The Frictionless Economy

There are many reasons why Amazon, Uber, Air bnb, Netflix and Google have built such successful business models. A key contributor has been their ability to increase convenience for consumers and create an experience which has less friction, than the business model they disrupted. A mundane example of frictionless is me buying coffee at the same street cart daily. Jimmy, my coffee guy, spots me from a distance and keeps my coffee ready. Skipping the line, I slip him a dollar and I am on my way. It’s not just about those few New York Minutes that I saved, but it’s also about me not having to speak my order out (coffee with milk, two sugars) or wait for the change or whatever else it might be on that given morning!

Now there is quite a debate going on, on what the effect of convenience is on the psyche of humans. To which I will say, money can buy you a lot of things, even love and happiness maybe 🙂 but it can’t make your day 25 hours. And like a dollar saved is a dollar earned, a minute saved is a minute earned!!

My point being, organizations that keep disrupting traditional businesses by creating experiences with reduced friction or keep improving a disrupted business model by moving towards a frictionless experience, will continue to thrive and create value for their consumers and their shareholders.

So, let’s explore the art of the possible in a frictionless economy, using an example we are all familiar with, that of Uber. The reasons Uber is powerful are:

  • I don’t stand in the rain to hail a cab, I order it from my phone
  • I don’t enter my pick up point or give directions, the GPS does
  • And what I absolutely love – After a red eye flight with turbulence, and after a long wait at the baggage carousel, it’s Uber that gets me fastest and cheapest to my bed with the least hassle. No standing in taxi cab queues, no speaking out addresses, no fumbling for your wallet or waiting for change or receipts and I could add a few more points for dramatic effect!

But the elimination of friction does not stop here. For example, I still must open the Uber app to call a cab. That friction is now being eliminated by voice assistants like Alexa. And soon, ordering an Uber will become further frictionless. For example, my MS Outlook calendar will be synched with a variety of services (think Alexa Skills) including Uber. MS Outlook puts in a reminder to wake me up, calls my Uber based on expected time to the airport and notifies me when my ride arrives. At my destination, I deplane and walk to the shared cab area directly, because MS Outlook is on the cloud and has ordered my Uber based on tracking my flight and need I say that it knows where I am headed too!

That is the power of Frictionless, enabled by key building blocks like the Smart Phone, Internet, Cloud, API connectivity between applications, AI etcetera. And while this seems easier in a B2C scenario, it is possible in the B2B scenario too. 

For example, in the Supply Chain of the near future, SKUs are auto ordered by stores using a combination of Video (that tracks items moving of shelfs) and AI enabled prediction (that combines multiple factors like history, weather, current fads etcetera). Robots load the SKUs from the warehouse into driverless Telsa trucks and robots unload the same and replenish shelves. RFID tags on every SKU will automatically update inventory at both the warehouse and the store. 

A while back I met the Head of Business Intelligence for a reputed NY Hospital on my daily commute. We got talking about analytics and AI and he gave a great real example. They are moving towards tagging every instrument in the operating room with a RFID (https://www.stanleyhealthcare.com/products/t7a-autoclave-tag ). This enables Business Intelligence Systems track the actual whereabouts of the instruments and helps realize a variety of use cases. For example, detect if an instrument was left in the body of a patient post operation (more common occurrence than you and I would like to believe), track if instruments have been disinfected, track inventory across hospitals for better access and reduced redundancy, track pilferage etcetera. A new capability of tagging each instrument has enabled so many new use cases in a much more frictionless manner. This is happening NOW!

Another example of a future possibility is cross border payments – a business which has legacy infrastructure, thin margins, very large volumes and high regulatory and compliance overheads. Blockchain is purporting to disrupt this business. Let’s leave aside the question of will and when, Blockchain will enable this disruption. Instead let’s look at the underlying possibility – the promise of a very secure mechanism to record ownership and transfer of assets. So how could it disrupt the way we do things and make it frictionless? Soon when my mother wants to send money to her grandson on his birthday, all she has to do is say ‘Alexa send 100 dollars to my grandson for his birthday’. Alexa knows the context – which grandson based on whose birthday it is next, which account to debit, which account to credit. Authentication of my mother’s identity happens through her voice print and facial recognition through the cameras in the home. The cross-border money movement from India to US happens through the Blockchain backbone. From 15 days, the transaction is now complete in 15 minutes.

In the future Friction will be introduced by choice. For example, in the scenario above you probably want Alexa to repeat the instructions and seek confirmation. It may also suggest sending a text to the recipient’s parent as he is a minor. In the Uber example, I should have the option to reroute the destination or add a stop – maybe I want a sandwich before I reach my destination. Friction will also be introduced for one very critical reason, to ensure information security, data privacy and any other steps that may be required based on regulatory directives.

For success in the future, organizations must design their services and products keeping the concept of the Frictionless Economy in mind. For consumers this will mean the ability to move away from transactional work into more judgement based and analytical work, for example how to make businesses even more frictionless!

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