The future of business: algorithmic and platform-defined [Gartner]

The future of business is algorithmic and platform defined. That was the message from some of Gartner’s most senior analysts at the 2015 Gartner Symposium and IT Expo, currently underway in Cape Town.

To some extent, the technology research house points out, that’s always been the case. After all, what is Coca-Cola’s famously secret recipe if not an algorithm? What’s happened over the past few years though is that algorithms have become increasingly sophisticated, allowing businesses to move from a space where they ask customers what they want to one where they understand what customers are actually doing and can adapt accordingly.

As Gartner Senior Vice President Peter Sondergaard notes, the businesses that are capable of making those changes will be able to fend off upstarts. Without that willingness to change, companies run the risk of dying out before they’ve even figured out what’s happening.

It’s worked for the likes of Netflix, Amazon, and Waze, but they’re just the most visible examples. Algorithms are set to go beyond business and become a pervasive part of our daily lives.

The algorithms we interact with (knowingly and unknowingly) on a day-to-day basis are also set to get a lot smarter, learning and adapting on the fly. That in turn means that the rate of change, both in business and technology, will accelerate at rates faster than the world has ever seen.

Entering the post-app era

In fact, it’s already happening. If Gartner is to be believed, then apps — the most disruptive thing to happen to the consumer tech space — are about to be disrupted. According to the research house, we’re about to enter the post app era. By 2020, it says, smart agents such as Google Now, Siri, and Cortana will facilitate 40% of interactions. In the same year, it predicts, Microsoft’s strategy will be centered more around Cortana than Windows.

That’s because, far more that traditional apps, these smart assistants are fueled by algorithms that can learn from experience. They’re context-aware and capable of providing incredibly personal experiences.

The ability to provide those experiences depends, at least in part, on trust. And a large part of that trust comes from making feel comfortable that they’re secure using those services.

Building a culture of ‘relaxed awareness’

As Sondergaard notes, the new concerns when it comes to security in the tech space “are not just protection, but also safety and quality.”

In the past year or so we’ve seen headline after headline surrounding major security breaches at large tech companies. Small wonder then that Gartner predicts that most big companies will spend 30% or more of their IT budgets on security by 2017. At the same time, nearly 10% of IT staff will be dedicated to security.

But that money and those staff are meaningless if companies still view the biggest security threats as external ones from malicious players. That’s a very old-school approach and neglects the amount and power of the technology people have in their hands today.

It’s the kind of thinking that led people to assume that there had been an external hack when the New York Stock Exchange, Wall Street Journal, and United Airlines went down on the same day in June this year. It turned out that there had been a large-scale systems failure, largely because the systems were too complex.

Gartner’s advice to companies is to make sure that their security systems are as simple and effective as possible and to “act more like an intelligence officer than a policeman”

Given that the average piece malware lies dormant for up to seven months before it is activated, that advice is as salient for external threats as it is for internal ones.

When it comes to the latter, Gartner also suggests building a culture of “relaxed awareness”, which gently pushes people towards the right safety practices and rewards them for sticking with those practices.

Economics of connections

Trust isn’t just about security though, it’s also about creating a sense of openness.

As Gartner analyst and author Frank Buytendijk notes, being open in business means that “Allow your connections to interact and multiply without you”.

He points to the example of Tesla opening its patents on superchargers and Goldman Sachs releasing some of their trading algorithm. Counter to traditional business sense, he argues, these companies opening that information up actually makes that information more valuable.

“Every organisation has some form of algorithm or data that is more valuable shared than kept to yourself,” he says, adding that “when you give you open yourself up to new possibilities”

That’s just about sharing data though, extend this sharing to the data that comes from things, then the game changes completely. Sensors on ships can, for instance, provide valuable data around ocean temperatures.

Businesses therefore have to ask themselves what sensors are out there that they can leverage and take advantage of.

When you give to others and take from others, Buytendijk points out, then the number of connections multiplies.

A great example of this is Discovery’s Vitality wellness programme, which rewards people for leading a healthy active lifestyle and encourages people to share their data using personal technology. By rewarding people for sharing that data, it also encourages sales of the technologies it accepts data from, feeding into a virtuous cycle.

Thing is, you can’t achieve any of that if you’re unwilling to give up control. If you try to do things the way you’ve always done them because “that’s how it’s always been done”, you’re going to run into serious obstacles.

The point is, there are people who can do things better than you; so why not let them? And at the same time why not allow people to tap into your expertise too?

If letting go is going to have its desired effect though, you have to build up trust. No one is going to let you use their data, for instance, if they don’t trust what you’re going to do with it.

It’s all about building trust and verifying. Algorithms such as those used by Amazon allow it to detect exactly how much trust it can place in its customers.

But algorithms don’t work if they don’t include human context. Without that human context, you risk people losing trust in your product and company. Uber learned that lesson the hard way in December 2014 when a lone gunman held 10 people hostage in a Lindt Cafe in Sydney. As people tried to leave the city centre, demand for the ride-hailing service, shot up causing its surge-pricing to kick in.

The company was pilloried, all because it forgot to build that vital human context into its surge pricing algorithms.

The future of business may be algorithm-driven, but they have to be algorithms that serve people rather than make slaves of them.