In hopes of better understanding the depth of the changes Generation C will bring with it, Booz & Company is exploring the shape of the world inhabited—and influenced—by Generation C to investigate the trends that will affect the next decade, and to define the parameters of what should be an ongoing debate about what that future will look like and how business leaders should respond.
Underpinning this study is the belief that the world of 2020 will be a better place. This belief rests on a number of economic, demographic, and technological "macrotrends".
"Following the lull that took place during the recent worldwide recession, we expect to see some form of economic growth, with globalisation picking up speed again," said Richard Shediac, the Booz & Company partner leading the firm's Middle East Public Sector practice. That will reestablish an international environment of global migration of talent and labour as well as capital. With ageing Western populations, new consumer segments will be created, including a relatively wealthy retirement segment and a new young middle class, and the BRIC countries (Brazil, Russia, India, and China) will continue to grow rapidly. The pace of innovation will create an ever more digital world, even as wireless devices confirm their emerging role as the dominant tool for trade, entrepreneurship, and Internet access for the masses. Finally, concern for the environment and for energy security will remain at a high level.
The influence of Generation C
"The trends outlined will have a wide range of effects on how people use communications technology, on how they gather and consume information and entertainment, and on how they interact," said Ramez Shehadi, the Booz & Company partner leading the firm's Middle East Information Technology practice. The latest consumer behaviour studies confirm that these trends are real, and they are reshaping the mass market.
• On the grid 24/7: Being connected on a 24/7 basis will be the norm in 2020. We forecast that by 2020, the number of mobile users will reach six billion and the number of people accessing the Internet will reach 4.7 billion. The Internet's power will develop through its online economic might and also offline as a cultural and political influence. At the same time, personal and business activities will mingle seamlessly, as the day fragments into a flexible mix of personal and business activities—work, commuting, shopping, communications, entertainment. As "off-grid" time becomes rarer, it will become increasingly valued.
• Social animal 2.0: Thanks to the pervasive popularity and performance of social collaboration technologies and mechanisms, including social networks, voice channels, online groups, blogs, and other electronic messages, the size and diversity of networks of personal relationships will continue to grow. The average person in 2020 will live in a web of 200 to 300 contacts, maintained daily through a variety of channels.
• Digital information osmosis: People will dramatically increase their consumption of digital information. The vast pool of available information will allow consumers to pick and choose the information they want and how they want to consume it. "Nonlinear" information consumption will become the norm and the supply of digital information itself will explode.
• Broadcast privacy: Concerns about privacy and the security of personal data decline as consumers come to perceive the benefits as outweighing the risks and as mechanisms to secure and process personal information become smarter. "Growing use of social networking increasingly determines consumption patterns. Viral marketing and positive peer reviews become essential to success, which in turn erodes the concept of brand value, traditional marketing, and bricks-and-mortar outlets," noted Shehadi.
• iEverywhere: As privacy concerns dwindle, personal data such as identity, payment details, shopping preferences, interests, and member¬ship in social communities becomes widely available. Generation C will be able to access its digital life from a growing multitude of digital interfaces, requiring a fully interconnected world where services and data exist in the cloud, virtually.
• Growing generation gap: The upper limit of the digitally literate grows older, as the 50-plus age bracket broadly migrates online. At present, 65-year-olds spend just two to three hours online in a typical week, yet the 65-year-olds of 2020 will spend closer to eight hours online weekly. Generation C will distance itself, particularly in the development of its own pervasive culture of communication. That culture has led observers to dub this group "the Silent Generation," as digital communication channels have replaced the physical interaction so dear to prior generations.
• Social virtualisation: As 24/7 connectivity, social networking, and an attitude of personal freedom further permeate the walls of the corporation, workers, mixing business and the personal over the course of the day, will "self-organise" into agile "communities of interest." By 2020, more than half of employees in large corporations will work in virtual project groups.
• Resident consumers: The trend toward the consumerisation of corporate IT will continue. "More than half of the CIOs in a recent Booz & Company survey said that in the next three to five years most employees will bring their personal computers to work. The trend to employees as "resident consumers" will be led by Generation C, given its familiarity with technology and its expectation of always-on communications," explained Shediac.
• Talent injection: Non-Western knowledge workers will continue to migrate to the developed world as virtual communities make it easier for them to join global teams. As they do, they will bring with them the innovative ideas and working behaviours they generated in their home territories.
• Face time bonus: The proliferation and increasing sophistication of communication, interaction, and collaboration technologies and tools will result in knowledge workers travelling much less frequently. The opportunity to meet face-to-face will be accorded primarily to top management, and business travel will become a valued luxury.
The developing world
• Digital entrepreneurs: Skilled and innovative digital entrepreneurs will emerge throughout the developing world in massive numbers. These have the potential to significantly disrupt traditional Western business models and have a highly connected audience that can benefit from their new ideas.
• New mass audiences: As the developing world increases in connectivity and sophistication, a huge new audience of people who have not yet been exposed to consumerism will develop outside already-connected urban centres. These audiences will leapfrog years of technological development and quickly emulate the behaviour of Generation C.
ICT industry impacts
The effect of these changes will be to tie information and communication technologies more tightly into the daily lives of people throughout the world. "These will have major implications for the telecommunications and technology industries, which must begin now to develop complex webs of interacting technologies and business models," commented Shehadi. What challenges are these two critical industries facing, and how should they respond?
• The infrastructure/application divide: Customers are already shifting their loyalties, and their consumption patterns, from their telecom operators to application and service providers. This trend is playing out just as technology trends are also driving the telecom industry toward the strict separation of infrastructure from services and applications. Today, telecom players that remain vertically integrated will come under substantial pressure. Thus, the telecom industry will evolve into two types of players: the efficient utility driven by fibre and wireless access technology; and the fast moving, customer-centric software innovation powerhouse.
• The customer relationship: As consumers use more and more different services, they will establish a wide variety of commercial relationships. A key industry control point may emerge in the areas of secure identification, localisation, and (micro) payments on behalf of all these smaller service players. Various contenders are preparing their game, including financial institutions and telecom operators. "Operators are fundamentally well positioned in this arena, but they will have to establish themselves as honest brokers, and find a way to offer a transnational interface to global service providers," noted Shediac.
• The power of the cloud and IT/telecom convergence: The shift to cloud computing is clear and pervasive. As the technology that underpins most of the future consumer technologies and preferences, it is already gathering speed. Both information and the intelligence needed to manage it are moving quickly into the cloud.
• The centreless Internet: Traditional aggregation points such as portals have already become yesterday's focus. Browsers have been touted as the new control points, yet so far they have generated limited customer loyalty. If anything, the Internet will grow increasingly centerless, as services become dynamically reconfigured and consumers choose their preferences as the need arises, following the crowd from one hyped thing to the next.
• The technology shake-up: Suppliers of hardware and software technologies to the telecom industry will struggle as operators, their traditional customers, choose their respective paths—either infrastructure or services.
Growth in global telecom
"The trends outlined above will pose real challenges for every player in the global telecom industry over the next decade. We expect there to be real opportunities for growth, especially in specific areas," said Shehadi. The revenues from legacy voice communications that Western operators have long relied on will decline rapidly as the service becomes little more than a bare-bones infrastructure commodity. There are a number of trends that will compensate for this steep loss in revenues:
• In more developed economies, pervasive broadband is an essential underpinning of any of the above visions, and of the additional top-line growth to be expected from such services. In particular, governments are likely to directly co-invest in or at least coordinate industry partnerships to build next-generation fibre-based and wireless infrastructure.
• Second, an opportunity lies in the ability of telecom operators to reach vast but still-unconnected segments of the world's population.
• A third avenue for growth can be generated if the technology and telecom industries can translate to other industries their understanding of how Generation C behaves and collaborates, and the technologies it prefers, and then capture some of that new value.
These changes will be accompanied by any number of new services and devices in both telecom and surrounding industries. Most of them will require these industries to change and cooperate in new ways, including the personal identity and interaction device, the digital passport, and M2M—variously translated as "machine-to-machine" or "machine-to-mobile"—communication.
Creating future value in any of the above ways will depend heavily on the ability of players of all kinds to partner with each other and across industry boundaries.
Cross industry perspectives
The connected, always-on world of 2020 will have a powerful impact on a variety of industries beyond ICT, thanks to the wide proliferation of digital and mobile services and the open infrastructures that will connect across industries. "Generation C's impulse to share what they know, and to willingly erase the distinction between their online and offline lives, will transform both how information moves around and how players in different industries communicate and market to customers," commented Shediac. Among the industries most likely to be affected:
• Healthcare: As information about doctors and hospitals, medical treatments, and costs floods the Internet, consumers will gain real power being able to research and review healthcare. Online services will become a primary channel for medical advice, widespread connectivity will boost electronic diagnosis; digital health monitoring will become accepted practice; and medical R&D will come to rely on social media such as crowdsourcing. The personalisation of medicine will lead to new insurance models, and electronic medical records and national e-health infrastructures will connect with online identity and digital passport technologies.
• Retail: Ubiquitous connectivity will integrate the online and offline worlds, and will lead to a form of augmented reality that allows a more elaborate presentation of retail goods. Peer reviews will become a real-time decision-making tool and social networks will become critical for brand awareness and customer preference. This will lead to a "winner-take-all" dynamic among retailers. Social media techniques such as crowdsourcing will be used to further product innovation, and increased connectivity will generate new monetisation models driven by new partnerships.
• Travel: By 2020, business travel will have declined in the face of costs and alternative meeting technologies. In the leisure segment, traditional intermediaries such as travel agents will be cut out, and peer reviews will be a dominant forum for deciding on vacations.
Even the concept of distance will be transformed, as the world becomes fully modeled in 3-D and therefore open for inspection by prospective visitors. "The digital world will also further invade the car, with better information on the environment and improved safety through the presence of sensors that check for sleepiness or drunkenness, and simplified maintenance based on remote diagnostics," noted Shehadi. It will also improve the efficiency of the street network, allowing for instant data on traffic and the ability to determine traffic flow.
These changes will provide enormous opportunities for ICT companies.
The advent of Generation C will drive fundamental change in most industries—and create substantial opportunities and threats for all involved. Booz & Company predicts a series of "eras" triggered by the sequential rise of critical new technologies. The year 2020 will be a dif-ferent world. The general outlines, and a great deal of the particulars, are clear. As such, it is incumbent on the technology and communication industries to prepare to help lead us into this world, and to benefit from the technological, social, and cultural changes that will take place.