The David and Goliath story is one of the best-known stories in history. A shepherd boy – slight and barely armed – taking on the large, ferocious and well-armed champion warrior. The outcome seemed pre-ordained. After all, one of them had all of the advantages. The other seemingly had no advantages at all – merely a stick, a slingshot and a few stones.
But what the casual observer would miss is that it was the shepherd boy who in fact was the truly advantaged one. Unable to rely on mere brute strength or military skill, David was instead forced to develop a nimble ability to sling stones with deadly precision. And therein lay his great advantage. Because once he realized how to capitalize on his “disadvantages,” it became clear that these were actually killer advantages in disguise (quite literally).
When it comes to unlocking the full value of their data, European technology companies are currently grappling with their own “David Dilemma” – how do you turn what is seemingly your greatest weakness into a tide-turning strength? They have strengths, but a key one (restrictions on how companies can use data under GDPR) is largely being ignored because it is masquerading as a weakness. What can they do? Embrace their inner David and turn this ostensible weakness into an advantage – and exploit it to its fullest.
Data Driving the Future
It is a truism to say that technology has changed our world. But the world of tomorrow will be overwhelmingly powered by technologies that require more than just clever software – they’ll require unprecedented, massive amounts of data.
Key commentators, such as PwC, predict substantial economic gains generated by artificial intelligence (AI) in business. And machine learning (ML) is already at work in vital applications such as radiology.
At the heart of all this lies data. ML and AI literally ‘feed’ on data. Without comprehensive, historical, complete and relevant data, the quality and application of both ML and AI is severely compromised. Without good data there is no effective personalised customer journey, no tailored offering, no genuine omni-channel service and, for an increasing number of companies, perhaps no business at all.
Many organisations have vast swathes of data ideal for use in AI and ML. But this proliferation of data, and uses of data by businesses, has understandably sparked massive concerns among consumers regarding how companies are using their personal data. The General Data Protection Regulation (GDPR) was put in force in Europe just last year to address these concerns and has transformed – some would say ‘dramatically restricted’ – the way European businesses handle data.
But outside of Europe the picture varies. Some countries have, or are embracing, GDPR-like laws. Others, most notably China and the US, allow more latitude in companies’ use of personal data. It’s not a coincidence that these countries are largely seen as winning the AI and big data race.
Many therefore assume that this difference in data handling will create an unfair playing field. And it could. Will the less restricted ability to leverage personal data make China and the US the Goliaths of AI, ML and related data analytics technologies? Will Europe be left with nothing but a slingshot and a few stones? Perhaps. But it really all depends on what European companies do with that slingshot and those stones.
At first glance, it indeed looks as though greater freedom with data gives companies outside of Europe a big advantage in the “big data and AI race.” And if the situation was as binary as it seems at first blush, the ability of some companies to fully leverage personal data, while European companies are more constrained by regulation in doing so, would give the former a huge head start in AI and ML applications. But is it really that simple? Is GDPR really pushing Europe into becoming a technological backwater?
No, it’s not. Not if European companies can solve their David Dilemma.
Make your disadvantage your greatest advantage
David at some point clearly realised that fighting a giant with traditional means of sword and spear was futile. And, more importantly, he realised that his skills in accurately slinging stones from great distances – deemed laughable by Goliath – was actually a great advantage as he could fell the giant before they were even close to each other. He then capitalized on this realization to deadly – and historical – effect. European businesses can do the same, in two ways.
- Get more data by being more trustworthy. If there’s one thing business needs as much as raw data, it’s customers. And customers all over the world show a marked preference for companies that can be relied on to handle their data properly. For example, surveys consistently show that the overwhelming factor for customers deciding whether or not to share data is how much they trust the receiving organisation. In that sense, regulation by GDPR is a seal of approval.
And most customers are comfortable sharing the very data that most companies want – and that they need in order to thrive – as long as the data is handled transparently. Whatever the local regulation, customers worldwide value transparency, privacy and anonymisation. And they reflect this in their behaviours, including who they share data with. In that sense, GDPR compliance and innovation designed with GDPR (or similar) privacy standards in mind is a seal of quality for customers.
- Embrace the fact that GDPR is forcing you to build privacy-enhanced technology. The existence of GDPR is forcing European businesses to develop privacy-enhancing means of handling data in a way that is simply not being required of their competitors outside of Europe, particularly in China and the US. Not yet.
And that is the surprising source of European companies’ strength and advantage – the very fact that they are being forced to innovate under these strictures. Because, worldwide (including in the US), privacy regulation is becoming more stringent. More GDPR-like, in fact. But, rather than being beaten by the less well-regulated ‘big boys’ outside of Europe, companies that can optimise their data and develop privacy-enhanced innovations now, within the parameters of GDPR, will be well ahead of the curve when the rest of the world catches up. And, in the meantime, they are building and owning what will in due course become very valuable intellectual property that their non-European competitors will look to with envy.
These are just two of the ways that the discipline that the GDPR imposes on European companies could well create the circumstances by which those companies become leaders in big data.
David didn’t choose to use stones and a slingshot rather than a sword and a spear. He had to. Nature didn’t give him the stature to do otherwise. But, finding himself limited as he did, he nonetheless took full advantage of the situation and used the weapons at his disposal to easily conquer the giant warrior.
Similarly, European companies could find themselves nudged by the GDPR into finding their own slingshot and stones (in this case, more (and higher quality) data and better (and more innovative) tools for utilizing that data). And this could easily happen before companies elsewhere even realize that they’ve been left behind. European technology companies just need to recognise this hidden advantage – and aim right between the eyes to capitalise on it.
Reconnecting the retail brain: learning from the octopus
By John Malpass, Retail Consultancy Practice Lead at Teradata
An octopus has nine brains: one for each tentacle and plus one at the centre. Each tentacle can react super-fast to local stimuli to grab opportunity, hide or defend itself and the wider body. Many of these reactions are instinctive. But the central brain is essential, monitoring and analysing information from across the organism, and taking crucial decisions that ensure survival. It controls the whole body, makes strategic decisions, and ensures coordinated action by all the tentacles. The octopus’ seemingly miraculous speed, shape-shifting and camouflage capabilities, controlled by its central brain, are themselves a useful analogy for the future of retail.
Retailers need to adopt a similar approach leveraging enterprise-wide data and analytics not only to react fast at the edge, sensing and responding to changing customer behaviours and local market dynamics in each individual store, whilst also constantly informing strategic and future-focused decision-making.
As we’ve seen, for too many retailers brain and body have become separate, with data informing discrete projects and engagements but not used to transform entire business processes. Disconnects, friction and manual interventions in processes have all been highlighted in the current crisis, but they have been slowing things down and constraining value delivery for decades. To survive, the retailer of the future will have to become agile and able to respond to rapid and constant change. Just like the octopus, some responses will be automated; analytically enabled, managed and executed, while the central brain co-ordinates activities, thinks ahead, constantly learning and adapting to its environment.
The octopus has evolved over millions of years to develop and adapt its highly sensitive response capability. Retailers have had a few weeks to discover the benefits of a similar approach. Siloed solutions and manual processes cannot cope with the speed and scale needed to survive. As many will have experienced over the last few weeks, simply reporting what has happened can involve huge effort for little reward. Data is an asset, but it must be leveraged to deliver business advantage if it is to be valued. In later blogs I’ll demonstrate how data adds value to specific functions within retail, but for now I’ll share one example of how data can transform a process to create value on the shop floor.
In store bakeries are popular with customers, driving traffic, sales and margin and larger customer baskets. But margin can quickly disappear if too many or too few croissants are baked. One major supermarket, with over 400 in-store bakeries, found it had over 400 different ways of deciding how many items to bake during the day! To reduce waste and increase availability the retailer’s ‘central brain’ built a predictive model using data collected from across the organisation. Running the algorithm for each bakery with local, real-time data on current trading conditions automatically calculates exactly how many croissants bakers should make in each store and when to bake them. This one algorithm has delivered over 10% in additional sales.
This is the sort of transformation that retailers must embrace – not only knowing what customers in each store want but acting on that knowledge by innovating a way to better meet their needs. Growth-orientated retailers tell us they have three strategic priorities: a hyper-personalised, frictionless customer experience across all channels; more relevant localised and personalised Customer value propositions; and agile, cost efficient operations that respond to the demands of the modern digital economy. All demand reliable, trusted and real-time data at every point. The retailer of the future will run more than 50 million queries per day. That scale of data: every product in every store, every customer through every channel, 24/7, 365 days a year, means that automation is the only way to act at the speed needed to compete.
Automating the routine, while managing exceptions and alerts, creates time and space for more strategic analysis so retailers can switch from firefighting to scenario planning and simulation. This literal mind-shift opens the door to more strategic and forward-looking analytics and the use of big data to create new added value activities. Using data to define tomorrow’s opportunities and strategise the best next steps will build an agile business capable of responding to the demands of the modern digital market.
The global pandemic has been a harsh wake-up call for many in retail. Creaking systems, siloed and hard to reach data, and intensive manual processes have all been strained to breaking point. Those that were already set up and using enterprise-wide analytics will have fared better, but even those who have not taken the first steps should now see the urgent need to use data to transform their businesses. Luckily, evolution in retail does not need millions of years, and in the next few weeks I’ll outline how individual roles and functions can rapidly use data to change the way they do business. And you don’t need nine brains to do it.
The rise of nomadic work: how to turn your remote team into a creative force
By Paige Erickson, EMEA MD, Workfront
During the first stage of the lockdown in the spring, almost half of Brits worked remotely, causing businesses to completely rethink their working structures. Employees too have re-examined the traditional working day and now as many as 72 per cent of UK employees want to continue working from home, at least part-time. They state that working remotely helps them increase productivity and offers a better work-life balance. This sentiment from workers coupled with strong financial motivation for companies to continue to support distributed workforces, it seems unlikely we’ll ever return to the office in exactly the same form as before Covid-19.
In fact, for many, the office nine-to-five is already in the past. Instead, the pandemic has accelerated the trend of “nomadic work”, where a healthy percentage of employees can work from absolutely anywhere. This helps workers find the balance that works for them, whether that’s sometimes in the office, a couple of days from home or even working while travelling.
Covid-19 has proved that where we work isn’t as important as we thought. Instead it is how we work, and the outcome of that work, that’s critical.
A moment of shock-change for business
The pandemic has thrown companies into a moment of shock-change, as they have had to determine nearly overnight how to support a now-remote workforce. How, when and where we work changed, making maintaining productivity on the right work in this new environment incredibly difficult.
Realigning on what it means to be productive – and how to measure that productivity – is now essential for companies. The notion of a structured, on-premisis workday where activity could be observed and continually calibrated is a thing of the past. And yet, in order to navigate the current and future state to positive business outcomes, this new distributed workforce must function as an interdependent web that consistently generates not just output, but focused and strategic outcomes.
We need more than just communication tools
For some businesses the move to remote working was a new concept, and they experienced a sudden, greater dependency on technologies they had not typically used before. Zoom, Teams and Slack have become defining tools amid the pandemic, with many individuals using them both to continue business operations and socialise with colleagues they otherwise could not see physically. It was a fast and simple way to connect colleagues who were suddenly working in isolation.
When the pandemic struck, the question most leaders focused on was simply: “how do we keep everyone talking?” And while that was an important first step, the fact that the workforce could communicate didn’t necessarily mean they had the support they needed to engage fully in the right work.
Strategic work needs more than just communication, it requires constant connection between the day-to-day work (wherever it happens), and the prioritised objectives of the business.
Keep working towards the same outcome
Present and future work requires that companies meet employees where they are, with the right processes and technologies to support them in becoming, and staying, engaged with both each other, and on work aligned to strategic objectives.
Collaboration technologies have seen a huge surge in uptake as leaders look for ways to keep their newly nomadic workforce productive. And while most collaboration tools can help teams coordinate and complete tasks and projects, without broader connectivity to systems, teams and departments across the rest of the business their impact is limited.
Tasks and projects themselves do not exist on islands. They require budget and personnel data from financial and human capital management systems to properly allocate and manage resources. Many projects require compliance oversight from legal and regulatory departments. Work also happens in specialised applications such as Jira, ServiceNow and Adobe.
Unless collaboration tools can integrate with the data, and processes happening in those and other applications, work stays siloed, and employees and leaders have limited context and visibility into why and how work is – or is not – progressing toward the right outcomes.
Work management engages your team, wherever they are
Work management practices and platforms are fundamentally different to collaboration applications. Instead of focusing solely on connecting people and teams, they are designed to connect strategy to delivery. This shift in approach absolutely requires that nomadic workers are outfitted with the right communication and collaboration support, and then goes several steps further.
Enterprise work management platforms also integrate work and data across people, systems and departments, providing context and connection for frontline workers, and visibility and navigation for leaders. Wherever they’re working, each person has what they need to do their best work, and the assurance that their work is making an essential contribution to a larger whole.
Harness the creative spark of your nomadic workforce
The pandemic meant businesses had to take a deep look at the way they work and operate to support their workforce from home. Now that we know nomadic working is here to stay, organisations must think beyond just the digital systems they need to get staff talking. It’s time to rethink the best way to build a truly nomadic working structure for your enterprise.
We’re in a time of workplace transition. ERP systems previously transformed how enterprises manage corporate resources and CRM solutions helped businesses find value in customer data. Now, work management platforms are set to transform how companies manage work — including nomadic workers — to become creative forces and give enterprises a competitive advantage.
Consumers in the COVID era can learn to embrace strong customer authentication
By Ed Whitehead, Signifyd managing director, EMEA
The changes that COVID-19 has caused in rapid succession make it hard to slow down and think about just how to approach the retail and payments landscape and a world that will never be the same.
But it is important for retailers and financial institutions to take a breath, think about where consumers are headed and come up with a strategy to take your enterprises there in time to meet them when they arrive. Granted, all this is going on in the midst of great disruption in the world of online payments.
First, ecommerce sales have accelerated at an unprecedented rate. When the World Health Organisation in March declared a global pandemic and government began ordering non-essential stores closed, consumers turned to online shopping for necessities and nice-to-have items.
Ecommerce sales in Europe peaked at 70% year-over-year at the height of online buying during the pandemic, according to Signifyd Ecommerce Pulse data. With non-essential stores reopening and with consumers less inclined to stockpile, online buying has cooled, but ecommerce spending in September remained at double their year-ago figures in some key verticals, according to Signifyd Ecommerce Pulse data.
That shift was unforeseen before the pandemic hit. But another disruption was long-anticipated and human-made. By the end of the year in most of Europe, merchants and banks will be required to adhere to the payment regulation known as PSD2 and it’s requirement for Strong Customer Authentication.
And while the UK has pushed enforcement of the regulations into 2021, the earlier enforcement deadline will apply to UK merchants who want to sell into the rest of Europe.
Interestingly enough, most of the worry over SCA has focused on whether merchants were ready for the change. But financial institutions also have work to do to prepare for SCA, both to serve their consumer account holders and to process transactions from their commercial customers, such as retailers. And while conventional wisdom has dictated that financial institutions are in a better position to offer SCA than are many retailers, a recent survey by Signifyd indicates that assessment might be overly sanguine.
Survey shows financial institutions need to reach out to customers
The September survey of 1,500 UK consumers found that 41% of respondents had encountered extra steps and complications while accessing their banking accounts in the past year. More than 37% said they had been unable to complete a financial transaction in the past year due to new security factors and 46.5% said they were very or somewhat likely to give up on a transaction that requires two-factor authentication.
Not very heartening results for institutions facing a requirement that customers be authenticated by two of three factors:
- Something the customer has (such as device ID).
- Something the customer knows (such as a one-time password).
- Something the customer is (such as a fingerprint or other biometric trait).
Part of the problem could be customer education and communication — or the lack of it. According to the September survey, 74.3% of consumers said they were either not entirely sure how SCA will affect them (34.3%) or that they were not at all aware of SCA and how it will change transactions (39.1%).
These worrisome findings actually point to an opportunity for financial institutions and retailers. JP Morgan notes that with ecommerce sales rising so dramatically, an increasing number of consumers are becoming familiar with two-factor authentication.
Signifyd’s own data shows a sharp increase in the number of online shoppers who had never or rarely shopped online before. The number of new customers buying from merchants on Signifyd’s Commerce Network, for instance, more than doubled in May, compared to pre-pandemic figures. (Signifyd defines a new online shopper as a customer who has not made a purchase from the more than 10,000 merchants on its global network for at least a year.)
The increase in the number of new shoppers arriving online has slowed, but it is still well above a-year-ago figures. And about half the new users trying online shopping return for multiple purchases within 30 days, indicating they are developing new digital habits.
That means banks and merchants have an opportunity to help these new consumers become accustomed to security safeguards like SCA even as they are getting used to shopping online in general. When done right, this early consumer education will ensure that these new shoppers and bank customers will be comfortable with SCA, given that it’s the way they’ve shopped and banked online since the beginning.
New online customers create new opportunities for merchants and financial institutions
So, online transactions are exploding. Consumers who eschewed ecommerce shopping before are becoming regular online shoppers. All good news. But what should retailers and financial institutions be doing to take advantage of the good news — and to make sure that those new online users become loyal customers.
Getting customers comfortable with transacting in the SCA era, of course, is just the beginning. Retailers and bankers want customers to be delighted with their online experience, a standard that is a few notches above “comfort.”
SCA requirements present an opportunity for retailers to fortify their fraud protection with state-of-the-art, machine-learning systems that will provide a better customer experience today and position them to accommodate future changes to payments regulations.
The trick will be to offer a friction-free customer experience while still protecting the enterprise — a feat that will require merchants and financial institutions to look at state-of-the-art technology to power their SCA systems. Consultancy CMSPI predicted that merchants could lose £108.1 billion in annual sales because of new SCA rules.
CMSPI says the new 3D-Secure version 2.0 that provides the infrastructure for SCA transactions will kill 35% of transactions because of technical problems, declined orders and delays that frustrate customers.
But that assumes retailers don’t turn to innovative solutions that improve the performance of 3D-Secure-powered payments systems. The tools are out there as technology companies have been developing solutions to streamline SCA and make the process far more efficient.
Long-term steps for building loyalty among existing and new customers alike
The pandemic and its disruption feel like they will never end. But they will. Retailers will want to be in a position to build on the relationships they’ve initiated with customers before and during the lockdowns and social distancing.
Some of that will be redoubling efforts they’ve made all along. They’ll want to build flawless online experiences. They’ll want to provide intuitive navigation and enhance the customer experience with engaging content, precise personalisation, invaluable customer support, seamless checkout and instant order confirmation.
Beyond that, it will be important that financial institutions and retailers to clearly communicate with their customers so that they know the rationale for SCA and understand that it protects all parties involved in a transaction.
Automated systems can help with many of the initiatives that lead to improved customer experience. AI-powered content management systems, personalization engines and automated inventory control can advance discovery and fulfillment performance. Fraud and automated order management systems that instantly determine the most efficient way to comply with SCA requirements can speed checkout and reduce the chance of cart abandonment.
No question, the COVID-induced upheaval can make planning for the future seem a little overwhelming at times. But retailers that find the mental space to plot the future step-by-step will find themselves in a strong position today and in the post-pandemic future that we all look forward to.
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