Protiviti roundtable on the promise, peril and potential of a metaverse future
- Nike is allowing users to design and create products they’re able to take with them. For Nike, this is increasing exposure of its brand to users who are going to be more digitally native, the ones who are going to be spending more time—and presumably, money—in immersive worlds.
- For a new space, we certainly are seeing a mass of early adopters who are ready and eager to engage in the metaverse, but a word of caution: I don’t think we’re quite at the “if you build it, they will come” stage just yet.
- We are working with several clients now, and any metaverse strategy starts by identifying those use cases where it’s driving meaningful impact to business… It’s critical to make sure you understand why you are going into the metaverse. What are you trying to accomplish?
Many people think of the metaverse as VR headsets, gaming and socializing with others in a virtual environment. However, the metaverse can also mean business. The metaverse has the potential to build brand awareness, launch new products and services, and improve customer experience. To find out how, Joe Kornik, Editor-in-Chief of VISION by Protiviti, caught up with three of Protiviti’s metaverse experts—Christine Livingston, Managing Director, Technology Consulting – Emerging Technologies; Alex Weishaupl, Managing Director, Protiviti Digital – Creative and UX Design; and Lata Varghese, Managing Director, Head of Digital Assets and Blockchain Solutions—to discuss the opportunities businesses have and the challenges they’ll face in the augmented future.
Kornik: Lata referenced a few interesting possibilities there, but how are businesses using the metaverse today, and how do you think they’ll use it in the future?
Weishaupl: Businesses are already leveraging the metaverse to create valuable interactions with and among people to address different types of business problems, as well as opportunities. The most common uses—both in terms of press coverage and actual experiences you can interact with today—relate to marketing. Consumer brands have been early adopters of the metaverse and are developing new environments aimed at engaging existing and new audiences. One brand known for its variety of marketing experiences is Gucci. The luxury goods brand partnered with Roblox to launch Gucci Town, a digital destination on Roblox “dedicated to those seeking the unexpected and to express one’s own individuality and connect with like-minded individuals from all over the world,” Gucci says. Gucci also embraces the decentralized metaverse to build an immersive concept store that showcases rare pieces, fosters conversation across contemporary Gucci creators, and even offers digital collectibles for purchase. Meanwhile, the metaverse is also playing an emerging role in employee training by providing new and interesting ways to conduct activities like onboarding and skills development. Mercedes-Benz has invested in AR-based metaverse experiences to upskill their service technicians in their dealerships by providing a virtual overlay to their products. They are also helping their technicians identify and address vehicle issues more quickly and, importantly, more predictably.
Livingston: As I look at the opportunity for the metaverse in manufacturing, we're seeing some upskilling and training bleed over into the metaverse, where we are able to provide real-time guided build instructions in an assembly process, or “see what I see” expert assistance when someone is troubleshooting equipment. We're also seeing a lot of manufacturers looking at digital twins, and how they may be able to increase efficiency, reduce costs and optimize operations. BMW has created a simulation of one of its assembly lines, which may enable it to simulate what may happen in a particular environment prior to pushing things to the production floor. It's exciting to see these real-world applications happening in virtual worlds.
Varghese: What Nike is doing is interesting: It’s created a blockchain-based platform, where it is allowing users to create products and monetize them. This is one way of using blockchain, to allow creators to get that benefit for the attention they bring to a brand, like I mentioned earlier. Users can design and create virtual goods that they’re able to take with them, and Nike can create products based on those designs. At last check, Nike had more than 100 million virtual goods and about 100 million royalties. And ultimately, for Nike, this is a way to generate new revenue and increase exposure of its brand to users who are going to be more digitally native; the ones who are going to be spending more time—and presumably, money—in immersive worlds. It’s smart; it meets consumers where they want to be.
The fundamental transition that’s happening is one from closed centralized platforms where users access free information in exchange for their data to a connected, open and immersive world with new players like Roblox, which has some 50 million active users and a huge economy inside the metaverse.
Kornik: You touched on a lot of industry sectors there. What other sectors could the metaverse impact in a significant way?
Weishaupl: The area I'm seeing the most amount of activity is in the retail brand space. Everything from consumer products to luxury goods because those businesses rely on creating demand, creating inspiration, creating interaction in some way around both the product and the brand that’s behind it. There’s a ton of work that’s happening within the retail experience space that we're really excited about. But I'd say, interestingly, an incredibly fast follow is in the financial services space. There's been no shortage of experiences that JP Morgan Chase has released, as well as many other financial services brands trying to figure out how to engage with customers, employees or partners, or other elements of their human ecosystems.
Varghese: It’s likely that brands that are selling to a certain type of customer today will want to continue to sell to them in the digital ecosystems/metaverse, so they will have to have some strategy on how to interact with that customer in the new environment. So, the metaverse likely impacts all industries. Is it going to replace existing technology? No; it's going to augment the technology experience a company’s customers are already having with the internet. Ultimately, it's always about solutions for the customer; it's never just about the technology.
Kornik: Where do you think the major pain points or barriers to entry are for companies? What are they struggling with the most?
Livingston: Having spent many years in emerging technology, we've developed an approach that helps drive business success, aligns strategy to key objectives and achieves consensus across stakeholders. We are working with several clients now and any metaverse strategy starts by identifying those use cases where the metaverse has the potential to drive meaningful impact to business. We start by identifying what the potential applications are. How might the metaverse and this new technology further your business objectives? What are some of those concrete use cases we can consider? And as we've identified those, we can then start to break them down into more digestible building blocks to understand what we need to do to enable these use cases.
There are a lot of new and emerging technologies and some mature technologies that you probably already have, and we look to determine what key technical components are needed across those use cases to bring a use case to life. And once we've done that mapping, we can start to prioritize and initialize that strategy and roadmap by aligning a company’s priorities against the identified business value. What’s the business hoping to accomplish with the metaverse and how complex is that technical execution, ultimately? Outlining that roadmap will let companies unlock business value in meaningful and tangible ways across the journey.
Varghese: Especially when it comes to integrating some of these newer technologies, which are still fairly complex for the average organization. Startups have carried the momentum in the crypto space thus far. These are technically advanced businesses and leaders will have to go on a journey to discover the level of infrastructure that’s right for whatever use case they choose. So, how do they develop policy in a way that aligns with the use case? Setting up controls while the regulation is still evolving, and even knowing all the risks that exist, is difficult; this requires significant collaboration across an organization. There is not one playbook to solve all these issues. It all comes down to what are the use cases, what are the risks and how do you get the organization aligned around the goals?
At last check, Nike had more than 100 million virtual goods and about 100 million royalties. And ultimately, for Nike, this is a way to generate new revenue and increase exposure of its brand to users who are going to be more digitally native; the ones who are going to be spending more time—and presumably, money—in immersive worlds. It’s smart; it meets consumers where they want to be.
Livingston: Absolutely. When you start to think about what that first venture into the metaverse may be for your organization, it's critically important to start by focusing on a shared objective and a key purpose. It sounds simple, but why is your company going into the metaverse? Are we trying to engage a specific customer population? Are we trying to improve efficiency? Are we trying to unlock a new market? What's our objective in the metaverse? Then you need to start to think about some of the known challenges: Are we going to enable “immersiveness”? What level of immersiveness is required? Interoperability is a really big challenge in this space right now; what if we purchase real estate in one decentralized world and it doesn't transfer to another? What if this doesn’t end up being a winning platform? Do we look at centralized or decentralized applications? Fully understanding some of those key concepts around the technology is critically important.
But equally important is aligning to the business value based on that technology, the immersiveness, interoperability and the sovereignty. What technology and what skills are you going to need as an organization to enable those things? Many companies are struggling to define a strategy for the metaverse. They are having challenges just identifying and aligning to a shared strategy and purpose objective for the metaverse. How am I managing the risks associated with the metaverse? How do I manage my brand, my reputation, the business side of things? Knowing all of this in this new and emergent space is going to be difficult; in fact, I would say, most companies don’t have answers to many of these questions. And to make matters even more challenging, as Lata said, that regulatory environment is changing very quickly in this space. Which platforms do you use? You have an increased chance of an attack as you start to expand to new endpoints, new devices, new technology platforms, and a new ecosystem.
Kornik: So, how should companies proceed?
Varghese: A lot of these technologies are free and open-source software and are being tested by many developers as opposed to just being tested within your own four walls, which is how traditional enterprise software was developed a few years ago. There’s not one regulatory body, there are multiple, and there's a lot that’s still up in the air, but companies cannot wait to act. Separating the security and privacy risks from the technology risk is important in our view. But your metaverse strategy should be more about the product and service, not about the technology.
Livingston: Agreed. I think we would generally say if you're trying to move an internal innovation agenda forward by educating around the technology, that’s a pretty big uphill battle, right? It's about putting the innovation initiatives and the metaverse in the context of the business value that you either hypothesized or can demonstrate. It’s critical to align on that shared objective. We’ve found that is the most successful way to move these initiatives forward. You must have a clear understanding of the organization’s risk appetite vs. the organization’s innovation appetite. There’s also the publicity risk. Everyone has seen, obviously, FTX has made major news. But the other side of that coin is brand relevance; are you too slow to move? There’s a 1995 interview with Bill Gates where David Letterman is laughing about how ridiculous the concept of the Internet sounds. Similar videos have emerged of the iPhone—'there is no keyboard, no one will ever use it!’ And the metaverse has its skeptics, for sure. So, I think there's also that balance of not being overly aggressive but also making sure you’re not the last one to move on it.
How might the metaverse and this new technology further your business objectives? What are some of those concrete use cases we can consider?
Weishaupl: One thing I'll add: The metaverse is in super rapid development, like the web in 1995 and mobile in 2007. An important piece of any developing platform or a developing way of interacting is risk around adoption expectations. Current metaverse experiences require users to be provisioned with several new things, depending on that experience: new devices because navigating a 3D metaverse on a screen just doesn't feel as natural, new services like the digital wallets that Lata highlighted earlier if you're participating in a decentralized metaverse, and new ways of navigating interactions and security. As a new space, we are seeing a mass of early adopters who are ready and eager to engage in the metaverse, but a word of caution: I don’t think we’re quite at the “if you build it, they will come” stage just yet. Expecting that this will hit the millions and tens of millions of users in the near term rather than thousands and tens of thousands of users is a big risk to any metaverse initiative, in my opinion.
Kornik: So, what are the next steps for business leaders to take as they enter the metaverse?
Livingston: I think as we've articulated, the first step is to identify your strategy and incorporate that strategy in your organization’s broader innovation goals. Start by creating a small cross-functional team that has some autonomy and the guardrails in which they're allowed to experiment, innovate and play. And within that experimentation, allow for some movement on the ROI, but give them that focus objective to work toward. Your ROI metrics are going to be different depending on your goals. For instance, acquiring a new customer base will be vastly different than trying to improve your operations. It’s important to start with that shared vision and then understand how some of the use cases that are identified will move that objective forward. And then, disseminate that shared vision within all of your teams. And as we talked about, understand where and how the metaverse will intersect with your existing technology infrastructure. And last but not least, it's critical to make sure everyone understands what you’re trying to accomplish in the metaverse, and then showing how the specific use cases align to that particular vision.
As a new space, we are seeing a mass of early adopters who are ready and eager to engage in the metaverse, but a word of caution: I don’t think we’re quite at the “if you build it, they will come” stage just yet.
Christine Livingston is Managing Director with Protiviti's Emerging Technology Group – Internet of Things.
Alex Weishaupl is a Managing Director, Protiviti Digital – Creative and UX Design. He is a digital design executive with a deep history of helping clients envision, build and evolve customer experiences that help their organizations find and deliver on their vision and purpose to build rich connections with their audiences—both external and internal.
Lata Varghese is Managing Director in Protiviti’s Technology Consulting practice and Protiviti’s Digital Assets and Blockchain practice leader. Lata is a seasoned executive with over 20 years of experience in helping clients successfully navigate multiple business and technology shifts. Prior to Protiviti, Lata was one of Cognizant’s early employees when the firm had less than1,000 employees, and she grew with the firm as it scaled to a $17Bn, Fortune 200 enterprise.