2023 Thought Leadership Agenda
2023 Digital Agenda
Still recovering from pandemic shocks, companies are now entering an era of heightened economic, financial, market, and geopolitical uncertainty. As we usher in 2023, management teams around the world will need to stay on top of digital trends that will drive their performance in the year ahead and beyond. Here are 11 trends at the top of our list:
1. Firms turn to technology to navigate uncertainty. With the economy weakening, interest rates rising, and productivity slumping, firms will invest more in AI, RPA, cloud, and digitized workflows to cut unit labor costs and boost profit margins. With layoffs expected to rise in 2023, companies will need to keep staff productive and engaged by facilitating remote working and collaboration, providing easy access to data and technical support, and building a safer and efficient workplace. To find their way through uncertainty, they will increase their use of analytical tools to assess risks, run scenarios, predict trends, and identify economic impacts.
2. The metaverse starts to emerge as a new business tool. The metaverse will begin to shift from an outward-facing customer initiative to a robust business tool for planning and decision making, training and collaboration, data and scenario analysis, and R&D and product development. It will be used in combination with other technologies to make customer experiences more immersive and digital twins more effective. Companies will explore use cases geared to their sectors and increase investment to avoid falling behind.
3. Cloud becomes the dominant IT platform for industries. In 2023, on-prem systems will continue to fade away, as firms shift most of their data and work processes to the cloud. That will drive a new era of business innovation, including accelerated product development, faster speed to market, greater data access for R&D, and improved collaboration among staff, suppliers, and partners. The rise of the industrial cloud, which will provide companies with cloud platforms geared to their sectors—will further fuel the trend.
4. Digital convergence supercharges business performance. The use of transformative technologies, such as AI, blockchain, cloud, IoT, quantum and edge computing, autonomous systems, and augmented and virtual reality, will not just grow in 2023, they will also converge to take process, product, and business model innovation to the next level. Examples abound, from autonomous drones drawing on sensors, GPS, and computer vision to smart manufacturing plants running on AI, automation, AR/VR and 3D printing. Digital ecosystems of suppliers will accelerate the digital convergence, setting the stage for Web 3.0.
5. Digital twins transform data analysis across cities and industries. Our recent study of 200 cities, showed that 67% of future-ready cities are using digital twins for an assortment of activities, from planning construction projects to real-time water management. In 2023, adoption of digital twins will grow as companies find new uses cases for their industries. Expect to see widespread use of digital twins to design prototypes, optimize manufacturing processes, conduct predictive maintenance, simulate security breaches, assess sustainability plans, and to study diseases.
6. Companies harness technology to achieve ESG goals. As pressure increases from regulators, investors, and consumers, sustainability will be a boardroom imperative in 2023. To deliver on decarbonization targets and other ESG goals and meet more stringent regulatory standards, firms will need to draw on cloud, AI, IoT, data analytics, digital twins, and other technologies to gather data, track performance, test assumptions, find resource efficiencies, and develop sustainable products, services, and processes. At the same time, firms will boost investments in sustainable technology, from solar power and electric transport to carbon-capture and LED light technologies.
7. Digital starts replace brick and mortar as the primary way to sell to customers. According to our research, digital sales already exceed traditional sales for many small and medium-sized businesses, a harbinger of things to come. To succeed in a digital marketplace, companies must move to take customer digital experiences to the next level, using AI, blockchain, superapps, embedded finance, and AR/VR to make them more immersive, frictionless, personalized, and mobile--and fully integrated with employee experiences. Firms across industries will become more proficient in digital and omnichannel marketing, while investing more in their own digital channels and building their presence on digital distribution platforms.
8. Firms build cybersecurity tech stacks to protect their businesses in a new era of risk. In 2023, as digital innovation accelerates, work extends beyond company borders, and cyber adversaries up their game, businesses will see a step-change in cyber risks. To respond, they will invest more heavily in next-gen cybersecurity tech stacks, including security information and event management (SIEM) systems, mobile device and identity and access management technology, and denial of service (DoS) protection. Companies will combine these and other technologies into a cohesive platform, while building a quantitative approach for assessing risks, measuring performance, and benchmarking results.
9. Cities will accelerate their plans to become future-ready. With climate change top of mind, cities will find ways to make sustainability sustainable by tapping innovative business models and “catalytic” financing. Cities will also harness the power of digital convergence to deliver more innovative urban solutions. For example, in 2023, Seoul will roll out a metaverse version of its city that draws on digital twins and AI and that is linked to the city’s administrative information system. Cities will extend their ecosystems to include partners that can provide them not just the tools, but also the commercial expertise, to operationalize these solutions.
10. The rise of the digital investor. Digital acceleration during the pandemic forever altered the course of investing. Digital investment management is no longer just the realm of young retail investors, it is a preferred channel for investors across generations and wealth levels. In 2023, investors will increasingly expect to invest through personalized mobile apps that enable them to carry out a range of financial activities. They will also demand a democratized choice of investments, from alternative and tax-exempt investments to ESG funds, customized indexing, and specialized advice. With rising regulatory complexity and competitive pressure from Big Tech and fintechs, financial institutions are putting big bets on AI, blockchain, IoT, cloud, and open platforms/APIs, while turning digital innovation into an ongoing process of strategic renewal.
11. Advanced use of AI start to transform a wide range of industries. Firms will make significant progress in using varying forms of AI: Computer vision for autonomous vehicles, medical imaging, and security; Deep learning to accurately handle image and speech recognition; Explainable AI to make decisions more transparent; AI-enabled robots and drones to perform more tasks in manufacturing, healthcare, and logistics sectors. One of the biggest breakthroughs will come from natural language processing, which will make computers adept at generating human-like language to enable better customer service, translation, and content creation. The recent introduction of ChatGDP--which wrote this trend, with my editorial assistance—illuminates the exciting AI road ahead.
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Building a Future-Ready City: A roadmap for the next phase of urban transformation
To provide urban leaders with a roadmap for futureproofing their cities, ThoughtLab teamed up with Hatch Urban Solutions and a coalition of business, government, and academic leaders to conduct this ground-breaking research, titled Building a Future-Ready City. To analyze the latest views and strategies, we benchmarked 200 worldwide cities—representing 5% of the global population. In addition, we surveyed 2,000 citizens across 20 cities, interviewed city decision makers across regions, and held discussion groups with urban leaders and experts.
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