Dr. James Canton

Book Excerpt - Ultimate Telecom Futures -The Digital Entrepreneur Scenerios

1 By Dr. James Canton
CEO & Chairman
Institute for Global Futures
Copyright 2001

A tidal wave is about to hit global civilization. It is called E-business and its effects will be profound, but they have yet to be felt. The emergence of a global, intelligent telecom network - still in its early stages - frees individuals and businesses from the constraints of time and geography. As a provider of goods or services, I will soon have the ability to reach two billion people nearly instantaneously though the network. Not only will this network be technologically agnostic (satellite, wireless, copper or fibre) it simply will not care where the marketplace actually resides. The market today for your products could be in four or five different parts of the European Union or in three parts of Asia. This will produce global ramifications, because network growth means direct economic growth. Think of it as being a little like the growth of railroads. When the railroads were built worldwide, towns would spring up. They would follow the commerce. The same will be true of the telecom network. Wherever it goes, and this intelligence grows is where commerce will go. People will have an 'always-on' ability to access and participate in markets without cultural or national barriers.

A new post-industrial, form of digital capitalism is unfolding, as we speak, around us. In the US alone, one third of real GDP is being driven by information technology. It could reach 50% in the next few years, even before biologically- and genomically-based 'economies' are considered. Yet, in the US, we know that there is only 5 million people who are directly creating these IT products and services, so the leverage on the larger population is enormous.

At the heart of it all (and based on the new telecom networks) will be real time business creation. Until now most of business has been ruled by a time axis. As a mail order or store customer, I currently wait to receive a product offering. Even before buying it, I perhaps will need to review it. I may have to wait to see it in an advertisement. I may see something and respond to it on television. I may receive it over a period of days or even weeks. Real time technology is speeding everything up - starting with Internet marketing. More is to come. Now, we are moving into a scenario where the presence of massive amounts of real time data will propel true real time merchandising into existence, just as major changes in life-styles, work-styles, and markets themselves are simultaneously hitting the global economy.

SCENARIO: THE DIGITAL ENTREPRENEUR
The resulting economic cocktail is explosive but makes possible the formation of astounding new value chains. The network will make it possible for me to go out and query, in real time, 20 (or more) million people who may be interested in a particular kind of athletic shoe that I am thinking of designing, Under this scenario, I am going to be able to float possibilities of products such as my new athletic shoe before the shoe is ever manufactured. These possibilities would be displayed via network-based, very high quality, Hollywood-like video clips. The clips would show the product and explain the benefits. Customer response would shape and refine the design. But the key point is the new concept of purchase. This emerging intelligence network would trawl the virtual market place with 20 or 30 million people who would be interested enough in my new product to make a commitment, and probably a micro-payment commitment, to buy the shoe. All this happens before I build that product. All these prospective customers will be able to virtually give me a digital signature that will confirm their micro-payment. In aggregate, these payments would represent perhaps 25% or even 50% of my manufacturing cost. So, once I have a commitment from a critical mass of perhaps 2 million of those 20 million people in real term, I have the capital for manufacturing commitment.

This is not possible today, or it is possible only sporadically. But this means an entirely new business model of 'digital entrepreneurship' will emerge. At its ultimate flowering, any individual with an idea could create a risk free value chain to realize it. The permutations are endless. Perhaps the digital entrepreneur in question is a young girl here who is launching this new athletic shoe business. The shoe design is tied to a certain demographic of young girls and particular shoe features. The entrepreneur need not necessarily have expertise in shoe technology providing she had access to value chain elements - and the right new idea. The shoes could be wired, with audio capability but deeply personalized. (chip technology will be so inexpensive that voice chips recognizing your security codes will mean that clothing will become reactive and intelligent - almost a metaphor for the intelligent network we are building). The demographic focus could be an exact and personalized one aggregating new styles, features and technologies. The creator of these businesses does not need to be intimate with these technologies or to own them. The new model means anyone with imagination can play in this game, and assemble their own supply chains, because the network will provide unprecedentedly cheap access to a global market. It will be an upheaval, because less than 1% of all the supply chains have been connected and transformed by the Internet to date. Telecom, banking, merchant, and logistic players will need to come together to make this possible, but eventually, these on-demand virtual supply chains will have a massive impact in economic terms. This would be true even if only conventional business were considered, because even in a just-in-time age, they still need to hold goods and work-in-progress. Globally, this economic cost amounts to several trillion dollars at any one time.

SCENARIO: ENTER THE KNOWLEDGE VALUE ENGINEER
Let's return to our scenario about the girl entrepreneur launching the athletic shoe. The query-design-customer commitment process makes a tangible business. I call that process 'knowledge value engineering'. In the future, there are going to be entirely new layers of digital entrepreneurs processing knowledge. This knowledge, and the associated access to 'who' the entities should be in the virtual supply chain will mean the difference between a viable business and no business at all. Managing this business alchemy needs skill and craft to co-ordinate the business and present the offer. This will create thousands of jobs and new occupations for the intelligent individual with leverage. There will be a critical need for 'knowledge value brokers': people who understand how to find, how to access, how to shape, how to design what customers will need. I have another term for that which I call 'customer relationship designers'. Customer relationship design will be an occupation. You will come to me and I, as a consultant will help you. I have now a specialty that didn't exist perhaps eight months ago. It is based only on this development in deployment and my ability to access this intelligent network.

SCENARIO: A BLENDED REALITY
This network will also mean that consumers will begin to experience possibilities of a 'blended reality'. A blended reality is where I no longer make distinctions between my virtual experiences, my virtual explorations, or my virtual relationships and 'physical' manifestations. This is because the electronic domain - the future Internet as a telecom portal will be so sensory rich and capable. I forecast that within nine years we will be outlawing certain kinds of virtual reality domains because they will be too seductive, and too dangerous.

Blended reality scenarios - apart from the dangerous ones - will show tremendous advantages for E-Business. Picture me as a typical future digital entrepreneur. I will be able to, from the deck of my house on a beautiful afternoon, decide that I am going to go ahead and log on to more companies in my new on-demand value chain. I may decide to create a new kind of robot that will clean up houses. It is a great idea, but I'm playing with my kids and don't really want to stop. But I can carry on both modalities. In the future, I could give voice commands to some autonomous virtual agents of mine. I can rough out web based designs, and at the same time send a verbal email message to one of my partners in Santiago, Chile, to log on to this web site which I have just designed based on this idea. I can tell my partner to reply later with his opinions. All that can be happening in the same moment. We are starting to see this with early adopters, using both the Internet and the telephone (usually a cellphone) simultaneously. The key point here is the simultaneity of these modalities. TV uses limited blended reality approaches, especially for Generation Y audiences. The messages are: if you like this particular programme, or you would like to choose the next one, please go ahead and log on to 'www make-a-choice-now', and let us know what you think. This level of blended reality programming is giving us a future look at E-business. The implications are both dramatic, the changes irreversible.

SCENARIO: MONETISED FUTURES
Inevitably, entrepreneurs will discover the implications of networked power and its ability to transform entire economic models. Take a simple example: the average person in the EU and most of North America (and elsewhere) is faced with a better part of a hundred different kinds of bills of which, for all intents and purposes, could be consolidated onto a single one. More than that, this activity could be shaped by loyalty, pointage and reward systems. Most of all, this could effectively be monetised because all this activity represents commercial commitments, perhaps to cell phone providers, banks, rental companies, and so on. In the future, we could monetise those spending patterns. Imagine 5, 10, or 20 million people commit in my pool to certain vendors with certain contracts. Customer recruitment is facilitated by discounts and loyalty points involving certain telcos, banks, and various merchants. Consumer to provider, and provider to consumer, contracts together represent webs of forward commitments that could be aggregated and even be eventually monetised as a financial instrument. In turn, a business could be built around this, and even taken public. The customer base is captured and remains active over a specific period of time.

SCENARIO: THE VIRTUAL PRIVATE MARKET
Emerging virtual private markets, or digital trade exchanges are also similarly very interesting phenomena. Trade exchanges are in their infancy. There are probably less than 30 and few are profitable. But the critical developments concern the big ones, such as in the car industry between Toyota and General Motors and others. First, they the trade exchanges are in a position of some power. They are already choosing certain suppliers that they want to put into a digital market place, so if you are not chosen your business now looks troublesome. But this trade exchange is expected to generate by 2003, a half trillion dollars worth of sales alone. This exchange is already building brand equity in the marketplace by advertising and promotion, and they estimate potential savings of over a hundred million dollars per year compared with 'classic' procurement systems. Having proved it can work, it will become a spin off. In other words, they are going to monetize an E-Business process.

This is happening without the obvious intermediaries - telcos. So. my advice for telco leaders remains, pay attention. Why? Because this strategy promotes the monetising a future E-Business process: it is a business in which telcos should be involved.

BUSINESS LABS: THE TRANSFORMATION OF EXPERIENCE
Clever E-business will strategize in terms of the transformation of consumer experience. When I as a consumer say 'transform my experience of how I spend my money', I am saying 'make me smarter about how I spend my money', or 'make me more efficient'. There is part of knowledge value engineering because it will give customers knowledge to be able to be more cost efficient, or productive in their product or service acquisitions. As a present- day consumer, I lack the true power of choice in the market, and am generally subject to confusion and inconvenience. The landscape of possibilities to shape my spending pattern remains unknown territory. It could be filled with very interesting possibilities, but providers need to understand the predicaments of their customers.

BUSINESS LABS: FUTURE TELCO STRATEGY
How does this affect the telco community? My advice to telcos in analysing this new era: you must work backwards regarding these emerging value chains, and value nets. What collaborations will put the telco enterprise at the 'epicentre' of this E-Business scenario? Telcos should realize that in 2025 the business of telecom will not be the same business that exists today. So, telcos should work backwards and think about the world of 2010. Start with 2005. It is right in front of us. We know there is going to be a billion people on the Internet, and we know that 75% of those people will be able to access the Internet from a telecom device that will incorporate voice, data and video communications.

Telcos must rethink their value proposition. This new proposition should be aimed much more towards this emerging future of E-Business. This means rethinking the telco alliances and value chain. Value chains will include producers of content and attainment, education, of sport. It also includes merchants, although not retailers per se. It means conversations with entities outside the telco world, with producers of brand and content about their view of the next 10 years and the possibilities for collaboration in E-business.

This is extremely important. AOL Time Warner may be the critical case study in the next few years that shows one possible path. It is the model that many telcos might envy if they were wearing the right hat. Consider AOL Time Warner as a builder and leader of global, branded content, now plus the AOL dimension, one of the leaders in branded Internet access. As they come together, they are looking for deals, especially with telcos. So if I was a telco, I would not want to be seen as the person who lays the railroad track and has the engine. Telcos should rather be perceived as the creator of the 'towns' I mentioned earlier. Many otherwise sophisticated telcos worldwide remain unaware of the evolving environment drawn by a once-in-a-lifetime confluence of technologies. In this scenario, telcos could be easily be relegated to utility status, rather in a role to advocate, shape and design these alliances. But better scenarios will need new thinking skills inside telcos.

So, the key strategy is to look around outside the immediate business and start to conduct conversations. It also involves fundamentally rethinking the telco core value propositions: What is the business we are in and will be in? What is the role (enabler, leadership) we want to be playing? What do we need to do in terms of people and relationships? At the epicenter of global E-Business opportunity resides people capital. My telco total value proposition would place it at the epicenter of E-Business or in these different demographic segments of the population. In short, I would not think about distance, or location, but I would think about 'who'. Perhaps, telcos should be asking themselves: What part of the transformation of civilization do we want to be apart of?

Meanwhile, my telco mission statement would encapsulate this value proposition. Consider this one as an example: 'our mission is to empower our customers with the system, the knowledge, and the experiences that they will need to be able to be more productive, engaged and to have a high quality of life, wherever they may be worldwide and for whatever their pursuits may be'.

But in all these scenarios, we are not relieved of social accountability. This is going to be a key area in its own right. The more connected the global databases become, the more we will have multiple violations of personal privacy, theft, and hacking. The 'dark side' of the inter-connected universe, of services, of value chains, value nets, is the growth of global crime, electronic crime, the invasion of privacy, and the growth of the surveillance society given all this technology. Inevitably this will bring us to the point where there will be great tensions between protocol systems and individual freedoms and liberties. I would caution telecom leaders to think hard and long about their role in the globalization of technology, and how it will be a force in social accountability particularly regarding the liberties and freedoms of individuals.

SCENARIO: INTIMATELY WEARABLE FUTURES
We could see US$100 communications devices, based on supercomputers, with voice and real time video conferencing capability. With streaming video and point-to-point and point-to-many communication, I could have a device that is wearable. It might even be embedded because it is so small - why not? While you are fixing my bridge my dentist will ask me, other than having my teeth whitened, would I be interested in having a new telecom chip. Using this chip enhancement, I will be able to pull down a screen on my left eye by saying a few words - such as pull screen - which will give me a data download of current emails or have a unified email basket that will be embedded or wearable. That device can be installed the size of the head of a pin but the efficiencies of let's say a super-computer. future telecom network is going to be.

We are already embedding computers: for heart disease we call them pacemakers. Now, we have computers being embedded eliminating and controlling epilepsy. Those computers will be miniaturized in size by many thousand times in the next few years. At some point - when they are the size the head of a match - we will see a transition. At that point, they will not merely be helping to eliminate a problem but to enhance my ability to access knowledge, to access network capabilities, to be able to communicate trans-nationally in multiple languages. Suddenly, this means human enhancement. This enhancement will also be part of a digital future and a new marketplace where digital entrepreneurs of the future can work towards deploying products. Again, they will be tied to this powerful global emerging intelligent telecom network. The implications will be extraordinary. Usable, accessible devices that are highly personal and which can be worn is a critical part of our information futures. They will enable us to have access to market information. We will be able to buy and sell over this new intelligent network using a huge array of resources and devices.