Technology has a crucial role to play in a world where companies have to act on environmental, social and governance priorities as much as financial ones. That was one of the messages from this year’s World Economic Forum Annual Meeting in Davos.
The purpose of technology is to support this shift, while also continuing to disrupt business and society.
Here are five key takeaways from world and industry leaders’ discussions at Davos 2020:
1. We’ll see a blurring of the digital and physical worlds
“Machine learning and AI is going to be built into every machine and every application,” Dan Schulman, president and CEO of PayPal told the audience in Davos. ”That’s going to change how quickly we can do things.”
This will involve payments and many other applications, where the physical and the digital world will merge.
Financial services were out of the starting boxes early, combining over-the-counter and digital interactions. Skype meetings with financial advisors are now offered as standard at the UK’s Nationwide Building Society, for example. Other sectors are now following suit.
This combining of the physical and digital – or “phygital” – is changing the brick-and-mortar customer experience across the board.
Uniqlo in Japan, for example, is streamlining the checkout process with systems that recognize customers when they enter the store, either using artificial intelligence and facial recognition or by digital identification via IoT chips. When they reach the checkout, all items in the basket are automatically identified via chips in the clothes.
Ultimately, such new technologies serve to benefit all stakeholders, creating efficiencies through automation, winning back shoppers from online marketplaces, impacting the bottom line, and helping to mitigate climate impact by enabling demand-led production approaches.
2. There will be a move towards platform companies
A by-product of digitalization is the rise of the platform company. The eBays and Airbnbs have led the way, but many other companies have gone down the same route: platforms bring together producers and buyers, users and products, creating communities and resources that can be accessed on-demand and that help add further value to a product or service.
Siemens has just created its Additive Manufacturing Network, for example, a platform connecting manufacturers and suppliers globally. It is already used by companies including sports retailers and manufacturer Decathlon to streamline its supply chain.
In healthcare, Apple and Google – two of the established platform companies – are disrupting traditional business models by offering healthcare analytics and communications tools.
3. Technology disruption is moving into the industrial space
While we have talked about Business 4.0 for some years, many of the anticipated technological shifts are only just coming into their own.
Shop-floor automation, cloud connectivity, IoT and AI are enabling manufacturers to hand previously manual processes over to technological tools.
As a result, manufacturing can be more flexible, adapt to customer demand more easily by scaling volumes up and down, and become more decentralized, with smaller factories and local distribution centers.
Feeding into this is additive manufacturing – often referred to by the name of one of its subsets, 3D printing – which allows for highly tailored, individualized production runs where traditional batch manufacturing required large volumes to create economies of scale.
Ericsson CEO Börje Ekholm said at Davos that his company is building a factory to serve the entire US/North America 5G networking market – with only 100 staff. The smart factory will use Ericsson’s own industrial 5G solutions. It will also pursue certification under the LEED green building rating system.
4. Building trust in AI is critical
Trust is critical to these changing business models, and the issue of technology governance was a hot topic in Davos, in particular in the context of ensuring the responsible use of AI – a technology critical to the progress of digitalization.
A framework put together by the World Economic Forum and its partners over the past year helps organizations roll out AI responsibly. And a new governance initiative it announced this year further aims to build trust among stakeholders rather than breed fear and discord.
The aim is for AI to be human-centric, maximizing the opportunities the technology offers while mitigating against any harm that may be done if it is given too free a reign.
Issues that the Forum’s AI framework will help companies address include data quality, minimizing bias, the level of human involvement, and the ethics of data collection and use.
5. Business will continue to evolve as the 21st century develops
Stakeholder capitalism, a system in which businesses exist to serve the interests of all their stakeholders, was the focus of Davos 2020.
Technology enables great efficiencies, but, “The efficiency of the whole is not necessarily supplying an opportunity to the parts,” Robert F Smith of Vista Equity Partners told a CEO panel on Leading a 21st Century Corporation at Davos. He cited the growing wealth gap and associated social issues as counterpoints to the flourishing technology sector.
Chuck Robbins, CEO of Cisco Systems, stressed during the same session that acting more responsibly for the benefit of all stakeholders is not just a CSR exercise – investing in the community ultimately has a business impact. For example, without affordable housing and community infrastructure nearby, a firm won’t attract good employees.
The purpose of technology
If Davos made one thing clear, it was that we live in a world of constant flux, where old paradigms are breaking down quickly, and new ones are still emerging.
As the digital transformation of the world continues, the challenge is for technology to serve its purpose by moving this process along and effecting positive change, all while being mindful to balance risk and opportunity, and profit and responsible and inclusive growth.
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Business & Technology Services
TCS’ Business and Technology Services organization combines the power of business excellence with digital innovations to help enterprises and leaders be purpose-driven and performance-oriented, making the shift from shareholder value to stakeholder value. By harnessing the abundance of data, talent, connectivity and capital, B&TS helps leading companies around the world build ecosystems that fuel growth and innovation, foster collaboration and engagement across ecosystems, improve health, safety, and well-being, enabling empowerment and inclusivity, and driving sustainability and positive environmental impact.