BENEDICT EVANS: We went from a world in which the internet had
suddenly become universal, and yet we're
still sort of latent to a world in which now everybody has
been forced to try everything online.
GERALD BREATNACH: Welcome to Fast Forward,
where we're speaking to some big-picture thinkers
about the impact of the pandemic on UK businesses
to help our customers plan for the future.
I've been speaking with the analyst Benedict Evans, who
is very well known for his annual tech
presentations and his weekly newsletters,
covering opinions and analysis on the global tech media
landscape.
I started by asking him what the next phase of the pandemic
might look like.
BENEDICT EVANS: I mean, I think we're
going through multiple phases of dealing
with COVID and lockdown.
There was a period a few months ago
when everyone jumped into the foxhole
and tried to work out what was going on.
And we work out that actually everyone has broadband,
everyone has a computer with a camera.
Actually, we can get on with business at home.
And so there's that moment where you think, OK, hang on.
Can we just continue what--
can we stay alive, so to speak, in lockdown?
There's a second phase, where you think, well, hang on,
we're not going to be here for months.
We're going to be here for six months.
And we're not going to get to anything
that resembles normal until next year, and probably not January
next year either, so we actually need to do business here.
And so I think it's been interesting to see
waves, in particular, of conferences,
first, postponing, and then saying,
OK, now we're going to have to go to digital because we don't
know what postponing means.
And I think you're now, over the summer,
seeing a lot of companies say, well,
we're just going to have to do some business while we're still
all working from home.
I think there's a first third phase as we slowly
emerge from this and move back to, now cliched phrase, a new
normal, but we're not really into that yet.
We don't know what that transition back to not worrying
about masks and airplanes will look like.
And then at the end of that period,
we're in some new world.
We don't really know what that new world is.
I mean, there was a period again a few months ago,
where it felt like everyone had picked up
their own favorite topic and said,
COVID is why I was right about this thing
that I wrote two years ago.
Well, whatever the topic was, suddenly COVID
proved that you're right, whether inequality
or cars or solar or geopolitics or the EU, anything.
Whatever your topic was, COVID proved you're right.
Certainly, crises just have that effect,
and crises hit much more broadly than e-commerce adoption.
Crises tend to reset things.
And so we are going to have clearly
a bunch of geopolitical change around the US election
and the role of China.
There's going to be a bunch of cultural change, even
simple things like what does fashion look like
and what does music look like.
There's going to be a bunch of business and economic changes,
and fiscal changes, and consumer expectation changes.
We went from a world in which the internet had suddenly
become universal, and yet we're still
sort of latent to a world in which now everybody has
been forced to try everything online.
GERALD BREATNACH: How are businesses
going to be disrupted in the long term?
BENEDICT EVANS: So people and technology
talk a lot about disruption, and everything is probably
disruptive to somebody.
But for everyone else, it just changes the business
environment, and it's a threat and an opportunity
and a reason to rethink how you do business.
So for example, buying tickets online
was hugely disruptive to the travel agent business.
Didn't really disrupt aircraft or airlines.
We just changed how the airline business works.
And the same thing for hotels, the same thing
for, say, restaurants.
Booking online, online reviews didn't
mean that somehow internet companies
competed with restaurants.
They just changed how the business worked.
And so I think the primary thing would be just
to presume that a lot of the customer journey around how
they come to you will change.
There may be new people, new competitors trying
to change what the product is or take advantage
of that new channel in order to compete with you in new ways.
It doesn't follow that the underlying product
will necessarily change.
I mean, buying plane tickets changed completely,
and the way we think about foreign holidays
changed completely.
Airplanes are still airplanes, and the basic economics
of running an airline haven't changed.
The way that you get customers has changed.
The way that your brand operates has changed.
And I think that there's a small number of companies, as I said,
that will discover that Amazon has done to them what
they did to Barnes and Noble.
I think there's many more companies which might look more
like Procter & Gamble, in that they're not particularly
worried about Amazon replacing all of their own brands
any more than they worried about Tesco competing
with all of their own brands.
What they do think about is, well, when we sell on Amazon,
that's not the same as selling in Tesco or Mott's.
I mean, customer journey is different,
and the buying decisions are different,
and the negotiating process is different.
And so we just have to flex and negotiate and adapt
to this new kind of marketing and new customer journey,
in exactly the same way that they adapted to Walmart
and they adapted to department stores
and they adapted supermarkets.
GERALD BREATNACH: What new strategies
should businesses be considering?
BENEDICT EVANS: So there's this great quote
from Jim Barksdale, who is a co-founder of Netscape,
that there's two ways to make money in business, bundling
and unbundling.
And if you think about the half of last hundred years
of retail, we've had that process going back and forth
multiple times from supermarkets, to boutiques,
to department stores, and over and over, back and forth.
And the same thing's happening in technology.
And this is a large part of what the internet does
because a newspaper is a bundle; a retailer is a bundle;
a shopping mall or a shopping street is a bundle;
a city is a bundle.
And when you change what the distribution channel is,
if you change your bundles, and what aggregation
becomes possible, and you create an image of which market,
and it becomes possible to do new bundles
or to unbundle in new ways.
And so if you look, for example, at what's
going on in financial services in the UK,
I can probably point to three examples.
The first one of these would be TransferWise,
which is an international money transfer service,
and they don't need to be part of your bank to do that.
They don't have to be part of Lloyds or Halifax or Citibank
or whatever it is.
They can create that as a separate company
and go direct to customers.
So they can unbundle this quite small but massively overpriced
business that's buried deep inside big commercial banks
and do it much better and do it in a much better price,
and it's very hard for those organizations to react to that.
The second example would be something
like Monzo or Revolut, which is in many ways a fairly
straightforward consumer banking product,
but they don't need high street retail.
So the customer acquisition process
is completely different.
And they can get to millions of customers
in a completely different way.
They don't need to have hundreds of stores across the country
in order to get to that customer base.
Now, they have to spend that money on something else.
They have to spend that money on customer acquisition
or on ads or in other places.
There's no free lunch.
But they don't need the retail estate
that they would have needed in the past.
The third example is a company in the UK called Countingup,
which is a business, an SME bank account that
includes accounting and CRM and some business process
management.
So your bank account tells you when the invoice has been paid,
and it generates your tax return.
And again, those would have been three completely separate
companies and three different pieces of software.
And you'd have to get the accounting software,
and you'd have to get the inventory software,
and you'd laboriously plug them into each other,
and maybe you download CSVs and import them from one
to the other.
But when you go online and you're in software,
and you're all in new software, it
becomes very easy to think orthogonally
about what kind of proposition you might package together
and how you might bundle that in a different way.
And I think those are ways of thinking about what
becomes possible, because the money itself, as we all know,
is a commodity you make somewhere else.
You made the money somewhere else.
But the question is, what package of propositions
can you build around that, and how does that change
if you don't have a shop?
And how does that change if you don't
have 40 or 50 years accumulated software stovepiped together?
GERALD BREATNACH: How has the public's attitude to technology
changed?
BENEDICT EVANS: Well, I think there's a moment of realization
here in many ways.
I mean, you can see that very obviously in video
that we all had high-quality video cameras and video
conferencing software.
But outside of Google and a few other places, no one used it.
You were going to go and meet that person
on the other side of London.
It would never have occurred to you to do a video call,
and now it has to be a video call.
And so when we all get back to normal, whatever that means,
will it still be a video call, or will you still
get in the tube in July and spend
45 minutes going across town to go meet that person?
I think there's an awful lot of moments
where people, we suddenly woke up and realized,
hang on a second.
We are all online now, and we all
have internet connected to some pocket supercomputers.
And we all ready and willing and able to do anything online now.
GERALD BREATNACH: Check out Benedict's website
for his latest tech presentation,
which builds on some of these ideas.
The critical thing for me is that, while in some categories
the fundamentals won't change, all businesses
should be thinking that their routes to market
will change significantly.
This is something we look at in some detail
in a piece of research called Decoding Decisions, which you
can find with our other research and analysis
on Think with Google UK.