When is it a bad idea to bet on the future? How about… never. First, we’re seeing massive shifts in customer behavior during the pandemic — behaviors that look likely to last. Second, the emergence of Millennials and Gen Z as significant market segments suggest that those new behaviors are just the beginning. Third, and most importantly, the big guys of digital — Apple, Facebook, Google, Amazon, and Microsoft — are all placing big bets that threaten to reshape the landscape for every business in due time.
So, maybe a better question is "How can you bet on the future to win?" And that’s what we’re talking about in this episode of Thinks Out Loud.
We’ll take a look at who’s leading the way towards the future, some useful frameworks for how to think about betting on the future, and how to place smart bets for your business… bets that you can win.
Want to learn more? Here are the show notes for you.
Thinks Out Loud Episode 327: Why Digital Leaders Bet on the Future Headlines and Show Notes
Show Notes and Links
Here are the regular show notes detailing links and news related to this week’s episode. Be sure to check out all the links that matter for your business once you’ve given the episode a listen.
- Day One at Amazon and Developing a Digital Culture (Thinks Out Loud Episode 325)
- Scott Brinker on Twitter: "Important to balance across this spectrum. But if you buy the premise that business environments are evolving rapidly — which I do — I think it’s better to lean to the left. https://t.co/7eS7wbtOfH" / Twitter
- Swap and go: electric trucks to run between Sydney and Brisbane using exchangeable batteries | Transport | The Guardian
- Amazon to let Whole Foods shoppers pay with a swipe of their palm | Reuters
- Amazon is opening a hair salon with an AR color bar | Engadget
- Online Grocery Delivery from Kroger (KR) to Be Done by Robot Warehouses – Bloomberg
- Almost a fifth of Facebook employees are now working on VR and AR: report
- The tech industry is looking to replace the smartphone — and everybody is waiting to see what Apple comes up with
- Apple’s Secret Augmented and Virtual Reality Project
- Amazon.com: Thinking in Bets: Making Smarter Decisions When You Don’t Have All the Facts eBook: Duke, Annie: Kindle Store
- Thinking in Bets | Annie Duke | Talks at Google – YouTube
- Digital media trends survey | Deloitte Insights
- The End of Millennials (Thinks Out Loud Episode 224)
- Your Big Opportunity When The Current Crisis Ends? Adults Under 40 (Thinks Out Loud Episode 280)
- The Five Drivers of E-commerce and Digital Transformation for Your Business (Thinks Out Loud Episode 293)
- We Live in the Future (Thinks Out Loud Episode 274)
- Taylor Swift’s Playbook Shows Why the Modern Marketing Team is a Media Company (Thinks Out Loud Episode 324)
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- A Brief Introduction to Thinks Out Loud. As a bonus, we’ve also included this PDF document that highlights some of our core episodes to help you dig into what the show is about. We think it will help you capture the show’s essence while you’re working your way through the 300-plus episodes published so far. Download it here.
- Digital & E-commerce Maturity Matrix. As a bonus, here’s a PDF that can help you assess your company’s digital maturity. You can use this to better understand where your company excels and where its opportunities lie. And, of course, we’re here to help if you need it. The Digital & E-commerce Maturity Matrix rates your company’s effectiveness — Ad Hoc, Aware, Striving, Driving — in 6 key areas in digital today, including:
- Customer Focus
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Past Insights from Tim Peter Thinks
You might also want to check out these slides I had the pleasure of presenting recently about the key trends shaping marketing in the next year. Here are the slides for your reference:
Technical Details for Thinks Out Loud
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Running time: 19m 06s
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Transcript: Why Digital Leaders Bet on the Future
Well, hello everyone. And welcome back to Thinks Out Loud, your source for all the digital expertise your business needs. My name is Tim Peter. This is episode 327 of the Big Show. And thank you so much for tuning in, I genuinely appreciate it. I think we’ve got a really cool show for you today.
Is It Better to Be Too Optimistic or Too Pessimistic About the Future?
I want to go back a few weeks — about three weeks ago — I was talking about "Day One at Amazon and how to develop a digital culture." And one of the things that really resonated for me the more I thought about “Day One” at Amazon is that it’s really about being forward-looking. It’s about thinking about the future you want to create for your business, and, while not getting tied up in the future at the expense of the present, being bullish on the future as a place that you want to be. And I think it’s particularly important given all the change that we’ve lived through in the past year.
Scott Brinker, who is… @chiefmartec is his Twitter handle. He is the VP of the platform at HubSpot and he chairs the MarTech conference every year. Had a great tweet, oh gosh, a month ago, I think, where he talked about why it’s important to balance across a spectrum of beliefs about the future. He basically has this great visual — I will link to this in the show notes, it’s definitely worth seeing — where it ranges from the risk of underreaching on the right hand side and the risk of overreaching on the left hand side with what he’s labeled “healthy skepticism” right in the middle.
If you start from “healthy skepticism” and work from right to left towards the risk of overreaching, you start with cautious optimism, then pass through that on your way to optimism and then finally can end up at idealism. And that’s when you’re way too… Getting out over your skis as people say, you’re thinking too far in advance and setting yourself up for a mistake because you are too soon, too early.
On the right hand side of the graphic, where you have a risk of underreaching, you have skepticism, then you have pessimism and then you have cynicism.
And what I think is really fascinating about this graphic is what Brinker said. He said,
"It’s important to balance across the spectrum, but if you buy the premise that business business environments are evolving rapidly, which I do, I think it’s better to lean to the left."
That’s a quote from Scott Brinker, but it could be a quote from me. Because I agree with him completely.
Of course, I want to be fair. It doesn’t mean you want to be all idealistic and think everything’s going to be wonderful and the sunshine and rainbows all the time, because realistically, that’s not going to happen. Getting too far to the left on this framework is every bit as bad as getting too far to the right. It’s just that it’s not okay to be pessimistic about it or cynical about where we’re going to go. Because we’ve seen that the future belongs to those who help create it.
Why It’s Less Risky to Try to Create the Future
There’s a very famous quote from Peter Drucker who said, "To make the future is highly risky. It is less risky, however, than not to try to make it." And if you look at Amazon, since I started by talking about Amazon and their “Day One” culture, they’re trying to make the future.
If you talk about lots of companies with this mindset, they’re testing lots of new ideas.
Let’s start with Amazon just as an example of this. They’re doing all kinds of interesting stuff. They are bringing Thursday Night Football to Amazon Prime. Their Whole Foods enterprise has a new payment option where shoppers pay for their groceries using their palm. They are opening a hair salon with an augmented reality “color bar,” where people getting their hair dyed can see what their hair color will look like using augmented reality before their stylist dyes their hair.
Now these last two, the Whole Foods thing and the hair salon are particularly interesting to me. Whole Foods because they’re finding ways to make payments and commerce more seamless. And what’s especially interesting about the color bar, the hair salon, is:
- That Amazon is dipping its toes a little more deeply into service industries. And from this experiment, even if it fails,
- They’re going to gain data and they’re going to gain experience.
And the question I always think about when I see tech giants try these kinds of ideas is where are they going to apply those lessons? Where are they going to apply that data?
This is standard practice for them. There was a comment from Amazon’s chief financial officer, Brian Olsavsky in their most recent earnings call about why delivering packages provides them an advantage, and the answer is because of the data they gain. He said, this is a quote,
"We also see that there’s a lot of cutoff times that we can extend again, because we pretty much have perfect information between the order placement allocation to warehouses where we’re going to pick up and box up the product and send it on its way, so lots of advantages.
He continued by noting that they’re going to continue, and again, I quote, “…a large investment in this area through 2021 as well."
Using New Offerings as a Learning Opportunity
So the beauty for Amazon of being able to deliver packages is the information they gather during that process. This should shock no one, but Amazon is a data company. They hoover up data like very few companies do, apart from other members of AGFAM or the "Frightful Five" or whatever you want to call them: Apple, Google, Amazon, Facebook, Microsoft. You could add Netflix to that, you could add Uber to that, you could add Peloton to that. They’re using data to learn about their customers and do lots more interesting things.
But what they’re all doing with these learnings is they’re saying, "How can we use this data and what we’re learning to shape the future we want?"
Now, Amazon isn’t the only one doing this; I don’t want to make this all about Amazon today. There was a cool story a few weeks back from Bloomberg about how Kroger is investing heavily in automated warehouses and using robots to battle Amazon and Walmart. There’s another very cool story in the Guardian about a company in Australia that is switching entirely to electric trucks with swappable batteries and maybe testing self-driving as well, to ship things across the country, across Australia, more quickly and easily and at lower cost. Apple and Facebook are making significant investments in AR and VR. These companies are betting on the future and taking at least a “cautious optimism” approach. And if you think about it, they’re the ones who’ve tended to win.
How Not to Do It
Now, by contrast, I want to give you an example of company who is struggling to bet on the future. And I want to be fair, it’s not entirely their fault. A couple of weeks back Macy’s in New York was hit with a ruling that prevents them from using a “pay with your phone” app in departments where salespeople work on commission, because the salespeople were then not receiving the commissions for the sales.
Now that is an insane outcome. And it’s not because Macy’s did something wrong in trying to create a better experience. And it’s not because the workers are wrong to want to be compensated fairly. But it’s insane because the ruling says the only way that they can satisfy those two needs of Macy’s offering the service and the workers being compensated appropriately is to make the experience worse for customers. That’s a truly absurd outcome and a terrible, terrible result for Macy’s customers. Which eventually will make it terribile for Macy’s, and further, terrible from Macy’s commissioned salespeople. Because if customers stopped coming in to the store because it’s not convenient for them to shop there, who’s going to lose out? The store. And the workers. The customer is going to find a way to do what they want to do. They just may opt to do it somewhere other than Macy’s. In the long run, this sets Macy’s — and their commissioned salespeople — up for a host of problems that they don’t need to have. Is that a bet on the future? If I were Macy’s, I’d look to pay the salespeople a share of any sales in the department and shift their focus to experience, repeat visits, and bonuses for exceeding targets. Or something like that anyway. I’m sure they’re looking at alternatives. But you have to remain optimistic about how to compete in the digital future.
Why You’re Better Off Betting on the Future
Now, there are other reasons why I’m so bullish about this and a big one is the emergence of Millennials and, increasingly, Gen Z as a market dynamic. There’s new data from Deloitte that is really worth checking out. Again, I will link to this in the show notes, but I’ve been talking over the course of the last year about how we’re living through "a generational shift to digital." Well, Deloitte’s data shows precisely how significant this generational shift is.
And just to define terms, Millennials in their data are people aged 25 to 38 and Gen Z are those aged 14 to 24. So Millennials are young adults to rapidly approaching middle-aged. As I like to refer to them, they are "adults under 40." And Gen Z are very young adults through people in high school. College and high school aged people.
But what’s fascinating in the Deloitte data is that these folks all act dramatically differently than their older cohorts, especially Gen Z. They’ve grown up in a world where digital is the norm, even before we had the pandemic. So their behaviors reflect what they expect in the world and from the products and services and companies that they interact with.
And we have to recognize that over the next five to 10 years, the older cohorts are going to start aging out of the marketplace in fairly significant numbers. Boomers on the Deloitte data are already listed as being 56 to 74. By my reckoning, they’re actually about 57 to 75, but regardless, they’re getting older. And within the next five years, Gen X starts turning 60 and is already heading towards retiremint.
Younger Generations Tech Digital for Granted
So, when we talk about betting on the future, there’s a reason for it. It’s sort of demographically assured. And it’s why I agree with Scott Brinker’s tweet about why obviously healthy skepticism is probably the safest place to live, but if you’re going to err, err on the side of cautious optimism, err on the side of betting on the future, because that’s where you’re going to set yourself up to be where your customers are today.
Another quote I’m very fond of using is the William Gibson quote that says, "The future is already here. It’s just not evenly distributed." If you watch the behaviors of Gen Z today and millennials today, you’re really looking at the behaviors your customers are going to be exhibiting for the next 15 years, more or less, until the next demographic cohort comes along and shows us a whole new way of doing things.
But the situation is one where we really need to be thinking bullishly on what the future will be and are we doing the right things to set ourselves up for that success? Are we making the kinds of investments or testing the kinds of things that Kroger is doing, that Amazon is doing, to try to anticipate the needs of our customers and learn from them?
How You Can Bet on the Future
How can you bet on the future? Well, there’s a great book I’m very, very fond of, I’ve talked about it here on the show many times before, called Thinking in Bets. It’s a terrific, terrific book all about how to make smarter decisions by professional poker player Annie Duke. And it’s a really smart way to think about how much you’d be willing to bet on a specific item. If you’re confident about something, if you’re reasonably confident about something, even if you’re not sure, how much would you bet? Would you bet $5? Would you bet $10, $50, $100, $1,000? I’d bet a thousand bucks on some of the ideas that my clients come up with or that we come up with together to try to test easily. It’s a fantastic mental exercise for gauging your confidence. When you’re not sure, you’d probably bet a lot less. If you’re confident, you’d probably be willing to bet a lot more.
If it’s something where it’s going to cost your business $10,000 or $100,000 or $500,000, how much would you be willing to invest to test even the first piece of it? If you’re talking about something that might cost you $500,000, has a potential upside of 10 million and potential downside of $750,000, well, you’d probably be willing to bet or invest $10,000 to $15,000 to $20,000 to $30,000 to find out whether or not you’re correct. And you can probably conduct a small scale test to do that. If you’re a smaller business and you’re talking about, the upside is, let’s say, a million dollars over the next year and the cost is going to be $50,000 or $75,000 to find out if the idea’s any good, could you run a $5,000 test? Would that be worth it? And the answer is often, yes. So think about how much you’d be willing to bet to learn the answer. Think about how much you’d be willing to bet on this. And it’s a great framework.
I would encourage you to check out the book. It’s a great way to think about your confidence in the future overall. And it can really be helpful in terms of you reaching the objectives that you have because it helps you frame how confident are you in where we’re going.
Me, I’m really confident. Clearly Amazon is really confident. And obviously, let’s be fair, they have the ability to place lots of bets. But I don’t think that that hair salon thing costs them a lot of money. It’s a test and where they’re going to learn from it and they’re getting smarter.
Conclusion: Why Digital Leaders Bet on the Future
What can you do to learn from what is out there, to learn from what your customers want and to help you figure out where you want to place your bets for the future? This is something that we need to think about really carefully, about “do we have the right amount of optimism” without overreaching? How do we set ourselves up so that we’re testing and learning continually, so that we can be where our customers are when they’re ready? And so that we’re ready for them when they are.
Because ultimately the folks who bet on the future are the folks who are going to win. And in case you think I’m wrong, I just have one question for you. Wanna bet?
Show Closing and Credits
Now looking at the clock on the wall, we are out of time for this week. Once again, I want to thank you so much for listening, it means so much to me. I want to remind you that you can find the show notes for today’s episode, as well as an archive of all our past episodes by going to timpeter.com/podcast. Again, that’s timpeter.com/podcast. Just look for episode 327. While you’re there, don’t forget that you can click on the subscribe link in any of the episodes that you see there to get Thinks Out Loud delivered to your favorite podcatcher every single week.
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With that said, I want to say once more how much I appreciate you tuning in every single week. I know that this has been a crazy year. I know that there’s so much going on in your lives. And it means so much to me that you choose to tune in and listen. So with that said, I hope you have a wonderful rest of the week, I hope you have a great weekend, and I’m looking forward to speaking with you here on Thinks Out Loud next time. Until then please be well, be safe and as ever take care, everybody.