CEOs are asking themselves ‘what if’…
Wearable sensors become good enough to transmit streams of highly accurate biometric data? What if devices start to dominate the volume of Internet conversations? What if cash disappears? Or our cars are networked to the surrounding infrastructure? Or hospitals become so inviting that we’ll meet there for lunch after our annual flu shot at the drugstore? What if we’re fitted for blue jeans by a scanner on our mobiles?
These all are real scenarios that US companies are working with now. Within the past five years, each has moved closer to reality. And they truly are scenarios, not just incremental product or service enhancements. The knock-on effects will have nth-degree implications for their business models, distributors, and suppliers. These examples alone lift a curtain on a near future where drug development, banks’ relationships with small businesses, equipment maintenance, healthcare provision, and clothes shopping will be done differently.
As the ‘what if’ scenarios take shape, so does the opportunity. If McCormick & Company, a spice distributor in an ancient industry, develops a personalized recipe engine to engage with online consumers and deploys robots to rapidly mix and fashion new flavors, you know we’re in a different place. Any company, in the view of McCormick Chairman, President, and CEO Alan D. Wilson, has to be on the forefront of technology to survive. “It’s not just a small move to one thing or another, it’s a diversification and fragmentation of where the consumer is, and that’s opened up the opportunity for a lot of competitors, as well as opportunities for us, to grow.”
At the same time, the risk of inaction is apparent. “If we did not act, we’d be vulnerable to activists. We’d be vulnerable to other companies that see our strong assets, strong channels, and our technology would become outdated. So not moving is more risky than moving,” said Alex A. Molinaroli, Chairman, President, and CEO of multi-industrial supplier Johnson Controls, Inc.
Given the technology means, the ends are changing. Classic industry lines are blurring: 36% of US CEOs say they entered or considered entering a different industry at some point over the past three years. Take drugstores as an example. Retailers by design, they’re taking that consumer expertise to push deeper into care delivery, offering services from immunizations to counseling for chronic conditions.
Most US CEOs see cross-industry migrations like this accelerating: 61% think it’s likely businesses will compete in industries other than their own over the next three years. While a fourth of US CEOs said they already partner with firms from other industries, 39% are considering such a move.
And as more mainstream businesses grow ambitious with technology, competitors from within the industry are also veering from predictable routes. Regional bank CEOs are very much at the intersection of these competitive cross currents. D. Bryan Jordan, Chairman, President, and CEO of bank holding group First Horizon National Corporation, expects their greatest competitors are likely to remain other regional banks, but he adds that “the nature of that competition is going to change as technology is introduced.” There are non-banks entering American banking, too. Consider the activity in the mobile payments process, for example, or in peer-to-peer lending platforms or the growth of preloaded or prepaid cards sold by retailers.
“It’s all about who has access to the customer and the ability to introduce products and services that allow them to expand their relationship with that customer,” Jordan said. “The more they can put through that infrastructure, the more data they have about what’s going on in the marketplace, and what’s going on in that customer’s wallet daily. With that, they have the ability to produce more and broader and deeper technologies that allow them to meet more and broader and deeper needs.”
Advances in data and automation techniques are pushing the ‘what if’ frontiers. Five years ago, KeyCorp was still building branches, said Chairman and CEO Beth E. Mooney. Today, the Cleveland-based lender is deploying funds toward digital platforms. Yet, customers still want contact with their bankers, and half of the payments in the business sector are still done through paper checks. Mooney has to balance these trends. “There has been a seismic shift in preferences in how people do business and what their expectations are,” she said. “These are things we’re going to constantly be monitoring, constantly making trade-offs, because the future is going to look different.”