World Economic Forum Annual Meeting 2014

  • The New Digital Context

    Wednesday 22nd January 2014 - 9:00am - 10:00am CET

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    The Issue

    Digital technology is transforming every aspect of life at breakneck speed. Half a billion smartphone users today will increase to 4-5 billion in six months. Customer demand for more bandwidth is exploding daily. The integration of cloud, mobile and sensor-driven technologies is rapidly creating a more direct and personalized relationship between customer and vendor. And this is just the beginning. From “a new digital context, a new ideas context” is emerging, and 2014 will be “the year of the crossover”, according to John T. Chambers, Chairman and Chief Executive Officer, Cisco, USA. We stand at the threshold of a revolution that will transform business models, redefine the legal environment and lead to the evolution of social norms.

    The Consequences

    According to PwC, 48% of chief executive officers are concerned by the speed of technological change. This concern is well placed because companies that are not “disruptive”, that do not drive technological change and reshape the market, will not stay alive. The good news is that digital technology enables a company to make these changes immediately

    Citing GE as an example, Marc R. Benioff, Chairman and Chief Executive Officer, Salesforce.com, USA, observed that the company has understood this and is developing machines with APIs (application programming interfaces), predictive and collaborative capabilities that respond to customers’ specific needs. According to Benioff, it is critical for companies to be informed about and responsive to their customer’s individual needs through digital technology. He says that, “If you are not linked to your customers more deeply and adapting more rapidly, you are making a mistake.” In this sense, every company will become a service company in the future due to continuous connectivity with customers.

     

    © 2014 PwC. Prepared for the World Economic Forum for general information purposes only.

    These changes are already visible in the healthcare industry. Connected devices enable individuals to monitor their health more effectively and to work collaboratively with doctors by continuous information sharing. Forward-thinking companies in the automotive industry are developing a collaborative car with the capacity to “talk” to the driver, dealer, manufacturer and insurer through a smartphone. In other words, these companies are leveraging digital technology to enable a more dynamic relationship between customers and their core providers.

    From a political and legal perspective, big data and the processing power available from big data have profound implications in the areas of information sharing, privacy and trust. Issues of security have created a situation where consumers do not know what information is disclosed to the government and what it is used for.

    Options for Action

    Panellists suggested different ways for building the “disruptive” capability into companies across all sectors. According to Marissa Mayer, Chief Executive Officer, Yahoo, USA, disruptive means having the right people. Building risk into the company’s DNA and allowing people to make mistakes is an important feature of Cisco’s company culture. Yahoo cultivates transparency in decision-making and welcomes input from employees.

    “It is essential to get the right information to the right device at the right time”, says Chambers. Avoid a silo mentality and consider ways that all elements in the digital context can be integrated to connect with customers in new ways. 

    Stay on the cutting edge of technological trends and engage in strategic investment in research and development. This implies being open to collaboration with other companies either by partnering or buying a stake, advises Gavin Patterson, Chief Executive Officer, BT Group, United Kingdom.

    Panellists agree that more transparency in the way data is used by governments is important for both customers and vendors. In a customer-centric world, customers expect to know everything about their data – where it is placed, under what conditions and who has access to it. Customers will choose their vendors according to where they have ultimate security and transparency. Furthermore, they will want to understand the laws governing data management and sharing. None of digital technology’s potential will be realized if customers do not have complete confidence and trust data management.

    At the same time, 100% privacy is neither possible nor desirable. Legislation has not kept up with changes in the digital context. It is essential that governments now develop clear legislative guidelines on information sharing in a way that ensures security without compromising individual rights. The panel concluded that the debate between security and privacy has begun. The customer has a right to be involved in this discussion.

    Significant Quotes

    “The personal enlightenment you get through new technology is awesome, but what does it mean when everybody knows everything? It’s going to fundamentally change our relationship with people and organizations…there has never been a more exciting and energetic time in the industry.” 
    Marc R. Benioff, Chairman and Chief Executive Officer, Salesforce.com

    “Behind the ‘Internet of things’ is an Internet of beings that companies need to connect with in new ways. Companies who optimize this one-to-one relationship with each customer in a deep and meaningful way will be market leaders.” 
    Marc R. Benioff, Chairman and Chief Executive Officer, Salesforce.com

    “You have to get the right information to the right device at the right time. You need to integrate technologies; you cannot think in silos.”
    John T. Chambers, Chairman and Chief Executive Officer, Cisco, USA

    Disclosures

    This summary was written by Dorit Sallis. The views expressed are those of certain participants in the discussion and do not necessarily reflect the views of all participants or of the World Economic Forum.

Speakers

  • Marc R. Benioff Marc R. Benioff
    Chairman and Chief Executive Officer, Salesforce.com, USA

    1986, BSc in Business Administration, University of Southern California, US. Over 30 years' software...

  • Gavin Patterson Gavin Patterson
    Chief Executive Officer, BT Group, United Kingdom

    Degree in Chemical Engineering, Cambridge University. Formerly: nine years at Procter and Gamble, in...

  • John T. Chambers John T. Chambers
    Chairman and Chief Executive Officer, Cisco, USA

    Since 1991, with Cisco: 1995, Chief Executive Officer; since 2006, Chairman and Chief Executive Offi...

  • Marissa Mayer Marissa Mayer
    President and Chief Executive Officer, Yahoo, USA

    BSc, Symbolic Systems and MSc (Hons), Computer Science, Stanford University. Formerly: 1999-2012, Vi...

  • Randall L. Stephenson Randall L. Stephenson
    Chairman and Chief Executive Officer, AT&T, USA

    1982, began career with Southwestern Bell Telephone; 2001-04, Senior Executive Vice-President and Ch...

Moderated by

  • George F. Colony George F. Colony
    Chairman of the Board and Chief Executive Officer, Forrester Research, USA

    Graduate, Harvard University. Founder, Chairman of the Board and Chief Executive Officer, Forrester ...

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