Where do you start to talk about innovation today?
“Double Acceleration’, a concept that also gives the title to a recently published book, is the theme I often start from in these times. We need to reconsider all markets in light of two important innovations: a new technological system that is maturing in recent years, and the acceleration of digital adoption by all consumers.
What happens and will happen on the market must be read and analysed in the view of these two key concepts”.
A double acceleration capable of changing distribution and production?
“Definitely. Shopkeepers have turned into broadcasters due to the pandemic, which has lowered the shutter on their shop windows. The use of digital tools has thus become fundamental, actually impacting the entire value chain. The situation configured due to Covid has created the conditions for the creation of a complex infrastructure, start-ups and tools to support the changed needs of producers and traders. I think of Bambuser as a possible example. The interesting fact is that these new realities, once they are born, are not limited to carrying out the task, but struggle so that the adoption of digital innovation goes further and further. Some, on the B2B side, have come to build real tv studios inside the company in order to best present their offer to customers. The consumer side has been joined by CRM systems with video calls, which have become essential to maintain contact with customers. Systems that allow those who sell to know their interlocutors better and in real time (what they have looked at online, the history of purchases, the products they have in the cart but not yet purchased …).
All elements that existed even before the pandemic, but which represented the niche of the niche, and which today enjoy success and diffusion.
It is clear that these tools can profoundly and radically change the traditional approach to sales, in particular by excluding the levels of micro-intermediation that offer no value-added services from the system.
In the coming years, it will be essential to study and learn about all the market access tools that already exist and that will be created gradually”.
How could physical retail change?
“The changes taking place could transform its substance. If, thanks to new technologies, shopkeepers can sell both to those who come across their shop window, and also to those who are miles away, tomorrow they may no longer need that physical showcase, thus modifying many real estate strategies in place today. Who knows, maybe the stores will turn into proximity micro warehouses, ready to serve the last mile at speed”.
What do these circumstances mean for a production company?
“That each company will have to map all the relationships it has with the market (from the supply chain, through colleagues and consultants, to the distribution point and the various intermediaries towards the consumer) and decide which of these relationships still have value and in what (physical or digital) space it makes sense that they exist.
The real job of the next 3 years will be to focus on this question and rethink ones structure of relationships”.
What is the central element, the eye of the cyclone of these changes?
“Sales data. The management of this data is an interesting movement that is involving retail and its relationships with brands and production. In times of big data, we are well aware about the crucial position of the person holding the information.
Until now, those who sell have always kept their information well protected, making themselves essential in the eyes of brands. Today, as their position falters and the context has changed, things could change.
I imagine three scenarios. Retailers realise how crucial sales data is for manufacturers and structure themselves, thanks to new digital platforms, to monetise their lead position. It is very difficult for this to happen because of the technical skills and changes of vision that this would entail.
The second possibility, which I think is most likely, is embodied in forced collaboration: retail provides information in exchange for secured contracts and collaborations.
Finally, I imagine a mutual cooperation that allows some to maintain their distribution role and others to work at their best. A perspective that presupposes a cultural leap that, to date, I consider impossible to occur”.
This, therefore, confirms the centrality of Big Data in the evolution of the industry…
“Let’s think about the Forrester Effect. At the moment we are seeing a problem in the availability of raw materials. The current restart of the economy has led to a sudden growing demand, because the final consumer returns to buy and does so with a certain desire for revenge. Witnessing this phenomenon, the distributor, who in the meantime emptied the warehouses having drastically reduced purchases during the lockdown, buys much more than necessary to ‘get comfortable’.
Industry with its production is right behind distribution, which also walks the climb, but it does so by seeing only the orders that the distribution is willing to show. With these already inflated data, it develops forecasts and places the related orders. It does not buy the bare minimum, of course, but much more to cover its shoulders in order not to lose the recovery train. This chain is practically transformed into a bubble disconnected from reality, only known by the distributor, and which leads to a shortage of raw materials and increased costs.
This Forrester effect could be avoided if, once again, data and information were handled and shared differently, without letting it stop at the first link in the chain, generating anomalies”.
What other themes should the supply chain consider?
“Today the sustainability theme is highly focused on the commonly called Scop1 and Scop2: resources that are used in production and the composition of the energy portfolio that you use. But tomorrow, as a matter of fact in some markets already today, Scop3 and 4 will become crucial: impacts of my machinery purchases or raw material supplies, and impacts that my products will have once they are placed on the market (during their use and at the end of their life).
What does this mean for the value chain? That in a very near tomorrow proving that you are sustainable in the final stage of a product’s life alone, compensating for emissions with some sporadic initiative will no longer be enough, but it will be necessary to assess the environmental and social impact produced by the entire life cycle of the product.
Those who are not ready or unable to measure their impact risk to stay outside the supply or distribution chain of large producers. The sustainability theme will not just become important from the point of view of marketing, but it will be a real theme of business opportunities”.
What other effects of the dual acceleration technology scenario should be considered?
“Making forecasts, will be increasingly cheaper. 5G, artificial intelligence, computational power of the cloud and robotics are ingredients that will create a real predictive economy.
Producing increasingly accurate forecasts will help optimisation. A concept that will also affect recent categories of thought, such as omnichannel. Giuseppe Stigliano gave already his opinion on this theme in his book “Retail 4.0”: it will not be important to be present everywhere to be found by the consumer, but to analyse and understand the channels preferred by the consumer, enhancing and optimising them, without necessarily covering every possible outlet. Also because managing all the current channels, plus new ones, is almost impossible”.
“Artificial Intelligence and Creativity. This relationship often creates resistance in the world of designers, who do not like the idea of being conditioned by an algorithm. They would like to see a new idea come to an end. In a provocative way, I would also urge the environment to evaluate the benefits that AI can provide to the creative gesture. As is already the case in other sectors. In food there are algorithms that suggest to chefs and bars tender taste combinations starting from the evaluation of the cultural references of customers who attend the restaurant. An analysis that does not detract from the creativity of the chefs, who are still able to make their own dish, but that helps to limit the chance of possibile mistakes.
There are already start-ups, even in fashion, able to elaborate and provide good starting points, through, for example, sentiment analysis, on which creative people can set their way of working”.
You thus like to torture designers and see them suffer?
“No, I like to provoke when I find resistance to change, because I consider willingness to change a fundamental attitude to enrich our experiences. I’m fascinated by the concept of Supermind. We must increasingly train ourselves to imagine a dynamic in which human and artificial mind work together, while maintaining separate roles. The machine is unbeatable in going vertically on defined and circumscribed aspects of experience, while creativity, that is, the ability to connect inspirations from distant and different realities, is typically human”.
What attitude do you think companies should train to develop in the near future?
Seeing yourself as part of larger ecosystems. Let me give you an academic example: today a big brand that sells running shoes should start imagining that the running ecosystem is much larger than the single shoe and some clothing. Consumers who practice running, beyond technical tools, need advice for their training, a nutritionist, a doctor who joins them to recover from injuries, someone able to better organise their trip to participate in the next marathon …
Basically: those who buy a running shoe do not have as their goal the shoe itself, but a wider and more complex experience that runners today must put together by looking on the market for the various puzzle pieces that they need.
Increasingly more hybrid markets will be built, made up of different companies, but which, together, will have a value proposition separate from their individual product and which will satisfy the consumer’s wider needs. The new business model will not be based on selling a shoe, but on offering an ecosystem that accompanies consumers on the path that will lead them to run the marathon, and therefore to satisfy their real desire. The point will not be to sell them a pair of shoes, but the subscription to a service that will include technical clothing and many other services. The example is not just academic, of course: brands like Nike already push in that direction.
It should be noted that also in this scenario the focal point will be represented by those who hold data referring to consumer behaviours. A fact that, once shared with the ecosystem, will be crucial to provide an increasingly appreciated service”.
WHO IS Alberto Mattiello
Business futurist, author, entrepreneur, thinker and speaker. He lives in Miami Beach, Florida. He mentors at corporations and universities, including Imperial College Of London and the Bocconi University in Milan. Alberto Mattiello is a technology and business innovation expert, international speaker with over 250 events in over 15 countries