February 2, 2016

Digitalization is about re-discovering the Human

Digitalization isn't just about technology - it's as much about how we're living and behaving as species. In order to surf the pace of change we have set for our world, we need to understand human dynamics from a very fundamental point of view.

As humans we have been around for about 200 000 years. On a universal scale this is a brief period and evolutionarily we have changed very little. However, the environment we live in has changed dramatically. More interestingly, some of the most significant disruptions to our habitat we have orchestrated ourselves.

The agricultural revolution was one of these major developments shifting our biological balance with the world. As soon as we ceased to be hunter-gatherers, we simply ruined our natural diet. Next came the industrial revolution, which compromised our natural physical ways of moving and tore work-life balance apart; the information revolution, which collapsed our circadian rhythms; and finally the social revolution, which has seriously confused how we interact with one another as individuals and within society. If we look at these phases from a cross-disciplinary perspective we come to realize, for instance, that specific conditions such as clinical depression and specific psychological disorders only emerged after these developments. Majority of cancers and cardiac diseases are directly associated with the modern western diet and lifestyle. Natural communities formed by siblings, grandparents and relatives have been broken as people have spread out and live far away from their families.

The environment we have created through these seemingly superior developments is actually very inhuman. No wonder there is tension. Even though clinical life expectancy may have risen globally, quality and humanity of life is still in many circumstances questionable. So if we now ask why are all the changes in consumer behavior and business happening, it is very easy to understand that we as natural species are simply bouncing back. We are regaining our humanity and executing our need to feel well again in the world we live in. We have finally found the capability to liberate ourselves from conventional linear value chains and technocratic, industrial frames of life. We begin to actually value not only life itself, but the experience of life. This is one of the most significant forces of digitalization.

When we talk about digitalization, we easily use technology and business as starting points. However, today more than ever, it is actually human nature that is the ultimate driving force.  Based on this foundation, I introduced five human trends at Tieto’s Bankdagen 2015 event in Stockholm, which illustrate how the tensions in our environment appear in business and human behavior.

1. Experientialization

As humans, we're growing tired of being immersed in digital devices and interfaces. We're starting to find value in real life and real experiences - travel, learning, emotional experiences - instead of basic goods and services.

In turn, we're seeing a rise in interest in technologies such as augmented reality and wearables that enhance, rather than replace, the real world. Elsewhere, successful businesses are selling experiences rather than products and services.

 2. Communal reengagement

A similar phenomenon is our newfound desire to step outside of our online social networks and reengage with one another face-to-face in shared spaces. An example of this is Restaurant Day, which started in Finland in 2011 and is now held in more than 30 countries worldwide. Despite their real-world nature, these events are, of course, organized and propagated via digital services.

3. Inflation of ownership

This increased focus on personal and social experience also translates to a decline in how much we value the idea of material possession. Today's younger generations are not nearly as preoccupied with owning houses and cars as their parents were; they want to have what they need when they need it, and then get rid of it easily once they're done. More broadly, this means a rise in hiring, leasing, sharing and recycling.

4. Consumer empowerment

One of the most profound and disruptive impacts of digitalization on business is to allow the consumer to have much more power and influence over the value chain. Thanks to social networks, practices like crowdfunding, and platforms like Uber and Airbnb, anybody can become an investor, entrepreneur, merchant, taxi driver or accommodation provider in a matter of minutes.

5. Behavioral hacking

Finally, one of the most intriguing new trends in human behavior is the effect of data and the quantified-self on how we live. When we gather and share information on our exercise habits and music preferences, for example, we begin to understand the connections between our environment, our actions and our feelings - and we influence it.

This explains why we're suddenly interested in products like insurance policies that are priced based on our actual health and fitness data, and why those products could actually make society smarter, healthier and more energy-efficient.

From a business perspective, these trends demonstrate the importance of thinking about digitalization and innovation in terms of the human point of view, not the technological one. In the finance industry, for example, customers might value the ability to pay for insurance directly using health and fitness data. For utility companies, the next big thing might be to allow customers to sell the energy they've saved in a given week back to their neighbors in the next.

Key to discovering these kinds of new service concepts is in cross-industry collaboration, which I've blogged about before. Together with human centeredness, this is one of the core principles of Tieto Experience Hub. Often, when we start to innovate, we do it within the context and environment we know – few utility companies currently look in to retail for guidance on new products and services, and banks could gain more insight on consumer behavior by studying how people play video games.

Breaking down these barriers is a big task, but when we put the human at the center of how we think about digitalization, it makes a lot of sense to do so.

Watch the presentation about the same topic held at Tieto’s Bankdagen 2015 event in Stockholm. 

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