The baseball player, Yogi Berra, famously said “Prediction is hard. Especially about the future.” That is of course entirely correct. Who of us predicted the COVID pandemic or the way the stock market tanked in 2022? Of course, there are always doomsayers who continuously predict these things, but they are right in the way a non-working clock is right twice per day.
The challenge is that we need to run our lives moving forward based on our best guesses and assumptions about the world around us. Whether we like it or not, we need to make predictions. The easiest is of course to assume that tomorrow will be like yesterday, as we don’t need to do anything but keep doing what we are already doing if that is the case. However, predictions are especially helpful when we need to course correct.
So, going out on a limb, I thought I would share some of my predictions for 2023 after sharing my reflections on 2022 last week. These predictions are organized around “the world”, industry and technology.
Starting with the world and society we live in, there are three predictions that I believe have a reasonable likelihood to materialize over the year. First, in my view, global tensions will continue to de-globalize society. After decades of ever increasing globalization, there are many signs of countries and regions increasingly putting up boundaries between themselves and others. One example is what often is referred to as the death of the Internet in that many countries are putting up virtual walls around their country’s network like China has done for decades. Another is the increasing use of regulation and tariffs to favor local industry over global ones. Even the strongest proponent of globalization, the US, is now proposing tariffs that would force European car manufacturers to build their cars in the US. And, of course, we see defense budgets go up around the globe in response to increased threat levels.
My second prediction is that the European energy crisis will diminish and become less of an issue in 2023. The extreme price fluctuations that we saw, especially around natural gas, were, in my view, a panic reaction by buyers in response to the sudden shutoff of Russian gas. As supply networks are now adjusting and we are, apparently, buying Russian gas anyway but via China and India with a markup, I don’t see why we would not see the market stabilize at or close to pre-crisis levels.
My third prediction for 2023 is that the stock market will recover during 2023. I am not claiming that we will fully return to the levels in December 2021, but that we’ll recover most of the losses incurred during 2022. My argumentation is simple statistics: research shows that bear markets typically last between 2 and 16 months with only a single 30 month outlier after the internet bubble burst early 2000s.
When it comes to predicting where industry is headed in 2023, again three predictions. First, although already getting into swing in 2022, the coming year will significantly increase the importance of owning the end-customer relationship for many companies. I discussed the rationale for this in my previous blog post, but the increasing focus on continuous value delivery through product upgrades and services requires a direct connection to the end customer. Pushing upgrades and services through the existing value network of wholesalers, retailers and installers will simply be too slow and force companies to share too much revenue with these partners.
My second prediction is that as part of fighting to own the end customer relationship, many companies will initiate or double down on their platform strategies. It provides a valuable argument to partners that are disrupted by the moves of the company as these will be offered to become complementors and join the platform ecosystem. Also, for companies that fail to gain sufficient market share in the end-customer relationship game, taking the role of a complementor in a large competitors ecosystem may well be the next best choice.
My third prediction for industry is that 2023 is the year data is finally starting to be used for value creation. All companies I work with are collecting vast amounts of, frankly, often useless data. However, I have seen the awareness of the importance of data-driven decision making and proper use of the right data go up significantly and there is an increasingly broad awareness. Consequently, I predict that next year we will see quite a few data-driven innovations from companies that were stuck in a mechanical mindset up to recently.
Finally, when looking at the technology in our lives, my predictions are mostly concerning artificial intelligence. My first prediction is that generative AI will see broad adoption in 2023. 2022 was the year that we were all blown away by great examples such as DALL.E and ChatGPT. Now these solutions as well as open-source solutions are being commercialized and have reached a point where these are good enough to provide very valuable starting points for graphic designers and writers as well as for generic customer interaction.
My second prediction is very close to my heart and concerns software development. Github Copilot has blown away everyone who I know and has tried it. The productivity improvement of tools like this is so significant that there is no way that these technologies will not see significant adoption in 2023. It is interesting that my pet peeve concerning programming languages has been that the abstraction level has not gone up and that we are still mucking around with C. I used this language in the 1980s to earn some income while I was a student! My assumption was that we needed better languages, but it turns out that what we needed was AI that can generate the code at lightspeed instead.
My third prediction is that digital twins will take off in a big way in 2023. Many companies I work with are hard at work to transition from a digital version of each product type to maintaining digital versions of each product instance. This is critical as an enabler for services and continuous software updates. As a corollary, I predict that the “metaverse” will have little impact in 2023. First, the technology for virtual and augmented reality is not ready for mass rollout and, second, we need to get the digital twins in place before VR/AR gives sufficient commercial benefit. There is a parallel to how we needed to go through the Big Data era before AI could take off at scale.
Concluding, prediction is hard, as Yogi Berra said, but we need to predict where the world is going in order to make accurate decisions and take action. Assuming that tomorrow is going to be like yesterday is a “head in the sand” strategy that will get you disrupted for sure, so we need to focus on what might change and our response to those changes. In this post, I shared some predictions concerning the world, industry and technology in 2023. I probably will be proven wrong, but to end with another Yogi Berra quote: “You’ve got to be really careful if you don’t know where you’re going, as you might not get there!”