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2018: Digital predictions in the year of fragility

There are many reasons to be optimistic about the year ahead. The global economy is slowly gaining momentum after almost a decade of stagnation.¹ Technology that was once the domain of science fiction, such as AI and virtual reality, are being recognised as business tools, not toys.

But as evident in the 21st annual PwC CEO Survey, beneath the optimism lies anxiety: about companies’ ability to compete for the best digital talent, and fears around geopolitical uncertainty, cybersecurity and over-regulation loom large.

So where to now? In the flurry and upheaval of last year, where the accepted norms of politics, economics and society were challenged, or tossed aside, opportunity abounds. And while technology is well placed to help companies to thrive in this environment, it would be naive to foresee only smooth sailing.

It can be said then that 2018 will be a year of fragility. If last year all the balls were thrown in the air, this year we wait, with caution, to see where they land. Decisions and strategies should not be made hastily or set in concrete in case some of those balls turn out to be eggs which smash, rather than bounce.

With that in mind, leaders in digital transformation from PwC Digital Services give their predictions on what will be the biggest themes of 2018.

Monty Hamilton, Partner, The Experience Centre, Melbourne:

We will see mass adoption of platforms, with tech creating a step-change in experience.

This year offers a smorgasbord of technology: so many platforms are now here and ready to scale. I expect mass adoption of voice, blockchain and AI. Make no mistake, it is all about experience. If a company wants to shine, it will need to use these technologies to create a frictionless experience from start to finish for their stakeholders.

Products and subscription services that offer an “all you can eat” service will in turn eat into traditional usage based provider revenues. If that’s you, you’ll need to react quickly or customers will beat you to it.

With the proliferation of blockchain technology, virtual currencies, including Bitcoin, will increasingly be accepted into the mainstream and I expect at least one major e-commerce platform to accept payment in this format by the year’s end.

Gul Khan, Manager, The Experience Centre, Melbourne:

Governments will start becoming a digital influencer in the platform power battle.

In 2017 governments around the world missed bold opportunities to modernise and remain relevant in a changing digital world. We also saw the social contract between governments and citizens erode, resulting in declining institutional trust.

Historically, governments have been complacent in embracing technological change with the well intentioned argument that by moving cautiously and being risk averse, they are protecting the integrity of the democratic system.

But instead we saw this create a power vacuum that the world’s tech conglomerates are now filling and using to define a new political economy. The lines of responsibility and power between corporations and governments are getting increasingly blurred.

In 2018 governments will seek to re-balance this power struggle through bolder and faster regulation and legislation, and will begin rebuilding citizen trust through greater digital access, resulting in tech companies becoming increasingly ruthless to secure platform advantage.

Governments will start to lead the way with national AI strategies, for example, and stop playing a reactionary role to the monopolisation of markets by tech conglomerates.

Particularly, there will be a focus on rebuilding trust with young people – the cohort with the lowest levels of institutional trust of any generation. We’ll also see more and more leadership positions filled by young people, as we saw in the last New Zealand federal election.

Brett Fairbank, Director, The Experience Centre, Melbourne:

Businesses will capitalise on the understanding that a better employee experience leads to a better customer experience.

Employee experience – also known as people experience – will be the next customer experience. For years, organisations have been transforming the customer experience and improving employee engagement and culture. However, companies typically have looked at these two objectives as separate problems.

This year, businesses will find the commonality between these two problems and address them in unison through an integrated experience strategy, while creating a virtuous reinforcing relationship where a better employee experience drives a better customer experience.

Some organisations are already capitalising on this understanding, such as Xero and Sportsbet. Both have combined the two disciplines into one function, led by a chief customer and people officer.

Many of the approaches that have been developed in customer experience can also be applied to people experience. Understanding where friction exists in the people experience can also be a leading indicator to issues that many exist in the customer experience.

Emmy-Lou Hamley, Senior Consultant, The Experience Centre, Melbourne:

Augmented and virtual reality will expand beyond training to become a powerful tool to promote employee wellbeing.

Building on employee experience being the new customer experience, I believe we can go deeper this year – how do we design organisations that can respond to the complexity inherent in its people? How do we create organisational ecosystems that can adapt to change (drawing on sophisticated people analytics and AI)? I say: death to the old change management model!

There’s been a bit of a false start with augmented reality and virtual reality in business. Its adoption seems to be predominantly focused around training, but I think we will see more use of this tech to create empathy, which can be a powerful tool for organisations.

Finally, we have seen the rise in “wearables” for managing our personal health, but what about designing services with wellbeing at the heart, and exploring the role of tech in capturing organisational wellbeing? There are already some cool projects like the “How is Australia feeling” mental health app, but imagine getting this measure on an organisational level? Powerful.

Philip Otley, Partner, The Experience Centre, Sydney:

Companies that tackle middle management’s resistance to change will reap the rewards of technology.

2018 will be the year Australian companies again battle to ‘unfreeze the frozen middle’. Digitally powered change efforts of various intensities will become the norm in Australia. Organisations will be required to tackle the tricky challenges of mistrust in leadership, misaligned individual motivations, missing skills or behaviours, outdated measurements and reward systems and the failure of management frameworks and models to keep pace with the promise – and threat – of disruptive technologies.

Huge prizes remain available to organisations which can get on the front foot in preparing for, and adapting to, this future of work.  

Will Kingston, Senior Consultant, Customer Strategy, Sydney:

The race to democratise AI will be won.

In the same way the printing press democratised knowledge in the 1400s, the democratisation for AI will be just as important to human history, and the race to be first will be won this year.

Microsoft, Google, IBM and Amazon are making their AI tools freely available via the cloud. Any organisation can use AI services like chatbots, image recognition and natural language processing to derive new insights from their data or integrate AI into their products. Moreover, developers now have free rein to go onto cloud platforms and build AI tools such as machine learning using existing frameworks.

Volvo is using Microsoft’s AI tools to recognise when drivers are distracted to warn them and prevent accidents. Jamie Oliver is using Alexa to make it easier to find recipes. Students are embedding AI in robotics projects using IBM Watson. The bottom line? Digital innovation is being taken out of labs and into the hands of everyone from big companies to school kids, exponentially accelerating the speed and reach of change.

Bill Bovopoulos, Director, The Experience Centre, Melbourne:

Digital twins will be used more widely across more industries this year.

If you aren’t familiar with digital twins, you likely will be by year’s end. A digital twin is a representation of a physical object or process. Producing digital twins are now within reach of a much broader community; designers and engineering teams can use a combination 3D models, 360 video, real time data, IOT and realistic AR/VR or mixed reality simulations to produce a digital twin to optimise performance or validate manufacturability. And it is not new technology: NASA, for example, has run complex simulations of spacecraft for decades.

A digital twin, through its system of sensors, can gather data, predict problems that may occur with its physical counterpart and its life cycle and in turn save money and open up potential revenue streams. As the cost to entry for this technology is lowered, I expect digital twins to be used more widely across more industries, particularly in mining, energy and even healthcare. Gartner predicts that by 2021, half of large industrial companies will use digital twins, resulting in those organisations gaining a 10% improvement in effectiveness.