On FourWeekMBA one of the primary focuses is to dissect important trends happening in the business world, that have the potential to affect and reshape current industries.
Thus, as a business person, you might want to keep an eye on the following trends identified in 2020, and that will continue to affect the business world in 2021, plus additional trends identified as among the ones shaping the business world in 2021-2025.
COVID-19 and the process of forced digitalization
If you are familiar with the technology adoption curve model, you might know how technologies move from innovators down to late majority and laggards. It’s important to remark that the process of technology adoption it’s all but linear. Indeed, there are many “chasms” that technologies have to go through before getting to the point of mass adoptions and those are not guaranteed at all.
The Internet born decades ago, it became commercially viable by the end of the 1990s. Yet as the dot-com bubble of the early 2000s showed, many of the commercial use cases experimented through the initial stage of development of the web were not viable yet.
The companies that came out from that era became dominant players and what we now call tech giants. The combined capitalization of those tech giants has grown exponentially and now the web has come to a point where it was ready for mass adoption, where digitalization of one’s business isn’t an option anymore.
While this process of bringing digitalization to the late majority and laggards would have taken probably another decade, it was all accelerated in 2020, with the COVID-19 pandemic.
The pandemic forced the process of digitalization at the point where being online wasn’t an option anymore, it became the core business model for many companies. Many small businesses had to quickly adapt to this new reality and some of the trends that we saw strengthening at light speed were. At the consumer level some of the key trends were:
- Remote Working.
At the small business and enterprise level some other trends were:
- Digital Marketing.
That called for important business model changes for many.
Let’s see some of the consolidating trends from 2019, the ones that played a key role in 2020, and those that might in 2021.
Uberplatforms: The Platform 2.0
Businesses today aren’t structured to work in teams.Yes, there’s business to business, B2B. But even in a B2B transaction, you’re still responsible. Like if you’re in a B2B lending network, and you’re depending on a third party to vet the authenticity of a particular client that you’re lending money to, and they turn out to be a bad actor and the government comes after you for lending money to a bad actor, you can’t say, “Oops, it wasn’t me. It was someone I trusted in my network.” No, you are responsible. You go to jail, they don’t go to jail.
In the Internet era, platforms rose as the primary catalyzer of business across the web. As a result of designing, building and maintaining a successful platform, those companies became trillion-dollar ecosystems.
A further step we’re going toward, thanks to the Blockchain, is the potential creation of super or uber-platforms. Those that can be built by combining the capabilities of several digital platforms.
Think of the Uber-platform as an enhanced version of a digital platform. This process will be ready and complete when Blockchain protocols will be mature enough to enable new global entities, as key players.
And the interesting point is those companies part of the uber-platform will act as a single, integrated entity, even though they will be independent companies. We can expect this trend to become mature in the next ten years.
Tip: There is no action yet to take on this trend. Yet it is worth to keep an eye on.
Walled gardens are back
As highlighted in the previous paragraph, uber-platforms might become the norm in the coming decade. There is a current trend though, which for the moment is extremely strong. That is about the platforms that dominate the world as of 2019:
Companies like Google and Amazon, when small startups, focused on growth. As they grew to become tech giants they focused on domination. Domination is achieved when the platform is able to cover the end-to-end journey of its users.
Where a company like Google could not offer a full journey from search to the transaction on its platform (due to technology, and business limitations), it limited itself to perform a core function (search).
When Google first launched, its presumably superior search capabilities were used to enable users to get out of walled gardens. Google‘s growth and distribution itself were propelled by deals like AOL (one of the first walled gardens of the Internet era).
Google‘s value proposition was compelling because it enabled users to get out of those walled gardens to finally explore the web. Google has been the “ten blue links” company for about twenty years.
Starting 2015-16, the company finally managed to roll out a set of features intended to cover more and more of the journey of the users. Today those features are the rule:
The occurrence of Google advanced features covering more and more of the users‘ journey, according to SEMRush sensor.
As competition from other platforms grew, and search technology improved exponentially, Google became a walled garden itself.
And Google itself transformed in a walled garden, where users are locked-in and provided as much value as possible within Google search results pages. In this transition, Google invaded several verticals (from Travel to Shopping) to become the primary brand people deal with, from search to (almost) purchase.
Tip: This transition of digital platforms in walled gardens is concerning regulators (we’ll see it in the upcoming trend for 2020) and should concern you as a business owner. Any physical business has a component of digital nowadays.
If that is the case you need to understand how to surf this wave or be swept away by that. One way to take advantage of this trend is to look for microniches:
The several data scandals that happened in the last years have awakened public concern around the safety of digital platforms. Probably one of the most iconic moments that we’ll remind in the coming decades is those of Mark Zuckerberg before the US Congress.
While Zuckerberg well symbolizes the tech monopolists that dominate the world today, he’s not alone there. Today we have more of a tech oligopoly of companies born and matured with the web.
Proposals have been made to break those tech companies. New technologies, like Blockchain, are awakening again dreams of decentralization. However, this is more of a cultural problem than a tech problem.
Where conventional wisdom assumes that the rise of machines is inevitable, the central questions become about when it will happen. Rather than about how and why it should happen in the first place.
Tip: Not much to do here, but to wait and see what will happen, and of course from a personal standpoint make sure to use those digital platforms with more consciousness.
Chinese tech domination
The reasons Chinese tech companies might dominate the Western world isn’t just due to a lack of competition in their own marketplace from outsiders. But also, and especially by the features of the Chinese consumer market, which offers itself as the perfect lab for tech companies to rise and become global players in no time.
In the FourWeekMBA interview with Jeffrey Towson, he highlighted:
China is arguably the world’s most complicated consumer market now.
I mean you can look at 30 million Chinese consumers live in caves. You can find Chinese consumers in the far West where you’ve got several hundred million of them that looked like a different country.
You go to downtown Beijing, you get more billionaires in Beijing than New York City.
So there’s a huge fragmentation and complexity to them and it’s just getting more so because one, there’s a lot of them.
So when you get a lot of anything, you’re going to get a lot of complexity, and two, you still get this big spread between very, very developed market behavior like Beijing and Shanghai and behavior that’s out in the fields and in the mountains.
So it’s just this hugely complicated subject and the only wayyou can really understand Chinese consumers at this point is you have to go small.You have to study micro populations, Chinese moms, sports enthusiasts, inland consumers, dads.You just have to break it up that way and you find out people are very, very different.
Tip: if you have a physical or digital business look for ways to expand it to Chinese consumers.
Strongest trends in 2020
During the pandemic three core trends reshaped the digital world:
- Remote Working.
For instance, Amazon and Google began an arm wrestle for e-commerce domination.
Pinterest and Shopify expanded their e-commerce presents by enabling social shopping features.
The pandemic changed forever the way we work, and while remote working might still be far from being a mature market in terms of potential development, it is indeed among the fastest growing. Zoom with its freeterprise (then turned into a freemium as the company became a consumer business) and it speeded up its growth.
Other companies all jumped in, from Microsoft, Google, Facebook, they all prioritized video conferencing in 2020, as a way to enable remote working. Competition intensified, and companies like Slack had to consolidate with a player like Salesforce, to prevent to be eaten up by Microsoft’s aggressive growth campaign in the business productivity space.
Other core trends also comprised:
- Digital Marketing.
The Tech IPO Frenzy
As 2020 became unexpectedly a favorable year for digital companies, many of those born in the course of the 2010s, and a few others decided to go public.
The pandemic has worked as an amplifier for tech business models. And among those, companies built on top of the cloud seem to be the ones that are growing at a faster speed.
Many tech companies are going public this year to rush to the market in a favorable year for digital businesses. Some of them also quickly IPO to get liquidity due to their cash negative balance.
Whatever the reason is, this is an opportunity to look under the hood of companies that have been build from scratch in the last five-ten years.
Below the list of the most notable companies getting listed, both at consumer and enterprise-level:
Business life in 2021
With the pandemic still hitting the Western world, we can expect those trends above to keep consolidating. Cloud-based businesses will propel AI-based business models.
Indeed, cloud computing proved to be the perfect technological infrastructure for AI companies, as algorithms still require a massive amount of computation, which is made available on the cloud. And companies like Amazon AWS, Google Cloud, IBM Cloud, Microsoft Azure have all served as platforms to enable the birth of SaaS business models now worth hundreds of billions (take Salesforce).
And consumer businesses (take Netflix) taking over the world.
In that respect, cybersecurity became a core priority, as a too centralized web relying on a few nodes (tech giants run most of the web) is extremely vulnerable to shocks and attacks.
In addition, too much centralization also raised the question of whether the web is still sustainable and if it makes sense instead to decentralize through new Blockchain protocols. Indeed, on Monday, December 14th, 2020, Google experienced a multi-service outage that saw many of its free applications down, which was perceived by billions of people across the world, and even if it lasted for a short period of time, it exposed the weakness of a web which was supposed to be decentralized at its core and that instead became too centralized.
So a core problem to solve in the coming years will be that of centralization vs. decentralization of the web. Indeed, with the forced digitalization brought by the pandemic and the massive amount of capital available on the public markets, we might see the further development of companies that will have very weak foundations, ready to expose the whole world to potential and complete shutdowns!