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The Macroeconomics of Connection and Social: 6 Industries and 34 Trillion Dollars in Technology’s Crosshairs

[ 1 ] October 25, 2012 |

Here’s the big lie, social media is a really really small thing. There, I said it. As much as some of my peers believe it is the “air we breathe” and ranks up there with the invention of the wheel and the printing press, it really isn’t.

As I will show, there is a much more interesting bigger world out there – a $70 trillion globe that will be affected by the advancement of connected and emerging technology. I would argue, at most, $7-8 trillion or the world’s economic engine is currently directly affected, but perhaps not wholly influenced, by our peer-to-peer habits. For most other industries, it remains a non-core object of interest. This will change.

Below we have summarized the world’s 25 biggest industry sectors, estimated how big they currently are and looked at the likelihoood and size of wealth risks to each, bucketing them into four categories:

  • Sprinters – those industries already being affected by the tumult of swift technology/new media change
  • Targets – those industries about to be affected by sweeping, large scale technology/new media change
  • Cows – those industries that will likely see sizeable but slow affects of technology/new media change
  • Turtles – those industries fairly insulated and defended from connected technology/new media change

Let’s deal with the 6 biggest risk industries in this post – a group that may have $10-11 trillion in value shift to others or bleed away in value over the next 10 years based on the development and adoption of connected technologies.

The Targets

Our picks for the most vulnerable industry sectors to advancing technology/emerging media were:

  • Education
  • Retail
  • Public service
  • Health care
  • Insurance and
  • Banking

These currently represent almost half of the full global economic pie – $34 Trillion. I believe that a third of their value is at risk due to fast moving technology change. If you can imagine a much different world that could exist through technology, without much friction – then the risk is likely real. Here’s why:

I -Education – $3 trillion sector, $2T technology risk

Biggest Risks:

- a middle class that cannot afford education

- currently available technology that is enabling education digitally and seamlessly

- developing countries needing to access leading education affordably

- economies requiring high skilled workers more quickly and competitively

- deficit-ridden governments unable to finance education sustainably

Expansion over the next decade:

- The mainstreaming of online universities and highly reputable universities getting in the game

- All-star, A-list professors teaching at multiple universities through video enablement becoming celebrities i their own right

- Peer-to-peer education exchanges and online reskilling old economy sector workers

- Student-owned co-ops that share revenues from ventures launched during educational years

- Education becomes staggered over life – less about 4-8 years when young, more about an “in and out”certification of skills over a full career though a continuing education digital course series

Ways to insulate blow:

- Launch innovative global online brand universities – become well-differentiated in the online space

- Become much more bespoke and customer-oriented in terms of student needs and expectations

- Establish agencies for your best performing professors – increase online teaching, speaking and content revenues

- Create place-based ecosystems of value that demand a critical mass of location-based infrastructures, investment, expertise and people

II – Retail – $9 trillion sector, $2T technology risk

Biggest Risks:

- increased adoption of ecommerce globally with better, more efficient logistics to service orders

- algorithms that automatically understand better price and value options eliminating high-low/deal pricing tactics

- individualized shopping services that use the smarter semantic tools to scour the web for the best offers and customized satisfaction

- the cost of urban real estate ballooning with city population development, retail spaces crunched and thus the pursuit of better sales, less cost and more impact per square foot

- real time peer-to-peer word of mouth and location-based mobile – continued biggest influences on purchase preference vs. historical advertising and flyer formats

- declining real incomes, making dollar stores and second-hand stores chic

Expansion over the next decade:

- Flagship, showcase stores to try things out and subsequent buy them online

- Offering mini-retail and online banner line extensions to satisfy different psychographic customer needs

- Low cost online Asian retail brands and expansion of high-end brands, the middle getting squeezed

- Online brand enterprise showrooms – e.g. Facebook clubs, Amazon cafes, Google bars

- “Minority Report” like, augmented reality, shopping experiences enabled by your smartphone

- Expansion of second hand stores and tracking customers online over the course of their lifetime value and monitor lifespan of their goods

Ways To Insulate Blow:

- Offer leading and immersive customer experiences and attached online and offlike brand communities that demand live interaction

- Expand service offerings to bring retailers closer to the home and post-purchase service of needs e.g. Best Buy’s Geek Squad

- Exclusive merchandise and partnerships only available through your stores

- Mini-stores, pop-up stores and mobile enabled retail walls to sell more stuff, with more impact in less space

- Smart and connected digital signage concierging shoppers through their retail experience

- Shops buy their used branded merchandise back and house second hand online and in real life stores within young, depressed neighbourhoods

III. Public Service – $7 trillion sector, $3 trillion technology risk

Biggest risks:

- Unsustainable deficits, inability to justify civil servant salaries

- Aging population requiring support but also an underutilized part of sector

- Municipal services getting more costly, technology needs to provide efficiency

- Arab Spring-like social media enabled revolts happen in more countries and as reaction to a wider array of issues

- Feeling of voter and citizen disenfranchisement from decisions – digital electorate influence gains foothold e.g. Iceland’s crowdsourced constitution

Expansion over the next decade:

- More participatory government and cheaper operations through online election balloting and plebiscites

- Citizen activism rises – government provides stimulus, activities are performed by population

- Technology-enabled service delivery and social innovation of  crime, roadwork, public transit, emergency, health and administration

- Crowdsourcing, crowdvoting and crowdfunding government-led projects

- Reskilled aging population perform important online tasks, counsel and community projects offsetting pension gaps

Ways to insulate blow:

- Build youth council or parliament wings that inform established government expectations of young voters

- Integrate all key frontline services into web and social-enabled platforms

- Consider new forms of taxation or incentives to support citizen-led crowdfunded or social innovation projects

- Better web-based collaboration and integration across governments

IV. Health Care – $4 trillion sector, $1.5 trillion technology risk

Biggest risks:

- A hyper-inflated health care budget that is unsustainable given additional issues of population aging and increases in longevity

- Peer-to-peer health care through platforms like Patients Like Me and simply through social interaction , increasing the expectations placed on doctors and the medical community

- Front line primary care doctors are time-stressed and not the most amenable to change

- Continued disintermediation of middleman, patients pursue direct access to health care providers and policy makers

Expansion over the next decade:

- Nanotechnology and sensors better able to monitor and prevent sickness and disease

- Remote sensory and video access to doctors will eliminate need for costly long term stays or visits

- Customer records and experience will be driven instantaenously by technology interfaces – tablets/wearable monitors/electronic health passports

- Doctors and medical staff increasingly compensated on customer satisfaction ratings

- Health insurance premiums tied to testable lifestyle risk factors

- Patients matched with doctors and other like-minded and like-conditioned people through crowdsourcing sites and peer evaluations

Ways to insulate blow:

- Embrace technology as a way to improve the customer experience

- Add preventative treatment elements, smart incentives and partners into the health care regime

- Adopt standardized electronic health care passports that support preventative and reactive health care functionality , aggregate “big health data” and improve customer feedback and tracking

V. Insurance – $4 trillion sector,  $1 trillion technology risk

Biggest risks:

- Commodification of sector in a dynamic and free-flowing information world

- Technology lowers insurance barriers to entry for new players

- Self-forming groups of customers negotiate purchase en masse for members

- Regulatory harmonization limits amount of “wiggle room” in products globally

- Aging population, “once in 100 year” climate catastrophies and economic crisis puts pressure on profits

Expansion over the next decade:

- Smarter insurance packages that match customer values or real experience (e.g. car insurance based on better, more informed driver records)

- Environmental risk management becomes a bigger need for enterprises

- Big data acquisition, filtering and insight  to help insurance companies deliver better pricing, underwriting and loss control

- Incentives for preventative vs. reactive insurance planning and assessment

Ways to insulate blow:

- Better understanding of customer needs and online purchase paths

- Greater variety and simpler, more transparent customization of insurance options

- Team up with and co-incent with not-for-profits with consistent values as your organization

- Start leveraging information tapped in legacy systems and other currently tough-to-access databases to anticipate risks better

- Insurance companies move from policy sellers to risk management and governance through better understanding of big data and smarter tech-enabled foresight

VI. Banking – $7 trillion sector, $1-2 trillion risk

Biggest risks:

- Online and mobile banking expansion and adoption, rendering the retail bank delivery model obsolete

- Precipitous drops in trust for banks and finance community post-2008 will continue

- The beginning and expansion of new types of peer-to-peer funding and lending platforms like Kickstarter, Indie GoGO, Zopa, Funding Circle, Community Lend and others

- The incursion of other more progressive and non-traditional players into the banking sphere – retailers, telcos, hardware companies, tech companies and ecommerce providers

- 2.5 billion people, mainly in the developing world do not have bank accounts but do have mobile phones

Expansion over the next decade:

- Non-traditional bank entities expand – online banks, peer lenders, mobile banks, retail and utility-led banks

- The need for transparency and cause-motivated enterprises – some financial firms adopt and follow through on triple bottom lines goals, operations and cultures, restoring pockets of trust

- Less banking brand loyalty, savvy, informed consumers will now leap for the best offer

- The escalation of new more competitive and sophisticated technologies – location-specific GPS marketing, facial recognition, smart signage, interactive touch screens branch wireless, and RFID and NRC e-wallet payments

- Developing-world mobile banking and microcredit entities become the norm

Ways to insulate blow:

- Create leading edge, tech-enabled service and experiences and expansion of services (e.g. small office services, coffee shop, leading portable offices, local retailer markets) at the branch level

- Take the first mover advantage in cashless transactions, peer to peer lending and investing and other radical developments

- Partner and provide back end support for the new incumbent finance players

- Transition quickly from retail branches to mobile leadership

- Use big data intelligence and forecast algorithms to better understand customer buying and banking cycles and reconstitute them in the form of bespoke banking packages, advice and partnerships

Over the next few months as we head to 2013, I’ll be looking to profile some of the more insulated and already-Sprinting industries and providing tangible examples, big and small, of the real world already adopting these paradigm-changing and connected technologies and new media.

Let me know if you find any and drop me a line.

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Category: Education, Healthcare, Public Service/Government, Resources, Retail/CPG, Wikibrands Awards, Wikibrands by Industry, Wikibrands Insights

About Sean Moffitt: Managing Director, Wikibrands and President/Chief Evangelist, Agent Wildfire View author profile.

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  1. [...] to crumble in its wake. Disintermediation of industries continue and as one looks forward, as Wikibrands has, there are up to $34 trillion dollars on the table left to be disrupted. Just like no one can [...]

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