Wherefore Art Though, Middle Man?

With technology and customer experience advancements, married with further capabilities in Artificial Intelligence, the “middle man” – or Broker – will soon take on the same role as the Shakespearean language – longingly outdated. Call it what you may, but we are entering a period of Disintermediation – where the middle man that has held such an important part in the chain between provider and consumer is under threat of being wiped out due to social media, the Internet of Things (IoT) and Artificial Intelligence (AI).

We broached this subject in our paper looking at technology and its effect on business in 2017 and beyond – and laid a lot of the responsibility on the further-needed development of AI. But, there are a number of places where the middle man has already essentially been removed:

• When was the last time you (or your assistant) used a travel agent to book travel?
• How many times have you (or your assistant) visited the office supply store for reams of paper – or even called a salesperson to order supplies?
• If you’ve got a baby still in diapers (or nappies), are you running out to the store or are you having boxes drop-shipped directly in a timely fashion?

This list can go on – and we’re already seeing movement towards automation or the removal of a human intermediary for items as diverse as insurance (both purchasing and registering claims), refrigerator stocking and, medical regulating and dispensary of prescription drugs. What we’re really waiting for, though, is the ability for technology – specifically AI – to deliver real value.

The key consideration in respect to disintermediation is actually understanding what intermediaries and brokers bring to the table. What they bring generally consists of two things:

• Cost Effectiveness or Price Comparison
• Value for Money or Delivering Service you’d pay for

Factoring for the above includes a seasoned knowledge base, pointed experience, access to tools the general consumer doesn’t have access to, and most importantly, the ability to use judgement to deliver the strongest outcome for the client.

An example in further detail relates to those who do use travel agents to book trips – leisure or business – and realize that agents can still provide value in reducing time to find the best rates and strongest value for accommodations (along with being on hand to service any problem that should arise.)  To really grasp how simple the value proposition is, all we need to do is think back to volcanoes sending damaging clouds over the whole of Europe, unexpected snowstorms over the Northeast of the United States, or unclear and immediate travel directives from any of the numerous governments around the world to understand that travel agents deliver a value that even serious wealth and upper-tier elite status cannot always deliver alone. In many cases, consumers will bypass agents for automated booking systems and won’t think twice about buying the vacation insurance without even recognizing what those insurance limitations are.

Most consumers don’t have the time to research and explore all the permutations that would enable them to make a judgement call about what higher costs make sense. Certainly, there’s a host of price comparison sites to find comparative pricing on anything from travel to insurance and utilities, cars, homes and more. But there’s often more to it than just price, considering time to receive it, warranties, installation, etc. Social media has begun to answer some of those questions and brokers are adding more contextual information on websites and directly into listings, but a bit of judgement is still required. Deciding not to take a 2AM flight to save $50 might be obvious, but can you risk immediately losing your power if a payment is a day late in order to save £100 per year on utilities as the company on offer has strict terms and conditions? Will that cheaper car insurance hammer me for a windscreen repair or delay in paying out in the event of an accident? Would you rather lease a vehicle with service included at a higher monthly payment if it reduced road tolls and/or gave you access to carpool lanes? These are just some examples of the judgement calls and knowledge base that brokers often know, but AI will eventually provide.

The smart mixing of social feeds and AI – with a sprinkle of data collected via IoT – will save time and logistics when delivering the exact options each consumer wants. And all of this will be the driving force behind disintermediation. Already, high-end auto manufacturers are removing the need for a middle man to “reveal” the features of cars. Cars are being displayed in shopping malls and you can book test drives at your home and office. You can already select features you like online, work out your payment options and then have the car delivered directly to your door without even visiting a dealer or showroom. Once AI is fully integrated, full feature sets of products can be presented for purchase at the click of a button – without the buyer having to wonder if they are missing out on anything.

Before we get ahead of ourselves, there will need to be a cultural shift before this comes to the mainstream. Luckily, the development of true AI is on a trajectory that gives us some time to see that cultural shift. When IoT devices and wearables are collecting data that can be parsed by doctors, insurers – hell, even lifestyle brands – to deliver products that are most necessary, it’s not such a jump to see how this all relates to manufacturing, B2B, SaaS and Retail.

IBM’s Watson is already providing a glimpse of the leaps occurring in AI development. No longer just a series of logical answers to questions, it’s moved into an area of emotional intelligence – that which human’s pride ourselves on possessing and we assume computers never will. Yet way beyond predicting chess moves, or figuring complex mathematical equations, AI is indeed beginning to answer questions in context using native language, to think creatively outside of the box, and handle supporting scenarios.

One example is ROSS, a legal advisor app that works much like Siri. A lawyer can ask questions of to obtain a natural language response in real-time, in the same way a client might—for instance. We are seeing Lemonade in New York being hailed as the ‘Uber of Insurance’ and followed by a host of other companies across the pond from Friendsurance to Brolly, Trove and Neos, all utilizing AI and even in some cases boasting “90 secs to get insured, 3 min to get paid”.

Bringing it all back to the Middle Man’s delivery of cost effectiveness and value for money, these are components that need to be truly understood before AI can reasonably replace an actual person. Perhaps those who feel there must be an intermediary can glean some overarching concepts from medicine – where the removal of a doctor might not be a smart model of disintermediation. There are constant judgement calls and nuances required in the diagnosis and treatment of patients. While doctors will be able to better use available data in much the way AI would, there’s a complexity that we are possibly still decades away from being able to replace this specific intermediary element – if it happens at all. But, IoT is acting as a transitionary mechanism – as Novartis recently pointed out with their inhalers for Asthma sufferers. Remote monitoring of the end device direct to the manufacturer can often reveal not just usage patterns, but could reveal the wrong drug has been prescribed due to constant or heavy usage. This not only can assist doctors with changing prescriptions, but allow pharmaceutical companies the ability to alter or refine drugs at source, including personalised medicines.

In a new world of hyper-acceleration, hyper-connectivity and hyper-engagement, it is clear that 20^th Century business strategy has no place in the future. Legacy systems, processes and even thinking needs to be radically addressed. Agents, brokers, accountants, book-keepers – even buyers and advisors – are all set for the chopping block. Those who will survive this onslaught are those who offer new creative, strategic leadership in their respective fields. Yet, before companies begin their path toward the removal of the key middle man – or even transactional intermediary figure – they’ve got to engage in a bit of reverse engineering. Only through unpacking the customer experience and interpolating that with data, can the proper decisions be made by which “middle man” components can be automated, bypassed, or just plainly removed.

For, if the connective tissue is removed without attending to the fibre that draws the best experience together while just squeezing the most out of the margins without providing the core components of cost effectiveness and value for the money, we are destined to fail. And, it will be a far deeper tragedy than anything Shakespeare coined at the turn of the 17^th Century.