All aboard the innovation train.
Last year was a big year for technology. Tech products were on everyone’s shopping lists, tech services made life easier for many people and it proved to be very profitable for some companies.
What does 2019 hold in store for us? An in depth report on forbes.com pointed the way.
Technology continues to play a huge role in consumers’ choices. Companies that have learned to embrace it — and master it — will be the winners for 2019.
The article points out that, in recent years, big-name retailers that have filed for bankruptcy, closed stores or shuttered their doors (think Sears, Toys R Us, and Aeropostale) cite various reasons for their downturn, but one cause continually mentioned is the decline in mall foot traffic and traditional retailers’ inability to compete successfully in e-commerce space.
The draw of technology for consumers is twofold: the capability to personalize the shopping experience and the convenience of being able to learn more during a new product launch and purchase products from anywhere at any time.
The article adds that Amazon’s acquisition of Whole Foods is among the biggest retail stories in recent memory. At the time, Whole Foods was lagging behind competitors in terms of technology. One driver of the acquisition is the growth of online grocery ordering and delivery. Nielsen U.S.A. projects online grocery shopping to grow to a $100 billion business by 2022. A staid industry that was slow to innovate, traditional grocers and their stakeholders will be forced to recognize the need for investments in technology if they expect to remain competitive in 2019 and beyond.
The Forbes article pointed out that top beauty chain Sephora is embracing technology and even staying ahead of the curve by integrating technology into customers’ shopping experiences. Consequently, the company was named one of the World’s Most Innovative Companies 2018 by Fast Company. Sephora recognized early on that digital was becoming a way of life for shoppers. In 2015, Sephora formed its Innovation Lab and invested heavily in its website, social media and advanced technologies such as augmented reality (AR), artificial intelligence (AI) and radio-frequency identification (RFID) technology.
Sephora Virtual Artist is the company’s AR “3D live experience” that allows shoppers to upload a photo and virtually try on lipstick, blush, eye shadow and other cosmetic products — essentially, a valuable try-before-you-buy tool that saves time and money. Sephora’s Color iQ, in partnership with Pantone, uses AI technology to scan faces, identify the Color iQ number and recommend “scientifically precise” foundation, concealer and lip shades. The company’s partnership with Google Home Hub promotes the brand’s beauty tutorials and videos, allows consumers to ask questions and receive beauty tips and provides directions to the nearest stores.
The article added that forward-thinking prepared foods and restaurants are also incorporating technology in an effort to retain and grow their customer base. 2019 trends include home delivery of prepared meals or meal kits, online ordering via the website and the capability to text orders to restaurants.
McDonald’s has partnered with Uber Eats, an offshoot of rideshare company Uber, which allows users to order and have delivered food from select restaurants via their website or a smartphone or tablet. The restaurant has also installed self-service ordering kiosks in its restaurants as a way to cut costs and curb wait times. Other examples include automation of the food-preparation process, such as “Flippy,” the world’s first autonomous robotic kitchen assistant, a partnership between Miso Robotics and fast food restaurant chain CaliBurger.
The article points out that the advent of these new technologies presents opportunities for enterprising entrepreneurs to capitalize on new trends. For example, shopping online and having purchases delivered directly to consumers’ homes has made holiday shopping more convenient. Consequently, however, incidents of porch piracy have risen, affecting 25 million people whose packages are stolen.
While online grocery shopping and ordering has spared consumers from traipsing up and down the aisles, a trip to the grocery store is still required for some purchases. Most online grocers require consumers to pick up their groceries at their stores. Those that offer home delivery struggle with keeping foods fresh and frozen in the event the homeowner isn’t home to accept delivery. And for those who work during the day, parking in a private garage or driving around during the workday, home delivery is not a viable option.
While this is exciting stuff, we need to seriously question where the ground-breaking tech ideas of yesteryear have gone. An article on livemkint.com did just that.
This may seem like an odd time to question the ingenuity of the technology sector. With news of artificial intelligence (A.I.), automation and machine-learning swirling around, the technology space looks like a bright spot in a dull economy. Mega venture funds and frothy startup valuations seem to bear out this optimism.
The article points out that fifty years ago, we imagined a very different future. Stanley Kubrick’s classic 2001: A Space Odyssey released during the heyday of the space program assumed that by the early part of this millennium, space travel would be routine; machines would be terrifyingly intelligent; and computers and humans would have intelligent conversation.
By that yardstick, the present is decidedly underwhelming. Our phones have become smarter, interfaces slicker, and communication faster. But other predictions haven’t come to pass.
The article adds that most space programs are limited to unmanned expeditions. After the lull of the past few decades, space travel is in the news again. But even Elon Musk, the eternally confident founder of Space X, expects to send a manned expedition to the moon only in 2023, the first lunar journey by humans since 1972.
Driverless vehicles are not ready to replace humans yet. The vagaries of human traffic are just too much for these ordered systems. Robots, which are used extensively in manufacturing and distribution, haven’t been able to adapt to routine human tasks. Automated assistants like Siri are great for one-off tasks, but it’s near impossible to hold a conversation, especially with a thick accent.
Has the tech sector fallen short or were our collective expectations unrealistic?
Dog walking, not cars flying.
The Live Mint article points out that there are around 290 unicorns, or unlisted startups valued at more than $1 billion, across the world. In theory, these unicorns represent the best of our ideas. Investors seem to agree, ploughing over $980 billion into these companies.
But an analysis of the companies shows startups working on truly innovative problems constitute less than a tenth of these companies.
The article adds that most of the funds (and noise) is soaked up by startups engaged in one of two things. The first, on-demand and e-commerce platforms, find new ways to order things without leaving your couch. The other class of startups, social media and entertainment firms, are focused on designing content that keeps you in that couch for as long as possible.
Take on-demand firms. Uber has improved the taxi-hailing experience; WeWork has made renting office space easy; and with Swiggy, it’s nice not to have to walk to the restaurant for food. But we are still riding in the same taxi, working in the same office, and eating from the same restaurant as before. The order-to-fulfilment process has been streamlined and the supply more closely matches demand. But this isn’t innovation that has fundamentally altered how we live, work, or play. It’s just made it incrementally better.
The article points out that the desire to disrupt any activity with on-demand or online substitutes can sometimes veer into the absurd. Early last year, SoftBank’s Vision Fund invested $300 million into Wag, a startup that lets you book a dog walker. (The Vision Fund’s stated goal is to “invest in businesses and foundational platforms that will enable the next age of innovation”.)
With social media companies, the innovation argument is even weaker. Facebook and Google evangelised the cult of connectivity. But after the initial productivity gains from improved communication, watching YouTube videos, sharing Google photos or browsing Facebook are not growth-accelerating. On the contrary, the fatigue induced by aimless scrolling on Twitter or WhatsApp are a drain on productivity.
For an industry that fetishizes disruption and innovation, this lack of creativity is disappointing. One reason for this state of affairs could be financial. The computer scientist Jaron Lanier has argued that the monetization model driving the internet has created perverse incentives for tech companies.
The article adds that from the early days of the internet, we assumed that most of the content and services should be free. But the desire to democratize access to information came at a cost —the advertising-supported business model. The largest tech companies today—Facebook and Google—rely on advertising for a majority of their revenue. Even Amazon has now got into the game, by selling pixels on its site to eager sellers.
In the push to generate more advertising revenue, these companies need to continually find ways to keep users addicted (or engaged) to their platform. And as users have become smarter, the algorithms have become even more intricate.
The article adds that, today, some of the largest employers of A.I. and machine-learning talent are social media platforms. ByteDance, the creator of Tik Tok and the most valuable startup on the planet, employs legions of AI and machine-learning engineers. Tik Tok does a great job of curating and customizing content, based on what’s most likely to appeal to a user. But peel away the glamour and the product is still a social network for amateur music videos.
A generation of our best engineers are spending their productive output on building behavioural nudges that manipulate users to stay on their platforms. Moving to a model where users pay for what they use could help us focus our efforts on ideas that meaningfully improve society.
Out of ideas?
The article points out that the innovation deficit could be more systemic. The economist Robert Gordon, a vocal proponent of this view, has argued that the golden age of technological innovation is behind us. To support his thesis, Gordon points out that before 1750s, there was virtually no economic growth. Inventions like the steam engine, railroads and telephone drove economic growth over the past 250 years. This growth spurt was an anomaly and there isn’t any reason to blindly believe we’ll continue to find new ways to grow.
His analyses suggests that most of the technology changes that improved our quality of life had taken place by the first half of the twentieth century. These include the internal combustion engine, electricity, air travel, indoor plumbing and kitchen appliances. We have just been incrementally improving them ever since.
The article adds that the Boeing 707 was introduced in 1958. Since then, air travel hasn’t gotten that much faster. The kitchen in an average Western home largely resembles the kitchen from 1950s, albeit with more energy efficient appliances. Using productivity data for the past few decades, Gordon concludes that the major breakthroughs of recent times—personal computing and the internet—did improve our lives by automating tedious manual tasks. But the gains aren’t nearly as dramatic.
In particular, since the 2000s, most of the technological innovation has centered on entertainment and communication devices that are smaller and smarter. While our lives are certainly a lot richer, improving consumer utility isn’t on the same scale as inventing electricity. Finally, the growth of developing economies like India and China isn’t due to new innovation; these countries are merely catching-up and adopting technologies that have already been invented.
The article points out that the end of innovation thesis is appealing but it doesn’t explain why markers for innovation show an upward trend. The number of patents filed have continued to rise in the past few decades and adoption time for newer technologies has gotten shorter.
Instead of no more ideas, perhaps ideas are just getting harder to find. As another economist, Tyler Cowen suggests to Live Mint that in the past few centuries, we have plucked all the low hanging fruit. Innovation from here on out will get harder.
“Idle hands and minds are the devil’s tools. However, coming up with innovative ideas does cost money. Reprioritise your research & development budget; innovation is necessary in the modern age,” said Bradley Geldenhuys Co-Founder and CEO of GTconsult.