2016 digital consumer trends

The on-demand economy, incumbent acquisitions of tech players, and security are driving the modern evolution of business.

Kleiner Perkins Caufield Byers better known as KPCB focuses on early-stage ventures. They released the Internet Trends 2016 report on June 1, 2016. This report highlights global and macro business trends. KPCB identified five major growth drivers over the past two decades. First connectivity growth is slowing (internet users rose to 3 billion from 25 million in 1995). Second emerging country growth is slowing. Third, government debt is growing (government debt-to-GDP rose to 66 percent from 51 percent in 2000 for 50 major economies. Fourth, interest rates have declined (U.S. 10-year Nominal Treasury yield fell to 1.9 percent in 2016 from 6.6 percent in 1995. Lastly, the population growth rate had declined to 1.2 percent from 1.6 percent in 1995. Adjusting to slower growth and increasing aging populations create opportunities for business that fearlessly innovate and continue to improve efficiency.

Three reoccurring trends are worth exploration: the on-demand economy, incumbent partnerships with non-tech firms, and security.

On-demand economy

Generation Z is comfortably managing five screens at once, and Millennials are savvy with two screens. This shift is apparent when observing the video evolution over the last 90 years. The traditional TV dominated the buzz in 1926. On-demand, DVR, and streaming was all the rage erupting racing out of 1999. Semi-live started with Snapchat stories in 2013, creating a culture of tune-in or miss out. By 2016, consumers were focused on real-live with the emergence of Periscope and Facebook Live – on demand on your terms. The customer’s usage, sophistication, and interest in technology continues to grow rapidly. This on-demand economy is relying on smartphones as users tell stories with their cameras for This trifecta of communications, video, and platforms are changing how consumers view brands. Twitter, Pinterest, and Instagram are losing to image-based platforms such as Snapchat and OfferUp.

The lesson: Image-based platforms are dominating engagement.

Find a partner

Incumbents are increasingly putting their bets on technology companies to fuel short-term top-line growth and long-term bottom-line growth. KPCB reported that non-tech acquisitions had increased 2.6 times since 2012, totaling $28 billion in 2015. The pace of acquisitions has been explosive.

Avis founded in 1946 obtained Zipcar, the world’s largest car sharing, and car club service.First Data a leader in payment processing was established in 1971 and purchased Perka a cloud-based customer loyalty solution that connects businesses to their customers using location-based apps and mobile phones. First Data also acquired Clover, a cloud-based Android point of sale (POS) platform. Nordstrom founded in 1901, acquired HauteLook a member-only shopping website offering flash-sales and limited-time sale events with top brands. Incumbent players are increasing revenue with tech firms – the trend is contagious.

Non-tech incumbents are also making investments in technology companies and their mobile applications.

Overvaluations exist amidst internet startup companies. However, there are also pockets of undervaluation. The best rule of thumb for determining internet company valuations is to use the present value of future cash flows.

The lesson: Non-tech incumbents must align with a tech company to be competitive.

Data-as-a-Platform and security

As data explodes – data security concerns explode.

The debate over data private as caught fire through 2016. The spark started in February 2016 with the Apple vs. FBI, when the FBI claimed it needed access to a suspect’s phone who committed the San Bernardino, CA shooting. That request, however, was later denied by a New York federal judge. Then Microsoft in April 2016 fought for the right to inform customers after law enforcement requested their data (emails or other).

Senators Richard Burr and Dianne Feinstein, the Republican and Democratic leaders of the Intelligence Committee, fueled this frenzy by introducing the Burr-Feinstein Anti-Encryption Bill. The outcry was immediate. Kevin Bankston, the director of the New America Foundation’s Open Technology Institute, was quoted in Wired with “I gotta say in my nearly 20 years of work in tech policy this is easily the most ludicrous, dangerous, technically illiterate proposal I’ve ever seen.” Overall the bill was not well received.

The lesson: As data volume expands so does your company’s security risk, plan accordingly.

The bill is mostly dead, with one hand reaching from the grave – as of today, the Burr-Feinstein Anti-Encryption Bill has no support. Let’s all sleep a little better knowing that encryption still matters (thanks, WhatsApp). The need for on-demand services, creating partnerships, and building diligence around security will continue to be global trends into 2020.

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Peter is a technology executive with over 20 years of experience, dedicated to driving innovation, digital transformation, leadership, and data in business. He helps organizations connect strategy to execution to maximize company performance. He has been recognized for Digital Innovation by CIO 100, MIT Sloan, Computerworld, and the Project Management Institute. As Managing Director at OROCA Innovations, Peter leads the CXO advisory services practice, driving digital strategies. Peter was honored as an MIT Sloan CIO Leadership Award Finalist in 2015 and is a regular contributor to CIO.com on innovation. Peter has led businesses through complex changes, including the adoption of data-first approaches for portfolio management, lean six sigma for operational excellence, departmental transformations, process improvements, maximizing team performance, designing new IT operating models, digitizing platforms, leading large-scale mission-critical technology deployments, product management, agile methodologies, and building high-performance teams. As Chief Information Officer, Peter was responsible for Connecticut’s Health Insurance Exchange’s (HIX) industry-leading digital platform transforming consumerism and retail-oriented services for the health insurance industry. Peter championed the Connecticut marketplace digital implementation with a transformational cloud-based SaaS platform and mobile application recognized as a 2014 PMI Project of the Year Award finalist, CIO 100, and awards for best digital services, API, and platform. He also received a lifetime achievement award for leadership and digital transformation, honored as a 2016 Computerworld Premier 100 IT Leader. Peter is the author of Learning Intelligence: Expand Thinking. Absorb Alternative. Unlock Possibilities (2017), which Marshall Goldsmith, author of the New York Times No. 1 bestseller Triggers, calls "a must-read for any leader wanting to compete in the innovation-powered landscape of today." Peter also authored The Power of Blockchain for Healthcare: How Blockchain Will Ignite The Future of Healthcare (2017), the first book to explore the vast opportunities for blockchain to transform the patient experience. Peter has a B.S. in C.I.S from Bentley University and an MBA from Quinnipiac University, where he graduated Summa Cum Laude. He earned his PMP® in 2001 and is a certified Six Sigma Master Black Belt, Masters in Business Relationship Management (MBRM) and Certified Scrum Master. As a Commercial Rated Aviation Pilot and Master Scuba Diver, Peter understands first hand, how to anticipate change and lead boldly.