Consider a single innovation such as driverless cars and its impact on a wide range of businesses. There are the obvious consequences for car manufacturers and their suppliers. But what happens to related industries like insurance in a world of autonomous cars? How does this one shift impact car rental companies, car dealerships, taxis, auto repair shops and the lease car financing business? Add to this oil companies and gas station chains and you have two more industries experiencing a sea change through innovation.
Even in the wake of Covid-19 and the seismic shift we’ve seen in consumer habits and expectations, there are still a number of industries that TCS Futurist, Frank Diana, believes may evolve greatly in the years ahead.
Unsurprisingly, retail tops the list. Already in 2020, we’ve seen dramatic change thanks to changing consumer habits, a year of online-shopping, a variety of item delivery, pick-up and return models, and store closures. These changes show no signs of slowing down in the years ahead. Likewise, another two industries that are going to undergo a sustained period of innovation-led change are the insurance and transportation industries, respectively.
All three will be absorbed by broader, horizontal ecosystems. Although this change will be dramatic and may cause some unrest at first, ultimately, it will mean happier and more loyal customers and corporate leaders who are not under constant strain to reimagine the business.
This change is just the tip of the iceberg. Today’s successful CEO would be wise to look at this trio of disappearing industries as canaries in the mineshaft. The evolution from vertically-oriented industries to horizontal ecosystems, constructed from a complex value chain of partners, has begun. Transportation, insurance, and retail represent the three first industries changing at a faster pace than other verticals.
Any number of sweeping technological breakthroughs — artificial intelligence (AI), blockchain, the internet of things, and the data-crunching power of advanced analytics — will have a similar impact on other industries. The rapid advance of innovation, coupled with the enormous value creation to be captured through multi-stakeholder propositions, means a long list of verticals will either disappear or be transformed. In their place will be horizontals that cut across multiple verticals. Few industries will be immune to this trend.
Given the impact Covid-19 has had on our society, both in the UK and across the world, customers and businesses alike value more than ever a personalised solution in real-time. Even if they’re not able to interact in person, this online, virtual world, still requires that customer-centric, purpose-driven attitude to delivering customer satisfaction. It is still about anticipating the needs of the customer and providing that seamless solution. This is only truly possible with AI, machine learning and other innovative solutions working across an industry and related industries that connect to it.
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The impact of covid-19 and online commerce on brick-and-mortar stores is well-documented and obvious. The pressure on traditional retail will continue to grow, even with the prospect of a covid-19 vaccine on the horizon and the hope of a return of consumers to the high-street. In fact, the future is likely to lead to the ever-presence of 3D printing and further cases of consumers making their own personalised products. Ranging from clothing to hard goods to even food, the need for traditional “one size-fits-many” retail outlets will continue to reduce. Supermarkets will feel additional pressures from lab-grown meats (reducing the need for animal farming), home-grown meats and vegetables, and vertical farming that optimises yield.
This ecosystem, often referred to the ‘Maker’s ecosystem’, is one in which the means of production are democratized, taking the marginal cost of producing “things” close to zero. The impact of this change will be broadly felt. This will see a distribution of small-scale manufacturing and a new distribution paradigm that optimises transport and logistics networks. A hybrid economy, rooted in the maker movement, will allow networks of prosumers (consumers who produce their own products) to eclipse large corporations. These networks will enable mass customisation and shift a greater portion of value creation to personalisation, forcing retailers to adapt to local tastes and co-create with customers.
In the short-run, technology is a great boon for the insurance industry. Increasingly, AI will take on tasks such as price quotes and customer inquiries and streamline the claims reports process, across all types of insurance, be it car, health, life or home. AI will speed the time it takes to settle a claim and let companies better analyse rate-determining factors.
If we look at car insurance specifically, you can see how these changes will take place. As autonomous vehicles become more common, we suspect there will be dramatically fewer traffic accidents, reducing – or one day, even eliminating – the need for car insurance. And, when the odd accident does occur, 3D printing will be on hand to eliminate the need for garages to make the costly repairs.
Over the next two decades, insurance either will be absorbed as a value-added piece of various ecosystems, or the need for it simply goes away.
As we continue to see Uber, Lyft and LIME continue to share up the transport business, with Uber re-winning its London contract this year, the entire mobility ecosystem is being disrupted thanks to innovation.
As we become more mobile and the threat of covid-19 begins to dissipate, car ownership and self-travel will start to become more obsolete. We will have autonomous vehicles, drone taxis and electric aircraft seamlessly deliver passengers to their destination directly from their home or a nearby transportation hub. This transition will continue in stages. On-demand and shared car models will dominate the early days, with autonomous vehicle ownership increasingly becoming an indulgence of the wealthy. In its final stages, autonomous vehicles will expand into fleets that serve as the first true commons — a shared resource that handles all aspects of transportation.
A similar fate awaits the freight industry. Any number of accelerating technologies, starting with autonomous vehicles and including blockchain, AI, and the internet of things, will dramatically improve the efficiency of transporting goods from point A to point B, upending long-haul trucking, along with the warehousing and distribution industries.
A paradigm shift
This isn’t to say that executives in any of these industries should wave the white flag and start preparing to shutter their doors. What’s required is a shift in mindset. These horizontal ecosystems are the future so it’s about finding your place among a meshwork of partners. Be open to new partnerships, even those that violate conventional wisdom. If the answer is cooperation and collaboration among competitors, that’s preferable to obsoletion. A new approach might manifest itself as closer connections to suppliers, customers, and other digital counterparts connect in peer-to-peer networks. Old metrics for success and performance might need to be tossed aside.
Remember, you don’t have to be the fastest runner. Just faster than your competitors.