Forecast 2015: From innovative startups to an economic “spiral of doom”
Professors in the Ross School of Business see some key trends on the economic landscape this year: Disruptive businesses will be on the rise, peer-to-peer payment systems will gain popularity, and the trajectory of income disparity could lead to a potential spiral of doom.
Read on to learn what our own business experts predict for the near future.
Entrepreneurship: Disruption and big data
Stewart Thornhill, Executive Director of the Zell Lurie Institute for Entrepreneurial Studies
Disruptive business models will be on the rise, with more Uber and Airbnb-type startups. There will be more and more innovation in what is known as the surplus economy. For example, people with cars and bedrooms they aren’t using can be part of the ecosystem. Instead of inventing new products and services, people are finding ways to create businesses with what is underutilized. The combination of connectivity, big data, and linking users together means there will be more businesses that find ways to take advantage of the converging trends in 2015. More predictions from Stewart Thornhill
Income disparity and a spiral of doom
Wallace Hopp, Professor of Technology and Operations and Senior Associate Dean for Faculty and Research
All signs point to a continued concentration of income and wealth in 2015 unless there is shock to the economy. The larger the disparity in income, the less money is in the hands of those who spend it the most. The bottom 20 percent spend every nickel they get because they need to. That money circulates in the economy very quickly. If you put it in the hands of the top 20 percent, they are going to save it, which means it will circulate more slowly. The result will be slower growth, fewer jobs, and potentially a spiral of doom. More predictions from Wally Hopp
Consumer protection and prosperity
Scott Rick, Marketing Professor
Consumers should go shopping. Ross research has found that shopping restores a sense of personal control over one’s environment, and this helps to alleviate sadness. It’s worth noting that the shopping episode need not be expensive. However, consumers should make sure to protect themselves. Recent security breaches at many major retailers have highlighted the risks of paying with plastic. It’s less psychologically painful to swipe a credit card than to instantly remove cash from your checking account or your pocket. Some research suggests that merely being exposed to credit card logos can cause us to spend more with cash! More predictions from Scott Rick
Digital interaction between marketers and consumers
Puneet Manchanda, Marketing Professor
In 2015, m-commerce will grow to early maturity as customers become comfortable with conducting transactions on mobile devices, especially from within apps. Similarly, electronic payment systems will struggle to find traction, but one area that will grow faster than normal is peer-to-peer payments (Venmo, Square Cash, etc.). When it comes to the digitization of the economy in 2015, big data will deliver more value even as the hype around it dies out. Despite threats to privacy, consumers will continue to yield data to businesses that offer “convenient” solutions such as Uber and Airbnb. More predictions from Puneet Manchanda
Developments in marketing data
Fred Feinberg, Marketing Professor
Companies will learn how to better tap multiple streams of data to enable real-time marketing intelligence that’s highly personalized. Some of the most exciting sources are from geolocation on smartphones and “wearables.” Dedicated applications and always-on data collection will allow tight, inexpensive tests of marketing tactics. More products will become services with local delivery.
More predictions from Fred Feinberg
Upward urban development
Peter Allen, Lecturer of Real Estate
Cities will continue to attract the best and the brightest. The most popular cities with students here seem to be Detroit, Chicago, and New York, with Detroit rapidly gaining momentum; it is estimated that 1,000 new residents support $200 million in new real estate development in Detroit. Sustainability also drives young people to cities; using subways, walking, buses, and putting fewer cars on the road appeals to younger generations. More predictions from Peter Allen