
6. Nightmares come true for shop owners
The retail business has been under a lot of pressure from online shopping — both domestically and internationally. But sales are still pretty fragmented in Denmark with many different players sharing the market.
That is in stark contrast to the US. Last year Amazon accounted for 44% of the entire online shopping market.
With an Amazon Prime membership, American consumers have free shipping all year round. That resulted in 5 billion deliveries in 2017. That’s 570.000 deliveries every hour of every day last year. Amazon loses more than $4.8 billion by offering this service which makes it pretty hard for anyone to compete with them.
Many Danish retailers probably think “Good thing they are not in Denmark!” But soon they will be. I expect Amazon to open in Scandinavia within the next year. Probably in Sweden first, but they will probably cover Denmark, too.
That is bad news for both brick and mortar stores as well as online shops, but good news for the Danes and the general development. We can learn a lot from Amazon. They will raise the bar for customer service and continue to innovate and inspire us, and thereby force everyone to deliver their best.
7. Mixed Reality will take a Magic Leap forward
Virtual Reality (VR) was on everybody’s lips last year, but the huge commercial breakthrough never came. I do not expect it to happen in 2018 either, even though the development towards better and more flexible headsets will continue (such as the wireless HTC Vive Focus) and we will see even more impressive titles being released.
On the other hand, Mixed Reality (MR), where reality gets a digital, visual layer on top of it, looks more promising.
It is an experience many of us first met with the global Pokémon Go craze. The third generation has just been released and the upcoming launch in China can lift the game to new heights.
More importantly, MR is now being built into the hardware of the newest generation of smartphones. This will improve the quality of the experiences and make it significantly easier to develop MR apps. Expect a huge increase in interesting MR apps in 2018. And if you cannot wait, try IKEA Place, MeasureKit and CARROT Weather.
The biggest and most anticipated event in this field in 2018 will be the launch of Magic Leap’s first product.
The company was established in 2010 and they have raised an impressive $1.4 billion without launching a single product! That will happen in 2018, where the Magic Leap One headset will be available to us mortals. And, if it is anywhere near as good as the rumors have it, we are talking about a revolution in the MR field and retina displays.
8. Robots are coming and AI is everywhere
2018 will be the year, where the majority of people will interact with a robot for the first time — probably without them even knowing it. And I am not talking about a Terminator-science-fiction-like physical robot, but the so-called chatbots.
Different forms of artificial intelligence are on the rise without us even realizing it. Examples are when we use Google Maps, talk to Siri on our iPhones, let Netflix pick a good film for us or leave the driving to our Teslas.
As soon as a solution works, we stop calling it artificial intelligence — we just use it. And in that way, the use of AI will gradually become a bigger part of everyday life.
Will all of us become unemployed then? No, that is not likely. Even though McKinsey predicts that 40% of all working hours in Denmark could be automated through existing technologies, it is not likely to happen that fast.
But, we will need to start focusing on the skills and competencies that are hardest for technology to take over: care, empathy, social skills, complex problem solving, coordination and cooperation, creativity and critical thinking.
Both companies and employees need to prepare for a huge change in the work market in the coming years.
9. Everything becomes intelligent
Next generation of printers automatically orders new ink, when they are about to run dry. The same goes for washing machines. Flower pots will water the plants when needed while thermostats adjust the heat according to our daily flow within the home. And garage doors realize we have left the house and activate the intruder alarm. All are examples of intelligence built into physical products.
The combination of built-in sensors, ubiquitous data communication, shared data protocols and AI-based algorithms make it possible to create the intelligent home or the intelligent workplace.
Development has been ongoing for years. But with the Amazon Echo, built with an open protocol, they have made it possible for production companies all over the world to integrate into a shared platform.
That is why Echo has more than 25,000 skills today. Echo is not yet officially available in Denmark but I predict this will happen in 2018.
Amazon is far from alone in this field. Samsung’s vision for smart appliances is really exciting and Google’s Home platform is another promising initiative.
So even though the Internet Of Things (IoT) probably will not have a great, commercial breakthrough in Denmark in 2018, it will be the year where most of us will become acquainted with intelligent consumer products and see how they can make life easier for us.
That is why Danish companies need to start looking into the possibilities of these products.
10. Companies under cyber-attack
Last year we saw, how a cyber-attack can bend even the biggest companies. The NotPetya attack ended up costing the shipping giant Maersk approximately $320 million.
Hopefully, it was a loud wake-up call for most managing directors. The question is, whether enough is done to prevent future attacks.
DFDS, Northern Europe’s largest shipping and logistics company, has said they are attacked daily and that they now spend more than $8 million every year on defending themselves against cyber-attacks.
Sadly, these things have come to stay. The fight against digital pirates is an arms race and all companies need a serious and continuous effort in order to stay safe against new threats.
I predict, that one of the great themes for 2018 will be more large-scale, coordinated attacks. Also, I think we will see a large, well-reputed company come to a standstill. Our infrastructure will take a hit too, I predict.
Therefore, all companies must double-check their digital contingency plans and prepare for battle.