OUT of the BLUE Iam 2/4 .NOW EDITORIAL

OUT OF THE BLUE iAM 2/4 .NOW EDITORIAL

The Digital Revolution is all around us. The impact of digitization on Under the overarching theme iAM, we have developed four established businesses, institutions, and start-ups is profound, and different concepts. is opening up new dimensions to deliver products and services and .me: How individualism and personalization take on new to interact with customers. dimensions with digital. However, perhaps even deeper than the industry changes are .now: How digital is changing our perception of time and our use the underlying changes that digital is having on our personal of resources and professional lives. In a positive feedback cycle, users foster the development of innovations and, at the same time, change .here: How digital is broadening the concepts of place behaviors and preferences upon using them. The expectation of and presence technology to make our lives easier and faster is growing. As digital continues changing what we do, the question arises: is digital .mind: How digital is affecting our minds and our attention changing who we are? The material is crowdsourced and linked for further reference Out of the Blue digs into these changes: new behaviors, new and reading. We are only scratching the surface and invite you to preferences, and new social mores that are emerging with such a join us on this journey. Both .here and .mind are scheduled for a strength and transformative power that we could be witnessing the January release. dawn of a new concept of the self: the i.AM.

Knowing how individuals evolve in the digital revolution will be – Oliver Wyman’s Communications, Media and Technlogy practice critical for business and institution. Out of the Blue’s purpose is to contribute to this knowledge.

2 “Are our devices turning us into a new kind of human?”

– Amber Case, cyborg anthropologist, TED Radio

3 iAM

Digital is an integral part of our lives. Technology is blurring the lines between the digital, physical and biological spheres while reshaping our perception of space and time and even the concept of our identity or persona. The expectation of technology to make our lives easier and faster is growing. As digital continues changing what we do, the question arises: is digital changing who we are?

4 iAM INDEX

.ME How individualism and personalization take on new dimensions with digital.

.NOW How digital is changing our perception of time and our use of resources

.HERE How digital is broadening the concepts of place and presence

.MIND How digital is affecting our minds and our attention

Ogilvy & Mather China Center For Psychological Research, Shenyang Phone Wall Campaign. Used under permission

5 How digital is changing our perception of time and our .NOW use of resources Digital platforms have enabled producers to connect with consumers to deliver solutions and results faster than established organizations, responding to immediate needs, often in user friendly and intuitive ways. They have also demonstrated their effectiveness in freeing up underutilized resources in the moment of need. Successful services are built around a moment, and the context of that moment, often in a network that leverages independent contractors and partnerships. We can step in and out of experiences as we wish and as our needs evolve. In this way, digital platforms have given consumers more choices, more tools, more information, and more peer-to-peer power than ever.

“We no longer have a sense of a future, of goals, of direction at all.

We have a completely new relationship to time; we live in an always-on “now,” where the priorities of this moment seem to be everything.” – Douglas Rushkoff, American media theorist

7 A SHIFT IN SOCIAL CAPITAL THE PREVALENCE OF “NOW” IN DECISIONS ON HOW TO INVEST OUR TIME AND RESOURCES

Our linear lives are changing. The standard path that previous generations followed of investing in a good education, landing a good job with a company HOME OWNERSHIP DOWN AND where they stayed for the majority of their career, buying a house, and saving RENTING UP up for old age is no longer valid, possible, nor always desirable. According to the English Housing Survey 2014- Materialism is losing importance in defining who we are and as a measure 2015, the past decade shows a clear trend of success. We increasingly define ourselves and others by different status towards increased renting as opposed to buying symbols such as experiences, authenticity, connection, health, ethical, for young people. In 2004-05, 24% of those and sustainable lifestyles, etc., that by definition are more ephemeral. aged 25-34 rented privately. By 2014-15 this had increased to 46%. Over the same period, In parallel, we are valuing “now” more. Secularized societies, consumerism, the proportion of 25-34 year olds buying with a and dimmer prospects of the future are opening up a new spirituality rooted mortgage decreased from 54% to 34%. in mindfulness and making the most of here and now. In the US, the number of renter households City life is also spreading: Not only are we growing more urban, but digital increased by nearly 9 million from 2005 to devices also are enabling us to bring urban experiences with us wherever 2015, the largest 10-year gain on record. Rental we go. demand has risen across all age groups, income levels, and household types, with large increases among older renters and families with children.

Sources: English Housing Survey, The State of the Nation’s Housing 2016

8 The internet makes human desires more easily attainable. In other words, it offers convenience. Convenience on the internet is basically achieved by two things: speed, and cognitive ease. If you study what the really big things on the internet are, you realize they are masters at making things fast and not making people think.” – Evan Williams, Twitter co-founder

ON-DEMAND DIGITAL PLATFORMS OFFER INSTANT GRATIFICATION, CONVENIENCE, AND EASE OF USE

Our fast-paced connected lives and the increasing amount of economic activities centred around online platforms, where SIZING THE ON-DEMAND ECONOMY sellers can reach customers directly by responding to an Europe: In 2015, gross revenue in the EU from collaborative immediate or specific need, have resulted in the rise of a platforms and providers was estimated to be €28 billion. booming on-demand economy. The biggest five sectors were accommodations, passenger Most notable in big cities, an array of on-demand services promises transport; household services; professional and technical to make our lives easier by summoning a chauffeur, butler, chef, services, and collaborative finance. florist, bartender, or fashion consultant, as well as almost any US: In 2015, 22.4 million consumers were estimated to conceivable item via apps, often with the promise of instant spend $57.6 billion. The largest category spends were online delivery and/or gratification. marketplaces (16.3 million consumers, $36 billion annual While some on-demand companies are relying on independent spend), transportation (7.3 million consumers, $5.6 billion contractors to get high volume for one-time transactions with annual spend), food/grocery delivery (5.5 million, annual close to zero margin, others are looking into subscription models, spend $4.6 billion). optimization of delivery routes, and training and coaching of their According to Crowd Companies, the collaborative economy own staff to find viable business models and to deliver timely and has received $28 billion in funding from 2002 to date. While convenient services. investments are still happening, the rate seems to be slowing, and startups are disappearing or consolidating.

Sources: Harvard Business Review, European Commission, Crowd Companies

9 REAL-TIME MATCHMAKING DIGITAL PLATFORMS ENABLE US TO LEVERAGE RESOURCES WHEN AND AS WE NEED THEM

Apart from saving us time and allowing us to order nearly everything on our smartphones instantly, the on-demand or sharing economy allows for THE VALUE OF UNDERUSED RESOURCES AND optimization of underutilized assets, property, and skills. MONEY SAVING Along these lines, the true value of the likes of Uber and Airbnb is that they The potential economic gain, linked with a better fulfil our needs for mobility, personalized “boutique” lodging, and adventure use of capacities (otherwise underused) as a result without having to own and deal with the hassles of ownership of the assets of the sharing economy, amounts to €572 billion in we temporarily use. annual consumption across the EU-28, according to a recent study by the European Parliament. Likewise, online university courses offered by the likes of Coursera and edX offer us the possibility to tap into micro-targeted learning experiences without A June 2016 Eurobarometer shows that users investing in high tuition fees and dedicating our time entirely to studying. mainly appreciate that collaborative economy services are easily accessible and cheaper than traditional services, and that products or services can be exchanged, rather than paid for. A Piper Jaffray report from June 2015 found that private accommodations available through digital platforms, such as Airbnb, were generally less expensive than hotels in cities throughout the world, often undercutting hotel prices by more than 50%.

Sources: European Parliament, European Commission, Piper Jaffray

10 NEW STAKEHOLDERS IN A .NOW WORLD, THE ROLES OF AN EMPLOYER, AN EMPLOYEE AND A CUSTOMER ARE BEING REDEFINED

Just like technology is disrupting traditional business models, it is also creating challenges for regulators around the world. Across the US, Europe, and Asia, the kinds of Digital platforms are bringing together people who might otherwise not markets most impacted by the sharing economy be consumers with people who might otherwise not be producers. The on- are those with a history of significant top-down demand economy is creating new stakeholders in need of protection and new regulation: transportation, lodging, employment, problems that need to be remediated. and others. In June 2016, city officials from New York, Although many on-demand companies are global in their reach and scale, Paris, Seoul, Athens, Barcelona and Toronto the impact and spread of some is mostly felt in big metropolitan areas and in got together to produce a common framework tourist destinations. Around the world, on-demand companies have had a to promote clearer ground rules for sharing- mixed reception, ranging from a warm welcome, acceptance to outright bans. economy companies.

Sources: Swiss Re, Bloomberg

11 ON-DEMAND HOW .NOW IS TRANSFORMING INDUSTRIES

TRANSPORTATION: Digital platforms enable on-demand ride EDUCATION: Digital platforms allow for life-long learning hailing, car sharing and car-pooling when and as needed The success of Uber, that is currently valued at approximately Top universities are offering MOOC (Massively Open Online $62.5 billion compared to Ford´s and Honda´s value of Courses) that carry no or only a nominal cost, and are frequently approx. $60 billion each and GM´s market value of around $55 delivered by leaders in their field. billion, has inspired automotive companies to rethink their positioning – reframing themselves as providers of mobility, not According to Class Central, an online platform that aggregates merely manufacturers of vehicles. Read more MOOC info, about 4,200 MOOCs were offered by more than 500 universities around the world, with the number of students who Tesla aims to make all vehicles fully self-driving, and sees signed up for at least one course hitting over 35 million in 2015. In car-sharing as a way to make buying one more affordable. August 2016, there were 1300 online courses starting; 105 of them were new additions. HEALTHCARE & CARE: Digital platforms open up opportunities Other examples include Coursera, edX, Chegg, TakeLessons for a more personalized healthcare and Udemy. Companies such as Doctor on Demand, Pager, and MedZed use video platforms and in-person visits to provide fast, easy, and DELIVERY & LOGISTICS: Digital platform spur the growth of cost-effective medical access. The companies are leveraging on-demand delivery companies certified doctors and nurses, who often provide services in their spare time. By using a combination of courier services on wheels (self-employed contractors on bikes, motorcycles, cars, foot, etc), subscription Companies are also increasingly using digital capabilities to develop services, partnerships, aggressive funding and algorithms, a highly personalized insights into an individual’s behaviour, with the number of competing on-demand delivery services are racing to ultimate goal to enable patients to cope with their condition and get things moving. prevent further damage to their health. Companies include European-based Delivery Hero and Deliveroo, US-based Uber and Postmates, and Asian-based WaiMai. ACCOMODATION/SPACE: Digital platforms open up new ways of finding, renting and sharing space STATISTICS & INFORMATION: Digital data analysis compete Platforms such as Airbnb have offered people to rent out excess with public sources for close to real-time data spare-rooms and have offered tourists a different, often better prices, more unique and customized experiences. Chinese Baidu uses billions of location records from its 600 million users, as a lens on the Chinese economy to tracking the flux of RefugeesWelcome connects individuals in private homes with people around offices and shops as a proxy measurement for refugees in need of lodging. Read more employment and consumption activity. Other sites, such as HomeAway, HomeExchange and Love Stanford University researchers have been training an AI to identify Home Swap allow members to rent out or swap their houses in regions of poverty from daytime satellite images. By picking out 150+ countries. water sources, signs of agriculture etc., the new system is 81% more accurate at identifying poverty in African countries than Similar short or long term rental for office spaces are also conventional night time analyses. popping up, allowing workers to network, connect or find a breathing place. In the Philipines, the World Bank partnered with Grabtaxi to use real-time taxi data to improve traffic in Manila. In the US, Uber has created a restaurant guide by analysing the pick-up and drop-off points in 12 cities.

12 So the magic there is, you basically bring the cost below the cost of ownership for everybody, and then car ownership goes away.” – Travis Kalanick, Uber Co-Founder and CEO

CASE STUDY

UBER Redefining transportation

By removing the friction from the typical taxi cab transaction, and reinventing the customer experience, Uber has changed the taxi industry in many cities UBER IN NUMBERS worldwide. Available in 507 cities around the world The Uber experience is 100% smartphone driven: By using a network of real-time 1 million drivers on the Uber worldwide platform geo-located independent drivers and riders, Uber matches demand and supply in an asset-light model. 1 billion rides completed in December 2015 The ultimate goal of Uber to become a substitute for car ownership, might not 2 billion rides completed in June 2016 be far off: According to a study released by the American Public Transportation 62.5 million rides completed in July 2016, up Association, the more people use shared modes of transportation, the more likely 15% from June. they are to take public transit, own fewer cars, and spend less getting around. $62.5 billion valuation, the largest for any A paper by Freakonomics’ Steven Levitt, et al, indicates that consumers private start-up in the world, and in history have benefited greatly from Uber. They estimate that for each dollar spent by $8.71 billion equity funding raised in 12 rounds consumers, about $1.60 of consumer surplus (i.e. how much a customer would from 70 investors, including Goldman Sachs, have been willing to pay but didn’t have to) is generated. Overall consumer Google, Baidu and Jeff Bezos. surplus generated by the UberX service in the United States in 2015 was estimated to be $6.8 billion (double what the drivers were paid, and six times what Uber itself earned).

Sources: FaberNobel Innovate, American Public Transportation Association, Consumer Surplus at Uber

13 Our goal is that by 2018, we will be able to serve 30 million passengers and 10 million drivers on a daily basis.” – Jean Liu,President Didi Chuxing

CASE STUDY

DIDI CHUXING Mobilizing China

For China´s fast-growing population of urban residents, Didi Chuxing is becoming a real commuting option. Didi lets users select a taxi, private car, CONSOLIDATION AND shared car, shuttle van, or bus to pick them up. Thanks to a partnership with FURTHER FUNDING Chinese social media Tencent, Didi´s ride-hailing button is included in WeChat. Furthermore, 80% of all taxi drivers use Didi to find passengers. In August 2016, Uber sold its UberChina operation to Didi in exchange for 20% stake in Didi has also introduced an app that lets passengers book test drives of new the merged company, while Didi has invested cars on behalf of several carmakers, including Mercedes and Toyota. Users send $1 billion into Uber. Both companies have a request for a test drive, and a nearby owner of the relevant car will deliver it. invested billions of dollars in the Chinese market Users can complete purchase of a vehicle through the app, and can earn cash and have yet to turn a profit. back if they lend out their new car for test drives. In January 2016, Didi Kuaidi reported it had received 1.4 million requests in 90 days from customers seeking Didi Chuxing has raised $7.3 billion from 17 to use the test-drive service. investors, including an $1 billion investment by Apple in June 2016. The company is currently The company thinks technologies like artificial intelligence and machine valued at $35 billion . learning could help anticipate passenger needs and meet demand. In an ideal scenario, Didi Chuxing would be able to send drivers out to crowded locations before rides are even requested.

Sources: Wall Street Journal, Time, Venture Beat, Tech Insider, Bloomberg

14 CASE STUDY

MOBIKE On-demand bikes

Chinese bike sharing Mobike created by a former Uber employee, GPS to enable user to find nearby bikes. Once located, users scan offers a bike-rental programme in Beijing, Shanghai, Guangzhou, the QR code located between the handlebars of bikes with their and Shenzhen that allows users to pick up one of its 30,000 rental smartphones to unlock the bike. Once the journey has come to an bikes anywhere for 1RMB (€0.14) per half hour. end, users activate the lock again in any parking area with white lines to park the bike. Instead of using depots like many bike-sharing schemes, Mobike uses QR codes and GPS that allow users to find and leave bikes The app also comes with a health tracker, giving riders information wherever they want. To register, users pay a one-time deposit on how far they’ve travelled and the calories burned en route, and of RMB 299 (€40) and download the Mobike app. The app uses indications on how to get to nearby vacant bikes.

Sources: Smartshanghai, Trendwatching.com, BloombergTechnology

15 CASE STUDY

REFUGEES WELCOME Airbnb for refugees

Founded in Berlin and launched in multiple European countries in October 2015, Refugees Welcome is an “Airbnb for refugees” that connects individuals in HOW IT WORKS private homes with refugees in need of lodging. 1. Register your flatshare and provide us basic The organization has six full-time staff and 60 volunteers, and has helped house information about your accommodation. 287 refugees across Germany. 2. We will put you in touch with a local buddy who will liase with you and a refugee Its success is spreading as far and wide as the refugees themselves, with national websites in Portugal, the Netherlands, Canada, Austria, Spain, 3. We can help you find ways to pay your rent. Poland, Greece, Sweden, and Italy. More than 5,000 flat shares are currently Keep in mind you don’t have to pay the registered worldwide. rent yourself. 4. Your new flatmate will move in. Of course we About half of the rent costs for refugees’ private lodging is covered by German will continue to support your flatshare. job centres, and another quarter is financed by private donations...... Refugees have daily interactions with their hosts, which facilitates further To ensure the match is successful, people offering integration. It has also had a profound effect on how hosts, their families, and lodging are asked what languages they speak, friends view refugees. what their housemates, if any, are like, and to describe their city and surroundings.

Refugees Welcome Sources: European Commission, Irish Times

16 CASE STUDY

AMAZONFRESH AND IN-FRIDGE On-demand grocery delivery

Supermarkets are facing a double challenge in getting food delivered in a timely manner and at a good price. The majority of grocery-delivery services IN-FRIDGE DELIVERY BY ICA SWEDEN make money by marking up grocery items, per-delivery fees, and upgrades to other, less-costly annual memberships for free deliveries on orders over a In Sweden, e-tailer ICA has been trialing In-fridge, certain size. a delivery service that includes unpacking the customer’s groceries in their home, during the AmazonFresh is investing in refrigerated warehouses, inventory, and delivery first half of 2016. services. Its same-day or next-day grocery delivery service is offered in 20 Participating test customers place their order cities in the US and in London. Customers can use AmazonFresh for $14.99 per online and include details about when they will be month as an add-on to their Prime membership. Amazon is reportedly also out of the house. PostNord, the delivery service planning to build its own brick-and-mortar convenience stores and pickup that ICA works with, goes into the customer´s locations to push further into grocery deliveries. home and unloads the order by using a Glue smart digital lock and key, that customers can control remotely by using a smartphone or a temporary digital key. While the delivery service comes at no extra charge during the trial phase, ICA and PostNord said they intend to pass on the cost to customers in the future.

Sources: Tech Crunch, Bloomberg Technology

17 CASE STUDY

RENTOMOJO, FURLENCO, FLYROPE AND STYLEFASHION On-demand furniture and fashion

Forget IKEA – online furniture renting in India is booming, as millennials value convenience and ready-to-go swappable solutions over ownership. SWAP AND RENEW DESIGNER FASHION Rentomojo offers furniture and appliance rental services in eight Indian cities In a similar fashion, Indian on-demand platform to cater for the growing rental market and increased mobility among young “Flyrobe” offers users premium designer wear people. The company promises to bring ease, affordability, and flexibility to all and outfits for rent. The company was founded things related to furnishing a home or an office by offering curated furniture- in September 2015 and was recently selected rental solutions for a monthly fee (the typical customer pays $30 per month as one of seven Indian startups (together with for an average of eight months at a time). The current team of 320 people at Rentomojo) to be part of the third edition of the Rentomojo serves approximately 20,000 subscribers. Google Launchpad Accelerator. Competitors to Rentomojo include Furlenco, which has shipped $20 million In Singapore, StyleTheory offers three swappable worth of furniture to 15.000 customers in India, with a furniture utilization rate items of designer womenswear at a time for a of 95%. The company conceptualizes, designs and manufactures its furniture, fixed monthly subscription fee of $63. Members and rents out “furniture packages” for a minimum of three months. The brand can borrow up to three items from brands positions itself as “like new” furniture: The company´s refurbishment process, including The Kooples, Carven, and Maje, and which includes sterilization, sanitization, deep fabric cleaning, and polishing, return them in a prepaid envelope when they’d ensures that returned furniture is as good as new before it gets rented out again. like to try three new pieces. Shipping and laundry of all items is included in the subscription price. As of October 2016, StyleTheory has 3,000 customers on its waiting list. Sources: Knowstartup, Techcrunch Trendwatching.com conference, London, October 2016

18 CASE STUDY

SCOOTERINO AMEN Confession and blessing on-demand

Residents of Rome in need of a blessing no longer have to go all Upon arrival the priest will perform a blessing, confession, or the way to church. Instead, they can order a service from a priest interview with the customer free of charge. After the meet, the user via Scooterino Amen, and the ride-sharing app will bring a priest can rate their priest. to them on a scooter. Visitors to the city can also participate and receive a blessing or make confessions on-demand. Scooterino app is Rome’s first scooter ride-sharing mobile app that allows passengers and scooter drivers to share rides on motorini. To take part, Catholics simply download the Scooterino app and request a priest in the same way they would an Uber. Then, a scooter driver picks up a nearby priest and drives them to the location.

Scooterino Amen Sources: Wanted in Rome, Scooterino Amen, Springwise

19 CASE STUDY

ON-DEMAND OFFICE AND SPACES Flexible, creative, and multi-cultural work experiences

Coboat is a co-working space on a catamaran that travels the world. KantoorKaravaans are mobile micro-offices that let office workers The ticket includes accommodation, catering and high-speed do their day-to-day business in the middle of beautiful, national internet free to any digital nomads, founders, or freelancers who parks in the Netherlands. KantoorKaravaans are mobile off-the‑grid are able to book one of the 20 available spots by week. Additionally, workplaces that come equipped with work-related necessities Coboat enables inspiration and knowledge exchange, as well as the including Wi-Fi, coffee machines, and conference rooms. chance to experience the world on water. Getset is a location services platform that allows everyone to Breather offers “peace and quiet on demand”: spaces for around upload and rent out their spaces – offices, homes, and studios – £20 an hour, in New York, San Francisco, Boston, Los Angeles, as film locations. Chicago, Washington DC, London, Montreal, Toronto, and Ottawa. The private workspaces are intended to be used for a wide range of Coboat adventure purposes, from a spot to get some work done, to a place to catch an hour of rest during a business trip. Breather official video

Karavaan official video

Sources: Coboat, Breather, KantoorKaravaan

20 CASE STUDY

ON-DEMAND E-RESIDENCY Digital residency for entrepreneurs

Estonia, one of the smallest countries in the world and a leader in e-government, hopes to grow its digital residents to 10 million by 2025 by E-residents can: offering a digital affiliation. Establish and administer a company online Launched in December 2014, e-residency gives citizens of any nation the Conduct all the banking online, e.g., make opportunity to set up Estonian bank accounts and businesses that use a electronic bank transfers verified digital signature and are operated remotely, online. The e-residency does not include a passport and citizenship. Nor do e-residents automatically Have access to international payment owe taxes to the country, though digital companies that incorporate there service provider and obtain a physical address can benefit from the country’s low tax rate. Digitally sign documents (e.g., annual reports, contracts) within the company as well as with The process to set up an e-residency includes four steps, a one-month external partners waiting time, and a €100 fee. So far 14,200 e-residencies have been granted and 1,147 new companies have been set up, according to government Declare taxes online statistics in November 2016. The majority of applications have come from Finland, Russia, US, Ukraine, UK, Italy, and Germany.

Official video

Sources: e-Estonia.com, Government statistics on e-residency

21 DIVE DEEPER

TEXT VIDEO & AUDIO

The Sharing Economy, PwC The Sharing Economy: Radical capitalism or high-tech pocket money?, Battle of Ideas, October 2015 Shared, Collaborative and On Demand: The New Digital Economy, PewResearchCenter, May 2016 The sharing economy: New opportunities, new questions, Global Investor 2.15, Credit Suisse, November 2015 Digital Matching Firms: A New Definition in the “Sharing Economy” Space, June, 2016, US Department of Commerce The On-Demand Economy Is Growing, and Not Just for the Young and Wealthy, Harvard Business Review, April 2016 Excel database with funding details on Collaborative Economy (by industry), Crowd Companies Honeycomb 3.0 overview of the collaborative economy with examples of more than 280 selected and screened companies across 16 industries. Crowd Companies Personalized Recommendation Engines Are Coming to Health Care, Sam Glick, Harvard Business Review The Sharing Economy: Disruptive Effects on Regulation and Paths Forward, Swiss Re Center for Global Dialogue, June 2016 Collaborative Economy in Europe, European Commission report Uber: The Transportation Virus, FaberNobel Innovate

22 Out of the Blue is a periodic publication from the Oliver Wyman CMT (Communications, Media and Technology) Research and Knowledge Management Team aimed at highlighting trends within the communication, media and technology space.

The Out of the Blue Team

Communications, Media and Technology Knowledge Management Mia Burner, Senior Knowledge Manager Borja Xercavins, Senior Consultant

Editorial Lorenzo Miláns del Bosch, Partner, Madrid Iria Aparicio, Manager, Knowledge Management

Marketing Kate Wildman

Design Paloma Sanchez Michael Tveskov Melissa Ureksoy

For more information, please visit www.oliverwyman.com