(Podcast) Horizon next: A future look at the trends | Deloitte Insights

What's next? A future look at the tech trends Insights in Depth: Tech Trends 2020

12 August 2020

In this episode of Insights in Depth, Deloitte leaders Mike Bechtel, Scott Buchholz, and Sonal Naik talk to Tanya Ott about the tech architecture of the future, the value of the freedom to fail, and investing in the new and the next.

“There’s this old quote in strategy land that operations eats strategy for breakfast. And what’s underneath that quote is this idea that the urgent has an undefeated record against the important. ”

—Mike Bechtel, futurist, Deloitte Consulting LLP

“The same way that we say, if you’re not falling while you’re skiing, then you’re not learning. If you’re not failing while you’re doing technology, then you’re probably not really pushing the boundaries of the possible.”

—Scott Buchholz, emerging trends research director, Deloitte Consulting LLP

Tanya Ott: We’re taking out the crystal ball and looking at the next horizon of technology today on the Press Room.

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Tanya: I’m Tanya Ott, and truth be told, I don’t have a crystal ball and neither does anyone else. But what I do have is three really smart people who keep their fingers on the pulse of academia, startups, venture capitalists, and established companies in hopes of charting the potential futures of technology.

Scott: Hello, everyone. This is Scott Buchholz. I am the emerging trends research director for Deloitte, which means I have the privilege of drafting our annual tech trends report.

Sonal: My name is Sonal Naik. I am managing director and leader [of] Deloitte Catalyst, which is our innovation team responsible for connecting with the startup ecosystem, curating the landscape, and incubating solutions.

Mike: Hello, everybody. Mike Bechtel. I’m a managing director and futurist here with Deloitte, where I look after our research, sensing and sense making of technologies two or more years away from widestream business adoption.

Tanya: So, Mike, does your business card actually say futurist on it?

Mike: It does. It actually does.

Tanya: That’s so cool. So we are here to talk about the future, to talk about Horizon Next. Sonal, we wanted to start by having you talk a little bit about Deloitte Catalyst. What was behind it?

Sonal: It’s funny, we’re in the business at Deloitte of giving sound advice to clients, and around the topic of innovation we know that leading organizations have a disciplined and measured program that kind of aligns to business strategy. So we stepped back and we knew we needed to take a programmatic approach. But we also had this philosophy that action is going to lead to more insight than planning and perfecting the approach. So we really wanted to mobilize a team quickly and try something and continue to iterate and see what worked. We had some early success because we started in the Israel ecosystem, which is contained, given the size of the geography and just the culture and the environment in Israel. We tracked the new technologies and players through a dedicated sensing and scouting team, and we built relationships with startups and incubators and investors and followed these relationships based on how much traction they were getting. And we learned a ton from that standup. Based on these learnings, we replicated the model in the US, and we formalized as a full team called Deloitte Catalyst. In addition to Tel Aviv, we expanded into regions in the US that were really fostering innovation—Silicon Valley, Austin, and the Northeast, like New York and Boston. This is where we were seeing a lot of energy, not only a lot of investment flow, but a lot of emerging companies that were doing some interesting things. But the US ecosystem, unlike Israel, is much larger. We had this breadth across over 10 domains or focus areas where we started to do our sensing and scouting and incubating. This proved to be quite a challenge for us because we had too much breadth. We had to step back. We discovered in order to drive the momentum, we needed to focus on fewer things and go deeper. So we restructured to six areas of focus for our innovation team. We aligned by industry and sector, which was for us an easier connection to understanding our clients’ unmet needs. And while we’re confident in this approach for now, we know we may need to pivot again. In this dynamic environment, flexibility is key. So whatever kind of structure you set up has to be willing to change with the times based on what you’re learning from the market.

Tanya: Besides that recognition that the scope was too broad when you came to the United States, what are some other examples of things that you realized in doing this that were not the way to do this work?

Sonal: We discovered here in the US that while these hubs in these key cities were really important, you also had to look across the nation because while you might find a really interesting solution in Palo Alto, another solution might be in Kansas City. You really have to be able to compare and contrast. Since we’re not directly investing and we don’t make a direct bet, unlike the VCs [venture capitalists], we should be looking at the best solution that is going to meet our needs. While we centered our teams in these hubs, we needed to be flexible to build relationships across the country. We really were about localized ecosystems, building relationships face to face, establishing personal connections. And while that was really important, we also discovered you need to be able to make relationships across the screen, too, because you want to be talking to the guys in Iowa, just like New York. We needed that flexibility as well. We couldn’t be in every city.

Tanya: Let’s talk about this transition from what’s new to what’s next, because it’s really easy to get very fixated on what’s new now, which is an important thing to do. But what you guys are really looking at is what’s coming up next down the road. What’s over the horizon, Scott? Maybe you could set us up and talk about that just a little bit.

Scott: We often try to get to the future by laddering on what we know today to generate our imagination for tomorrow. And sometimes it’s easier to imagine a far-flung future and work backwards from that far-flung future to how we might get there, in order to figure out what we do next, and then, and then. We can always change our minds, but at least it gives us a path to move toward something we consider positive and a destination we can all get our heads wrapped around.

Tanya: Mike, you’re the resident futurist. This sounds like the tension that we see between being somewhat passive and waiting for something to come to you or this idea of striking out and trying to find something unknowable. Mike, you would argue, I think, that it doesn’t have to be unknowable. And as Scott said, if you just envision where you want to go, that helps you a lot, right?

Mike: It does, Tanya. Practical people, and none are more practical than business people, tend to dismiss efforts to predict the future as fanciful because there’s more ways to be wrong than there are to be right. So the future is waved off as opaque when foresight might not be 2020. But even if it’s not transparent, it’s translucent. There are signals in that noise. To Scott’s excellent point, if we look at different flavors of the future, all the possible futures for starters, and then take a swing at what are the probable futures among them, and then a third cut at the preferred futures. As Scott said, the places we aspire to be, we call that looking backward, backcasting. People get it wrong when they forecast, because with forecasting you’re encumbered by today’s orthodoxies and in incrementalism and inertia. Backcasting says, we want to be there. Let’s work backwards to figure out how to build that bridge.

Tanya: How do you create this, you call it a matrix of maybes, things that could be in the future. How do you go about finding those and figuring out what they’re going to be?

Mike: As Scott and Sona will tell you, I’m a sucker for alliteration. So whether it’s a matrix of maybes or a portfolio of possiblies, you had me at hello.

But the real idea is this—taking a page, to Sonal’s point, from startup culture, you need to carry with you that freedom to fail. That willingness to, as we said earlier, be wrong even more than you’re right. To build that matrix of maybes, what we do is, frankly we set out a small team whose primary job qualification is curiosity. They inventory everything they can find that is “new to them” every darn day. Over the course of a calendar year, we’ll have literally nearly a thousand novel technologies with not much more than a Twitter-length description behind each. But in doing that, you start to develop muscle memory. You start to develop instincts and court vision, and before you know it, you see patterns. You see clustering of, “This thing seems a lot like that thing and I’m going to ladder these up into a concept I call X.” That matrix of maybes, it starts as a whole bunch of noise. But like anything else, practice, practice, practice, you start to refine those into clusters that makes sense. And over the course of the next several years, those clusters grow into big household name terms, like cloud computing or one day, quantum computing.

Tanya: So you’re talking about not predicting, but rather prospecting. You’re like people out shoveling for gold a couple of centuries ago. But where do you go looking for it? Where do you find these threads that you’re able to identify, latch onto, and then build into a structure?

Sonal: If we think about what we did as Catalyst, we used traditional resource tools. We used relationships to keep a pulse on what’s happening now and what’s coming. And for us, we formed some early relationships and partnerships with accelerators and incubators, particularly in some key sectors where we knew we needed some help to discern the landscape, [such as] government and health care, where there’s just so much happening. These partnerships helped us to glean the signals from the noise. And then certainly, looking at VC relationships, who, based on their investment thesis, we could figure out, OK, these guys are the ones that we might want to talk to that could help us identify some of the key technologies, key solutions, because they’re conducting diligence at a massive scale.

Mike: Sonal speaks very clearly about the startup activity and the venture activity that swims around that, no pun intended on sharks. But there are other signals even earlier. Before the startup activity, we can look at activity in the open-source arena. As software development has become more open and more collaborative, there are repositories where you can look at trends in code submissions and check-ins to see where the action is as a leading indicator for where the businesses will be. Before even that, you can look at patent applications. In startup land, patents are sometimes shrugged off as a weapon of last resort or more about war chests and puffery than a real tactic. But regardless, the patterns are instructive and help us see where the puck is going. And then maybe, to round that one out as a tidy trio, even before all that, you have grant funding—looking at where is the money moving into and through academia. Before the IPO’s, before the Series A fundings, there’s often a woman in a lab coat with an idea.

Tanya: That’s the research and development part of it. But then it does start trickling out and people start talking about it or doing things. You may see like acquisition activity or PR trends. People are talking about stuff. How much attention you pay to that side of it, because talk can just be talk.

Sonal: It’s interesting. We do look at acquisition activity, media, and PR. Certainly you want to stress test all the PR a particular organization might be getting, Tanya. But it’s interesting when you look at brass tacks. One of the things that we’ve found quite interesting is how much commercial momentum is an organization getting? Are they increasing their customers, or the size and scale of their customers? Is their reach extending? What has that trajectory been like? And then something as simple as job postings and how much of an organization is actively looking? What kind of talent are they looking for? The numbers they’re looking for is certainly an indicator of additional funding. Clearly if they’re growing by increasing their teams, they must be doing something right.

Tanya: Sonal, when you were first experimenting with Catalyst, how did you find the right partners to work with? What were the early conversations you had and what were you looking for?

Sonal: One of the things we needed to do early and often, because there is so much out there, is we needed to really work with our leadership, with the trends we were seeing amongst our client base to form a prioritized list of these hypotheses and use cases. That got to what are the biggest and most important unmet needs that we need to solve for. Those essentially narrowed our research objectives and narrowed the types of technology, the types of solutions that we wanted to investigate further. Then, in choosing partners, I mentioned earlier this concept of looking at the investment theses of VCs and CVCs to understand if they matched well with some of the focus areas that we had prioritized. Then we would make some calls. Who would be willing to work with us? What was their breadth and strength of their portfolio? How have they done? You quickly discover that this is also a little bit about the chemistry of partnership. Who really wants to work with you? Who has the appetite to be responsive? In some cases there’s a match. In some cases there is not. But who’s willing to engage?

Tanya: Deloitte is a consulting firm and does a lot of work with a lot of different people. But if someone is in corporation and they’re a leadership team trying to look at what is the horizon next, what’s the technology that we should be working with or looking at or in that space with, how do they go about doing that? What are the practical considerations for them? For instance, they may budget for a year or two out, but you’re looking at things that sometimes have a horizon much farther out than that.

Mike It’s an important question. There’s this old quote in strategy land that operations eats strategy for breakfast. What’s underneath that quote is this idea that the urgent has an undefeated record against the important. What we encourage companies interested in practicing futurism responsibly to do is to think of their technology investments as a portfolio. Like any portfolio, you need diversification so that you can manage down risk. So it’s OK—in fact, it’s healthy—that a majority or certainly a plurality of your technology budget is focused on the core, on the existing systems, on all of the hygiene necessary to keep the business safe and thriving in the now. If you put 60% of your capital toward that, and then responsibly put, say, another 30 toward the new, toward things that we like to call our macro forces or a digital reality, cognitive computing, distributed computing like blockchain, etc., much like investing, that serves as a hedge. That serves as a beachhead, a dash of novelty in your otherwise conservative portfolio. What we’re proposing and what we’re seeing our high-performing clients do is allocating a third tranche, a future-facing tranche that really looks to meet the future at that five- or 10-year lens. And a little dab will do you. A 5% focus on things that are not yet household names —ambient experience, exponential intelligence, quantum computing—that’s the recommendation. Don’t drop what you’re doing today, rather accessorize what you’re doing today with a little dash of tomorrow.

Tanya: Got it. We’re going to talk a little bit about those macro forces in just a moment. But Scott, first I wanted to have you talk a little bit about what happens if companies do wait to tackle these horizon-next technologies.

Scott: It’s probably pretty obvious to most people what happens when you wake up one morning and find that your competitors are several years ahead of you in terms of technology and other things. We see the history of businesses being disrupted by younger or more nimble or agile competitors. So to Mike’s point, whether the number is 10% of your budget or something less in times of COVID or something more because circumstances dictate otherwise, being thoughtful and deliberate about setting aside time, effort, and funds to make sure that you are planning for not just the near-term future, but the longer term future and the further-out future is really important and really healthy for every enterprise.

Tanya: You mentioned COVID, but what happens when organizations need to really quickly implement somewhat futuristic solutions? What challenges come with that?

Scott: One of the things Mike mentioned was thinking about investing in the new and the next and the over the horizon [technologies] as a portfolio. Part of the reason it’s important to think about it as a portfolio is because a number of those investments will fail and fail fairly catastrophically. We’ve grown accustomed to making small bets and always being successful. Success is assumed, and therefore, risk is essentially moderated out. If people are truly making big bets, then some of them should be failing. We should get comfortable with that. The same way that we say if you’re not falling while you’re skiing, then you’re not learning. If you’re not failing while you’re doing technology, then you’re probably not really pushing the boundaries of the possible.

Tanya: Let’s talk a little bit about the macro forces that you have been looking at. We’re not as concerned about individual technologies, but it’s important to lay the groundwork because we mentioned some of them. Mike mentioned ambient experience. He mentioned exponential intelligence. He mentioned quantum. Let’s just start at the top—ambient experience. What is it?

Mike: Ambient experience is the likely next generation in this generation-long move from computing being a sit-down, situated, click-and-type affair, to—if you think of the last 10 years, a lean-back-and-touch-and swipe affair to most recently getting rid of the screen altogether. My nine-year-old looks at me like I have two heads when I search for the weather forecast by logging in, authenticating, calling up a website, and typing in a zip code. She just says, “Alexa, tell me the weather.” Now, the ambient experience moves beyond the individual invocation of this device or that device, this brand or that company, and toward a likely near-term future where we ask the world around us and the fittest agent stands up to attention and provides that answer.

And so in that same way that looking back, what we take for granted today is the minor miracle of asking Google or Bing a question and getting an answer back. One day, we’ll just be accustomed to asking a question to the room or in open air and having the right device from the right company provide the right answer at the right time.

Tanya: That’s really cool sounding and a little freaky.

Scott: To Mike’s point, our children will collectively be more comfortable with this than we are. Another example is, if you are grabbing your suitcase and running out the door, then it is probably sensible for your intelligent home to realize you’re on your way to the airport, it should lock the door behind you and turn off the lights because it knows that your whole family is going on vacation. It should have called a car sufficiently in advance for you so that you can get there. It will have checked you in and sent your face to whatever appropriate authorities so that you can show up and be waved through airport security and/or whatever other combination of things makes sense to make it so that your life is as easy as picking up your bag and walking out the door, as opposed to having to deal with all of those administrative mundane tasks yourself today.

Tanya: So it’s a frictionless future then, for the individual?

Scott: Yeah, it’s a frictionless future.

Tanya: That’s the ambient experience, the sort of frictionless future for an individual. Exponential intelligence. Explain that one.

Mike: Exponential intelligence is a name that we’re beginning to give to this recognition that the word “intelligence” or the word “smart,” it means a lot of different things. You could say Albert Einstein is smart. Understatement of the century. But, you know, so is LeBron James, right? There’s an intelligence in the movement of the body, just as there’s an intelligence in the movement of numbers. Well, so it goes with artificial intelligence. This recognition that machine learning, deep learning, neural networks, pick your buzz word, they’ve gotten better and better and better at what we might think of as IQ, of cognition, the ability to solve a math problem. The next frontier seems to be computers getting better at recognizing and simulating emotional intelligence, at understanding how someone’s facial expressions might relate to the mood they’re in. Why? So that your intelligent call-center agent responds graciously if they’re in a happy mood. Politely, if they seem a little stressed, etc.

The idea that a machine can be charming, that a machine can be clever: these are the new frontiers of artificial intelligence.

Tanya: The final macro force that we talked about earlier is quantum. Scott, quantum has the potential to open up all kinds of things.

Scott: That’s right. Quantum computing, quantum technology is all about manipulating individual atoms to be able to do computing and other things in ways we haven’t done before.

Maybe the best analogy that I could give is an actual problem. If you imagine a set of cities and you’re trying to find the shortest road network that would connect all the cities. One way of doing it is using our classical computers. What you would do is you do a whole lot of math. It’s very complex. There’s a lot of geometry and all sorts of other things.

The other way that you could solve the problem is by getting a board, putting a map on it, putting a nail where each city is located, getting a bucket of soapy water, turning the board upside down, flipping it back over. And the soap film that stays will actually connect all of the nails with the optimal road pattern for that network. That’s actually how quantum computing works. It doesn’t do all the math. It just uses the physical properties of atoms and the physical properties of things to converge on the right answer.

So while it’s not going to solve every problem, there are lots of problems that suddenly become much easier to solve because we have new ways of doing things. That’s part of the reason people are really excited. It opens up the frontier for material science. It opens up the frontier for optimization and calculation in ways that we can’t even imagine today.

Tanya: In your Tech Trends report, in the section about Horizon Next, there are some great graphics. If I’m scrolling down here very quickly, I’m looking on the first page. It’s like a quarter of a piece of pie. And it has all different kinds of technologies in it. So, Crispr and auditory analytics and machine learning and computer vision and proof of state consensus. Then we move a little further down. We’ve got advanced quantum SDKs and exoskeletons and services meshes. Where do people start? If they go to this, what’s the one sort of takeaway you want them to have from reading the Tech Trends report and thinking about these issues?

Mike: In some ways, this an eye chart by design. It’s only by looking at the gale-force volume of all the things that will be, that you can pause and say, wait a minute. Do I want to look at this blizzard of buzzwords or do I want to back up and recognize that A) the future is coming, whether I hide from it or not, and B) might as well get busy making heads or tails of what we’re going to do about it. My thoughts are: Ladder up. From the piecemeal parts to the broader trends, recognizing that some of these are analytics, others are data management, others are interfaces. The categories are more enduring than the specifics. Good old Henry David Thoreau once said, “Read not the times; read the eternities.” And this baseball diamond, as we call it, is a reminder that nobody is going to master all the little blips, so get busy figuring out which ones matter to you.

Sonal: Don’t be afraid to experiment. The opportunity to do something big requires you to perhaps fail more than you would like. This idea of looking out into the future does require a little imagination, does require some experimentation, and some will work and some won’t. But the act of experimenting alone will not only provide lessons in themselves, but get you closer to the future that you want to wake up to every morning so you don’t feel like you’re getting left behind.

Scott: The important thing is not to get caught up in the level of detail. It’s not to spend too much time worrying about whether or not you have the exact answer. The important thing is actually to get started on the journey of making sure that you spend a little bit of time focusing on what the further-out future might look like. And you can do the investigation yourself. You can get help doing the investigation. You can do the backcasting and the design of how you’re going to get there yourself. You can get help. At the end of the day, what’s more important is starting the journey, getting comfortable with the experimentation, building the muscle to know what to do and how to do it. Because unfortunately, the future is not sitting there waiting for us to be ready for it. It’s coming whether we’re ready or not. And organizations that are the highest performing and that are continuing to accelerate past their competitors are the ones who’ve learned this, who are deliberate about it, focused on it, and continuing to move it forward every day.

Tanya: Well, we don’t have three hours for me to ask you what each of these individual things are, because they all sound super fascinating. But thank you so much for your time, Mike, Sonal, Scott. It’s been a really interesting conversation. I will totally say I’m not sure I understand all of it, certainly a lot of stuff on this list here, but anyone who wants to learn more is going to be able to go to the website for that. So thank you.

Mike, Sonal, Scott: Thank you, Tanya.

Tanya: Scott Buchholz is the emerging trends research director for Deloitte Consulting LLP. Sonal Naik is managing director and leader [at] Deloitte Catalyst. And Mike Bechtel is a managing director and futurist for Deloitte Consulting LLP.

That Tech Trends report we talked about is available at deloitte.com/insights. We’re on Twitter at @DeloitteInsight. I’m on Twitter at @tanyaott1. I am Tanya Ott. Stay safe out there … and take care.

This podcast is produced by Deloitte. The views and opinions expressed by podcast speakers and guests are solely their own and do not reflect the opinions of Deloitte. This podcast provides general information only and is not intended to constitute advice or services of any kind. For additional information about Deloitte, go to Deloitte.com/about.