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Category: Anecdotes

Big Data Predictions for 2017

Big Data Predictions for 2017contributed by:
Christopher Surdak, President & CEO

1. From the Mall to the Mortuary: The Retailer Apocalypse Continues

Call me Captain Obvious, but the die-off of major retail merchandisers will not only continue in 2017, it will accelerate. E-commerce juggernaut Amazon maintains its relentless assault on traditional retailers, and is likely to double its revenues over the next three years.   I’m not certain which brick-and-mortar stores will die, but Sears/K-Mart, JCPenney’s and Macy’s are all ripe for financial failure.  Additionally, there are scores of retail specialists that are in financial hospice, such as Men’s Warehouse, Walgreen’s and Office Depot. Even retail Goliath Walmart continues to ‘rationalize’ its inventory of stores; with a wave of additional closing being anticipated.

What does this have to do with Big Data?  Everything, actually.  Amazon is a data company that happens to sell stuff to consumers, rather than a retailer that uses data.  Amazon is a full-on digital company that uses data to completely out-compete traditional analogs.

2. Amazon Prime Shuttle? Amazon Pilots a ‘Ride For Hire’ Service

Part of being digital is relentless innovation, trial-and-error, and a fail-fast strategy. If you’ve used Amazon’s Prime service recently, you may have noticed that your package was dropped off not by UPS or FedEx, but by Tom, Dick or Harriett from down the street.  Amazon is using the sharing economy model of Uber and Lyft to provide same-day package delivery.  It would seem rational, economical, and therefore likely, that Amazon would expand this service to include delivering riders, instead of just packages.

The Big Data connection is that to be successful in a digital world you must know the context of demands and supply, and put these two things together better and faster than anyone else.  Once you have this mechanism in place, WHICH demands you supply is open to pretty much anything.  Amazon’s digital infrastructure can deliver people as easily as it can deliver packages.  As such, there’s a good chance we will see a trial of an Amazon ride-share service in 2017.

3. Uber Goes Gecko? The Rideshare App Starts to Insure its Drivers

Uber’s access economy model for transportation breaks with numerous traditions, and no small number of laws and regulations. Insurance is a significant challenge for this business, as companies that believe they are insuring an individual driver aren’t pleased to find out their customers have customers of their own.  The risk models and actuarial tables used by traditional insurance companies were never designed for an Uberfied world, which has led to a whole new market for insurance innovators.

Like Amazon, Uber was born a digital company and deals with such challenges in the same way: try something unexpected and see if it works.  Uber has both the financial wherewithal and the data necessary to provide insurance to its drivers far more effectively than traditional insurers ever could; even if analog insurers wanted to provide such coverage, which they likely don’t. So, I wouldn’t be surprised to see Uber provide driver and rider insurance, along with a whole range of context-aware products and services that build upon their control of customer context.

4. Bitcoin will surpass $1,000 in value, and then will pass $1,200 after Amazon announces it will accept direct bitcoin payments.

Bitcoin, the trailblazing cryptocurrency, has seen its share of ups and downs since its birth in January of 2009. In typical digital fashion, its swings in value seem to occur far faster and more frequently than with traditional currencies.  Nonetheless, bitcoin’s value has, on average, continued to increase over time, approaching $900 by the end of 2016.  As the bitcoin market matures, and traditional economic tools and assets grow riskier, bitcoin’s value will continue to both grow and stabilize.  I predict that bitcoin will soon surpass, and remain above, $1,000 per coin.  My stretch prediction is that Amazon will begin accepting bitcoin for payment, which will cause a further surge in the currency’s value.

What does Bitcoin have to do with Big Data?  Plenty. The blockchain technology that underpins bitcoin is undergoing widespread exploration in a number of different applications.  The value inherent in an anonymous, untraceable yet trustable source of funds is enormous in an increasingly digital world, and cryptocurrencies will likely grow in importance as our society’s data metabolism outstrips our analog financial services industry’s ability to keep pace.

5. Virtually There With the 10th Anniversary iPhone 8

While it’s hard to argue with the financial performance of Apple over the last decade, there’s a strong argument that the company has lost its ability to innovate.  Since Steve Jobs launched the iPad, Apple has been an engine of improvement, rather than innovation.  It’s painful watching Apple lose it’s digital-ness, and turn more and more analog, but all organizations mature with time.  One result of this evolution is that Apple frequently finds itself playing fast-follower to its more innovative competitors. With the coming tenth anniversary of the iPhone, Apple needs to show that it can at least keep up with other platforms, if not exactly blaze new trails.

One such example is in the arena of virtual- and enhanced-reality.  While Google, Samsung and even Microsoft have been innovating in this space, Apple has been notable by its absence.  If it’s going to make a real splash with its upcoming iPhone 8, Apple needs to enter the VR game, and needs to do so decisively. I’m willing to bet that Apple has plans for such a release in 2017, as they tend to be a year or two behind their competitors with such innovations.

A VR-enabled iPhone is relevant to Big Data because making VR useful is all about context.  The real-time data demands of interactive VR or ER are astronomical, and owning this space will be critical to digital competitiveness in the coming decade.  The deployment and adoption of commercially-viable, real-time, interactive ER and VR will increase our society’s creation and consumption of data by a million-fold.  Big Data indeed.

6. The Trump Administration Gives Birth to the BCL

Despite stumping on a platform of pro-business, anti-bureaucracy, pro-free-market policies, I anticipate that the coming Trump administration will, in 2017, lay the foundation for something that may be known as the Bureau of Cyber Labor (BCL).  This new government agency will be tasked with setting standards for and regulation of both physical and software robots as they enter more and more segments of our economy.

The BCL will grow out of an Artificial Intelligence working group created by Trump to understand the impacts of cyber labor. Robotic Process Automation (RPA) and Artificial Intelligence (AI) are positioned to become major forces of economic growth, and disruption. They will impact large segments of the current workforce, particularly in the middle- and upper-class.  Additionally, there are substantial moral issues that the use of these technologies bring to the fore even as businesses rush headlong into their deployment. I predict that in 2017 we will start to see the beginnings of what will eventually be a bureau of oversight for these technologies.

7. War Games are Outed

In the 1980’s movie War Games, global conflict between nations moved from the physical world into the cyber world.  In today’s world, we seem to be witnessing the opposite. The alleged Russian interference in the American presidential election may be a natural escalation of an online war that has been growing in intensity for decades. This war has grown to the point that it can no longer be hidden from our society. Cyber warfare between nation states will become more evident, as populist governments begin exposing the degree to which cyber conflict has grown over the last decade.

Global cyber conflict is a Big Data topic because, as I discuss in my book, Jerk, data is taking over for capital as the dominant source of wealth and power in the world. 2016 clearly demonstrated the power of weaponized data, as one or two well-placed and more importantly well-timed strikes were likely enough to change the course of the presidential election.  Any organization questioning whether investments in data analytics or governance are warranted are probably already falling into irrelevance.

8. In-Home Digital Assistants Testify in Court

One of the hot new items for sale in late 2016 were voice-activated digital assistants.  Both Amazon’s Echo and Google’s Home were heavily advertised during the holiday season, and both demonstrated their ability to perform a wide range of functions based upon their owners’ voice commands.  Anyone who has used Siri or Alexa on their smartphone has some experience with this technology, which is often the source of as much frustration as it is convenience.

As if smart phone digital assistants weren’t invasive enough, in-home devices such as Echo or Home literally live in our homes with us, monitoring all that we do in our most private spaces.  In order for these devices to respond to their users, they need to be listening all of the time.  And listen they do, as was recently discovered by an alleged murderer in Arkansas, who killed a colleague in a house where an Amazon Echo was installed.

Following the precedent set by Apple in the San Bernardino shooting, Amazon has thus far refused to release any data captured by the Echo to the police.  However, I predict that in 2017, enough people will have bought enough of these devices, and enough of these devices will witness enough illegal acts, that someone, somewhere, will be convicted of a felony based upon information recorded by their in-home digital assistant. So much for privacy.

9. Pokémon Go Hits Its Stride

One of the hot stories of 2016 was the release, and subsequent global explosion, of Pokémon Go.  This seemingly-benign enhanced reality game took the world by storm.  Within weeks of its initial launch, Go had millions of players spending billions of minutes taking trillions of steps as they wandered the planet looking for lost Pokémon characters.  Soon thereafter, people were being arrested for jaywalking and trespassing, injuring themselves by tripping over unseen obstacles, and even dying, literally, as they tried to locate Pikachu.

The gaming company Nintendo was the sponsor of this new enhanced-reality platform created by Niantic, and Nintendo pocketed 19% of the $600 million that Niantic earned in the first three months that the app was in use.  While by late-2016 much of the initial hype of Pokémon Go had settled down, it still has an enormous base of users and both Niantic and Nintendo have barely scratched the surface of the revenue engine they have created.

I predict that by the spring of 2017 revenues from Go will easily exceed $1 billion, and will then grow to over $2 billion by the end of summer.  These numbers give only the slightest hint of what is possible with enhanced and virtual reality businesses, which is a market that will explode over the coming decade.

10. Living Everywhere and Nowhere

Finally, for those who are deeply concerned about the populist, protectionist, anti-immigration sentiment that seems to be on the rise throughout the world – fear not.  The answer to such protectionism may be cyber migration, a trend which may pick up considerable steam in 2017. E-Residency was launched in Estonia in 2014 as a means of attracting talent and money into this small country’s economy.  It allowed people to establish a formal, legally-binding residency status with their national government, regardless of where a person actually lived.

Such status may seem pointless.  Indeed, many government officials scoff at the notion of virtual residency.  However, it has since become apparent that through e-residency, cryptocurrency, and the internet, it is now possible for individuals to set up entire corporate entities that don’t exist in the physical world, and circumvent centuries of analog infrastructure such as licenses, registrations and even taxes.

Given ever-increasing demands for public funds, and ever-increasing burdens of licensing and registration for businesses, countries that offer virtual residency may soon become digital safe havens.  Such countries will become free trade zones for digital organizations, freed from the paperwork, frustrations and taxation of countries buried in their own bureaucracies. To reinforce the potential of cyber migration to disrupt the world’s power structure, several other governments have implemented or are considering their own e-residency programs, such as Singapore and the City-State of Dubai.

Big Data Predictions: The Only Constant is Change

As this list shows, I’ve largely abandoned the traditional notion that Big Data is a technology discussion.  Big Data is not about technology, nor is it really about data.  Instead, what is revolutionary about Big Data is how it changes how we live, how we work and how we play, and how the digitization of our society is changing the most basic aspects of how we believe the world should work. The take away for large, traditional, analog organizations is this; your time is short.  Not only are the rules that you’ve followed for centuries losing their relevance, rules themselves are being replaced by a new means of control, called analytics.  The real revolution of Big Data is not that we can use data and facts to improve our world, it’s that increasingly we must.

 

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Spending Millions to be a Pin: I Get It

contributed by:Spending Millions to be a Pin: I Get It
Robert O’Leary, Managing Director – Client Engagement

If you’re like me, there are certain events in your life that you look back on and realize that they completely changed your perspective.  Your first week at college. Your first job. The day you first became a parent, and so on.  In the few months since Chris Surdak wrote Jerk – Twelve Steps to Rule the World I’ve listened as he has shared his concepts from the book with thousands of people.  At the conclusion of almost every presentation, I found the majority of audiences staring back in stunned silence as they absorbed his perspectives.

One backbone of Jerk is a notion that information is now more valuable than capital. Initially, this concept felt like a strange leap of faith that I had a hard time truly embracing; like ‘The pen is mightier than the sword’. I kind of get that one too, but I never really bought it. In my life I’ve watched many more people hurt by sword induced events than those induced by pens so I guess I’ve been more of a ‘sword guy’.

So, when I started reading Chris’ first book, Data Crush, it took me a while to really buy into the “information is value” thing. But as I read statements such as “Capital is now like oxygen. Its availability is assumed and not appreciated or noticed – until you don’t have any”, it made me tilt my head slightly, like a dog hearing a high-pitched whistle, and wonder how this new concept really makes sense. I thought that I must be missing something. It sounded good, and seemed to have some  reasonable basis like ‘The pen is mightier than the sword’, but it just didn’t push it in my soul like most concepts the way it must in order to really ‘get it’.

When I Finally Got It

The moment when it all came together and I ‘got it’ remains crystal clear in my mind. I can remember what I was wearing, where I was, and the time of day. I was in the backyard of a friend’s house, overlooking the Los Angeles basin.  I was watching the traffic on the 405 thinking about how happy I was to not be in it. I was enjoying a glass of wine and talking to Chris about Jerk. It was March 25, 2016 at 5:15PM Pacific Time.

Yes, I remember it with that level of detail. As I walked around listening to these new ideas I randomly focused on a nearby building. Suddenly, it all gelled.  It suddenly made sense.  In that moment, I swallowed the ‘red pill’ and my world view changed forever.  I’m surprised I didn’t drop the glass in my hand like you see in movies. That building was a Courtyard by Marriott, one of many hotels in that area frequented by business travelers. It has been there for many years and while I noted its presence there many times I never really noticed it.

But this time was different.

As I looked the building up and down, I thought, “Marriott spent millions on that building. They invested in point-of-sale systems, back-end integration with dozens of business information systems, an enormous HVAC system was installed and maintained as well as WiFi, cable TV, utilities, and all of the other amenities expected by guests. Huge sums of capital were invested in branding, loyalty programs, and on and on.  Marriott spent years of effort and millions of dollars to create that capital asset and to maximize their returns on their investment. They put enormous capital wealth into this building with the expectation of creating still more capital wealth.  After all, that’s how investing works, isn’t it? Ten years ago if you‘d asked me if I’d wanted to own a hotel, I’d scream ‘of course!’ It would mean that suddenly I’d have incredible wealth.

But in that moment, I literally and figuratively stepped back and realized: That hotel, and all it took to create it, are just a pin on my Hotels.com app.  Nothing more.

Just a Pin on an App

More and more, when travelers go on a trip and decide where to stay, they jump on some aggregator mobile app such as Hotels.com, Trivago or Expedia.  While they may have memberships in one or more loyalty programs, they are likely to shop around for the best possible deal, with loyalty points being only one input to their decision.  In minimal time, and with minimal effort, the aggregator provides a customized map of properties correlated to ‘our needs’ at ‘this time’ within ‘this budget’ and ‘in this area’ with ‘these amenities’. And after a quick review of user feedback and comments to confirm our choice, we press a button and send money to a lucky winner.

So, what really happened here?

Information was proven to be more valuable than capital. As long as there was at least one hotel that met my need, my decision was based on something more than just availability. This conclusion does not mean that capital has no value. To the contrary: I still need land and I still need capital.  They each have value and are required to successfully build and run a hotel. But, here the availability of both land and capital was assumed, and neither important to my decision.

The real value was the information about the hotel aggregated within an app. The app controlled my choice at that moment through the use of contextual information. The app inverted the laws of supply and demand, ignoring mass appeal to addressed my specific needs at that exact point in time. The app gave me the hotel I wanted, when I wanted, at the price I wanted, where I wanted it and with all the amenities I needed.

Despite branding, marketing, advertising and promotion, in that moment all of the hotels that met my requirements were commoditized.  They were either ‘in’ my search criteria or they were ‘out.’ Beyond that, they won my business either on price, customer ratings owned by the aggregator, or both.

Capital-Centric No Longer Makes Sense

When you view value created in this entire exchange using traditional capital-centric perspectives and metrics, it doesn’t make sense. How does the entity that invested all of the capital, raw material and labor in such a tangible asset become the commodity in the equation? Marriott should be rewarded for making the whole thing work so well. They did all the hard work. Right?
But that’s the point of this whole transition. Capital (in this case, a hotel) is like oxygen. Only the absence of a hotel – with the location, amenity list and price I want –  makes me concerned. Assuming that this is available, I now expect to just pick one that works for me.  And at the end of the day, I don’t really care about which one gets my money. I just want a convenient and cost effective place to stay that meets my needs. The tools that provide this experience are easily available and produce better results. They also capture most of the value in the transaction, turning traditional capitalism on its head.

So to the actual hotel owners and operators, I applaud your commitment to building and maintaining these costly assets. I really appreciate it. I also know it’s tough to accept that my selection was based upon the efforts of a company that owns none of it, and invested little or no ‘Capital in the entire process.

In the end, that translates into  ‘Congratulations on becoming another $20 million pin on my free app’.

Welcome to the value of Jerks in our new world.

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A Father’s Pride

contributed by:A Father's Pride
Walter J. Surdak, Jr., Head Coach

My son, Chris Surdak, has been a challenge.  He was an entrepreneur as early as junior high school. In 7th grade, he saw that a demand for chewing gum was not being satisfied during school hours.  He noticed back then that school lunches cost $0.60, which meant that every kid in school started their day with at least one dime. He also noticed that gum cost $0.05 per piece, and that represented an opportunity for a 100 percent markup.

He started small, bringing to school about 100 pieces of gum per morning. Within two weeks, I was driving him to our local K-Mart, where he bought their entire stock of bubble gum at nearly wholesale.  Within a month, he had franchised his business, and had five other kids selling gum for him.  He was wildly successful – until the school principal shut down the operation.  It’s evident that he fully understood the value of context even then.

Thirst for Knowledge

Chris has always had a thirst for knowledge in every field.  You can see proof of that in his two books, but especially in JerkJerk: 12 Steps to Rule the World defies categorization.  Its objective is to describe how the world of business got to where it is, what the challenges will be, and what can be done to succeed.  To fully explain all that, Chris provides the history of humanity in as comprehensive a manner as I have ever seen, and weaves in the philosophical and psychological factors that drive us as humans.  He throws in Yogi Berra and Samuel Clemens quotes to show off, and a little sci-fi in the last chapter that the reader will find fascinating.  So this is a business, technology, history, philosophy, psychology, comedy, sci-fi, futurist book.  It is engaging, enlightening and a very easy read.  It’s also frightening and challenging, if you stop to think about the consequences.

Intentional Exclusivity

Actually, Jerk is the Strategic Plan for Surdak & Co. – a unique consulting company Chris launched to benefit only a few companies.  Why only a few?  Because, Surdak & Co. wants to be a consulting company that truly partners with ONE company in every industry to guarantee their success, and will not share that strategy or tactical plan with any competitor, i.e. those few companies get complete exclusivity.  That’s meaningful because Chris only hires THE best in the world.  And as he continues to succeed, Surdak & Co. will corral the rest of the best.
AND, the best part is that I get to participate in this (ad)venture.  I spent my entire career doing Business Process Reengineering (BPR), and deploying technology as a business process enabler.  The technology has changed as the power of computers has multiplied, and new tools have made what was once inconceivable, doable.  The one thing that hasn’t changed is us.  CHANGE was the toughest part of BPR.  It still is.  And Chris and his team know how to make that happen.

So after 25 years of gaining experience and being totally frustrated with the bureaucratic nightmares of major corporations, my son is becoming an overnight success, and I’m as proud as I can be to see that happen, and continue to be a part of it.

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