Home / Blog / Megatrends for this decade – XXXV

Megatrends for this decade – XXXV

Summary of responses from 800 executives across several industry on measures of digitization and automation taken to counteract the impact of the pandemic. It is clear the acceleration of towards a digital transformation (blue shades) of the various processes and the impact on the workforce. Image credit: McKinsey&Company

a) The future of work is now, or isn’t it?

In the past year we have seen, and possibly contributed to, a momentous shift in the way of doing business, courtesy of the pandemic and of related countermeasures taken by governments all over the world. Not even the world wars of the last century have led to such dramatic change, in such a short time involving so many countries.

One of the most amazing thing was the resilience of business that in the space of a few days managed to find ways to ensure operation continuity. Clearly not every biz was able to reinvent its operation processes or to keep them operational by moving to the cyberspace. Think about the tourism area where movement restriction imposed by authorities led to a screeching halt of this business, affecting airlines, airports, catering, tourist attraction, hotels …

Other businesses, like healthcare and telecommunications, had to face a surge of demand and others had to move (part of ) their operation to the cyberspace like retail, banking, … sometimes inventing new channels to reach their market.

All of this is well represented in a study by McKinsey involving some 800 executives on the post pandemic lingering effect on the business and on the workforce, see the opening graphic.  As shown, close to 50% indicated changes in the supply chain (36% foreseen an increased digitalization and 11% a decreased one) and similarly a change in the customer channels (although here the foreseen changes were overwhelming in the direction of increased digitalization). More interestingly with respect to this trend are the expected changes in operation (employees interaction/collaboration and automation/artificial intelligence).

85% of interviewed companies indicate an acceleration towards digitalization in the area of employees interaction and collaboration (remote working and all what is connected) and 67% foresee an increase of automation and use of artificial intelligence.

Teleworking has been adopted wherever it was feasible, like for administrative work, education, software production and testing, plants control … involving a significant portion of the workforce. In Italy, as an example, TIM, one of the major telecom Operators, had 85% its workforce working from home for almost a year now (since the lockdown started in March 2020). The experience was a mixed bag, in terms of productivity, employees and customer satisfaction. On the whole, customer perception of the services did not change (remote customer assistance and interaction was already a reality before the pandemic), productivity did not show significant changes (at least in the short time) whilst employees satisfaction ranged from appreciation of the convenience of working from home to the concern of losing the human touch that is possible at the office in the face to face interaction with colleagues. Quite a few found that the convenience of tele-working was (at least partially) offset by the cramped working conditions at home (with an office that had to be shared with kids, pets and spouse) to the point that many tele-workers are longing for the old office space and hope to go back to the old times. This, for many companies, is unlikely to happen. In the cited example of TIM, the company has taken advantage of the forced lockdown and tele-working to change the office space into shared desk. Workers were asked to remove all personal stuff from their desks since the concept of personal desk was over. From now on, when on site working will be resumed only a fraction of the workforce will operate on site, about 30 to 50%, the remaining part will keep working outside of the office and the office space will become available on a first come first served bases through reservation. This has led to the release of office space and decrease of premises cost.

If on the one hand it is obvious that the pandemic has changed the way of working for a significant portion of the global workforce, the question now is if these changes are here to stay (as in the afore mentioned example of TIM) or if there will be a roll back to the previous “normal”, secondly  if they are here to stay what kind of consolidation will take place and therefore how the work by the end of this decade will look like and third what other changes may occur as result of the changes induced (or accelerated) by the pandemic.

Let’s consider the first question: are the changes brought by the pandemic going to become the new normal?

I guess that a single answer fitting all businesses and countries does not exist, however, in general, I would say that NO, the changes brought by the pandemic are not the new “normal”. Let’s consider a few examples:

  • In some cases we are going to see a full roll back to the previous situation, like in the case of restaurants that have been forced to move to “take away service” and want to go back to serving customers on their premises. A small number of these restaurants might be keeping the take away service as an additional revenue stream, since they had to organise the service to generate (some) revenue during the lock down. The extent to which this may happen will largely depend from the demand side. Will customers (at least a significant portion of them) be interested in the take away service from restaurants that used to be on premise service only (usually upper scale restaurants). I personally think that at least in the first post-pandemic period most people will want to forget the pandemic experience and go back to the previous habits, so no take away but enjoy an evening out. The behaviour of the demand is, obviously, very much culture based and Countries where people are used to take away may see the expanded offer well fitting their whims, whilst other Countries, like Italy, may just want to forget the past and go out again.
    Flippy, a kitchen robot for fast food restaurant can prepare burghers and salads. Demand is expected to grow as restaurants face Covid-19 restrictions. Image credit: Miso Robotics, California

    In those places where the take away food is going to flank the on site service it is likely that some stable reorganisation of work will take place to be able to manage the two types of services. In fact, delivering take away food, particularly for upper scale restaurant, requires a fine tuning of the menu (not all dishes are suitable for take away given the time lag between the kitchen and the table) as well as the ordering and delivering processes. During the lock down restaurants did not have customers on site so they could focus on the take away. With on site customers two different processes will have to be managed concurrently. Automation can surely help, although so far restaurant automation has served mostly lower scale restaurants but in the future better robots might be able to enter upper scale restaurants too and directly take orders and coordinate with the delivery chain. I do not see this happening, on a massive scale, through this decade although a few trials may start.

  • Retail stores have their strength in their location and the physical interaction with customers. Many retailers have invented a new way of interacting with clients using sort of videoconferencing where a prospective client would call and the shop assistant would move around the shop showing the wares using the smartphone cameras. That has been a patch to a dire situation and clearly those retailers are just pressuring to go back to the old normal. In a way managing the client relationship via a smartphone camera was an expensive way of doing business (it takes the continuous presence of a shop assistant to be with the client…) and still the physical experience could not be delivered. At the same time good shop assistants had the opportunity of a continuous engagement with the client, they could steer the client towards certain products and in doing so they developed a personal relationship that could be conducive to a better revenue stream. They also got the identity of the customer (their telephone number) and this could have been the starting point for a profiling
    The integration of physical and digital shopping is most likely the future of shopping and there’s a new word for this: Phygital. Image credit: WAM

    and for a call back when a certain product becomes available. As in any crises, some retailers just patched up a dire situation, others might have found an alternative way of doing business that can complement the old one, once the old one can be restored. Overall I think retail stores will go back to the old normal, but the few ones that have learned to create a personal, although remote relationship with customers will be in a position to create a new, complementary revenue stream that eventually may become essential as the competitive pressure from on-line retailers keeps growing. Actually, the pandemic has increased this pressure creating a habit in the consumers to use on-line retailers.
    Notice, additionally, how this form of retail, let’s call it click and mortar,  requires quite different skills on the side of the shop assistant, because of the need to establish a lasting relationship with the client on one side and to highlight the value of a product using a virtual channel. Technology has to become an integral part of the assistant interaction, sometimes having to cover shortcomings in technology management from the client side.

    There is even a new word to put under the same roof the on-line with virtual reality / haptic interfaces (to make you feel in the shop physical space) and the in-the shop experience flanked by the on-line presence: phygital. Take a look at this (entertaining) video and to to the clip here and have a look into the future of shopping today.

more to follow

About Roberto Saracco

Roberto Saracco fell in love with technology and its implications long time ago. His background is in math and computer science. Until April 2017 he led the EIT Digital Italian Node and then was head of the Industrial Doctoral School of EIT Digital up to September 2018. Previously, up to December 2011 he was the Director of the Telecom Italia Future Centre in Venice, looking at the interplay of technology evolution, economics and society. At the turn of the century he led a World Bank-Infodev project to stimulate entrepreneurship in Latin America. He is a senior member of IEEE where he leads the Industry Advisory Board within the Future Directions Committee and co-chairs the Digital Reality Initiative. He teaches a Master course on Technology Forecasting and Market impact at the University of Trento. He has published over 100 papers in journals and magazines and 14 books.