As computers and machines get smarter, many businesses that are successful today are going to have a harder time thriving tomorrow. Business owners need to think about the future now before they are overtaken by it.
In his new book, “Average Is Over,” George Mason University economist Tyler Cowen discusses what a future economy dominated by intelligent machines and increasing income inequality is going to look like.
We’ve broken out a few of the most important lessons that will help business owners figure out how to adapt and survive.
Being able to add value to computers is the way forward.
There are going to be a limited number of ways to succeed in the future. If your company consistently benefits from technology and is able to add value to what computers already do, you’re in good shape.
If a computer does things better without you, Cowen says, then it’s unlikely the business will survive. Travel agencies are a good example of a field that machines have taken over.
And the worst position to be in, Cowen argues, is one where computers are helping people in China and India compete against you, areas like telemarketing, manufacturing, and document review.
Marketing is going to be more important than ever.
Income inequality is already rising, and Cowen argues that the gap will increase further as computer and technology skills become more valuable and more job functions are automated. That means that a relatively small number of people with big incomes are going to be doing a lot of the buying of consumer goods.
Excellent marketing and sales skills, particularly the ability to connect and communicate well with individuals, will be more valuable than ever.
“Despite all the talk about STEM fields, I see marketing as the seminal sector of our future economy,” Cowen writes. “It might appear that a masseuse is not much affected by computers, at least provided you are sceptical about these robots that now offer massages. Nonetheless, masseuses increasingly market themselves on Google and the internet. These masseuses fit the basic model that favours people who can blend computer expertise with an understanding of how to communicate with other people.”
Targeted deals are the future.
Increasingly, consumers are willing to give up some privacy in return for lower prices. Cowen gives the theoretical example of a shopping cart that uses GPS to track consumers’ movements through the store and uses cameras to see reactions to products and deals in order to adjust pricing.
Pilot programs like this are already underway, and small businesses that are early adopters may be more successful at convincing people to make the trip to the store rather than ordering everything online.
“Companies have discovered that if the first product seems cheaper than expected, the customer is more trusting — and more willing to spend — for the duration of the shopping trip,” Cowen writes. “So if the intelligent machines spot you coming in the door and heading to the gourmet chocolate, maybe there will be a quite temporary sale, communicated by electronic sensors.”
Personal service is becoming more important.
One of the fastest growing parts of the economy is surprisingly low-tech. Job functions like chauffeur, gardener, and assistant are becoming more important because an increasingly wealthy group at the top can afford them. Companies that do a great job of providing personal service can capitalise on the trend.
“At some point it is hard to sell more physical stuff to high earners, yet there is usually just a bit more room to make themselves feel better. Better about the world. Better about themselves. Better about what they have achieved,” Cowen writes.
More high earners means an increasing demand for high-end service. Companies that can truly create a positive and personalised customer experience, either by selling personal services or providing generally excellent customer service, can expect better business in the future.
Hiring and empowering good managers will set businesses apart.
“If you have an unusual ability to spot, recruit, and direct those who work well with computers, even if you don’t work well with computers yourself, the contemporary world will make you rich,” Cowen writes.
Managers are actually going to be more important than ever in the economy of the future. Businesses that enable them to do their jobs, making people more efficient and stringing together distant teams, are going to benefit as other businesses fall by the wayside.
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