Carl Sagan, an American astronomer, cosmologist, astrophysicist, astrobiologist, and author, best known for his work as a science popularizer and communicator was definitely correct when he said, “We live in a society exquisitely dependent on science and technology, in which hardly anyone knows anything about science and technology”.
As I begin this article, I am going to use Mr. Sagan’s quote as my disclaimer by admitting that I am one of those people who “knows hardly anything about science and technology”.
Steve Jobs the co-founder of Apple is a legend when it comes to technology and innovation, so it is no surprise that he said that “Innovation distinguishes between a leader and a follower” but what is perhaps a bit surprising is that government leaders around the world are also starting to understand and embrace the power of innovation and technology. For example, India’s Prime Minister Narendra Modi noted that “The pace at which people are taking to digital technology defies our stereotypes of age, education, language and income.”
Innovation & Technology are becoming prevalent in many aspects of our day to day lives including 1) Education; 2) Communication; 3) Government; 4) Military; 5) Medical Science; 6) Transportation; 7) Religion & 8) Business and terms like Big Data, IR4.0 and Disruption are being used more and more in boardrooms, business meetings, seminars etc.
Big Data
IR 4.0
Disruption
While Innovation has been a buzzword since the 1st Industrial revolution the term Disruption has started to become more common during the present day 4th Industrial Revolution or IR4.0. In researching Disruption versus Innovation, I learned that Disruptors are always innovators, but not all innovators are disruptors. I also learned that Innovation and Disruption are similar in that they are both creators and builders. Disruption veers completely away from a given course by literally shifting how we think, act, and conduct business and also how we learn and manage our day-to-day lives. Describing disruption, Harvard Business School professor and disruption guru Clayton Christensen says that “a disruption displaces an existing market, industry, or technology and produces something new and more efficient and worthwhile. It is at once destructive and creative.”
How Times Have Changed
One only needs to look at the well know trademarks/logos in this picture to reinforce how times have changed as most of these companies were not in business or were merely start-ups at the end of the previous century. Several of these companies could be described as both innovators and disruptors:
The Amazon Effect
One company that has been recognized as a major disruptor of organized retail is Amazon which now has a phenomenon know as the Amazon Effect attached to its name. The Amazon effect is the ongoing evolution and disruption of the retail market, both online and in physical outlets, resulting from increased e-commerce. The name is an acknowledgement of Amazon's early and continuing domination in online sales, which has driven much of the disruption
The major manifestation of the Amazon effect is the ongoing consumer shift to shopping online. Another manifestation of the Amazon effect is the way physical retailers and malls are attempting to make in-person shopping a more compelling experience for consumers. Hybrid e-commerce models, like click and collect, have also arisen to streamline the purchasing and payment processes. Click and collect allows customers to select and pay for an item online and pick it up in-store.
Beacon-based technology is another transformation of the retail environment. Beacons located throughout stores can communicate with customers' mobile devices to help them locate products and services and deliver proximity marketing messages, among other possibilities. Proximity marketing might target a customer standing in front of a product display with discount or upgrade offers. The same technology can also enable contactless and automatic payment so the user can just select their items and walk out of the store with them.
Another giant in the technology sector which built its foundation on online shopping and trading is the Ali Baba Group founded by Jack Ma, one of China’s and the world’s richest men Mr. Ma was quoted as saying “Trust the young people; trust this generation's innovation. They're making things, changing innovation every day. And all the consumers are the same: they want new things, they want cheap things, they want good things, they want unique things. If we can create these kind of things for consumers, they will come.”
How Technology Benefits Franchises
Technology can help franchises use their capital and human resources more effectively. Technology provides franchises greater efficiency and versatility and is often a logical evolution for the systems, tools and processes a franchise has had in place for years. In many cases franchises may need to make investments and adaptations to maximize the benefits of technology but in today’s world the transition is often quick and pain-free and the benefits can be realized reasonably quickly. Some specific areas where technology can help franchises are as follows:
- Productivity
- Financial Management
- Marketing
- Training & Development
- Customer Service & Engagement
- Mobile Workplace
- Telecommuting
Cloud Technology
Another term initially popularized by Amazon was cloud computing. The use of Cloud Computing Technology or Cloud Technology makes computer system resources, especially storage and computing power, available on demand without direct active management by the individual user. The term is generally used to describe data centres available to many users over the Internet. Cloud Technology and in particular enterprise clouds are emerging as a solution of choice across all sector of the franchise industry including F&B, Retail and Services. Specific applications and benefits of Cloud Technology for franchise businesses includes:
- Consolidating Platforms for Systems, Tools & Processes
- Implementing Real -Time Inventory Management
- Implementing Real -Time Labour Management
- Establishing a unified gift card function
- Integrating Customer Data, Gift Card, Reward & Loyalty Programs
- Click and Collect Programs
- Improving Information Integrity
- Enhancing Customer Experience
Other key technological advancements that are having a positive impact on franchises include:
- Gift Card, Rewards & Loyalty Programs
- 3rd Party Delivery Services
- Beacon / Proximity Marketing
- Self-Service Ordering Technology
- Digital Merchandizing Solutions
- Product & Equipment Technology
StarBanks?? – Looking specifically at Rewards & Loyalty programs it is very interesting to note that Starbucks is holding more consumer cash than my established international financial institutions:
Emerging Markets Leading Technology Advancements
While the uniformed might believe that technology is being driven by developed countries and leading global economies the fact is that emerging markets are at the forefront of global technology growth.
Many emerging market tech companies are the most innovative and fastest growing in the world, driven by young, increasingly affluent and tech-savvy populations. The MSCI Emerging Market Index now has the largest technology weighting of any global index, with its share rising from 13% at the end of 2010 to 28% by the end of January 2018.Here are some reasons why emerging markets are leading the tech revolution:
- Huge Appetite for Technology
- The Power of the Mobile Phone
- Taking the Lead in FinTech
- Governments are Committed
- Technological Leapfrogging
- Emerging Market Technology Titans
Access to the internet including rapidly growing access to smart phones is one of key drivers behind this trend with China, India and Brazil identified as 3 of the top 5 internet users and with the sales of smartphones in emerging markets over the past decide far ahead of smartphone sales in developed markets. Interestingly, China, India and Brazil are also listed as the countries with the smallest percentage of their urban population not using the internet so the upside for these markets over the next decade is phenomenal. Notably these same 3 countries are listed as among the top countries in terms of being digitally active in adopting FinTech services.
FinTech Adoption Rates
I will wrap up with a quote from William Pollard an American physicist who started his career as a professor of physics in 1936 at University of Tennessee who said “Learning and innovation go hand in hand. The arrogance of success is to think that what you did yesterday will be sufficient for tomorrow”
While Mr. Pollards quote is almost 70 years old it is more relevant now than ever and I believe it is fair to say that to remain competitive and relevant across any sector of the franchise industry brands are going to need to Catch Up & Keep Up or they should probably Give Up.
Troy Franklin
World Franchise Associates