Harnessing the Digital Revolution
A recent talk given by Andrew McAfee and Erik Brynjolfsson, authors of ‘Machine Platform Crowd’, gave us an insight into what we can expect next from the digital revolution. They set out three emerging shifts: mind to machine, product to platform, and core to crowd.
Whilst this may currently all feel intimidatingly ‘techy’, this fast-unfolding revolution has huge implications across retail, as players have to adapt quickly to new threats.
Mind to Machine
With vast amounts of data at our fingertips, the first change is the move to data-driven decision making. Using the example of an old Brick Breaker game, we were shown just how intelligent machines have become – learning the game and developing their own techniques to master it. Popular culture has long seen stories that play on the threat to mankind posed by automata. Today, with Artificial Intelligence moving well beyond the realms of sci-fi and into everyday life, the dangers are becoming real – especially in the world of work, where machines are taking efficiency to heights we humans cannot match.
However, efficiency is only the start. According to McAfee and Brynjolfsson a second trend is emerging; namely, the move to fact-based decisions. This has big implications for market research, which has often been accused of only being as good as the intuition and guesswork of the researcher. It gives a brand the ability to really put customers at the heart of its business. And from fitting rooms to eye-tracking equipment we are already seeing this come to fruition. Innovations such as virtual fitting rooms and Ralph Lauren’s trial of smart-mirror technology are allowing retailers to analyse fit and track interest in individual items. Meanwhile, Smashbox’s use of eye-tracking technology uncovers what customers are most interested in based on their eye movement – hard evidence replacing often untrustworthy recollections.
So from better understanding their customers, to offering personalised content, the growing power of machine brings great opportunity.
Product to platform
The second shift we heard about is how the days of traditional buying and selling are morphing into something new. Apple, Uber, and Class Pass were all cited as examples of this; each having a group of buyers and sellers interchanging across a platform. For example, Apple’s App Store allows purchasers to buy new apps and external companies to sell them. Similarly, Uber creates a platform for both the passenger and driver, whilst Class Pass permits gyms to sell their spare spaces and customers to buy access to any free class in the city. New business models are emerging fast.
These developments got us thinking about further implications for retail. Firstly, as brands rush to perfect their social media platforms they may be hamstrung by an outmoded conception of what these should be about. For McAfee and Erik Brynjolfsson, having a platform should no longer be just about putting your brand out there, getting followers and building engagement – it can also be an entirely separate space in which to do business. Secondly, their Class Pass example shone a light on the fact that this aspect of the digital revolution does not have to be ‘techy’. In contrast to Apple and Uber, Class Pass is just a simple online gym membership. It does have an app where users can search for nearby classes and customise a work-out, but the product itself is straightforward; spare space in exercise studios. And it is this combination of digital capabilities and physical product that sets it apart from out and out ‘tech’ platforms. So, whether you’re a digital giant or not, the move from product to platform holds great relevance.
Core to crowd
The third shift we can expect to occur involves the realisation that the ‘crowd’ is more capable than the ‘core’. Here, ‘crowd’ refers to the millions of people now accessible through a connected device. ‘Core’ on the other hand represents the core capabilities of a business – those already employed and possessing great talent and skill.
Referencing Quantopian and the American Health Institute, McAfee and Brynjolfsson showed us how the huge pool of ‘ordinary’ people can come up with better answers than those employed as specialists in the field. With online competitions, so-called ‘geeks’ across the world can compete for the best algorithm or solution – allowing companies to tap into talent beyond their own four walls. The threat to the big companies is clear. Where once they might have had the clout to find, train and retain the top talent, the democratisation of knowledge and access means that a much more fragmented, fluid picture is about to form.