The Future of Service
Predictions for 2050
What will service look like in the future? Top international researchers came together at a thought leadership conference to predict the future of service; identifying key trends, how service firms will change and what role technology will play in 2050.
As robots replace baggage handlers and burger chefs, and peer-to-peer platforms disrupt traditional business models, digital advances are transforming service experiences. But just how far can it go? Will mass automation be the rule, or will customers still want personalised service?And how can businesses adapt and thrive in the brave new service landscape?
The multi-dimensional customer experience
In today’s interconnected world, customers can shop, learn and work online.Traditional bricks and mortar businesses co-exist with digital spaces and social media. Service innovation and customer experience expert, Professor Janet McColl-Kennedy says “the customer experience now takes place in a three-dimensional space – that is where digital, physical and social are interlinked. Retailers are already using augmented reality, such as smart mirrors for customers to try on clothes, and businesses are using virtual reality to manage workplaces.
Companies need to be thinking about the customer experience in a three-dimensional space –digital, physical and social. They will also need to consider whether all three dimensions are in their control. “It’s the consumer who chooses what store to go to, what digital platform to use and which friends to bring,” says Janet.
“If a platform doesn’t support social interactions, their friends might suggest using a competitor. Understanding this is vital for superior customer experiences, the traditional view of the customer experience must be re-thought.”
To survive in the new interconnected world, Janet says firms must ensure that relevant data is accessible and there is a seamless integration of systems and devices into user activities. Data management and cyber security skills will be critical for businesses to thrive in this new world.
Today’s organisations struggle to understand where their data resides, who accesses data, how and for what purposes. It is critical data platforms collect and store activity information and personal identifiable information in ways that cannot be misused.
“Data security requires more than keeping hackers outside your system; it also means backing up data,protecting data from corruption and managing to whom data are distributed.” Blockchain technology holds promise,” says Janet.
The rise of the robots
The digital world is all pervasive. Next-generation robots will offer advantages to organisations, especially where tasks are simple and routine on one hand, or cognitively complex on the other. Companies which can integrate them effectively will gain a competitive edge. But to what extent will customers accept them?
Customer acceptance of front line service robots depends on whether the customer wants a deep or shallow interaction with the front line staff member and whether customers’ emotional needs need to be met. Robots can be trained to mimic the expression of emotional responses but they do not actually feel emotions. They may even seem 'real' in short-term interactions.
There is evidence to suggest that we are willing to be served by robots if it makes for a more streamlined and customised experience, but only to a point. It also depends on the type of transaction and the robot’s appearance - it should look humanistic but not overly so, or we find it too creepy.
Operating without operations in a 5D world
Imagine spending a day in Disneyland, seeing the sights, enjoying the rides and sharing the experience on social media – but all without leaving your own home. Virtual reality, holograms and 5D technology will soon make this a possibility. Increasingly,service companies will operate through an immersive digital environment without the expense of a physical space.
While firms once controlled their own operations and had well-defined relationships with suppliers, service delivery is now more complex. Items are increasingly connected within complex ecosystems or smart cities. Boundaries between customers and providers are blurring – think of the Airbnb user who both lets and rents a room – and traditional notions of ownership are changing.
In this complex, interconnected world, a business’s role will increasingly be as an orchestrator, coordinating the various elements of the service but without owning any of the parts. At the same time, innovations such as machine learning and remote monitoring will allow us to have greater control over the whole customer experience.
Changing contexts create new opportunities
Shifting demographics, consumer attitudes and the introduction of new technologies will make existing services irrelevant. However, these changes can also drive innovation and offer new opportunities.
Just as Airbnb exploited a shift in society norms; marketing expert Dr Alastair Tombs says managers should be alert to such changes and the opportunities they bring. Alastair and colleagues identified three key trends to be aware of. Services are increasingly tailored to individual needs and personalisation will be the norm by 2050; speed is all important and customer expectations are driving new ‘on demand’ services; the ability to transmit data digitally and deliver services remotely is reshaping industries from banking to education.
“The key is seeing change as an opportunity rather than as a limitation. Managers who understand the trends will have the upper hand.”
The disruption of the sharing economy
Airbnb and Uber have expanded rapidly in recent years, but what is the future of the sharing economy? The academics identified three possible scenarios. One is a ‘centrally orchestrated economy’ where a few platforms dominate the market. For example, private taxis could partner with Uber drivers, leading to one platform creating a natural monopoly.
Another possibility is that niche providers would emerge and disrupt the dominant platforms - think of UberBlack, a luxury ride share experience matching elite consumers with elite car owners. The third scenario is that AI-enabled platforms could remove the need for intermediaries altogether. Instead, there would be open sharing with services such as SharePay allowing customers to split the bill.
Access, equity and fair treatment
As our world evolves in its ability to provide new possibilities of service the infusion of technology into the digital, physical and social realms raises important questions around access, equity and fair treatment.
While more customers are connected digitally, access to and underrepresentation across different service sectors remains variable. We need to consider the ethics of access to service.
The moral imperative to design for service inclusion is the key message highlighted by Dr Josephine Previte and colleagues. Technology has disrupted the traditional service-scape, physical place and space which service transactions have occurred. For example, consider in the future for services that are increasingly digitised how the role of wheelchair ramps in physical spaces may be replaced by other digital access requirements so that all customers and providers can participate equably in the service-scape. What does this mean for managers designing inclusive spaces across digital, social and physical places?
Josephine says the goal should be "fair access, fair treatment and fair exit from a service”. By building on the four pillars of service inclusion –enabling opportunities, relieving suffering, fostering happiness and offering choice – service providers can empower customers and transform lives. For example, by connecting consumers in remote areas to healthcare or providing free online education.
New business models
Names like Walmart, McDonalds and Volkswagen dominate their respective industries, employing thousands of staff and controlling assets worth multi-millions. Now, these titans are coming under attack from leaner, more agile competitors.
Traditional businesses use a structure known as the M-model (multi-divisional business model). Newer companies like Uber, TaskRabbit and Craigslist are built on the T-model (triadic model). T-model businesses bring together buyers and sellers and allow them to interact directly via a digital platform. Effectively, they are a new type of middleman. T-model companies have few assets and employees - Airbnb owns no hotels while TaskRabbit employs no workers – but tend to have higher market values.
It is predicted that T-model businesses will continue to shake up the established order, although the M-model will not disappear altogether. However, businesses can learn from the newcomers. Companies need to rethink their current business model and offering to sustain competitive advantage.
Service workers will have new roles
The world of work will look very different in 2050. Today, many workers still rely on organisations to create conditions that benefit workers, customers and organisations.Organisations provide training, coaching and reward structures to motivate and reward employees. However, this is changing and the onus is being placed on the service worker to be intrinsically motivated, accessing their own networks and information sharing platforms.
With the increasing transience of service work, more workers will freelance, balancing their next side hustle while keeping one eye on their current job. Associate Professor David Solnet believes that by 2050 the service landscape is likely to have transformed dramatically, moving further away from long-term, permanent arrangements. Many service workers already engage simultaneously with multiple employers across separate yet interwoven service ecosystems.
Today’s service workers are more mobile and this trend is set to continue. As Dr Nicole Hartley point out “similar to butterflies and birds in a prairie, workers will cross-pollinate ideas and innovations throughout the ecosystem”.
Long-term work arrangements will be less common, as the gig economy and breadth of work available drives service workers to seek employment aligned with personal preferences. Turnover is likely to be higher, meaning that companies must think laterally to retain the best and brightest of their service superstar workers.
These new changes will bring a host of new challenges, including an increased reliance on individual workers to plan for their future through self-funded retirement and healthcare, as those responsibilities shift from employer to employee.
Where to from here?
In all of the discussions about the future, technology emerged as an important theme, says Professor Janet McColl Kennedy, “our experts agree that there will be more use of technology in service interactions. However, they also believe that not every aspect could or should be automated.
“Humans will not be completely replaced by machines. Machines have their place and will become more commonplace. However, the human touch will still be important in many contexts, perhaps even more so in some areas. There are many opportunities where a customer needs an emotional connection; this could end up being a potential differentiator for businesses. Most people like interacting with other people at least in some form or another,” says Janet.
The ideas within this article are drawn from a series of papers published as a special issue (2018 November edition) of the Journal of Service Management titled 'Theorizing Beyond the Horizon: Service Research in 2050'.