What It Means in the Boardroom
One -hundred years ago the good times were starting to roll. Women finally were granted the right to vote and with the rise of urban areas, clerical jobs gave women economic freedom from a life destined to be handed off from father to husband. Technological booms such as the assembly line meant people could now purchase modern day appliances like automobiles, new refrigerators, and radios to connect to the world beyond. The economy was booming and everyone across economic classes saw their lives improve, until it fell apart in 1929.
Hopefully, as a society, we are wiser than we were 100 years ago and will not be destined to repeat the mistakes of the past. This is why the role of the board of directors as stewards of governance and oversight will become increasingly important in the decade ahead. Twenty years ago, we witnessed the dawn of the digital age. We are now ready for our own roaring twenties. We need our directors to have intellectual honesty, moral courage and the knowledge and education to foresee untended consequences of technology and the business models and practices deployed in our new modern age.
Today, we are poised for a decade of setting the stage for what will come. Not unlike 1920, many of the technologies being developed will require significant infrastructure and capital investment to bring to life the true potential benefits for humanity. As an advisor to boards on disruption, there are many trends I am watching. Here are a few of the ones I think will have the biggest impact in the 2020s and that boards need to understand clearly.
Back to Basics – The End of the Era of Unicorns
Why this is a Trend. The tipping point is clearly coming even in Silicon Valley as venture capitalists begin to report a concern about the lack of profitability in even their most promising investments. As companies like Theranos and We Work have turned out to be fraudulent, masquerading as a tech company with creative accounting to hide the reality and Unicorns like Uber, AirBnB, Snapchat and so many others are still not turning a profit after nearly a decade in business, the market may no longer tolerate such a long and expensive lead time to basic business fundamentals with outsized valuations.
What I’m Watching. I am carefully watching what big Venture Capitalists say at conferences and in interviews, as well as what is the word on the street from companies trying to raise money in a new climate. I’m carefully looking at the companies that remain teetering on the edge of profitability for another dot-com-like crisis where the irrational exuberance bubble eventually bursts, likely this decade.
Automation Meets Infrastructure
Why this is a Trend. For the transformative technology that exists to translate into real changes in our life, infrastructure changes will be needed scale the potential. For example, our roadways are not designed for automated cars interacting with humans. Urban areas were not built for 5G and fiber optic cable. Most buildings were designed and structured for last century technology instead of a virtual, augmented or fully automated component to the workforce. With climate change driving a need for alternative energy in smart homes and smart office buildings, something’s got to change.
What I’m Watching. I’m watching carefully the construction industry and how it is adapting to these new demands, as well as how and where fiber and 5G are being deployed. Which companies will provide the services needed to facilitate this change – there is opportunity there. I’m also carefully watching who is going to dominate the connection between artificial intelligence, the internet of things and voice-based search to create the standards that will follow us across our lives.
Tech Trust Busting & Data Privacy
Why this is a Trend. In the last couple years, as leaders from Facebook, Google, Amazon, Twitter and Apple have been invited to Capitol Hill to help legislators understand their business model, the great awakening has occurred. Consumers and law makers alike now realize that all of these “free” platforms come at a cost – privacy. As cameras and voice activated devices infiltrate every facet of our daily life the ease of invading privacy is no longer science fiction. Combined with the vast amount of data just a handful of companies possess and their ability to favor their own sales channels and advertising over others, expect to see an increase in anti-trust investigations and data privacy legislation.
What I’m Watching.
No matter who wins the next election cycle, there will be scrutiny of the big five: Google, Amazon, Facebook, Apple and Twitter, as well as others. Despite the political polarization, this one is largely bi-partisan and one voters want addressed. I’m watching pending legislation and investigations by agencies into these companies and how big Tech CEOs are positioning themselves for what’s coming and alternative strategies forward.
Supply Chain & the Return to Locally versus Globally Sourced
Why This is a Trend. Climate change pressure will go beyond how we use plastic or what car we drive into the very nature of how we deliver goods and services around the world. Combined with a desire to eat healthy, fresh locally grown goods, the demand for more locally sourced products and services will trickle throughout the supply chain. Additionally, the need for more jobs in suburban and rural areas where the cost of living is more affordable for the average person will create new opportunities to produce and supply goods people need locally instead of on the other side of the world.
What I’m Watching. I’m carefully watching changes in the agriculture and food production business to allow for production of food in new ways that can be grown and delivered locally reducing the carbon footprint and increasing nutritional value. Companies like Amazon are helping their employees begin distribution companies around the globe to better meet distribution channels with less long haul trucks, cars, planes and boats required. Of course, trade policies impact long-term strategy of businesses as they prepare for a potential future where cheap overseas labor may no longer be cheap. I’m also watching the companies that start building community driven training programs or partner with universities to feed well trained graduates into their companies. This will reduce education costs for many who can’t avoid costly university tuition and increase employee loyalty.
The Business of Healthcare
Why This is a Trend. The baby boomer population is aging with more health care available than ever in our history. They will live longer than any generation before them. Gen X, Millennials and GenZ will all live longer and longer. At the same time, the system that promises to pay retirees for their health care will eventually run out of money. The business of health care simply has to change or evolve.
What I’m Watching. I don’t expect this to be fixed in Washington D.C. in such a polarized environment anytime soon. I’m carefully looking at the entrepreneurial community and innovation labs from Fortune 500 to innovate new ways to help the health care industry cut costs, improve security to avoid a catastrophe, utilize biometric and new tools to better deliver services, drive health and wellness from the start and help make health care more affordable. Government will have to fix the end game solution of how it is all structured, but in the meantime, look to the innovation of entrepreneurial companies and innovation labs to help solve the surrounding problems.
The Enron Moment in Cybersecurity
Why this is a Trend. It is widely accepted among security experts that we will never be “safe” or free from cyber threats. In fact, many cite concerns that the big one is already planted in systems and just needs to be activated. Despite increased attention to this issue, as companies are facing so many threats, this one could get less attention at the time it is needed it the most.
What I’m Watching. I’m closely watching how the SEC is beginning to hold boards and corporations more accountable for their cyber-readiness. I’m watching legislation that has been pending for several years to address this issue. I’m also watching closely which companies continue to source critical IT services from China, the Ukraine and other hot spots for potential corruption or intrusion.
Digital Currency & The Future of Money
Why This is A Trend. Bitcoin was just a teaser and is mired in controversy because of nefarious activity associated with cryptocurrency. But, new forms of trading a digital asset of value will be demanded as consumers seek alternate ways to participate in economic growth. Digital currency already exists in video game culture and many internet-based eco-systems. The same concept exists for those who buy gold or art as an investment, it’s not hard to see this translate into digital assets of new forms.
What I’m Watching. I’m watching the big financial players and their patent portfolios carefully. This helps me understand what new tools they may deploy to create the infrastructure and credibility needed for digital assets to begin to replace traditional currency. I’m also closely watching the governments of the world as they will begin to regulate digital assets to provide some stability to the market. Finally, I’m watching Apple, Google, Facebook and Amazon as they could most easily roll out and scale their own digital dollars.
These are just a few of the big tends I’m watching as we move into the 2020s. The next decade is a big one. We will see not just technological advances, but the changes in infrastructure and society required to move us out of the roaring twenties and into the next mid-century age. The companies that pay attention to the trends, set the right incentives for their workforce to adapt and change and embrace a culture of continual change and improvement will survive and drive our future. The role of the board of directors in providing governance and oversight in this critical decade will change as everything around them does. As you approach this new decade, I hope you will have the intellectual honesty to question old assumptions, see potential new future possibilities, have the moral courage to question management when needed and offer the leadership we all will need from Corporate America.
If you are interested in a keynote, workshop or facilitated discussion on emerging technologies, future trends, cybersecurity or cultural shifts for your next board meeting or executive retreat, contact me at jwolfe@consultwolfe.com or 513.746.2801.