Daniel Burrus and IBM’s Rich Berkman on Tech Trends and the Road Ahead

Daniel Burrus:
Hello. My name is Daniel Burrus. I’m the author of seven books, including Technotrends, Flash Foresight, and The Anticipatory Organization. For the last 40 years, I’ve been running a research company that has been focused on looking at the future of technological change and the actions you should take today.

Daniel Burrus:
Today, I am interviewing Richard Berkman, and he leads IBM’s Global Digital, Commerce Business. So this is a global business and it’s digital commerce. That’s our subject today. Rich, tell me a little bit more about yourself.

Richard Berkman:
Sure thing, Dan. And thank you for having me. My name’s Rich Berkman. And as you mentioned, I lead our Global Digital, Commerce practice at IBM. I’ve been in the space of commerce and e-commerce across multiple industries, but clearly focused heavily on retail and distribution for a long, long time, almost 30 years in that space.

Richard Berkman:
And where I started out, I pioneered the world’s first retail store for online shopping back in the early 90s with a small group of founders that was putting physical retail stores in place in L.A. and New York to incubate and humanize online shopping. So we had T1 lines pumped into these stores while everyone was still on 28 and 144 modems. And we were incubating and really gaining an understanding of what it meant to shop online, what it meant to humanize it, make it secure.

Richard Berkman:
And from that day forward, I have been involved in driving great experiences from startups and upstarts to enterprise clients in helping them transform their experiences to really hit customers across the many different channels that they can interact on right up until today. And so we look forward to taking them into the future that way.

Daniel Burrus:
All right. Well, now you can get a little bit of an idea of why I wanted Rich to be on this because he’s got amazing depth of knowledge and it goes back a long ways.

Daniel Burrus:
So with that said, let’s start out by talking about some of the biggest challenges retailers are facing as we look at digital commerce. And let me just address that phrase very quickly. We are used to talking about e-commerce and that’s where you look, you click, and you buy. And it’s kind of like what it’s been so far. But we’re moving to intelligent commerce and what technology is allowing us to do.

Daniel Burrus:
And it is also, something happened in 2020 called the pandemic and it actually caused us all, it forced everybody on the planet to go digital. And it drove, e-commerce advanced 10 years in less than a year, advanced 10 years… Now look it, we’re talking beyond exponential. And what we’re here to tell you is that means there’s beyond exponential opportunity if you know where to find it. So the challenges that you’re facing are whoa, e-commerce, Amazon’s eating the world. How are we going to survive? There’s been retails closing down like crazy, stores going on. You’ve read the list. You know what’s going on.

Daniel Burrus:
Rich, talk to us a little bit from your experience because, again, you’ve got a global experience with heavy technology dealing with retailers and the entire area of commerce. What are you seeing as their biggest challenges? And I’d like you to add opportunity in there.

Richard Berkman:
You’ve hit a lot of great points there. The last two years have forced a fundamental change from the tactical implementation, the click/buy of what you were just talking about of commerce technology to become commercialized as a strategic growth driver. And that’s what I think people really realized over the last couple of years through that advancement of 10 years of digital transformation in a very short period of time. In simple terms, commerce is no longer in the back seat or the back office of processing transactions, or just thinking about it as the buy button.

Richard Berkman:
It’s also clear that successfully driving growth, that commerce experiences have to be the North Star. To do this, retailers must stay laser-focused on providing shopping experiences which are trusted, convenient, and relevant. Understanding how to best provide those in a contextual way that informs and approaches towards personalization, channel automation, visibility, and new business models are all expanding with our clients. And applying intelligence to commerce becomes the only way to ensure that each interaction consistently delivers on the brand promise of retailers today. So is it that you can drive and deliver your message, your information at the preferred channel with the right information at the right time with the right content.

Richard Berkman:
So we want to empower customers with expanded business models. This includes marketplaces, subscriptions, B2B2C in many cases. And the only way to build this customer loyalty in a very dynamic and ever-changing world of engagement options is to have a clear focus on the experience you’re delivering your customer and your capability to deliver those experiences across channels for where it is relevant that your customers are engaging.

Richard Berkman:
All that is made a lot more challenging for enterprises who are thinking about moving from, what I would call the old point-and-click and legacy stacks of commerce to suites, to an API-led decoupled architecture that can support the kind of experiences that really translate to the bottom line, our quantifiable business outcomes. And that is going to allow our customers and those trying to deliver great enterprise, physical meets digital and e-commerce experiences or intelligent commerce experiences, to deliver and take advantage of new and emerging technologies from various third parties that allow companies to be more nimble, to be more responsive, and to engage their customers in market dynamics in a quick and valuable way.

Daniel Burrus:
You know, one of the things I’d like to talk about is being agile and nimble is good. You got to be good, but that’s also reactionary. Agility is about reacting as quickly as you can to a disruption after it disrupts. Reacting as quickly as you can to a problem after it occurs. And you need to be agile. But one of the things that we’re trying to help you to do is to also become what I call anticipatory because we know some future facts here.

Daniel Burrus:
One is AI is not going away. Number two, AI’s being embedded in everything. Number three, you don’t have to own the AI. We’ve got AI as a service today so that you can buy your little piece of it and apply it to whatever it is you’re trying to do. Another thing is we’re no longer in a period of rapid change. We’re in a period of true transformation. And if you’re just changing a process or product or service, how you sell, how you market, frankly, you’re falling behind every year. You better be transforming it because the world is now transforming. Are you only changing? Quick thoughts on that, Rich.

Richard Berkman:
To really address some of those opportunities, if you will, around data, around intelligence, around insight, it’s been a huge challenge for many over the years. And some of our best clients and some of where everyone has the opportunity to leverage that kind of insight is to derive those great insights from the data you have. As we like to say, it’s all in the data. I’ve been saying that for years, going back to one of the analytic startups that I had that followed the commerce and experience stuff because business leaders need to stop giving lip service to understanding their customer and they really need to focus on leveraging data and more importantly, the insights they can derive from that data to understand their customers better, right?

Richard Berkman:
They need to leverage it and they need to use it in a permissioned way. That’s a very important aspect of today which is, especially in a cookieless world that’s coming forward for a lot of people. They have lots of data. They need to use it. And in order to use it, they need to then activate it and know your customer. The KYC of understanding your customer and knowing your customer really is where you have an opportunity to move the needle.

Richard Berkman:
I think what most people don’t realize about AI especially is that folks try to boil the ocean as it relates to how can I leverage this AI. And they go through tons of use cases and lots of them are very macro. When you look at the bottom line in the small margins in retail, what you have to recognize is that if you apply AI in a very targeted way, just moving the needle a little bit with that AI accounts for tens of millions, if not much more billions of dollars. And that’s where people often get lost, where do I apply the AI? And that’s where you really have an opportunity to discover the best places in your retail, in your commerce, in your digital journeys where you can apply that AI and make it effective for those experiences you deliver to your clients.

Daniel Burrus:
So what do we want you to do? What we want you to do is to realize that this is strategic.

Daniel Burrus:
What we want you to do is realize that this is strategic, and digital commerce and all commerce, in other words, it’s… Remember we live in a human world and a technical world, we live in both, and we live in a physical world where people will want to shop, but we also live in a digital world. So, we did omni-channel marketing, where we tried to bring our different channels together for the same kind of experience whether you’re online or off.

Daniel Burrus:
Frankly, that is getting to be old-fashioned. Now what we need to do is to really integrate the entire experience together and make the E part, the eCommerce part and the physical part so seamless and blended together that you really don’t think of them as separate. And this is, as you referred to before, Rich, is your strategic north star. As I call it; a future fact, hard trend. This is not going away, this is getting more so. And if something is gaining in speed and power, I want it to be my best buddy, not my worst enemy.

Daniel Burrus:
So, one of the things I would want you to do is to take a look at your current strategies as a leader in retail, and ask yourself, “Is digital…” The digital part of commerce, notice I’m not calling it eCommerce, I’ve elevated it, “Is the digital part and the holistic part and the part where we bringing it all together, is that indeed designed as a north star with our strategies going forward?” And if not, you should be making some adjustments.

Daniel Burrus:
With all of the technology innovations taking place and the fact that we’re in a truly transforming phase where we’re transforming every business process, because technology is already enabling it; what can retailers do to make what we’ll call intelligent commerce, their new key growth engine? What are some thoughts you might have on that?

Richard Berkman:
So, the first thought is that they really need to be strategic in their efforts, and they need to know where they stand against the best experiences that their customers are having elsewhere. And as the saying goes, don’t try to boil the ocean. There’s a never ending list of channels and features and functions that build off any company’s foundational commerce capabilities, but not doesn’t mean all of them are right for your business.

Richard Berkman:
We’ve discussed previously, Daniel, that it begins with understanding your customer, their needs, where they are and where they aren’t channel-wise relative to a company’s products and services that they offer. And sometimes you may even discover that you have a base of buyer that you never knew you had.

Richard Berkman:
As an example, a long, long time ago in a planet far, far away when I was working to help launch one of the first online community forums as part of a retail commerce site for a popular women’s hosiery brand, we rolled out and began monitoring the discussions that were going on and leveraging that insight to uncover what we found is a very significant new market opportunity.

Richard Berkman:
I’ll give you one guess as to what the popular channel was that led to purchases in their community. Anything?

Daniel Burrus:
Boy, that could be a lot. I probably would guess wrong. You tell me.

Richard Berkman:
It was swimmers. So, they found that using pantyhose contributed to faster times and reduced friction in the water, which of course has now led, fast-forward ourselves to new products that you see just in the Olympics over the summer where swimmers are wearing tighter, fitter swim tights. That all started because swimmers started using panty hose to drive faster swim times. They’d even start to put them over their swim tights as those were evolved, and then take them off. Like somebody who’s a batter puts on extra weights for their bat? Well, they would then do that and remove it to allow them do that.

Richard Berkman:
The moral here is that you don’t know what you don’t know. And the insight, it’s all on the data. Information is there for you, and if you can hone in on that, we really focus on three growth levers with our clients. And those growth levers allow them to help drive that north star vision that everyone can align around, and a roadmap to help them drive forward how they’re going to tackle achieving that vision.

Richard Berkman:
That starts with experienced orchestration and understanding what kind of experiences you need to orchestrate for your clients so that you match their best experiences that they have everywhere else. It means you’re leveraging data and insights effectively, and it means you have an ecosystem that you can quickly and easily evolve to take advantage of new intelligence and technologies as you go forward.

Daniel Burrus:
Well, on the customer experience and orchestration comment that you made, a lot of the problems retail has had over the years and a lot of the closures wasn’t because of just Amazon, it was because of boredom. What I’m getting at is, a lot of if you go into a Sears store, you go into a Target or whatever, and you look at the last several years; it’s the same old, same old. And after a while, it’s like, “Well, why do I need this experience?” Because frankly, it wasn’t a good one. And our people were not upskilled and up-trained, so a lot of times the shopper knew more about what they were looking for than the person that they worked talking to.

Daniel Burrus:
But technology can help us in so many ways, including our staff, because they can have a little Bluetooth thing in their ear going to a little AI up in the cloud and have amazing access to exactly where things are and what things need. We’ve got glasses coming up where you can overlay data with augmented reality, and all sorts of new tools allowing us to totally transform the world.

Daniel Burrus:
… telling us to totally transform the world of retail, but it all is about data. And it’s about extracting the insights from the data. As you said there, not just the swimmer example, but I’ve got countless examples myself. And if you look at any of the seven books I’ve written, I love to throw ideas out of how from data you can pull insights. The CEO of Sony made a great comment several years ago. He said, “If we only knew what we know.” In other words, there’s all this data, but we don’t know what it is. We don’t know what it means. Thank goodness we have AI and other tools that are allowing us to extract that knowledge and bring it to us. That means we need to have a strategy, we need to have a system to be able to do that, and thanks to the internet of things and something called edge computing, you just begun to see the ability to create data.

Daniel Burrus:
Well, a lot of data doesn’t help me, strategic insights does. So that’s where we need some tools to help that to take place, so to make this a strategic growth engine realize it is. And by the way, if you don’t do it, if you don’t really make this your strategic growth engine, guess what, your competitors will. In other words, one of the things I like to teach people is the cost of the no is more expensive than the cost of the yes. See, back in the old days, three, four years ago, you could say no to something and good. I say, “No, I don’t have to spend money. I don’t have the cost. My people don’t have to work. I’ll just say no to new technology, no to AI, no to all these things. I’ve got a website, who cares whether it’s working or not. I’m busy doing what I’m doing.” Of course, you can busy yourself right out of business.

Daniel Burrus:
But in this case, these things are hard trends, future facts. They are happening and expanding. If you don’t do it, someone else will. What I’m getting at is the cost of the no could cost you your business, as many retailers have discovered. It could cost you a new client base that’s richer and better than your current one because you didn’t even know that it existed. It could cost you new ways of tweaking your store based on real time intelligence that could change sales within 24 hours for brick and mortar. You could do that, if you’ve got the right centers and the right data.

Daniel Burrus:
So we’re really talking about what do you do. Make this an imperative, make this strategic, do a little assessment of your current strategies that you have in place, and make is this indeed a digital north star for our retail? Whether you have five stores, one store or 5,000 stores, is this our digital north star? Again, what’s the cost of it not being? And I would say you don’t want to experience the cost of the no here. I think you need to experience the cost of the yes. Any last comments on this element of things that they can do to make it a digital growth engine?

Richard Berkman:
Yeah, I think you nailed a number of really important factors there. But if I was going to call out just a couple things, it would be that you don’t want to end up in the analysis paralysis state. You have tons of data and insight and that’s why what you said, Dan, around being strategic with it is so important. You can go and measure everything, but using AI, really honing in on opportunities to leverage your data effectively and especially across channels as well is critical today because if you don’t do it, your competition is for sure. And the key there is that with very acute focus on critical measures to your business, applying AI and tweaking things just a little bit can account for big movements in the needle for your bottom line.

Richard Berkman:
And so that’s really important, as that physical meets digital. Everyone remembers those days of walking into the store returning an item and going, “Hang on, you did that somewhere else. I can’t find you in my system. Let me go figure out and get a manager to come over here and help.” Today, it’s expected that what I do online, if I come into your retail store, you know exactly what I bought, when I bought it, and can facilitate that return and that purchase, and that experience can be delightful.

Daniel Burrus:
Well, with technology, I might even know who you are coming in because you were here previously. So I can say, “Oh, hi, Rich, good to see you again.” Well, how do I know that? Because something came up on my screen and I can see it, or something appeared in my glasses to say, “Oh, this is Rich.” So we can make this, like elevate the human experience. We’re humans. So the key here is, don’t wait, take action now. But change is not slowing down, hey, it’s speeding up. If digital transformational change is not your best friend, it’s going to be your worst enemy. And this is about using it to your advantage. And one way to do that is to look into the future of retail. I believe that the good old days of retail are not behind us, they’re indeed ahead of us, but they don’t look like what was behind us.

Daniel Burrus:
So a key question is, okay, what is ahead of us? And one of the things that we know is something I would call the datafication of everything. Whoa, what does that mean? That means that because of the implementation of the internet of things where we’re putting intelligence embedded in just about everything, it could be put into a sidewalk, it could be put into a vending machine, it could be put into anything, and we’re adding intelligence to it and we’re adding networking to it, the explosion of data is going to be immense. And that means you want to take advantage of that, because you can just let the explosion of data happen and let everyone else take advantage of it, or you can take advantage of it yourself.

Daniel Burrus:
And the beautiful thing is thanks to virtualization, you don’t have to own all the tools. You can pay for the use of the tools. So whether it’s AI as a service, blockchain as a service or any other one of the technologies, you don’t have to physically have it all as something that you own on premise, you can use it as a service, which means any of us can truly transform business processes going forward. So with that said, again, Rich as the head of IBM’s Global Digital Commerce Practice and Business, what are some thoughts you have about the future of digital intelligent commerce?

Richard Berkman:
So there’s a lot out there, Dan, in terms of trends and what we see in the future of commerce, especially for retailers. There’s social commerce, there’s sustainable commerce, there’s converged, unified, what we call phygital commerce, business model expansions, subscriptions, marketplaces. The list goes on and on in terms of the opportunity that’s out there. And as you can imagine, whether it’s as a service, all of those things are creating data that’s that explosion you’re talking about.

Richard Berkman:
And numerous analysts out there talk about ubiquitous commerce, commerce everywhere approaches. The key here is understanding that digital commerce is strategic and it requires the full blending of business, and that means industry focus specific to you with experience design and technology. All three legs of those stools are needed to deliver on the great experiences that our client’s client customers expect. It also requires that you have a modern ecosystem that’s able to deliver on your brand promise but also absorb all of those wonderful as a service technologies you were just talking about. I want to be able, as a provider to my customers, to have the nimbleness and that agility to absorb some of those technologies, but that takes a modern environment for me to do that.

Richard Berkman:
If I’m still working off old legacy systems and you’re telling me that I’m trying to infuse a new as a service offering, I may not be able to do that for months, if not years, based on how my older technology environment looks. So areas we focus on today are leveraging customer market insights to deliver real time exemplary experiences.

Richard Berkman:
Other key trends around the explosion of expansion of business models from B2B to D2C to marketplaces, will you own a marketplace or will you be part of a marketplace? That’s a consideration that needs to happen. Or are you both? Subscription models, the notion of usership versus ownership. Now, you don’t have to only be a subscriber to these great technologies, your clients may be a subscriber and want usership of yours. We might see a world where you are renting or subscribing to various things and trading them in or even using… Buying secondhand has become a very popular thing, especially amongst the younger demographics.

Richard Berkman:
That again goes back all into that data. And the more you are informed, the better opportunity you have to build that loyalty that you’ve talked about and to drive and maintain your revenue in terms of those target markets that allow you to create better customer relationships. Again, it’s different strokes for different folks, but the key is being strategic in all of your efforts on what’s right for your brand and your customers.

Daniel Burrus:
Hey, you mentioned legacy technology. Legacy technology, I worry about to some degree, I…

Daniel Burrus:
… legacy technology. Legacy technology, I worry about to some degree. I worry more about legacy thinking and give me someone who is more future oriented, future thinking about where things are going versus where things have been. See, I’m worried about all of you right now, because I think a lot of us are going to be in a wait and see environment. Let’s wait and see what happens in this year. Let’s wait and see what happens with all this intelligence stuff, with all this data stuff. Geopolitics, let’s wait and see what’s going to happen. Today, you can wait and see yourself right out of business.

Daniel Burrus:
Secondly, we have to take action and move very quickly. For example, why didn’t a cab driver think of Uber? Why didn’t Marriott think of Airbnb? And I know why. They’re all busy doing what they’ve always done. So if you stay busy doing what you’ve always done, you’re going to be in trouble because there’s a new future out there. It’s right there for us to see. So I would like you to create a list of things that I do know about the future, what I call those hard trends, those future facts. What are those things that are shaping the future? Is AI a fad that’s here today or gone tomorrow? Hint, no. It’s getting more powerful as time goes on. Is IOT, internet of things, is edge computing… And these a few of the things that I’m talking about, robotics. Are those going away? No, it’s kind of like a baby boomer. They’re not going to all of a sudden get young.

Daniel Burrus:
Hard trend. Hey, they’re going to get older. So my point is there’s a lot of things I know. I want a list of things I am certain about, and then take a look at that things that you are certain about. And as Rich mentioned, there are many things you could be doing, but I don’t want a list of things I could do. I don’t even want a list of things I should do. What I really want is one or two things that I must do. So in listening to us, what I’d really love for you to do is to come up with one or two things that you must do. It’s a strategic imperative for you to tap into the unbelievable, beyond exponential opportunities we have right now to reinvent retail. To have the good old days of retail truly be ahead of us and not behind us and legacy thinking ain’t going to cut it.

Daniel Burrus:
One last quick thing about legacy technology. I want to brush over that very quickly. And that is you have the old technology, and then we have the new technology. And we think either it’s this or that. But one of the principles I teach is the [inaudible 00:32:38] principle. It’s this and that. In other words, you can’t just turn off the old. That’s how everything work, but you need the new. So the key is integration. If you design the integration of the old and the new to have more value than just the old or just the new, you end up with a path to go forward. You need a path to give forward, instead of, well, we can’t change everything. Everything’s running on the old stuff. Nothing we can do.

Daniel Burrus:
Well, and once again, I’m worried about you, if that’s your thinking. So let’s look at creating the pathway from the old to the new. And again, my list of things that I do know about the future and list of things that I can’t act on, instead of all the things that I can’t act on, that’ll help you to move forward. Any thoughts on that, Rich, you’d like to tie into?

Richard Berkman:
When it comes to really things that we see that people can think about and at least come to the realization on from a trends perspective and what they can take advantage, you mentioned one earlier, Dan, digital transformation’s a way of life, right? That’s something everyone should accept now. And for market leading retailers, commerce has become a top strategic focus in that way of life, not just for the digital native retailers, but also for the physical and digital channels coming together, right? Human capital is scarce. You got to think about how you can leverage your best people more effectively. Sustainable and sustainability and transparency are urgent priorities for our clients today. And you can’t just go with the greenwash message. It has to be really true focus on how you’re building sustainability and transparent… That’s important for some products more than others, but it’s a clear focus of consumers out there today.

Richard Berkman:
And tech adoption, you nailed it. Around all the technologies you mentioned, it’s going to reshape business operations and it’s going… We’ve done a lot of research in these areas from IBM and our consulting groups. And we spend a lot of time understanding what the needs are of our customers in the marketplace itself, and between adoption of those business operations, especially for omnichannel businesses is critical and building the trust and security to underpin a sustained set of innovations is also critical to maintaining that trust with your customers themselves.

Daniel Burrus:
Yeah. One of the keys I think we want to leave everyone with here is the key is to take action now and not put it off. I can wait till next week, next month, next year. Not to be too busy, but once again, to realize that we’re in a true period of transformation, not change. And let me make a final comment about that. Change comes to us from the outside in causing us to crisis manage, put out fires, and react and respond. Transformation, whether it’s personal or business always comes from the inside out. And that means you have more control. So frankly, I like transformation because if I’m transforming a process, a product, or service, if I’m transforming my retail operation, I now have more control because I’m not just reacting to the world as it happens and to those people that are disrupting me, I’m becoming what I call… And this is what I’d like you to do. I’d like you all to become a positive disruptor, creating the transformations that need to happen to elevate your relevancy and dramatically accelerate your growth.

Daniel Burrus:
Rick, I really want to thank you for joining this conversation today. Your expertise going back literally decades. Thank you so much. Your contribution was fantastic. And I know people really benefited from hearing you.

Richard Berkman:
Thank you so much, Daniel. It was a pleasure being with you and really appreciate you having me.