Understanding the metaverse and its possibilities: PwC

The metaverse is here. And while the vision is still evolving and future adoption is unknown, businesses are already experimenting with its building blocks and making decisions about how the metaverse plays into their strategy.

In this episode Mohamed Kande, Global Chair at PwC, is joined by Judson Althoff Chief Commercial Officer at Microsoft, to discuss the big questions around the metaverse for business leaders—what are the opportunities in your industry? What are the risks? What’s around the corner?

To learn more on the topics and research discussed, check out the 2022 PwC Metaverse survey.

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About the podcast participants

Mohamed Kande serves as the Global Chair at PwC. Previously he was US & Global Advisory Leader and the CEO of the combined PwC consulting businesses in the US, Mexico and Japan. He also served as the US and Global Advisory Leader for the technology, media, telecoms, and hospitality industry sectors. His expertise spans the areas of strategy, technology, business model reinvention, and mergers and acquisitions.

Judson Althoff is Executive Vice President and Chief Commercial Officer at Microsoft. He is responsible for the sales strategy, execution and revenue growth of the company’s commercial business. He leads a team that empowers Microsoft’s customers to digitally transform their business by democratizing and scaling digital experiences across their organization.

Episode transcript

Find episode transcript below.

ANNOUNCER:

00:00:01:09 Welcome to PwC Pulse. A podcast to provide insights to help you solve today's business challenges.

MOHAMED KANDE:

00:00:10:04 Hi, I am Mohamed Kande, Vice Chair, U.S. Consulting Solutions Co-Leader & Global Advisory Leader at PwC. And I will be your host today.

00:00:20:11 The metaverse is here, and the technologies that make it possible are rapidly evolving. While the building blocks of the metaverse are still maturing, there are opportunities that exist today. From employee collaboration and training to engaging with your customers in new ways, to new experiences and offerings.

00:00:40:10 Now is a time to get started. PwC has been in this space for a while, shaping what it means for ourselves and our clients. Today, I am excited to welcome Judson Althoff, Executive Vice President and Chief Commercial Officer at Microsoft. Judson, welcome to the podcast.

JUDSON ALTHOFF:

00:01:01:09 Thank you, Mohamed. It's great to be here with you.

MOHAMED KANDE:

00:01:03:16 So, Judson, over the course of your career and now as the Chief Commercial Officer in Microsoft, you have had the opportunity to see and to be part of transformational technologies. How did you pay a passion for technology come to be?

JUDSON ALTHOFF:

00:01:18:22 Well, I probably dates back pretty far, Mohamed. I have to probably say it came back all the way to my childhood. My father is a brilliant physician, but had a really hard time with technology in the household. And I always had the responsibility as a kid of resetting the time clock on the VCR.

00:01:36:22 So from day one, even as a kid, you could see how people would react positively to the applied use of technology and how it could bring joy to their lives, even if it was as simply as making a video program come on the television.

00:01:50:04 And so throughout my whole life and getting my degree and my engineering background, I've always been excited about the applied use of technology and the difference that it could make, whether it be something as simple as enjoying entertainment experience or something very tangible in someone's lives, either an educational experience or improving a business outcome. So for me, that's where the passion lies, is the applied outcomes that you can drive with technology as the foundation.

MOHAMED KANDE:

00:02:16:14 I guess it is great to have a job where you can actually apply your passion to it, right?

JUDSON ALTHOFF:

00:02:20:00 Yes.

MOHAMED KANDE:

00:02:20:25 So, Judson, when you meet with more business leaders than almost anyone I know, by the nature of the job that you have today, tell me, what are they talking about today?

JUDSON ALTHOFF:

00:02:30:04 Well, first of all, it's a real privilege to be able to interact with business leaders around the world across so many different industries and companies of so many different sizes. It's one of the great things about Microsoft's partnership with PwC is we get to serve so many clients with so many different backgrounds and so many different technology needs.

00:02:48:16 But I would say coming out of the pandemic, there are some very real trends. I think people were thinking that once we got out of the pandemic, there would be lots of blue skies and rainbows and the world would be an easier place to do business.

00:03:00:16 And the reality is, as we've come out of the pandemic to challenges of a different kind, we see a tremendous need to get the workforce back to a productive state and in enable not only great productivity in the workplace, but thread the needle on productivity and employee satisfaction and well-being because there's labour shortages around the world and just about every industry.

00:03:23:26 And you have to do more than just help your people to be successful in the work they do. You have to create the environment where they actually enjoy the work they do and look after their nurturing potential and career growth.

00:03:35:11 So we spent a lot of time thinking about how technology can really empower the future of work. Also, people are concerned about the global supply chain and the constraints there are in the world, creating some resiliency and perseverance into the supply chain.

00:03:49:22 Sustainability is top of mind, and those two things often go hand in hand because thinking about creating more sustainable technology solutions often improves supply chain outcomes. And then, of course, cyber security is top of mind right now, because one thing hasn't slowed down in the economy right now. It's the rise of bad actors. And so creating a strong cyber foundation so digital businesses can thrive.

00:04:13:24 But I would summarize all of that by saying, Mohamed, that there's tremendous uncertainty out there in the market, and the only pathway through uncertainty is continued in accelerated innovation.

00:04:25:11 So we have to come together to help our customers really embrace technology, to accelerate innovation and build real perseverance in their business. It's true that no business is 100% resilient, but those that are fortified with some amount of digital capability are more resilient than others.

00:04:43:09 And so a real opportunity for technology to play a role in helping customers navigate uncertainty around the world.

MOHAMED KANDE:

00:04:50:12 Now, this is great, Judson. You know, the last time we met in person, we discussed the metaverse being top of mind for many companies. In fact, we did a survey at PwC and found out that 66% of executives said that their companies are actively involved with the metaverse. And about half of the consumers that we surveyed said also as exciting from where you sit, hundreds that resonate for you is the metaverse, a fad or the future?

JUDSON ALTHOFF:

00:05:19:26 Yeah, it's a very dangerous question Mohamed. Because every time I tried to guess or project or predict whether a new technology was a fad or whether it was here to stay, I have been sorely wrong.

00:05:34:11 So I think the most important thing to do when a new technology comes out or a new set of capabilities, is to assess the pragmatic or sort of the applicability of how a given technology may improve a business scenario.

00:05:48:03 So when it comes to the metaverse, there's no question that the notion of simulating things in an alternative world can have an impact. It can have an impact on how people collaborate. It can have an impact on how people have immersive experiences. It can have an impact on how we simulate business processes.

00:06:08:03 And so I think for our customers thinking about how to navigate the metaverse, stepping back and really asking some deep questions about how the technology itself can improve your business, whether it be through empowering your employees to collaborate more effectively or reaching customers in a new way, or even thinking about simulated product design or business process scenarios.

00:06:30:11 There's a lot of potential to leverage what underpins that metaverse and the core technologies there to influence business, because certainly as technology trends have proven, if you can get ahead of the game, if you can be thoughtful about your approach towards applied technology, you can get a leapfrog advantage against your competition. And I think you'll see that play out here as the metaverse matures.

MOHAMED KANDE:

00:06:53:11 No, that is true, that the challenge of the metaverse today is even definitions. Right? Because if you ask 100 people today about what is a metaverse, you will get 100 different definitions of what exactly it is, right?

JUDSON ALTHOFF:

00:07:05:07 Yeah.

MOHAMED KANDE:

00:07:06:05 And I know that to you and Microsoft, you have a very pointed view on this. How do you really define the metaverse?

JUDSON ALTHOFF:

00:07:11:27 So I think about the metaverse in three categories the consumer metaverse, the commercial metaverse and the industrial metaverse. The consumer space is probably the most evident because you've heard and seen so much of it out there.

00:07:28:11 A lot of business to consumer companies are starting to invest more in the metaverse. And you certainly see the technology come to life in the consumer realm, in the form of gaming scenarios, in the form of collaborations scenarios.

00:07:42:00 If you sort of study Web3 constructs, you see a lot of NFT gaming coming to life and there's even a monetization model that is you know arguably less than stable today, but is certainly a new frontier for monetization and commerce.

00:07:58:11 And so thinking about how to create marketplaces and monetize your brand and thinking about how the consumer metaverse can effectively be another dimension to omnichannel commerce for your business is an important thing if that's, if that's relevant to you as a company.

00:08:15:03 The commercial metaverse is about how do we come together in the hybrid realm of work, how do you have more inclusive experiences and how do you get closer to being able to collaborate in real time and include broad perspectives to solve problems? The best example I can give here is the work that we've done to help companies really simulate environments and come together and collaborate in different worlds.

00:08:42:23 To have a hands on experience about how to improve product design or how to solve problems together.

00:08:51:11 Imagine you and I coming together with our teams from around the world to think about the next cool idea for autonomous vehicle design and actually being able to be immersed into that product and open the door to the car or sit in the seats, understand, you know,

00:09:07:11 --how the vehicle may go down the road all while operating far from our offices in different places from around the world, the types of immersive experiences can really, really be accelerated through the commercial metaverse.

00:09:21:11 The last one, and probably the one that has the greatest potential is the industrial metaverse. And this is the notion of taking any manufacturing process, any supply chain logistics process, and simulating it infinitely in the cloud to refine the process before having it take on a physical form.

00:09:40:11 The power here is and the potential is just enormous Mohamed because if you think about it, if you make anything or you move anything, you create a carbon footprint.

00:09:51:21 If we can simulate it infinitely in the cloud before you make it or before you move it, we can undoubtedly create a more effective and efficient process in manufacturing.

00:10:03:11 Save money, of course. These types of solutions tend to pay for themselves very, very fast. But in addition to being able to produce products more effectively and more efficiently, we can also do so with far less waste, a far lower carbon footprint, less consumption of potable water.

00:10:20:17 In short, we can create better products more sustainably by harnessing the power of the industrial metaverse, and we can create real business impact and at the same time, real societal impact.

MOHAMED KANDE:

00:10:31:21 You know, Judson you're absolutely right. Because when people think about the metaverse, the consumer metaverse and the commercial metaverse are quite familiar to people, right?

00:10:42:11 Because they can see it, they can potentially experience it. The industrial metaverse is actually quite new, but we know it's important. What is Microsoft doing today to bring the industrial metaverse to life?

JUDSON ALTHOFF:

00:10:53:05 It's a great question. So as a technology company, as a cloud platform company, the first thing we're doing at Microsoft is to create the underlying platforms that empower industrial metaverse solutions.

00:11:08:11 So we have a broad set of IoT capabilities that allow you to create a sensor fabric for any manufacturing environments and, you know, model out the end-to-end supply chain and logistics processes that underpin really every manufacturing supply chain process.

00:11:25:11 We, of course, have the cloud scale platform and the data services that can allow you to harness the enormous amounts of data that can come off of a sensor fabric.

00:11:36:11 We then have machine learning capabilities that allow you to then reason over that data and the Digital Twin Service that allows you to model in three dimensions in the industrial metaverse, any process.

00:11:49:11 Again, whether it be a chemical refinement process, whether it be an actual mechanical design process, or whether it be logistics and delivery networks, you can model that using digital twins.

00:12:02:20 And then we also have capabilities that allow the model to teach the people and the people to teach the model in a full digital feedback loop. And again, design better products more sustainably.

00:12:13:11 The other thing that we're bringing to bear frankly speaks well to our partnership, Mohamed, because in so many of these scenarios you need to provide rich advisory capabilities back to the client.

00:12:24:03 Client needs to understand how can the industrial metaverse change my business? What are the potential that I have to not only improve my bottom line, but help me deliver on my promise, on my sustainability in net zero goals back to my customers and back to society.

MOHAMED KANDE:

00:12:41:21 You know, Judson, I remember a couple of years ago when we built together the first digital factory of the future, I can just think about the potential now that we might have to build the next generation manufacturing processes. Can you provide a few more examples of how some of the most impactful companies out there? What have they done to leverage industrial metaverse?

JUDSON ALTHOFF:

00:13:01:15 Well, look, we've seen everything from consumer goods companies that have, you know, hundreds of different brands to, of course, energy companies that are looking to pivot to renewables, to local governments that have simulated even their own smart city design power grids using offshore wind and solar to largely supplant their reliance on fossil fuels to power cities from there or to.

00:13:31:15 Frankly, even bakers bakeries that look to, you know, harness their network of how they create edible goods and deliver them from farm to fork to people around the world with the lowest carbon footprint possible.

00:13:45:11 So you can simulate just about anything in the cloud. With digital twins, typically it has its greatest benefits in manufacturing, but also supply chain and logistics scenarios for just about any business out there.

MOHAMED KANDE:

00:13:57:17 You know, Judson, this is fascinating. And I know we talked about the technology. Let's talk about people. People want to trust the technology. Right? And the metaverse brings new opportunities, but some new risk and trust challenges. Can you talk more about what those challenges are and also how companies could get ahead when the thinking about planning the metaverse strategy?

JUDSON ALTHOFF:

00:14:20:03 Totally. There is one vulnerability in this digital world. And in fact, digital businesses can be more vulnerable than physical operations if they're not hardened by design up front with a strong cyber security strategy. We recommend upfront prior to any industrial metaverse pursuit that our customers have a strong foundation for cyber operations. That starts with having a strong identity back playing.

00:14:47:13 It then requires very significant investment in endpoint protection. So if your employees, frontline workers in the factory are getting data streaming off of digital twins, it's coming across on hardened frontline managed devices end point devices, whether it be mobile phones or tablets, etc. The sensor fabric itself has to be hardened. So we, we create cyber defence products for IoT networks as well.

00:15:15:07 So that you guard against threats coming in from really any vector that would look to attack the factory environment itself. To then of course, hardening the applications, managing data governance and encryption, and making sure that that's well-managed. To then of course, providing the environment, the incident and event management platform that enables customers to look left or right across their cyber defence network and make sure that their digital business is, in fact safeguarded and resilient and future proofed.

00:15:46:15 So lots of work to be done there. And of course, can from the outside looking in in first look appear to be a business risk. But if well-managed and if well-designed, you can create great resiliency in the cyber foundation of any business.

MOHAMED KANDE:

00:16:02:14 So the commercial metaverse, consumer metaverse, industrial metaverse, when you look ahead, Judson, what are you most excited about?

JUDSON ALTHOFF:

00:16:11:23 I think it depends probably on, you know, which customer I happen to be talking to on any given day. I love the industrial metaverse side of things because I come from that background.

00:16:24:11 But I also think that the consumer metaverse, the commercial metaverse, can have broad implications on how the world interacts.

00:16:35:11 I think the consumer metaverse, frankly, can stand to be the great equalizer in how people get data and information in an equitable way.

00:16:40:08 And so everyone has an opportunity to participate in the digital economy. I think the commercial metaverse has huge implications on how people come together to collaborate and solve complicated problems.

00:16:51:11 So think about the latest cancer research and enabling doctors with different perspectives from around the world to be able to come together and work in new ways to solve complicated problems.

00:17:01:08 So it's a safe answer, but I kind of think all of the above option D is probably the right one. And I think, you know, depending on how you look at your business, you can see a better future through the applied use of metaverse technologies.

MOHAMED KANDE:

00:17:14:20 You know, Judson, I can tell you the electrical engineer in me can relate to everything you just said. Thank you for that, Judson. I want to thank you for joining us today on this podcast, and it was really great to hear your thoughts on metaverse, the key issues around the space and the opportunities for business leaders. And to our listeners, thank you for joining us on this episode of PwC Pulse.

00:17:36:09 For more information on these topics and to check out the full 2022 Metaverse survey we discussed today, please visit PwC.com. And once again, thank you very much for joining us Judson.

JUDSON ALTHOFF:

00:17:47:02 Awesome. Thanks Mohamed. My pleasure.

ANNOUNCER:

00:17:49:14 Thank you for joining us on the PwC Pulse podcast. Subscribe to PwC Pulse wherever you listen to your podcast or visit PwC.com/pulsepodcast to hear our next episodes.

ANNOUNCER:

00:18:03:03 This podcast is brought to you by PwC. All rights reserved. PwC refers to the U.S. member firm or one of its subsidiaries or affiliates, and may sometimes referred to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details.

00:18:21:07 This podcast is for general information purposes only and should not be used as a substitute for consultation with professional advisors.