Remove This to Win, But Beware of the Consequences

What do Uber, Netflix and TikTok have in common?

It's one word.

And working out how to remove it will become the most important strategic discussion for CEOs across the globe in the coming years.

It should already be the most important word.

And that word is friction.

Why the best companies are all frictionless

The companies I named at the start are all early examples of how you can have global success by removing friction from your customer's lives.

Uber, for example, removes friction by making it much easier and faster to pick up a ride than the metered taxi model it replaced.

Netflix removes friction by delivering quality, bingeable content without delaying consumer gratification with adverts or timetables.

And TikTok takes it to another level by removing the friction of viewers needing to spend time choosing what to watch. Its algorithm calculates what people want based on how they interact with the app. In fact, the more you think about it, the more obvious it becomes that the best companies are masters at removing friction. Google (frictionless search), Wise (frictionless cross-border payments) and Amazon (frictionless shopping) are just three more examples.

On the other hand, the brands we love to hate are the ones that waste our most precious asset. Time.

For example, don't you get frustrated with the excessive form-filling when hiring a car, queueing at a bank branch, or holding for a call center agent?

I know I do.

What Klarna's AI assistant proved in one month

Fortunately, this is all about to change, and companies that have clung on to life like limpets despite wasting millions of hours of their customers' lives will have to adapt to survive because of the widespread adoption of large language models, like ChatGPT.

Take the example of Klarna, a leading global payments and shopping service.

On February 27 2024, they announced that their new AI assistant had handled two-thirds of customer chats in its first month. That's the equivalent workload of 700 full-time agents, which equates to an estimated $40 million improvement in their bottom line. They went on to say that the AI agents were on par with customer satisfaction scores, were more accurate in errand resolution (leading to a 25% drop in repeat inquiries) and were able to resolve queries in less than two minutes, compared to the previous 11.

You don't have to be a call center expert to understand that these are just staggering improvements which showcase the potential of moving from human to artificial intelligence. And you have to remember that this is version 0.1, and we should expect exponential improvements over the next few years.

Why an empathetic, always-on bot could beat human agents entirely

In fact, the idea that a machine will be able to better communicate with humans in a more personalized, knowledgeable, and empathetic manner is no longer just science fiction. It's fast becoming a science fact.

Having just spent a wasted hour on the phone with my internet service provider, I can't wait. I would pay extra to be able to deal with a bot that listens to my problems, understands my history, is able to take decisions without escalating, can respond not just in my language but in my accent or dialect and is able to pick up on any number of visual and audio cues to better understand me and make me feel valued and appreciated. Perhaps even loved.

And if this leads to hours-long call times because customers feel compelled to share their personal trials and tribulations, why not?

After all, our buying decisions are based on emotions, and who better to exploit that than a machine?

Because unlike human agents, the virtual kind are available 24/7 in every single corner of the globe and they know more about us than any human ever can.

These are not just my fantasies. The markets agree. When Klarna shared its AI successes, it was reported that a leading traditional call center company saw its share price drop in just one day.

Do We Really Want a Frictionless World?

CEOs now have no choice but to switch their investments from human to artificial intelligence to provide frictionless services.

The benefits for investors and customers are clear. It's equally obvious that the millions of knowledge workers who operate today's phones will have to find new vocations, and they will have to find them fast.

Which begs one big question. Do we really want a frictionless world if the cost is that human capital becomes worthless?