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WIRED Smarter 2018: 5 key takeaways

Whether in energy, retail or finance, the world of business is being disrupted. The Reference attended WIRED Smarter Retail in London to hear from those behind the disruption and share their perspectives on innovation and transformation in the modern economy.

Man or Machine? Both!

Federico Marchetti, founder and CEO of YOOX NET-A-PORTER-GROUP (YNAP), taught us that in the age of AI and advanced automation the human touch is more important than ever before. He already knew back in 1999 when he founded YOOX that he had to strike the right balance between Man and Machine. This strong belief is reflected in the choice of its name. The human X and Y chromosomes embracing the binary 00 of code: YOOX. 

Currently, many processes from YNAP are fully automated: not only is the webshop fully personalized, but in the warehouse packages are already automatically selected and conditioned downstream. And there is more: it goes without saying that a luxury brand has top-notch stylists, but they put this clever at work by using Artificial Intelligence to feed their insights to the personal shopper offering of YOOX. It is so easy to imagine how YOOX could take it even so much further. “It will probably be easier to let a machine do everything in the future. It’s a choice to stop ourselves from allowing technology to replace what we truly value,” Federico Marchetti says. “Luxury cannot be exclusively AI created, 3D printed and drone delivered. The human touch will always be important.” That’s why YNAP has workers interacting with customer orders at the very last stage of the process. They put the silk paper in every box and make a nice bow around it. 

Marchetti ends his session with making a prediction: as machines have an ever growing influence in our daily lives, one day a label will no longer have its country of origin, but will simply state: Made By Humans.

frederico-marchetti-wired

AI is here (for the winners)

We already briefly touched on Artificial Intelligence in the success story of NET-A-PORTER, where a selection robot picks out the most suitable items for planned activities. This means the items are being chosen because they fit the customer’s tastes and activities, but they also match with the location and the type of trip. And this only makes sense. Research studies have shown that customers are more likely to buy from (r)etailers that go for the personal approach and know the kind of products they like. This is even more applicable in the demanding luxury sector. 

Next up in WIRED Smarter’s impressive line-up is Kerry Liu, co-founder and CEO of Rublikloud. He states that few industries have gone through the same level of transformation as retail did over the last 10 years. The dominance of data-driven retail platforms such as Amazon and Alibaba have been creating a vacuum that forces traditional retailers to either embrace new technologies or fall into irrelevancy. This belief is also shared by Richard Potter, CEO of Peak, a retail startup that enables businesses to put AI at the heart of their operations to boost revenues and profits. He claims that AI-powered can show for a 30% faster revenue growth and 50% higher profit margins. He backs it up by presenting some figures for Footasylum: 28% uplift in digital campaign revenues, 74% reduction in cost per social click and 25% reduction in stock days. Peak managed to do so by developing an AI system that leverages your data working across multiple business functions, enhancing processes and making your other business systems – from CRM to ERP – work smarter. This product connects with other systems because traditional ERP systems, data silos and data warehouses are not built for AI. It focusses on revenue growth on the one hand through a.o. hyper personalization and a recommendation engine and supply chain optimization on the other hand. Think of warehouse optimization, stock allocation and demand forecasting.

AIS-wired

Kerry Liu shares his insights on prioritizing an AI project. Three elements are important: skill, impact and speed, but he rapidly adds:

“if you want AI to help you win the inflection point, all that matters is speed”. 

Also Florence Diss, Head of Commerce Partnerships at Google, touches the topic by giving the Starbucks example. Data Scientists at Starbucks know what coffee you drink, where you buy it and at what time of day. Paring this with data from millions of other users, along with other correlating data, they have very real and actionable insights and can actually deliver better personalized service to other customers. 

Change? Imagine it forward!

The opening keynote was by Beth Cornstock, Author and former Vice Chair, the first female vice chair at General Electric. She thinks companies often approach innovation the wrong way. They either try to throw money at the problem before it has a clear market, misallocate resources, or don’t get buy in from senior leaders to enact real change. She’s the author of the book Imagine It Forward: Courage, Creativity, and the Power of Change. “You have to imagine a new future that others can’t see, then you have to make that change happen”, Comstock says and she shared 3 ways on how to get there.

  1. Count to three no’s before you feel like you’ve even begun. She pleaded to transform  ‘no’ into ‘not yet’. Like a golden retriever you should keep bringing that bone back, because you’ll have to get past three no’s before you get to a yes.

  2. Tell me something I don’t want to hear. Comstock feels we live in a time of incredible fear of failure – she almost named her book failing forward – and rallies to create a culture of trust where it’s ok to be vulnerable. Challenge people to share something bold. That implies giving yourself and your teams permission. “Stop waiting for somebody else’s permission to act on your imagination. When you tap into your imagination, you see the future unfold”, Comstock says.

  3. Apply the 70 / 20 / 10 principle. When allocating resources, you should apply the 70 / 20 / 10 rule. Spend no more than 70% of your time on the “now”, the tasks that have to get done today, this week and this month. This leaves you a window of time and attention to think about two other future states – the next and the new. “The next” should get 20% of your time. This is planning for later in the year or next year. The other future state, “the new” should get 10% of your time. “Getting out of the office is a good start here”, Comstock says. “Seek out new ideas, identify emerging trends and think about how they might apply to your business.”

beth-comstock-wired

Shape your organization

We also had Amazon’s CTO Werner Vogels on stage sharing his views on how customer centricity drives innovation. A summary on Amazon’s culture:

  • Make investment decisions in light of long-term market leadership considerations rather than short-term profitability considerations
  • Learn from both your successes and failures: “We will make rather bold than timid investment decisions. Some of these investments will pay off, others will not, and we will have learned a valuable lesson in either case. It’s not an experiment if you already know what the outcome will be. Innovation should be part of your DNA. However, try to reduce the cost of failure. Don’t forget decisions are most often two-way doors – you can mostly always back out again, but if you wait too long the opportunity might have already passed.”
  • Also focus on things that will never change. Be stubborn on the vision, but flexible on the details.
  • Focus on the narrative: prefer a 6 pager over a PowerPoint presentation
  • Be an extremely customer-centric company and work from the customer backwards. We start by writing a press release, because it forces you to focus on the essence and the added value. Then write the FAQ and the rude FAQ, as it will reveal the pain points. Only then you can start defining the user interaction and only the last step is writing the user manual.
  • Work in small teams

3 perspectives on design

  • Florence Diss, Head of Commerce Partnerships at Google: we build an ecosystem for partners to leverage Google Pay through an API layer. And don’t forget: sometimes the best payment solutions are simply invisible. Think of Uber as a great example, but also the smart integration of Google Pay in the Starbucks app to refill your Starbucks Card balance from inside the app brings a lot of added value both for Starbucks and its customers.

  • Martin Harbech, Group Director of Facebook pleaded for zero friction future, as it is the single biggest threat to your business.

  • Emilie Colker, Exectuive Director at IDEO, talked about the future of design in retail and emphasized the importance of some major shifts like “from ownership to access”, the circular economy and “from competing with retailers to competing with entertainment” as the experience becomes so much more important. The difference between shopping and buying is bigger than ever before. The latter is now all about transactional and should be based on convenience and efficiency. This gives more room for building experiences that extend your brand helping people engage with your product. Do so by reinventing where people come from and what their roles are. Look at Nespresso hiring bartenders, but always create authentic relationships.

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