Business Models for Future Information | Jiro Kokuryo (Dean of the Faculty of Policy Management)

2010.08.05

While my duties as dean have kept me busy and away from my research, if I had the time, there is a theme I would love to pursue right now: "business models for future information."

The catalyst for my thinking on this subject was serving as the head of the judging committee several years ago for the "Net KADEN Grand Prix," an award for outstanding online-enabled home appliances.

I saw how devices like hard disk recorders were competing on the convenience of their scheduled recording features and devising clever ways to link online data with reservations. While I was admiring their ingenuity, I was stunned to realize that within these machines lay "future information" in the form of "reservation data." When this data is brought online and aggregated, it allows us to see "tomorrow's market."

In other words, this is a technology that can tell us "tomorrow's viewership ratings."

Looking back at the 20th century, just knowing "yesterday's viewership ratings" was enough to build skyscrapers in Shiodome. The economic value of understanding consumer trends and sending targeted messages to stimulate demand is immense. If we could know tomorrow's ratings, something even more incredible should happen.

Before we move on to tomorrow, let's look back at the past a little more. It's fair to say that 20th-century online systems, starting with POS (point of sale) systems, made a tremendous contribution to aggregating "today's" information. This allowed for the tracking of daily changes in consumer behavior, leading to significant advancements in both product development and logistics.

And now, an era is dawning where we can know "tomorrow" by connecting all devices with scheduling functions via the internet.

For example, if I were running a pizza delivery business and knew that Customer A was going to watch the World Cup on TV tomorrow, what kind of message should I send them? My limited imagination can only come up with sending a coupon for a discount if they pre-order beer and pizza the day before... But if they pre-order, it not only increases sales but also allows for more efficient preparation, from sourcing ingredients to advance prep, which lowers costs, compared to the usual rush of unexpected orders an hour before the game starts. So, it's okay to offer a significant discount.

What could we do if we knew the reservation data for all the air conditioners in Japan? By knowing the peak electricity usage, we could optimize supply planning. And when an unusual peak is anticipated, we could send a message like, "Lower your thermostat by one degree now and get an x% discount on your electricity bill." (To put it more technically, this enables demand control instead of supply control), creating a win-win for both providers and consumers.

The Net KADEN Grand Prix awards program ended about three years ago, but I believe that many of the ideas that were only seen as possibilities back then are now on the verge of blossoming. The tools to actually collect future information are already widespread in society, and we have accumulated a considerable amount of rules and know-how regarding the handling of personal information, which has been a concern. The final push to reap the fruits of this is the development of business models that translate "convenience" into concrete products and services.

I would really like to explore "business models for future information."

(Date of publication: 2010/08/05)