Over the past 20-plus years, digital marketplaces have fundamentally transformed commerce and consumer expectations around the world. But although names like Amazon and Uber have become household names at this point, the evolution of and disruption caused by digital marketplaces is far from over.

In 1995, eBay launched the mainstream digital marketplace movement with its unique online auction model. In 2009, the gig economy expanded and supercharged the digital marketplace concept with hybrid marketplaces that combined specialized products and services across diverse market segments, a la Airbnb, Postmates, Lyft, TaskRabbit and the like. By 2020, marketplaces around the world will account for 40 percent of the global online retail market. But believe it or not, by that time, these dynamic entities could look quite a bit different, both technologically and economically.

To understand the digital marketplaces of the future, it’s vital that we understand the current state of these entities, along with their most pressing challenges and near-term growth strategies. Because there’s been precious little research done into this matter to date, Altimeter Group and Kahuna set out this year to get a handle of both the current state and future of digital marketplaces. Our findings revealed a landscape of formidable players on the cusp of their next evolution and a new chapter for commerce, platforms and experience in the process.

Key findings in our research included:

Marketplaces are bigger than we thought. Of the more than 100 marketplace executives we surveyed, the majority of participants represented high-revenue companies. One-third of those companies generated $100 million or more in revenue in the last fiscal year. Further, 38 percent earned $50 to $99 million and 25 percent claimed $1 to $49 million. The majority of marketplaces (35 percent) reported gross merchandise volume (the total value of merchandise sold to customers through a marketplace) of $500 to $999 million. Only 12 percent reported over $1 billion in GMV. In addition, 25 percent reported GMV of $250 to $499 million and 19 percent reported $50 to $249 million.

Competitive differentiation is their biggest challenge. Marketplaces cite four common customer-facing challenges in pursuing growth: competitive differentiation, buyer retention, buyer acquisition and social media engagement. Other challenges that marketplaces faced include shopping cart abandonment (26 percent) and technology resources to scale growth (23 percent). Among the top challenges, only e-commerce companies said competitive differentiation and customer experience are equally the biggest challenges. Among mixture companies, participants said competitive differentiation is the main challenge.

Marketplaces are challenged to retain sellers as well as buyers. The three main reasons for seller disengagement are insufficient competitive differentiation (46 percent), insufficient sales (33 percent) and marketplace service fees (31 percent). Additionally, sellers claim that marketing costs (28 percent) and the lack of buyers (26 percent) are critical business issues. It’s also interesting to see that 24 percent of marketplaces claim sellers leave due to network leakage, where customers leave to transact directly with sellers.

Marketplaces judge their health according to loyalty. Among the many metrics that can be employed to gauge marketplace health, 46 percent of those surveyed place emphasis on tracking customer lifetime value (CLV), which reflects larger and more frequent transactions. At 23 percent, marketplaces are also tracking buyer and seller loyalty. Tied for the third top optimal health metric at 11 percent are peak liquidity and repeat customer transactions. Peak liquidity is a crucial metric as it represents the ratio between buyers and sellers that maximizes transaction value.

Very few are achieving Pareto’s ideal ratio. When it comes to the Pareto principle, experts believe that 80 percent of total transactions should be generated by 20 percent of sellers. The same can be said for buyers: 20 percent of buyers should drive 80 percent of the transactions. But today’s marketplaces aren’t quite there. The majority of marketplaces claim that the concentration of sellers driving 80 percent of transactions ranges between 40 percent to 60 percent. Almost half of all marketplaces say that repeat customers account for upwards of three-quarters of all transactions, and one-third say repeat customers are responsible for half of all transactions.

The Next Evolution of Marketplaces

The above insights are telling with regard to the future of digital marketplaces. In light of current challenges related to competitive differentiation and marketplaces’ near-obsessive focus on customer loyalty and repeat business, we can expect to see a shift in marketplace approach in the coming years. Tomorrow’s most successful marketplaces won’t just be a place to exchange services and goods. They will be experiences unto themselves.

Marketplaces will soon look beyond connecting buyers, sellers and service providers to create unified platforms that deliver complete experiences as the product or service. For example: When customers set out to find a solution for dinner, they don’t set out to simply find a place or book reservations. They set out to eat dinner, whether that’s in the restaurant or through delivery. The process by which they discover solutions for dinner are based on several things that apps, networks and marketplaces solve discreetly, not holistically, for the most part. There are many individual, disparate aspects that add up to the bigger picture, but do not portray the picture in and of themselves. These services include matching personal tastes with options, location, reviews, menus, pictures, videos, reservations, coupons, and much more. Therein lies an opportunity for marketplaces.

How marketplaces develop solutions for these holistic experiences will become the next defining competitive advantage for them — and the next redefinition of the consumer experience.

The post How Digital Marketplaces Will (Again) Redefine Commerce and Experience appeared first on ReadWrite.

In the wake of Cambridge Analytica, data misappropriation, #deletefacebook, calls for regulation and pending testimony to U.S. Congress, Facebook announced a series of initiatives to restrict data access and also a renewed selfie awareness to focus efforts on protecting people on the platform. What’s more notable however is that Mark Zuckerberg also hosted a last-minute, rare town hall with media and analysts to explain these efforts and also take tough questions for the better part of an hour.

Let’s start with the company’s news on data restrictions.

To better protect Facebook user information, the company is making the following changes across nine priority areas over the coming months (Sourced from Facebook):

Events API: Until today, people could grant an app permission to get information about events they host or attend, including private events. Doing so allowed users to add Facebook Events to calendar, ticketing or other apps. According to the company, Facebook Events carry information about other people’s attendance as well as posts on the event wall. As of today, apps using the API can no longer access the guest list or posts on the event wall.

Groups API: Currently apps need permission of a group admin or member to access group content for closed groups. For secret groups, apps need the permission of an admin. However, groups contain information about people and conversations and Facebook wants to make sure everything is protected. Moving forward, all third-party apps using the Groups API will need approval from Facebook and an admin to ensure they benefit the group. Apps will no longer be able to access the member list of a group. Facebook is also removing personal information, such as names and profile photos, attached to posts or comments.

Pages API: Previously, third party apps could use the Pages API to read posts or comments from any Page. Doing so lets developers create tools to help Page owners perform common tasks such as schedule posts and reply to comments or messages. At the same time, it also let apps access more data than necessary. Now, Facebook wants to ensure that Page information is only available to apps providing useful services to our community. All future access to the Pages API will need to be approved by Facebook.

Facebook Login: Two weeks, Facebook announced changes to Facebook Login. As of today, Facebook will need to approve all apps that request access to information such as check-ins, likes, photos, posts, videos, events and groups. Additionally, the company no longer allow apps to ask for access to personal information such as religious or political views, relationship status and details, custom friends lists, education and work history, fitness activity, book reading activity, music listening activity, news reading, video watch activity, and games activity. Soon, Facebook will also remove a developer’s ability to request data people shared with them if there has been no activity on the app in at least three months.

Instagram Platform API: Facebook is accelerating the deprecation of the Instagram Platform API effective today.

Search and Account Recovery: Previously, people could enter a phone number or email address into Facebook search to help find their profiles. According to Facebook, “malicious actors” have abused these features to scrape public profile information by submitting phone numbers or email addresses. Given the scale and sophistication of the activity, Facebook believes most people on Facebook could have had their public profile scraped in this way. This feature is now disabled. Changes are also coming to account recovery to also reduce the risk of scraping. 

Call and Text History: Call and text history was part of an opt-in feature for Messenger or Facebook Lite users on Android. Facebook has reviewed this feature to confirm that it does not collect the content of messages. Logs older than one year will be deleted. More so, broader data, such as the time of calls, will no longer be collected.

Data Providers and Partner Categories: Facebook is shuttering Partner Categories, a product that once let third-party data providers offer their targeting directly on Facebook. The company stated that “although this is common industry practice…winding down…will help improve people’s privacy on Facebook”

App Controls: As of April 9th, Facebook display a link at the top of the News Feed for users to see what apps they use and the information they have shared with those apps. Users will also have streamlined access to remove apps that they no longer need. The company will reveal if information may have been improperly shared with Cambridge Analytica.

Cambridge Analytica may have had data from as many as 87 million people

Facebook also made a startling announcement. After thorough review, the company believes that Cambridge Analytica may have collected information on as many as 87 million people. 81.6% of these users resided in the United Sates with the rest of the affected users scattered across the Philippines, Indonesia, United Kingdom, Mexico, Canada, India, among others. Original reports from the New York Times estimated that the number of affected users was closer to 50 million.

Mark Zuckerberg Faces the Media; Shows Maturity and Also Inexperienced Leadership

In a rare move, Mark Zuckerberg invited press and analysts to a next-day call where he shared details on the company’s latest moves to protect user data, improve the integrity of information shared on the platform and protect users from misinformation. After initially going AWOL following the Cambridge Analytic data SNAFU, he’s since been on a whirlwind media tour. He genuinely seems to want us to know that he made mistakes, that he’s learning from them and that he’s trying to do the right thing. On our call, he stayed on beyond his allotted time to answer tough questions for the better part of 60 minutes.

From the onset, Mark approached the discussion by acknowledging that he and the rest of Facebook hadn’t done enough to date to prevent its latest fiasco nor had it done enough to protect user trust.

“It’s clear now that we didn’t do enough in preventing abuse…that goes for fake news, foreign interference, elections, hate speech, in addition to developers and data privacy,” Zuckerberg stated. “We didn’t take a broad enough view what our responsibility is. It was my fault.”

He further pledged to right these wrongs while focusing on protecting user data and ultimately their Facebook experience.

“It’s not enough to just connect people. We have to make sure those connections are positive and that they’re bringing people closer together,” he said. “It’s not enough to give people a voice. We have to make sure that people aren’t using that voice to hurt people or spread disinformation. And it’s not enough to give people tools to manage apps. We have to ensure that all of those developers protect people’s information too. We have to ensure that everyone in our ecosystem protects information.”

Zuckerberg admitted that protecting data is just one piece of the company’s multi-faceted strategy to get the platform back on track. Misinformation, security issues and user-driven polarization still threaten facts, truth and upcoming elections.

He shared some of the big steps Facebook is taking to combat these issues. “Yesterday we took a big action by taking down Russian IRA pages,” he boasted. “Since we became aware of this activity…we’ve been working to root out the IRA to protect the integrity of elections around the world. All in, we now have about 15,000 people working on security and content review and we’ll have more than 20,000 by the end of this year. This is going to be a major focus for us.”

He added, “While we’ve been doing this, we’ve also been tracing back and identifying this network of fake accounts the IRA has been using so we can work to remove them from Facebook entirely. This is the first action that we’ve taken against the IRA and Russia itself. And it included identifying and taking down a Russian news organization. We have more work to do here.”

Highlights, Observations and Findings

This conversation was pretty dense. In fact, it took hours to pour over the conversation just to put this article together. I understand if you don’t have time to read through the entire interview or listen to the full Q&A. To help, I’ve some of the highlights, insights and takeaways from our hour together.

1. Mark Zuckerberg wants you to know that he’s very sorry. He articulated on several occasions that he feels the weight of his mistakes, mischaracterizations and gross misjudgments on everything…user data, fake news, election tampering, polarization, data scraping, and user trust. He also wants you to know that he’s learning from his mistakes and his priority is fixing these problems while regaining trust moving forward. He sees this as a multi-year strategy of which Facebook is already one year underway.
2. Facebook now believes that up to 87 million users, not 50, mostly in the US, may have been affected by Kogan’s personality quiz app. Facebook does not know the extent of which user data was sold to or used by Cambridge Analytica. This was not a data breach according to the company. People willingly took Kogan’s quiz.
3. Facebook has also potentially exposed millions of user profiles to data scraping due to existing API standards on other fronts over the years. The extent of this scraping and how data was used by third parties is unknown. Facebook has turned off access. Even still, it is unacceptable that it wasn’t taken seriously before. Facebook must own its part in exposing data to bad actors who scraped information for nefarious purposes.
4. Mark believes that Facebook hasn’t done a good enough job explaining user privacy, how the company makes money and how it does and doesn’t use user content/data. This is changing.
5. Mark, and the board/shareholders, believe, he’s still the right person for the job. Two reporters asked directly whether he’d step down by force or choice. His answer was an emphatic, “no.” His rationale is that this is his ship and he is the one who’s going to fix everything. He stated on several occasions that he wants to do the right thing. While I applaud his “awakening,” he has made some huge missteps as a leader that need more than promises to rectify. I still believe that Facebook would benefit from seasoned, strategic leadership to establish/renew a social contract with users, Facebook and its partners. The company is after all, fighting wars on multiple fronts. And the company has demonstrated a pattern of either negligence or ignorance in the past and then apologizing afterward. One can assume that this pattern will only continue.
6. There’s still a fair amount naïveté in play here when it comes to user trust, data and weaponizing information against Facebook users. Even though the company is aiming to right its wrongs, there’s more that lies ahead that the company and its key players cannot see yet. There’s a history of missing significant events here. And, Mark has a history of downplaying these events, acting too late and apologizing after the fact. “I didn’t know” is not a suitable response. Even though the company is making important strides, there’s nothing to make me believe that sophisticated data thieves, information terrorists and shape-shifting scammers aren’t already a step or two ahead of the Facebook team. Remember, following the 2016 election, Mark said it was “crazy” that fake news could somehow sway an election. He’s since recanted that reaction, but it was still his initial response and belief.
7. Facebook is already taking action against economic actors, government interference and lack of truthfulness and promises to do more. Its since removed thousands of Russian IRA accounts. Russia has responded that Facebook’s moves are considered “censorship.”
8. Not everything is Facebook’s fault, according to Facebook. Mark places some of the onus ofresponsibility on Facebook userswho didn’t read the ToS, manage their data settings or fully understand what happens when you put your entire life online. In his view, and it’s a tough pill to swallow, no one forced users to take a personality quiz. No one is forcing people to share every aspect of their life online. While the company is making it easier for users to understand what they’re signing up for and how to manage what they share, people still don’t realize that with this free service comes an agreement that as a user, they are the product and their attention is for sale.
9. Moving forward, Facebook isn’t as worried about data breaches as it is about user manipulation and psyops. According to Mark, users are more likely susceptible to “social engineering” threats over hacking and break-ins. Social engineering is the use of centralized planning and coordinated efforts to manipulate individuals to divulge information for fraudulent purposes. This can also be aimed at manipulating individual perspectives, behaviors and also influencing social change (for better or for worse.) Users aren’t prepared to fully understand if, when and how they’re succeptible to manipulation and I’d argue that research needs to be done in understanding how we’re influencing one another based on our own cognitive biases and how we choose to share and perceive information in real-time.
10. Facebook really wants you to know that it doesn’t sell user data to advertisers. But, it also acknowledges that it could have done and will do a better job in helping users understand Facebook’s business model. Mark said that users want “better ads” and “better experiences.” In addition to fighting information wars, Facebook is also prioritizing ad targeting, better news feeds, and the creation/delivery of better products and services that users love.
11. Even though upwards of 87 million users may have been affected by Kogan’s personality quiz and some of that user information was sold to and used by Cambridge Analytica, and that user data was also compromised in many other ways for years, the #deletefacebook movement had zero meaningful impact. But still, Mark says that the fact the movement even gained any momentum is “not good.” This leads to a separate but related conversation about useraddictiveness and dependencyon these platforms that kill movements such as #deletefacebook before they gain momentum.
12. Users cannot rely on Facebook, Youtube, Twitter, Reddit, et al., to protect them. Respective leaders of each of these platforms MUST fight bad actors to protect users. At the same time, they are not doing enough. Users are in many ways, unwitting pawns in what amounts to not only social engineering, but full-blown information warfare and psyops to cause chaos, disruption or worse. Make no mistake, people, their minds and their beliefs are under attack. It’s not just the “bad actors.” We are witnessing true villains, regardless of intent, damage, abuse and undermine human relationships, truth and digital and real-world democracy.
13. People and their relationships with one another are being radicalized and weaponized right under their noses. No one is teaching people how this even happens. More so, we are still not exposing the secrets of social design that makes these apps and servicesaddictive. In the face of social disorder, people ar still readily sharing everything about themselves online and believe they are in control of their own experiences, situational analyses and resulting emotions. I don’t know that people could really walk away even if they wanted to and that’s what scares me the most.

Q&A in Full: The Whole Story According to Zuckerberg

Please note that this call was 60 minutes long and what follows is not a complete transcript. I went through the entire conversation to surface key points and context.

David McCabe, Axios: “Given the numbers [around the IRA] have changed so drastically, Why should lawmakers and why should users trust that you’re giving them a full and accurate picture now?”

Zuckerberg: “There is going to be more content that we’re going to find over time. As long as there are people employed in Russia who have the job of trying to find ways to exploit these systems, this is going to be a never-ending battle. You never fully solve security, it’s an arms race. In retrospect, we were behind and we didn’t invest in it upfront. I’m confident that we’re making progress against these adversaries. But they’re very sophisticated. It would be a mistake to assume that you can fully solve a problem like this…”

Rory Cellan-Jones, BBC: “Back in November 2016, dismissed as crazy that fake news could have swung the election. Are you taking this seriously enough…?”

Zuckerberg: “Yes. I clearly made a mistake by just dismissing fake news as crazy as [not] having an impact. What I think is clear at this point, is that it was too flippant. I should never have referred to it as crazy. This is clearly a problem that requires careful work…This is an important area of work for us.”

Ian Sherr, CNET: “You just announced 87 million people affected by Cambridge Analytica, how long have you known this number because the 50 million number has been out there for a while. It feels like the data keeps changing on us and we’re not getting a full forthright view of what’s going on here.”

Zuckerberg: “We only just finalized our understanding of the situation in the last couple of days. We didn’t put out the 50 million number…we wanted to wait until we had a full understanding. Just to give you the complete picture on this, we don’t have logs going back for when exactly [Aleksandr] Kogan’s app queried for everyone’s friends…We wanted to take a broad view and a conservative estimate. I’m quite confident given our analysis, that it is not more than 87 million. It very well could be less…”

David Ingram, Reuters: “…Why weren’t there audits of the use of the social graph API years ago between the 2010 – 2015 period.

Zuckerberg: “In retrospect, I think we should have been doing more all along. Just to speak to how we were thinking about it at the time, as just a matter of explanation, I’m not trying to defend this now…I think our view in a number of aspects of our relationship with people was that our job was to give them tools and that it was largely people’s responsibility in how they chose to use them…I think it was wrong in retrospect to have that limited of a view but the reason why we acted the way that we did was because I think we viewed when someone chose to share their data and then the platform acted in a way that it was designed with the personality quiz app, our view is that, yes, Kogan broke the policies. And, he broke expectations, but also people chose to share that data with them. But today, given what we know, not just about developers, but across all of our tools and just across what our place in society is, it’s such a big service that’s so central in people’s lives, I think we understand that we need to take a broader view of our responsibility. We’re not just building tools that we have to take responsibility for the outcomes in how people use those tools as well. That’s why we didn’t do it at the time. Knowing what I know today, clearly we should have done more and we will going forward.

Cecilia King, NY Times: “Mark, you have indicated that you could be comfortable with some sort of regulation. I’d like to ask you about privacy regulations that are about to take effect in Europe…GDPR. Would you be comfortable with those types of data protection regulation in the U.S. and with global users.”

Zuckerberg: “Regulations like the GDPR are very positive…We intend to make all the same controls and settings everywhere not just Europe.”

Tony Romm, Washington Post: “Do you believe that this [data scraping] was all in violation of your 2011 settlement with the FTC?”

Zuckerberg: “We’ve worked hard to make sure that we comply with it. The reality here is that we have to take a broader view of our responsibility, rather than just legal responsibility. We’re focused on doing the right thing and making sure people’s information is protected. We’re doing investigations, we’re locking down the platform, etc. I think our responsibilities to the people who use Facebook are greater than what’s written in that order and that’s the standard that I want to hold us to.”

Hannah Kuchler, Financial Times, “Investors have raised a lot of concerns about whether this is the result of corporate governance issues at Facebook. Has the board discussed whether you should step down as chairman?”

Zuckerberg: “Ahhh, not that I’m aware of.”

Alexis Madrigal, Atlantic: “Have you ever made a decision that benefitted Facebook’s business but not the community.”

Zuckerberg: “The thing that makes our product challenging to manage and operate are not the trade offs between people and the business, I actually think that those are quite easy, because over the long term the business will be better if you serve people. I just think it would be near sighted to focus on short term revenue over what value to people is and I don’t think we’re that short-sighted. All of the hard decisions we have to make are actually trade-offs between people. One of the big differences between the type of product we’re building, which is why I refer to it as a community and what do I think some of the specific governance issues we have are that different people who use Facebook have different interests. Some people want to share political speech that they think is valid, while others think it’s hate speech. These are real values questions and trade-offs between free-expression on one hand and making sure it’s a safe community on the other hand…we’re doing that in an environment that’s static. The social norms are changing continually and they’re different in every country around the world. Getting those trade-offs right is hard and we certainly don’t always get them right.”

Alyssa Newcomb, NBC News: “You’ve said that you’ve clearly made mistakes in the past. Do you still think you’re the best person to run Facebook moving forward?”

Zuckerberg: “Yes. I think life is about learning from the mistakes and figuring out what you need to do to move forward. The reality is that when you’re building something like Facebook that is unprecedented in the world, there are going to be things that you mess up…I don’t think anyone is going to be perfect. I think that what people can hold us accountable for is learning from the mistakes and continually doing better and continuing to evolve what our view of our responsibility is. And, at the end of the day, whether we’re building things that people like and if it makes their lives better. I think it’s important not to lose sight of that through all of this. I’m the first to admit that we didn’t take a broad enough view of what our responsibilities were. I also think it’s important to keep in mind that there are billions of people who love the services that we’re building because they’re getting real value…That’s something that I’m really proud of my company for doing…”

Josh Constine, TechCrunch: “Facebook explained that the account recovery and search tools using emails and phone numbers could have been used to scrape information about all of Facebook users, when did Facebook find out about this scraping operation and if that was before a month ago, why didn’t Facebook inform the public about it immediately?”

Zuckerberg: “We looked into this and understood it more over the last few days as part of the audit of our overall system. Everyone has a setting on Facebook that controls, it’s right in your privacy settings, whether people can look you up by your contact information. Most people have that turned on and that’s the default. A lot of people have also turned it off. It’s not quite everyone. Certainly, the potential here would be that over the period of time this feature has been around, people have been able to scrape public information. It is reasonable to expect that, if you had that setting turned on, that at some point over the last several years, someone has probably accessed your public information in this way.”

Will Oremus, Slate: “You run a company that relies on people who are willing to share data that is then used to target them with ads. We also now know it can be used to manipulate ways or ways they don’t expect. We also know that you are very protective of your own privacy in certain ways. You acknowledged you put tape over your webcam at one point. I think you bought the lot around one of your homes to get more privacy. What other steps do you take to protect your privacy online? As a user of Facebook, would you sign up for apps like the personality quiz?”

Zuckerberg: “I certainly use a lot of apps. I’m a power user of the internet. In order to protect privacy, I would advise that people follow a lot of the best practices around security. Turn on two-factor authentication. Change your passwords regularly. Don’t have password recovery tools be information that you make publicly available…look out and understand that most of the attacks are going to be social engineering and not necessary people trying to break into security systems. For Facebook specifically, I think one of the things we need to do…are just the privacy controls that you already have. Especially leading up to the GDPR event, people are going to ask if we’re going to implement all of those things. My answer to that is, we’ve had almost all of what’s implemented in there for years…the fact that most people are not aware of that is an issue. We need to do a better job of putting those tools in front of people and not just offering them. I would encourage people to use them and make sure they’re comfortable how their information is used on our systems and others.”

Sarah Frier, Bloomberg: “There’s broad concern that user data given years ago could be anywhere by now. What results do you hope to achieve from the audits and what won’t you be able to find?”

Zuckerberg: “No measure you take on security is going to be perfect. But, a lot of the strategy has to involve changing the economics of potential bad actors to make it not worth doing what they might do otherwise. We’re not going to be able to go out and find every bad use of data. What we can do is make it a lot harder for folks to do that moving forward, change the calculus on anyone who’s considering doing something sketchy going forward, and I actually do think we’ll eventually be able to uncover a large amount of bad activity of what exists and we will be able to go in and do audits to make sure people get rid of that data.”

Steve Kovach, Business Insider: “Has anyone been fired related to the Cambridge Analytica issue or any data privacy issue?”

Zuckerberg: “I have not. I think we’re still working through this. At the end of the day, this is my responsibility. I started this place. I run it. I’m responsible for what happens here. I’m going to do the best job helping to run it going forward. I’m not looking to throw anyone else under the bus for mistakes that we made here.”

Nancy Cortez, CBS News: “Your critics say Facebook’s business model depends on harvesting personal data, so how can you reassure users that their information isn’t going to be used in a way that they don’t expect?”

Zuckerberg: “I think we can do a better job of explaining what we actually do. There are many misperceptions around what we do that I think we haven’t succeeded in clearing up for years. First, the vast majority of the data that Facebook knows about you is because you chose to share it. It’s not tracking…we don’t track and we don’t buy and sell [data]…In terms of ad activity, that’s a relatively smaller part of what we’re doing. The majority of the activity is people actually sharing information on Facebook, which is why I think people understand how much content is there because they put all the photos and information there themselves. For some reason, we haven’t been able to kick this notion for years, that we sell data to advertisers. We don’t. It just goes counter to our own incentives…We can certainly do a better job of trying to explain this and make these things understandable. The reality is that the way we run the service is, people share information, we use that to help people connect and to make the services better, and we run ads to make it a free service that everyone in the world can afford.”

Rebecca Jarvis, ABC News: “Cambridge Analytica has tweeted now since this conversation began, ‘When Facebook contacted us to let us know the data had been improperly obtained, we immediately deleted the raw data from our file server, and began the process of searching for and removing any of its derivatives in our system.’ Now that you have this finalized understanding, do you agree with Cambridge Analytica’s interpretation in this tweet and will Facebook be pursuing legal action against them?”

Zuckerberg: “I don’t think what we announced today is connected to what they just said at all. What we announced with the 87 million is the maximum number of people that we could calculate could have been accessed. We don’t know how many people’s information Kogan actually got. We don’t know what he sold to Cambridge Analytica. We don’t today what they have in their system. What we have said and what they agreed to is to do a full forensic audit of their systems so we can get those answers. But at the same time, the UK government and the ICO are doing a government interpretation and that takes precedence. We’ve stood down temporarily…and once that’s down, we’ll resume ours so we can get answers to the questions you’re asking and ultimately make sure that not of the data persists or is being used improperly. At that point, if it makes sense, we will take legal action, if we need to do that to protect people’s information.

Alex Kantrowitz, Buzzfeed, “Facebook’s so good at making money. I wonder if your problems could somewhat be mitigated if company didn’t try to make so much. You could still run Facebook as a free service, but collect significantly less data and offer significantly less ad targeting…so, I wonder if that would put you and society and less risk.”

Zuckerberg: “People tell us that if they’re going to see ads, they want the ads to be good. The way the ads are good is making it so that when someone tells us they have an interest…that the ads are actually relevant to what they care about. Like most of the hard decisions that we make, this is one where there’s a trade-off between values people really care about. On the one hand, people want relevant experiences and on the other hand, I do think that there’s some discomfort how data is used in systems like ads. I think the feedback is overwhelmingly on the side of wanting a better experience…”

Nancy Scola, Politico, “When you became aware in 2015 that Cambridge Analytica inappropriately accessed this Facebook data, did you know that firm’s role in American politics and in Republican politics in particular?”

Zuckerberg: “I certainly didn’t. One of the things in retrospect…people ask, ‘why didn’t you ban them back then?’ We banned Kogan’s app from the platform back then. Why didn’t we do that? It turns out, in our understanding of the situation, that they weren’t any of Facebook’s services back then. They weren’t an advertiser, although they went on to become one in the 2016 election. They weren’t administering tools and they didn’t build an app directly. They were not really a player we had been paying attention to.”

Carlos Hernandez, Expansion: “Mark, you mentioned that one of the main important aspects of Facebook is the people. And, one of the biggest things around the use of these social platforms is the complexity of users understanding how these companies store data and use their information. With everything that is happening, how can you help users learn better how Facebook, What’s App and Instagram is collecting and using data?”

Zuckerberg: “I think we need to do a better job of explaining the principles that the service operates under. But, the main principles are, you have control of everything you put on the service, most of the content that Facebook knows about you is because you chose to share that content with friends and put it on your profile and we’re going to use data to make the services better…but, we’re never going to sell your information. If we can get to a place where we can communicate that in a way people understand it, then we have a shot at distilling this down to a simpler thing. That’s certainly not something we’ve succeeded at doing historically.

Kurt Wagner, Recode: “There’s been the whole #deletefacebook thing from a couple of weeks ago, there’s been advertisers who have said that they’re pulling advertising money or pull their pages down altogether, I’m wondering if on the back end, have you seen any actual change in usage from users or change in ad buys over the last couple weeks…”

Zuckerberg: “I don’t think there’s been any meaningful impact that we’ve observed. But look, it’s not good. I don’t want anyone to be unhappy with our services or what we do as a company. Even if we can’t measure a change in the usage of the products or the business…it’s still speaks to feeling like this was a massive breach of trust and we have a lot of work to do to repair that.”

Fernando Santillanes, Grupo Milenio: “There’s a lot of concern in Mexico about fake news. Associating with media to identify these fake articles is not enough. What do you say to all the Facebook users who want to see Facebook take a more active Facebook position to detect and suppress fake news?”

Zuckerberg: “This is an important question. 2018 is going to be an important year for protecting important election integrity around the world. Let me talk about how we’re fighting fake news across the board. There are three different types of activity that require different strategies for fighting them. It’s important people understand all of what we’re doing here. The three basic categories are, 1) there are economic actors who are basically spammers, 2) governments trying to interfere in elections, which is basically a security issue and 3) polarization and lack of truthfulness in what you describe as the media.”

In response to economic actors, he explained, “These are folks like the Macedonian trolls. What these folks are doing, it’s just an economic game. It’s not ideological at all. They come up with the most sensational thing they can in order to get you to click on it so they can make money on ads. If we can make it so that the economics stop working for them, then they’ll move on to something else. These are literally the same type of people who have been sending you Viagra emails in the 90s. We can attack it on both sides. On the revenue side, we make it so that they can’t run on the Facebook ad network. On the distribution side, we make it so that as we detect this stuff, it gets less distribution on News Feeds.”

The second category involves national security issues, i.e. Russian election interference. Zuckerberg’s response to solve this problem involves identifying bad actors, “People are setting up these large networks of fake accounts and we need to track that really carefully in order to remove it from Facebook entirely as a security issue.”

The third category is about media, which Zuckerberg believes requires deeper fact checking. “We find that fact checkers can review high volume things to show useful signals and remove from feeds if it’s a hoax. But there’s still a big polarization issue. Even if someone isn’t sharing something that’s false, they are cherry picking facts to tell one side of a story where the aggregate picture ends up not being true. There, the work we need to do is to promote broadly trusted journalism. The folks who, people across society, believe are going to take the full picture and do a fair and thorough job.”

He closed on that topic on an optimistic note, “Those three streams, if we can do a good job on each of those, will make a big dent across the world and that’s basically the roadmap that we’re executing.”

Casey Newton, The Verge: “With respect to some of the measures you’re putting into place to protect election integrity and to reduce fake news…how are you evaluating the effectiveness of the changes you’re making and how will you communicate wins and losses…?”

Zuckerberg: “One of the big things we’re working on now is a major transparency effort to be able to share the prevalence of different types of bad content. One of the big issues that we see is a lot of the debate around fake news or hate speech happens through anecdotes. People see something that’s bad and shouldn’t be allowed on the service and they call us out on it, and frankly they’re right, it shouldn’t be there and we should do a better job of taking that down. But, what think is missing from the debate today are the prevalence of these different categories of bad content. Whether it’s fake news and all the different kinds there in, hate speech, bullying, terror content, all of things that I think we can all agree are bad and we want to drive down, the most important thing there is to make sure that the numbers that we put out are accurate. We wouldn’t be doing anyone a favor by putting out numbers and coming back a quarter later saying, ‘hey, we messed this up.’ Part of transparency is to inform the public debate and build trust. If we have to go back and restate those because we got it wrong, the calculation internally is that it’s much better to take a little longer to make sure we’re accurate than to put something out that might be wrong. We should be held accountable and measured by the public. It will help create more informed debate. And, my hope over time is that the playbook and scorecard that we put out will also be followed by other internet platforms so that way there can be a standard measure across the industry. “

Barbara Ortutay, Associated Press, “What are you doing differently now to prevent things from happening and not just respond after the fact?

Zuckerberg: “Going forward, a lot of the new product development has already internalized this perspective of the broader responsibility we’re trying to take to make sure our tools are used well. Right now, if you take the election integrity work, in 2016 we were behind where we wanted to be. We had a more traditional view of the security threats. We expected Russia and other countries to try phishing and other security exploits, but not necessarily the misinformation campaign that they did. We were behind. That was a really big miss. We want to make sure we’re not behind again. We’ve been proactively developing AI tools to detect trolls who are spreading fake news or foreign interference…we were able to take down thousands of fake accounts. We’re making progress. It’s not that there’s no bad content out there. I don’t want to ever promise that we’re going to find everything…we need to strengthen our systems. Across the different products that we are building, we are starting to internalize a lot more that we have this broader responsibility. The last thing that I’ll say on this, I wish I could snap my fingers and in six months, we’ll have solved all of these issues. I think the reality is that given how complex Facebook is, and how many systems there are, and how we need to rethink our relationship with people and our responsibility across every single part of what we do, I do think this is a multiyear effort. It will continue to get better every month.”

As I once said, and believe more today than before, with social media comes great responsibility. While optimism leads to great, and even unprecedented innovation, it can also prevent seeing what lies ahead to thwart looming harm and destruction. Zuckerberg and company have to do more than fix what’s broken. It has to look forward to break and subsequently fix what trolls, hackers and bad actors are already seeking to undermine. And it’s not just Facebook. Youtube, Google, Instagram, Reddit, 4/8Chan et al., have to collaborate and coordinate massive efforts to protect users, suppress fake news and promote truth.

The post In Mark Zuckerberg We Trust? The State and Future of Facebook, User Data, Cambridge Analytica, Fake News, Elections, Russia and You appeared first on ReadWrite.

Did you know that 80 percent of users churn within three months of downloading an app? That’s because most apps are marketed to the masses and not necessarily to the right customers.

Oftentimes, the goal of app marketing is to reach as many consumers as possible with the hopes of recruiting en masse and converting at better-than-average ratios. But part of the challenge for marketers is that many of today’s strategies are driven by metrics that don’t link to advanced user targeting and growth.

More specifically, app marketers aren’t using available data strategically to deliver productive user experiences that ultimately drive greater business profitability.

Now more than ever, marketers must shift from tracking traditional vanity metrics to measuring the very things that contribute to retention and growth. More and more, successful companies are investing in customer-centric metrics such as CLV (customer lifetime value) to gain intelligent, consumer-centered insights that not only identify the most valuable customers but also key behaviors and preferences to continually improve consumers’ experiences and journey.

Next-generation marketing and CX are about identifying and engaging valuable consumers

CLV is more important than apps in isolation. It helps apps and other touch points work together to deliver value-added, cohesive experiences.

CLV measures the value a consumer represents to the business across all interactions over their lifetime, not just a single transaction or touch point. That is ultimately the definition of customer experience. It is the sum of all moments a customer has with your brand throughout their life cycle. Marketing and customer engagement is now a cross-functional mandate.

Not all app users are the right users. If you use the Pareto Principle, you can assume that 80 percent of business value is attributed to 20 percent of your active consumers. While these percentages aren’t by any means a standard, they do emphasize the need to identify and cultivate the important customers who drive your business.

Instead of casting a wide net and attracting as many users as possible in the hopes of retaining a reasonably active base, CLV tied to artificial intelligence (AI) and machine learning focuses marketers and also developers on targeted engagement and growth. The idea is to drive profit by investing in more value-added user experiences and personalized offers. Doing so intentionally cultivates meaningful relationships with key customers.

Next-generation customer engagement is about cross-functional collaboration and data sharing

Unfortunately, customer experience today is largely siloed. Marketing, mobile, in-store, e-commerce, digital and so on are not collaborating nor operating against the same customer and market data. But that’s all about to change with the proliferation of AI and machine learning tied to smart CLV initiatives.

When the goal is to deliver targeted and integrated experiences, not just in-app, but across each touch point and the life cycle overall, companies create a truly customer-centric approach. AI then helps brands get a more complete, shared view and understanding of customer behaviors and expectations.

Additionally, AI-driven customer-centricity fosters cross-functional collaboration and data sharing that, by design, boosts customer experiences, along with CLV and business growth.

Identify highest-value customers and deliver targeted experiences

AI/machine learning platforms offer intelligent insights when pointed in the right direction. Successful brands study how much revenue highest-value customers drive over their lifetime and how much it costs to manage those relationships. And they examine CLV across all channels to get a holistic view of high-value behavior in all interactions. When the system can analyze important traits of high-value users, it can learn how to optimize CLV.

For example, to reach potential high-value customers, AI/machine learning uses data from existing high-value customers to optimize campaigns and touch points. In a study by Bain aimed at retail banking, it was found that it costs banks $4 every time a customer calls or visits. However, if consumers can complete the transaction via an app, it costs only 10 cents.

The key is to deliver capabilities in ways that consumers prefer and appreciate. Imagine how much AI and machine learning could additionally uncover when tasked with identifying friction points and new opportunities.

AI and CLV call for a new customer-centric playbook

You’ve probably heard time and time again that it costs more to acquire a new customer than to retain one. Brands that are winning prioritize CLV and AI and are drafting the playbook as they go. They:

• develop a customer-centric mindset.
• open doors between silos around in-store, digital and mobile so teams can focus on one clear business goal, rather than individual metrics (such as engagement or clicks).
• align customer-facing groups to a business outcome such as CLV and promote cross-functional collaboration and data sharing to assemble a holistic view of the customer across all touch points.
• understand who their highest-value customers are, how much revenue they drive over their lifetime and how much it costs to manage the relationship — across all channels.
• focus on measuring and communicating clear business goals rather than individual or vanity metrics.

AI and machine learning improve both by using existing data without cognitive bias. The more the system learns, the more it optimizes.

In the end, not all customers are created equal. By identifying those who drive value, how and why, you can learn how to design and deliver personalized value to them and enhance customer engagement and experiences to grow your business now and over time.

The post App Marketers Turn AI and Machine Learning To Drive Growth appeared first on ReadWrite.

We are witnessing the rebirth of the automobile. It’s quite remarkable if we press pause to think about it. One could argue that much hasn’t changed since the first true gasoline-powered automobile was patented in July 1886 by Karl Benz. Now in the early 21^st century, Google (now Waymo), Tesla, Mercedes-Benz, BMW, Lexus, Ford, Volvo among others, are racing to market self-driving vehicles that will redefine our relationship with automobiles and the entire transportation industry as we know it.

2021: That’s the year auto manufacturers have promised fully autonomous vehicles on the road. Unless you ask Ford, then that year is 2026. With the increasing level of activity in the autonomous space, and more companies, products, and partnerships expected to enter the fray, mapping the ecosystem proves a complex and ongoing commitment.

See also: A pre-CES look at autonomous vehicles in 2017

I spent the better part of 2016 and 2017 sifting through the entire ecosystem of self-driving manufacturers, automakers, startups, and investments to get an understanding of the companies and the trends driving the future of self-driving vehicles.

The race to 2021 (or 2026) is officially the latest tech gold rush. With the incredible flurry of activity, that date is also ambitious considering the sheer volume of technological, societal and also governmental challenges to solve between now and then. The opportunities for innovation and invention are great for anyone working on those fronts. This is one of the reasons I set out to chart the territory.

Among the mammoth challenges I faced in doing so was the process of capturing and organizing a constantly evolving industry of incumbent, new and emerging players. The resulting trend report, “The Race to 2021: The State of Autonomous Vehicles and a ‘Who’s Who’ of Industry Drivers,” tracked close to 80 companies in 11 distinct categories across 19 market applications.

2021 or 2026, access to autonomous vehicles by the masses overnight is not as close as it sounds. Initial applications for self-driving cars will be strewn across vertical applications, limited to fixed public transit courses, university and business campuses, warehouses, military applications, construction, farms and fields, and inner-city transportation services where infrastructure and pedestrian laws have been adapted for safety. Over time, self-driving applications will expand as technology advances and prices come down. Initially, we identified 19 applications, but autonomous technology creates a new platform for inventors and entrepreneurs to define new mobile services…not just cars that drive themselves.

To get from where we are today to the future, it helps to see the roads clearly. There are some givens but more so, many unknowns on this journey. It takes perspective, imagination and tremendous expertise to pave new roads. There are many challenges and opportunities ahead.

Vehicles as Platforms – Opening up new revenue opportunities

Startups and technology leaders are driving the accelerated innovation in autonomous technology, forcing incumbents to partner, acquire, or ramp up R&D to compete (e.g. BMW and Baidu; Fiat Chrysler and Waymo, an Alphabet company; and GM and Lyft). Toyota, Intel, and Mercedes-Benz have dedicated business units. Automakers are essentially getting into the software/hardware and utility business as future profits will depend less on manufacturing, selling and financing automobiles and more on monetizing driving and the free time passengers will have on their hands (instead of a steering wheel).

Progressive automakers are repositioning their future foci away from just “making cars” to becoming mobility services and sharing companies, i.e. BMW, Daimler, Fiat-Chrysler, Ford, GM, Mercedes, Nissan, Tesla, VW, et al. To this trend, ride/hail companies are also attracting investments from traditional automakers to develop next-generation autonomous services.

Cities must become smarter

While automakers are racing to 2021 for the release of autonomous vehicles, hurdles beyond technology are also tied to the lack of city infrastructure, modernization and policies.

Collaboration accelerates innovation

In what’s viewed as an atypical move, several competitive automakers are sharing mapping and environmental data to expedite the arrival of self-driving cars.

Without doing so, automakers need to invest in costly third-party or proprietary technology, which requires thorough testing and results in longer development timelines.

As Automotive 2.0 approaches, new jobs are being created along the way

Leading automakers are struggling to attract and retain expertise and are “acqui-hiring” startups through acquisition, partnership or investment to get talent and accelerate development. Companies are racing to hire those proficient in AI, machine learning, robotics, and deep learning. Since the entire idea of the car is evolving, the design of cockpits, services, and interiors overall are ripe for innovation. This will create a need for designers, UX/UI specialists, and architects to re-imagine passenger experiences.

3D mapping literally paves the way to the future of self-driving vehicles

Mapping software has emerged as its own category among technology providers in the autonomous space, as 3D terrain mapping is a critical component to the effectiveness and safety of self-driving cars as they navigate their environments. Every curb, lane marking, traffic lights and signs, buildings, intersections, services, must be rendered in 3D to create a digital network and location index. Doing so, gives cars the ability to see the road in all conditions.

Cars will become intelligent and create a virtual hive mind to improve transportation

Unlike the interoperability conundrum facing the IoT industry, autonomous cars will be able to talk to one another (Vehicle-to-Vehicle aka V2V) to share road and environmental data. For example, cars will be able to report obstacles or hazards to following vehicles to optimize routes and prevent accidents. Additionally, Vehicle-to-Everything (V2X) capabilities with allow for the exchange of information between vehicles and infrastructure and application services.

Vehicles become data centers

Every aspect of the vehicle and its environment is generating unprecedented levels of data. Its estimated that one car will use 4,000GB of data per day. Machine learning, AI, deep learning, and data science overall, is need to translate everything into value. This will lead to improved or new services, increased safety, new conveniences, better parking, greater fuel efficiency, faster delivery times, cheaper insurance, integrated payment systems, personalized experiences, and disruptive innovation.

Most consumers are not ready to give up driving

Consumers are skeptical and even wary of robot cars. Many believe that self-driving cars are inevitable but are content with driving. Concurrently, experts and consumers are concerned about the ethics of artificial intelligence in times of dire need.

To help, automakers are ramping up their respective PR machines to introduce a more approachable narrative. New vehicles are also shipping with early driver-assist semi-autonomous features such as emergency braking, lane changing, self-parking, etc., to ease consumers into the future one feature at a time.

Self-driving features is not enough to earn consumer trust

Consumers are also wary of autonomous cars because they are not human. Consumers cite trust issues, fear, and ethics as reasons they have a hard time embracing the future. Cars become machines rather than traditional representations of status, ownership and pride. Consumers are aware that in certain scenarios, cars are programmed to react in ways that may injure or terminate other human beings. Automakers will need to tame fears and humanize the technologies before fully autonomous vehicle release and adoption is feasible.

Social science can help humanize robot cars

In addition to data science, social science is also becoming prevalent in autonomous development. Automakers such as Nissan and Audi are hiring anthropologists and social scientists to help build intelligent vehicles that can think and act more human. The aim is to teach self-driving cars to act more human in their control and on-road actions (e.g. honking, signaling other people or vehicles, moving closer to lane marketing before switching lanes). The idea is for vehicles to communicate intent and personality with pedestrians, cyclists, and other drivers.

Autonomous car makers are also becoming data companies

Cars are servers on wheels. Carmakers will also become data companies, borrowing cues from Apple, Google, and Facebook to convert data into insights and customize consumer services to deliver value-added experiences. Companies such as BMW iVentures and Toyota Research Institute are already partnering with data startups such as Nauto to share driver data as a means of more rapidly improving autonomous vehicle systems.

Automotive 2.0: Redefining the Car for a New Generation of Services and Value

Self-driving vehicles are coming soon via a self-driving truck (I’m sure). It’s not just about reacting to or living with them. It’s understanding the pieces that make up a new platform for transportation and mobile services.

Even though we can neatly see the 11 categories of companies driving us toward a new future and the role they play in doing so, the incredible amount of technology, invention, design, and economies of scale happening under the hood is as or more important than the drivetrain itself. Add to that the incredible amount of innovation still coming to bring capabilities and prices to service industries, consumers, and vertical applications.

Automotive 2.0 sets the stage for vehicles to become commodities separated not by driver experience but instead by passenger accouterments. Additionally, manufacturers face the inevitable shift from brand loyalty of today into more functional and lifestyle models where consumers employ automobiles-as-a-service.

For example, to many consumers, cars represent a status symbol or emblem of self-expression. At the same time, autonomous technology creates a reality that cars are also hospitality centers. Even before self-driving cars took the spotlight, transport services such as Uber and Lyft were already shifting the idea of vehicle ownership to that of mobility services. Entertainment and experiences become critical. While there will always be a car culture driven by those who love driving and see cars as an extension of their personas, it’s important to note emerging dynamics in consumer behaviors and preferences.

Competitive value and differentiation will evolve from driver-centric features and existing cockpit designs to new and innovative spatial considerations and user experiences. Instead of forward-facing seats for passengers, we’ll see interiors that resemble lounges, offices, and living rooms. The very soul of automotive brands will now need to embrace new marque values, innovative technology, and experience design as part of its DNA.

Autonomy, Take the Wheel

With the autonomous industry racing from zero to warp speed, every aspect of the driving world is set for innovation and transformation. Whether you’re navigating the self-driving world, you’re affected by its progress or you are shaping its future, it’s essential that you rethink everything from brand to mobile services to value and every bit of infrastructure that supports getting from point B (before) to point A (autonomy).

See also: You won’t be able to buy an autonomous car until 2026, says Ford

Automotive 2.0 needs architects (brand, UX, engineering, experiential, and so on. You, they design the course toward Automotive 2.0 as it completely changes the relationship between driver and automobile and manufacturer and consumer. No incumbent should assume that the brand can simply shift gears to drive market performance. Automakers must create new value for customers. Cars and vehicles become a blank canvas for new products and services and as such, creates a new paradigm for branding, monetization, and relationships. Automotive 2.0 sets the stage for vehicles-as-a-service to become products separated not by driver experience but instead by passenger accouterments.

This exciting and comprehensive new book by my dear friend Sudha Jamthe is your guide to understanding the future of self-driving vehicles and the new world to come. More importantly, her work helps us get smarter to accelerate our capacity to help share the future of the autonomous industry. In 9 sweeping chapters, you will become not only a self-driving expert but also you will clearly see the role you will play in bringing new autonomous business models and technologies to life.

Buckle up.

Unabridged foreword to the new book by Sudha Jamthe, “2030 The Driverless World: Business Transformation from Autonomous Vehicles.”

The post Automotive 2.0: The new road ahead to autonomous vehicles appeared first on ReadWrite.

One of the most famous advertisements in history, the “Kodak Moment,” symbolized much more than a brand. It was a mantra of life, one that united pictures, memories, and nostalgia.

The new “Kodak Moment” is that moment when executives miss how customers and markets are shifting in favor of preserving legacy mindsets and shareholder value. Kodak is one of the most oft-cited examples of a company that missed its turn at innovation — instead, gripping with all its might to a decaying rope of legacy products and process. As digital inevitably gained traction, Kodak’s fate was forever imprinted on the company’s lifeblood: film.

See also: How Helsinki is bringing corporate innovation to their core

Innovation was and is essential to the success of any company. And those that do not disrupt their own businesses will have the gift of disruption given to them. But innovation isn’t the only answer. Technology is an enabler of something greater. Visionary leadership, a culture of empowerment and collaboration and a new standard for risk-taking and reward are also keys to compete for the future.

Understanding corporate innovation is a mission that CapGemini’s Jerome Buvat and I (in my work at Altimeter) have focused on for over two years. To date, we have published a series of reports on the subject that surface trends, technologies, challenges and opportunities associated with all forms of innovation models.

Our latest study, “The Spread of Innovation Around the World,” explores the continued expansion of innovation centers, the ever-shifting focus on emerging technologies, shifting business goals and priorities and the archetypes for innovation approaches.

Defining innovation centers

Innovation is a word that is often overused and misunderstood. Yet, it’s the very thing that is driving the next economy. Startups and global companies alike are increasingly investing in new technologies and technology ecosystems to compete for the future. But innovation isn’t just about new technology and the latest trends, it’s about how leaders see new opportunities and apply inventive solutions to fix what’s broken, improve the status quo and create what doesn’t yet exist.

While startups are making headlines as they shape and reshape the future, big, stodgy companies, once considered too big to innovate, have been playing the startup game in their own way. Now it’s becoming standard practice for enterprise organizations to complement R&D efforts by investing in innovation programs directly in tech capitals around the world.

Innovation centers are on the rise and notably so. In our first report, we documented a total of 301 bona fide corporate innovation centers around the world in July 2015. By February 2016, that number grew to 368. As of October 2016, the number of innovation centers swelled to 456.

So what are innovation centers exactly?

Innovation centers represent enterprise investments in understanding new market dynamics, acquiring new expertise and resources, and also aligning with entrepreneurs, startups, investors, academic institutions, and related ecosystems driving new trends. Innovation centers assume many shapes, but at their core, they are comprised of special teams of intrapreneurs inhouse or moved into dedicated sites within relevant global tech hubs. They function outside of the traditional operational landscape with the goal of accelerating digital innovation, rethinking customer experience, improving operational efficiency and testing new business models.

Over time, the focus of innovation centers shifts to align with technology trends.  From March to October 2016, big data and analytics topped the list at 28% with IoT and Cloud following at 26% and 23% respectively. In order of priority, other technologies were also among the top areas of investment including robotics, fintech, biotech/digital healthcare, AI and cybersecurity.

Overcoming the “Kodak Moment”

Experts agree that digital delivered a fatal blow to Kodak. But, the company’s demise was found to be caused by a series of malignant illnesses. Ironically, Kodak pioneered the technology that ushered in a new culture of photography. Yet, Kodak was indeed actively investing in innovation at the time. And, this is a lesson for every company that’s actively establishing innovation centers around the world. Kodak’s fall from grace can be traced to not executing on new fronts. Even though innovation was present, it was not given serious consideration by decision-makers not qualified to was in large part, due to the lack of vision, execution and risk-taking among the C-Suite and shareholders. As a result, innovation was never given a chance to succeed.

There’s a lesson here for all companies when it comes to innovation, technology is only part of the story. The rest is enlivened through social science ranging from anthropology sociology, ethnography, etc.

While Kodak was in the business of preserving memories new players in the space such as Sony, helped shift the world of photography to that of sharing experiences. Consumer shifts were also the result of how technology impacted behavior and as customers evolved, so did their preferences, expectations, and their perspectives around photography, pictures and moments.

Innovation centers are just the beginning. The new Kodak Moment can further signify the moment leaders see how and why people are changing markets and how to deliver new value.

In previous reports, we found that one of the biggest challenges innovation teams face is bridging new opportunities back into headquarters or having deeper impact within the organization. Organizational leadership must double down on a balance between what I refer to as “iteration” and innovation. Simply defined, iteration is doing the same things more efficiently, better or differently. Innovation on the other hand, is doing new things that introduce new value. Therefore, dedicating resources to innovation must be more than a playing with new toys, hanging out with the cool kids or operating on a lean or bootstrap model to feel startup empathy.

Innovation is a way of business and it cannot be left to just one group. Innovation must become part of the culture and how company’s work. Everyone must push forward in their own work, perspectives and creating new value.

To that end, your role in change is to ensure that innovation centers are…

1. A node in the organization business and innovation strategy.
2. A value-added part of the local technology ecosystem.
3. Scalable and effective outside and inside the organization.

At the same time, your work must make sure that innovation centers are not..

1. Yet another silo.
2. Insular or too inward looking or blinded by technology sectors.
3. A bottomless pit for investment.

Innovate…or die!

While we will always see the rise and shifts of innovation centers around the world, innovation itself is not measured by how many innovation centers or technology bets are in play. Innovation is a result or an outcome. It’s measured by the impact of new products, methodologies, mindset shifts, new expertise and ideas executed. But make no mistake, innovation centers are attempts at thwarting disruption. And these strategic moves by companies seeking to outsmart disruption usually become the disruptors when they allow for innovation to become part of the corporate DNA.

Please read the report below or download at Slideshare. You can also Pdownload our previous research on innovation centers from Slideshare.

Part 1: The Innovation Game: Why and How Businesses are Investing in Innovation Centers

Part 2: Digital Dynasties: The Rise of Innovation Empires Worldwide

The post How corporate innovation centers make companies competitive appeared first on ReadWrite.

The race to autonomous or self-driving cars is on. 2016 was the year that we not only lost some of our most beloved artists, we also witnessed startups and automakers put the pedal to the metal to get the attention of industry influencers, experts and consumers around the world.

Google announced Waymo, its official foray into the autonomous space. Uber ambitiously defied the California DMV and launched a self-driving ride/hail pilot in San Francisco. Tesla pushed the boundaries with an early form of autonomous driving with AutoPilot. General Motors acquired Cruise, a robotics startup, for a whopping $1 billion. And, the list goes on.

See also: The fight is on for the $560b self-driving car market

I’m a car guy. I grew up in a time when cars were part of your identity. They represented who you were and also who you wanted to be or the idea of who you wanted others to see. But, that was my generation. Now cars are more than commodities to the mainstream, they’re trinkets to always-on lifestyles. Owning them takes a backseat to ordering them on demand.

Whether they’re driven or self-driven is increasingly moot. But for those who drive, I mean those who drive because they either love it or because they have to, autonomous cars represent a quandary at the very least. Will people buy or use cars where humans aren’t fully in control? The reality is that self-driving cars are inevitable and yet many stand at an intersection where some people “can’t wait” for them and others wonder whether robocars “will ever happen.”

But where are we really in the race to self-driving cars? That’s a quest that I set out to discover this year. I tracked 22 automakers and 34 hardware and software companies to better understand the varying players and how they each played a role in the evolving ecosystem. The result is a new report that’s available for download today, “The State of Autonomous Vehicles: A ‘Who’s Who’ of Industry Drivers.” It was released in beta format ahead of CES to provide a helpful primer of the self-driving ecosystem and also invite feedback to include companies I unintentionally missed or is expected to launch in 2017.

Are we there yet?

2021 is the year that automakers are pushing as the year that autonomous vehicles will hit the road. To what extent isn’t clear. But if I had to guess, I’d say it’s not the finish line, but a key milestone on the path toward autonomy.

After researching and revising the report so many times, I learned that to answer the question of when autonomous cars will be available isn’t the right question to ask. The real question is, to what extent will self-driving cars operate, when and where and how will that evolve over time?

With all the publicity in 2016 about self-driving cars, you’d think that they were already available on the market. Going back to CES 2016 and late 2015, I was invited by Mercedes-Benz to be a passenger in two different self-driving pilot vehicles (Intelligent Drive E-Class and S500 respectively). Those tests blew me away. While there’s still work to do, it’s incredible at just how far technology has come and how quickly it’s evolving. And, if you’ve ever driven (or been driven by) a Tesla in AutoPilot mode, the standard for self-driving, intelligence, safety and convenience only rises every day.

The technology is rapidly advancing. Everything from cameras, sensors and LiDARs (Light Detection and Ranging) to machine learning and artificial intelligence and the engineers building and connecting everything together, self-driving cars are seeing and learning how to drive on their own. Plus, humans and machines are making notable progress every day.

For example Google (Waymo) has logged more than 3 million self-driving miles on the streets of Mountain View, Calif., Austin, Texas, Kirkland, Wash., and Metro Phoenix to date. Of those miles, more than 700,000 have been accident free. And, 10,000 rides have safely carried Googlers and guests without the capacity for a human being to take the wheel because there is no steering wheel to grab.

At the same time, government regulation and city infrastructure are rapidly changing to meet operating and safety requirements. Cities around the world are facilitating public testing of self-driving cars, under specific conditions, where automakers, mobility services and technology vendors can test and learn while city engineers and planners identify weaknesses and opportunities to optimize and secure smart, connected cities.

The race to 2021

Yes, the race to 2021 is on. However, there will be no clear winner as there is no finish line.

What’s clear is that incumbents and startups are vying to redefine the future of transportation and mobility. To accelerate autonomy, automakers are investing in innovation and R&D centers around the world. Cities are partnering with ecosystem players to modernize regulation. Startups are being funded to develop new possibilities.  And new companies are forming in stealth mode every week to push forward next generation technologies such as advanced computer vision sensors (Chronocam), mobility services (Zoox), development platforms (PolySync), deep learning (DeepScale), deep neural networks, robotics (CANVAS), advanced 3D mapping (Luminar Technologies), and vehicle-to-vehicle (V2V) systems. In fact, since launching the report on the state of autonomous vehicles, I’ve already started to add another dozen companies.

This is getting exciting and overwhelming.

The very idea of what a car is and what it will be is evolving into something that’s aesthetically familiar but far more intelligent. More so, the very idea of what a car is, what it does, how it’s designed inside and out, and even how it’s financed, owned and insured are also set for disruption. As companies progress from Level 0 (no autonomous capabilities) to Level 4/5 (completely self-driving) cars, consumers will have access to incremental innovation that not only introduces intelligent new features and capabilities but also eases them into the idea of robots driving humans.

Please share your thoughts on the state and future of autonomous vehicles in the comments.

Brian Solis is Principal Analyst at Altimeter, a Prophet company, where he studies disruptive technology and its impact on business and society. He is globally recognized as one of the most prominent thought leaders, keynote speakers, and best-selling authors in innovation and digital transformation. His new book, X: The Experience When Business Meets Design, explores the importance of experiences and how to design them for customers, employees and human beings everywhere. Follow him on Twitter and LinkedIn.

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