Share
FacebookFacebook icon TwitterTwitter icon LinkedInLinkedIn icon Email

 

Magazine

From audio apps to food delivery, picking winners in era of change

Published 24 June 2021 in Magazine ‚ÄĘ 8 min read

 

Super forecasters see things more accurately than their peers. Keeping a fluid mindset is vital as we steer a course towards a post-pandemic business landscape. Howard Yu gazes into his crystal ball to identify four trends that are likely to outlast COVID-19 

Every government wants the world back to normal.¬†Businesses hope to reset for growth.¬†As¬†conditions¬†continue to evolve¬†rapidly, we must¬†constantly update our mental models.¬†The challenge for executives is to¬†adjust¬†without overcorrecting.¬†The¬†winners¬†are¬†‚Äúsuper forecasters‚Ä̬†who¬†consistently¬†see things¬†more accurately¬†than the¬†public.¬†Super forecasters¬†are¬†not¬†especially¬†clever.¬†Often, they¬†are¬†not even subject¬†matter experts. But they are¬†more¬†open to contradictory evidence¬†than their peers. They avoid seeking confirmation¬†of¬†their own¬†opinions.¬†They¬†are¬†more¬†comfortable¬†shifting¬†positions.¬†¬†¬†

This fluid mindset is important as we navigate beyond the pandemic’s many changes. The only way to keep up is to keep an open mind. So let’s take a look at four areas that are affecting the way we work, play, and live right now.  

 

Trend 1: Work anywhere culture is going big; smart companies are remarkably simple

The interesting aspect of the postpandemic office won’t be who’s returning and who’s working remotely. It’s how we’ll change the way we interact. 

Some bosses¬†still¬†see working from home as a¬†pure negative.¬†Others‚ÄĮargue‚ÄĮthat in-person presence¬†‚Ästthe serendipity of¬†bumping into colleagues in hallways and around watercoolers¬†‚Ästis¬†key to fostering¬†innovation and¬†maintaining¬†a company‚Äôs culture.‚ÄĮ¬†

There may be merit to these arguments. But the¬†hard truth¬†is¬†that¬†most people¬†want¬†their companies¬†to¬†offer flexibility.‚ÄĮA¬†survey by‚ÄĮLiveCareer‚ÄĮthat polled¬†more than¬†1,000¬†people¬†revealed¬†that¬†61% of workers said they would prefer that their companies make remote work permanent¬†‚Ästindefinitely. That‚Äôs why Spotify, Twitter, Square, and Unilever¬†have all¬†announced that their employees¬†can work from home¬†forever.¬†¬†

But remote work demands radical transparency. The best way to simplify communication so to avoid getting burned out by email, Slack and WhatsApp.  

Think about this: Having a zoom meeting to clarify an organization procedure would require a lot of coordination, let alone the actual meeting time. Then you have Wikipage where people can collectively document their knowledge for other users to search later.  

What¬†we¬†need¬†to move away¬†from¬†high-effort¬†communication¬†towards¬†low-effort coordination.¬†The most elegant¬†way to do this¬†is to¬†document everyone‚Äôs work automatically¬†and¬†make¬†it¬†searchable in real time. This way¬†a¬†large company¬†can¬†still have¬†a‚ÄĮsingle source of truth.¬†

Radical transparency is hardly a radical idea.¬†Software programmers have¬†been¬†doing it¬†for¬†a¬†long time under¬†the framework of¬†DevOps.¬†The hedge fund Bridgewater has¬†its¬†own version¬†applying to¬†investment decisions. And the world‚Äôs largest¬†completely remote¬†company,¬†Gitlab,¬†is all¬†about¬†‚Äúdocumentation first‚ÄĚ.¬†

Smart companies can be big. But to be agile in the remote work era, their communications need to be simple.  

 

Trend 2: Cryptocurrencies go mainstream when payment is made 

easy 

There has been so much speculation around Bitcoin that it’s hard to imagine how the wild-swinging cryptocurrencies can transition into an orderly payment system. But payment companies are quietly gathering steam. They are working on everyday ways to bring crypto into order. When Visa announced a new payment infrastructure in March, it was designed to enable crypto-native companies to settle payments directly without conversion to real money. This is a big deal.  

In the past, companies such as Visa or PayPal already allowed people to buy coffee (a favorite example) using crypto. But what happens behind the scenes is an on-the-spot conversion from, say, Bitcoin to real money to pay a merchant. Essentially, it’s only adding conversion functionality on top of the existing payment system.  

This is different. Visa has worked with Cryto.com to create a form of direct crypto payment. It works like this: customers who have a payment wallet with Cryto.com can buy a coffee using the digital stablecoin USDC. This is a cryptocurrency based on the Ethereum blockchain, and it’s pegged to USD 1:1. Visa doesn’t convert it to anything. Instead, Visa moves the payment through a new network and clears the payment at Anchorage, the first federally chartered digital asset bank in the US.  

Without conversion, the transaction bypasses the entire traditional banking infrastructure. No more slow-moving payment through SWIFT with hefty transaction fees. The moment customers pay, merchants are paid directly via crypto. With traditional banking infrastructure, merchants received payment days later and had to pay transaction fees. 

All these are far less glamorous than the stellar IPO of the crypto exchange Coinbase. But it’s the less noticeable projects that will bring crypto to the mainstream.  

 

Trend 3: Online food delivery will stay, but the survivors will become super apps  

When people say the COVID-19 crisis is continuing to devastate the economy, that doesn’t apply to all sectors, nor the startup scene. Like many shifts in consumer behaviors, demand for online food delivery is unlikely to drop in the post-pandemic era. But here’s the problem: except for consumers, it’s a sector in which no one wins.  

Delivery platforms such as Deliveroo or Uber Eats typically charge a 15% to¬†30%¬†commission on each order,‚ÄĮbut restaurants are subsisting on‚ÄĮrazor-thin margins (often less than‚ÄĮ5%).‚ÄĮTake the example of two¬†Californian¬†pizzerias that¬†had¬†once¬†generated profits between $50,000 and $100,000;¬†they¬†started to lose as much as $40,000 annually once their customers shifted to delivery,¬†the¬†New York Times‚ÄĮreported.¬†The¬†owner of a Chicago pizzeria¬†pocketed only $376.50 from Grubhub after more than $1,000 in delivery orders, according to¬†the¬†Los¬†Angeles¬†Times.¬†

There are many reasons for this.¬†The¬†total food¬†order¬†for each delivery are often cheaper.¬†Most people don‚Äôt order fancy cocktails or champagne together with takeout; they buy booze at stores. Since the customers don‚Äôt see the servers, tips are less generous. Then there are the additional expenses for drivers and bikers.There‚Äôs no single cause for the bad economics. It‚Äôs death by a thousand cuts.‚ÄĮ¬†

Meanwhile, delivery platforms are seen¬†by the public¬†as interchangeable. You can‚Äôt tell the real difference when ordering from different platforms. The one differentiation is the number of restaurant listings, but then most restaurants would sign up for multiple platforms¬†anyway.‚ÄĮ¬†

That leads to ruinous competition.‚ÄĮThere are too many players¬†in a crowded space.¬†Delivery platforms become big spenders on paid ads on Google and Facebook. They call it market investment, but they are merely buying temporary market shares.‚ÄĮ¬†

What we’re beginning to see is online food delivery companies becoming super apps. They branch out beyond the single function of bringing hot meals to houses. We have seen that with Meituan, operator of China’s largest food delivery and local services platform. Singapore’s Grab is offering everything from food and parcel delivery to hotel and airline bookings and access to financial and health services. This is also the logic of Uber. A ride-hailing service is easy to copy, but stitching Uber Eat and Uber Ride together can create higher customer stickiness. Becoming a super app is the new game in town.   

  

Trend 4:¬†Audio¬†apps will be big,¬†but Clubhouse’s format is not yet ready¬†

Before Clubhouse, there were podcasts. Before podcasts, there were radio talk shows. When screens are proliferating and screen time is lengthening, voice-only media fits well with our ever-growing multi-tasking lifestyle.  

Like many of our readers, I have an iPad, an Apple Watch, a Kindle, a flat-screen TV, two laptops, and iPhone. That is, by any measure, an excessive number of screens for one person. And all of my devices and apps are screaming for my attention. They demand my total focus, even if that’s only for a few minutes or seconds: the instant messaging, the text-based social-media feeds, the video- and photo-heavy apps.  

Audio apps are distinct. They can simply run in the background. I can listen to an audio book while grocery shopping or a podcast on Spotify while cycling. Not only are these apps less intrusive, they actually make mundane tasks more enjoyable. Waiting for the next train can feel productive when I’m listening to Think Again, by Adam Grant.  

That‚Äôs the allure of Clubhouse.¬†When every app these days seems¬†to promise an ‚Äúimmersive experience‚ÄĚ,¬†the ‚Äúdrop-in audio‚ÄĚ social network¬†is clever enough to focus on¬†voice-only chat rooms.¬†Community guidelines prohibit recording and transcription. Conversations¬†on Clubhouse are¬†therefore¬†only¬†available¬†in real time.¬†¬†

Being ephemeral adds further appeal, especially at a time when user privacy and data protection are coming to the forefront. But if Clubhouse is to become another billion-dollar business, or for any voice-only app to do so, it must resolve one missing link: organizing information.  

Google’s search¬†engine helps us locate¬†the¬†information we need. Amazon is powerful¬†not because of¬†its¬†extensive selection,¬†but¬†because¬†you can¬†locate¬†what you want quickly.¬†Spotify¬†is cool because it recommends new music¬†that¬†you¬†may¬†love. Netflix is (almost) addictive¬†because¬†it shows what you can‚Äôt stop watching. What we¬†see¬†here is the power of matchmaking¬†when¬†powered by artificial intelligence.¬†¬†

What that means is for a voice-only app (and that includes Spotify’s podcasts), the biggest problem has not yet been solved. We need better AI that can digest human speech and then classify and score it autonomously. Whoever can go beyond granular recommendations based on genre, and offer them based on content and stylistic analysis, will becoming the Google of voice apps. Is the technology there yet? Judging by the current performance of Alexa, Google Assistant, and Siri, I think there may be still some way to go.  

Now what about Clubhouse? Can it last, with its ephemeral proposition? It can, in theory. But it will involve quite a bit more work. And I am not sure if Clubhouse has deep enough pockets to fund such fundamental research and development. Still, one can imagine an AI machine that understands the real-time discussion inside the chatrooms. It’ll then label a speaker’s performance across multiple dimensions. Those will include subtleties like regional accents, political leaning, sentiment, pitch and tone, in addition to the speaker’s content. The more dimensions it scores, the more precisely it will be able to match a speaker’s quality, style, and topics with the listeners’ preferences. Of course, Clubhouse will never be able to give perfect recommendations, since nothing is pre-recorded. But that surprise element, while tightly controlled, will be its strongest appeal. Humans like surprises, just not too much. 

  

Authors

Howard Yu - IMD Professor

Howard H. Yu

LEGO¬ģ Chair Professor of Management and Innovation at IMD

Howard H Yu is the LEGO¬ģ Chair Professor of Management and Innovation at IMD and the Director of IMD‚Äôs Center for Future Readiness. He is the author of the award-winning book LEAP: How to Thrive in a World Where Everything Can Be Copied. Howard directs our Future Readiness Strategy and Business Growth Strategies programs.

Related

Locked door

My never-ending war on the Internet parasites

24 November 2022 ‚ÄĘ by Peter Bauer in Magazine

Peter Bauer, co-founder and‚ÄĮCEO of the cybersecurity company Mimecast, reflects on his company‚Äôs acquisition by‚ÄĮprivate equity firm‚ÄĮPermira for $5.8 billion, what keeps him motivated after two decades, and why his native South...

  • Audio availableAudio available
How to square the circle on sustainability

How to square the circle on sustainability

17 November 2022 in Magazine

Companies that integrate sustainability into their core strategy at the highest level will be better placed to reap long-term value for the benefit of shareholders and society alike. ...

Learn Brain Circuits

Join us for daily exercises focusing on issues from team building to developing an actionable sustainability plan to personal development. Go on - they only take five minutes.
 
Read more 

Explore Leadership

What makes a great leader? Do you need charisma? How do you inspire your team? Our experts offer actionable insights through first-person narratives, behind-the-scenes interviews and The Help Desk.
 
Read more

Join Membership

Log in here to join in the conversation with the I by IMD community. Your subscription grants you access to the quarterly magazine plus daily articles, videos, podcasts and learning exercises.
 
Sign up

You have 4 of 5 articles left to read.