You’ll forget most of today’s top brands – and this is why

Do these chief executives ring any bells: Cyrus Comstock, John Stephenson, Henry Fitz and Roy Stanhope?

Thought so.

100 years ago everyone knew them as they were the most valued manufacturers of horse carriages, racing fiercely over market dominance. Obviously we don’t know them because of a now seemingly self-evident paradigmatic change in mobility: cars.

Similar changes are taking place today, just on a lot more massive scale. The majority of the companies on the current S&P 500 list are estimated to be wiped out faster than their forefathers. Want to know why?

If someone asked what changed the most in your everyday life in the past decade, what would you answer? Most people will mention the ways in which they connect. Facebook, Whatsapp, Skype, Google hangout, Snapchat and Slack, to name a few, gave us a gazillion ways to interact digitally. And that’s what we did.

Now perhaps more interesting is how we would answer that question if it was the year 2025. What will change our lifestyle most significantly in the upcoming decade?

Based on what some of the world’s most interesting companies, including Google, Facebook, Tesla, Uber, Airbnb, Opower and Lyft are up to, the massive changes seem to relate to the ways we live and move about. We can already see it happening. A few lines of code gave AirBnB more than Hyatt Hotels got in 100 years of business. Similarly Google, with no previous background in car manufacturing, came up with a self-driving car that now challenges the industry in a fundamental way.

 

Towards a digi-physical reality

For a good while now, digital solutions have been able to tell us when the next tram arrives or when a package has been delivered to a post office. Now hopes are even higher. Within a few years we will be able to optimize our everyday routines better, share things more easily and hence make our lives run smoother. In practice this can mean anything from a bus finding its way to your door, to your fridge notifying you on your way back home that it’s empty, and maybe that one of your neighbors is preparing dinner and there’s enough for you as well. Two previously separated worlds, the digital and the physical, are merging. Bits are starting to find atoms.

Why is this happening now? Obviously digitalization explains part of the story. We can collect and locate data from basically anything, whether it’s stationary or mobile. The other part is the massive paradigm change caused by depleting natural resources in a time when global metropolis’ are getting more and more packed. Using the resources we have in smart ways and with zero-emissions will become the new standard. Period. This is why a number of intriguing solutions are being born in fields with the greatest resource inefficiencys.

In terms of market size it’s going to be huge. Smart buildings are estimated to be worth $150 billion dollars and smart energy $250 billion by 2020. Smart transportation is estimated to grow into a business worth $136 billion dollars by 2020. Moreover, the global sharing economy market was valued at $26 billion in 2013 and some predict it will grow to become a $110 billion revenue market in the coming years, making it larger than the U.S. chain restaurant industry.

 

Future horse-carriages?

Many of the solutions we are now surrounded with are going to be replaced by something very different. Fridges are not going to be replaced by more advanced fridges, but for instance home delivery services agile enough to deliver fresh food instantly when needed. Cars are not replaced by cars but a seamless access to flexible mobility. Offices can be partly replaced not by better offices, but by mixed and more optimised use of existing spaces.

Companies need to learn how to navigate in the landscape where the logic of incremental change applies no more. Some don’t think they’ll learn and expect a doomsday for the great majority of large multinationals.

We claim that the future can be navigated both by the new-comers and the traditional players. What makes the game more challenging for the latter is that they’ll need to unlearn the recipe of success born in the industrial era.

How is the recipe changing? Will your company be the horse carriage of the 21st century? Some alarm bells should start ringing if you think your user will be there in the future because she was there since day one, if you have a feeling of control over your industry, or if you think you can do everything by yourself.

Boundaries of industries are getting blurred and the only thing you actually can count on is your user. So spend a lot of time with her, just to learn. Then build capabilities you need, some of which you won’t find within your team, but from the ecosystem around you. These are essential elements of the recipe, not just to understand the upcoming decade and the changing patterns of lifestyles, but to contribute to and enable them in smart ways.

Wish to read more about the upcoming era of smart business? Reasons and implications of the paradigmatic change is collected in a recent publication by Demos Helsinki and Solved. Read it here: https://www.demoshelsinki.fi/en/julkaisut/cleantech-takes-over-consumer-markets/