Deforestation and the Trillion-Dollar Time Bomb

You probably recognize many of the companies on the first of the two lists we'll be examining today - like Colgate Palmolive, L'Oréal, and McDonald's, which are household names. You might not know the others - like Marfrig Global Foods and Bunge - but they're equally massive, and they depend on sustainable supplies of palm, soy, cattle, and timber & pulp - the "big four" forest risk commodities responsible most of the world's deforestation. These four commodities account for 24% of the cumulative income of 187 companies surveyed for a new report called "Revenue at risk: Why addressing deforestation is critical to business success", and their supplies could be disrupted if deforestation continues.

Produced by CDP (formerly the Carbon Disclosure Project) at the behest of 365 institutional investors, the report concludes that disruptions in supplies of forest risk commodities could cost $906 billion per year.

There's another list, too: the Forest 500, which names and shames the 500 entities that can end deforestation. Half those entities are companies, and many of them have pledged to end practices that kill forests. The list is compiled by the Global Canopy Programme (GCP), which ranks those pledges and gives credit for good ones. GCP also published a report today, and it's called "Sleeping giants of deforestation".

It shows that 57% of the companies on the Forest 500 either have no policies to end deforestation or none that the organization deems credible, while the CDP report shows that just 42% of the companies on the risk side have even bothered to investigate the ways that supply disruptions could impact their business.

On top of that, the Forest Trends Supply Change project tracks the progress that companies are reporting on their deforestation pledges and shows less than half of them are even reporting progress.

Add the findings up, and you find a global agriculture sector facing an existential threat and partially acting on it, but mostly hobbled by poor traceability and weak governance or blinded by apathy and overconfidence and frustrated by shortages of certified raw materials.

The GCP report looked at countries, too, and found many of those on the supply side - the rainforest countries that export forest risk commodities - were beginning to take action, while those on the demand side - the developed countries that import them - aren't. Paradoxically, while developed countries often funded sustainability efforts in tropical countries, only two of the importing countries on the Forest 500 - Germany and the Netherlands - formally support national sustainability efforts among consumers.

The Bright(ish) Side

It's not all doom and gloom.

Supply Change also found that those pledges with publicly-available disclosure were, on average, more than 70% of the way towards completion; and while many companies are certainly avoiding disclosure to hide bad performance, others have taken productive actions that are just difficult to quantify.

Danone, for example, is helping small farmers around the world shift to sustainable farming, and progress on that front won't show up incrementally the way shifting to certified commodities does. Likewise, Norwegian consumer goods group Orkla implemented a three-pronged sustainable palm oil policy in 2014 and recently saw their Forest 500 rating jump from three stars to five, as did two other companies: Colgate Palmolive and Marks & Spencer.

Orkla has been working for years to replace palm oil with options that are healthier and not associated with deforestation, and they launched their sustainable palm oil policy in 2014. That involved renegotiating their contracts with key suppliers and becoming a member of the RSPO at Group level.

"We have a regular dialogue with suppliers about the progress of the work," says Ellen Behrens, the company's Vice President for Corporate Responsibility. "We only work with suppliers who have good plans for sustainable improvement. Examples of supplier activities include the use of satellite-based risk assessments, fire alert systems and various types of training programs."

Like Danone, they're also looking to drive complex changes on the ground.

"We look for suppliers who engage in training of mill management and of farmers, and who engage in awareness-building in local communities," she says.

The final component, she says, is certification, which among others is important to monitor compliance with important aspects such as working conditions and the use of pesticides. Their most recent disclosure document shows that 40% of the palm oil, blends, and derivatives they purchase are either certified as sustainable by the Roundtable on Sustainable Palm Oil (RSPO) or have their impacts offset by Green Palm certificates.

"Certification is the easiest activity to communicate in a quantified way," says Behrens. "We're currently looking into how to verify other activities."

That's something to keep in mind as you explore the group's Supply Change profile: companies whose only pledge involves certification will show more "quantitative progress" than those undertaking more complex strategies, so it pays to heed the milestones embedded in the profiles as well.

Radical Transparency

The reports come in as a flurry of new transparency tools are also coming on line, as we covered in a recent edition of the Bionic Planet podcast, which is available on iTunes, TuneIn, Stitcher, and here:

Perils and Possibility

The CDP report uncovered a disturbing sense of confidence among companies with high exposure to the big four commodities, with 72% of them expressing confidence in their ability to source them in the future - even as 81% of companies in the Agricultural Production sector reported impacts related to forest-risk commodities in the past five years.

On the other hand, many also seemed unaware of the potential for growth that a shift to sustainable sourcing could offer.

"Investors are poised to capitalize on the opportunities that await," wrote CDP CEO Paul Simpson in the foreword. "Some of the biggest index providers in the world, including S&P and STOXX, have created low-carbon indices to help investors direct their money towards the sustainable companies of the future. Investors see opportunities in sustainably managed timberland, and are beginning to direct funding to innovative approaches to protect forests, such as REDD+ credits."

This story is cross-posted on Ecosystem Marketplace. Read the original.

Dollar Strength To Weigh On GDP

The dollar has spiked rather dramatically over the past several weeks on prospects of better economic growth and higher interest rates.  In fact, on a trade-weighted basis the dollar has eclipsed its highs from January of this year and is now hovering around levels last seen in early 2002.  While it’s generally a positive sign when a currency strengthens, dramatic movements in short periods of time can have serious repercussions for trade.  A rising dollar makes US exports less competitive relative to products and services sold by competitors based in countries with weakening currencies.  Therefore, dollar strength can act as a strong headwind for those US companies heavily dependent on exports.  And since 40-50 percent (estimates vary) of S&P 500 revenues are derived outside the US, a rapidly rising dollar is no trivial matter as it relates to corporate sales and profitability.  US consumers, on the other hand, generally benefit from dollar strength as they can use their stronger dollars to buy more goods and services imported from other countries.  But then again, the consumer’s gain comes at the expense of US companies that are losing US wallet share to foreign competitors.

We generally hear our politicians say that they are supportive of a strong dollar.  However, an appreciating dollar can cause problems for policymakers and central bankers as well as US corporations.  Why?  Because the size of our economy is measured by the following formula:

GDP = Personal Consumption Expenditures (~68% of total GDP in 2015) + Gross Private Domestic Investment (17%) + Government Expenditures (18%) + Net Exports of Goods & Services (-3%)

The final component in the equation, Net Exports of Goods & Services, is derived by subtracting imports from exports.  Because we always import more than we export, this component of GDP is always negative.  So, as we discussed above, we can expect imports to increase and exports to decrease in a rising-dollar environment.  If we hold all else equal, the rise in imports and drop in exports caused by an appreciating dollar is a drag on economic growth.  How much of a drag?  Well, since 1995 net exports have subtracted anywhere from 0.8% to 5.6% from GDP (on a quarterly basis), with an average of 3.4%.  This compares to about 3.1% in the most recent quarter (3Q16).  With the trade-weighted dollar at 14-year highs, net exports are currently subtracting just 3.1% from GDP – below the 20-year average of 3.4%.  You would think that the drag would be much greater given the huge dollar appreciation over the past couple of years.  Seems like something has to give, right?

We decided to go back and try to quantify the possible effects on GDP from the recent spike in the value of the dollar.  The last time the trade-weighted dollar index was this high (approaching 130) in 2001-2002, the trade deficit was subtracting 4.0%-5.0% from GDP.  In the chart below, we went back 20 years and tracked the quarterly average trade-weighted dollar against the ratio of trade deficit to GDP.  We also ran a regression to see how GDP growth would be affected if the trade-weighted dollar held current levels for the remainder of the fourth quarter.  Our regression analysis told us that the dollar’s recent strength could be a drag of 0.50%-0.90% of GDP in the fourth quarter.  It is hard to see how we hit some of the optimistic estimates out there (some as high as 3.5%-4.0% for the 4Q) if trade is causing such a nasty drag.

Source: The Bureau of Economic Analysis and The Federal Reserve

It should also be acknowledged that the effect on net exports from changes in the dollar seems to lag.  As such, we may not see the full negative impact in the fourth quarter.  In the second chart below, we put a three quarter lag on the historical deficit data.  It turns out that there was a much better correlation (R-squared of 42%) with a three quarter lag.  In other words, it seems to take (on average) three quarters for changes in the value of the dollar to affect the ratio of trade deficit to GDP.  As such, we suspect that if the dollar maintains current levels or rises further there will be a sizeable drag on GDP in 2017.

Source: The Bureau of Economic Analysis and The Federal Reserve

So what is our message?  Sudden and dramatic strength in the dollar is not without its risks, and the markets appear to be ignoring these risks (for the most part).  Aside from corporate profits and GDP, the bigger immediate risk is that of capital flight from the emerging markets.  We saw this late last year when the Fed had been forecasting as many as four interest-rate hikes in 2016.  The problem is that there has been a massive amount of dollar-denominated debt issued by entities in emerging markets over the past several years.  If money starts pouring out of those regions and into the US, those entities will find it that much harder to pay back their debts.  In addition, interest rates will rise in those regions, compounding the difficulties in servicing and refinancing that debt.  These pressures, at worst, could lead to a financial crisis.  At best, we can expect extended economic weakness in the emerging market countries.  Secondly, dramatic dollar appreciation can lead to disinflationary effects in the US as importers can lower prices in dollar terms and still maintain profitability.  While this is not as big an issue as it was in years past, the Fed is still trying to spur inflation through monetary policy.

As noted, sustained dollar strength could also have a longer-term effect on US economic growth and corporate profits.  At present, economists and stock analysts don’t appear to fully appreciate the impact that the surge in the dollar could have.  But the risks are clear and present, and this is a major reason why we do not believe the US economy can dramatically “decouple” from the rest of the world.  Like it or not, we’re in a global economy and can’t go it alone.

Bringing International Corporations To The Anti-Corruption Table

Since his first day in office, Secretary of State John F. Kerry has maintained that economic policy is foreign policy and vice versa. This principle recognizes that the bellwether for a country's success depends squarely on the soundness of its economic policies and whether it allows businesses - within and without its borders - to operate in environments of transparency, consistency, and predictability.

Combating corruption is critical to establishing and maintaining such environments. Corruption poses a major threat to global prosperity and it undermines the rule of law, government institutions, and human dignity. The World Bank has estimated that $1 trillion of transactions worldwide are tainted by bribery each year.

The United States has been robustly engaged on a wide variety of fronts to address corruption, from legislative efforts at home, to foreign assistance and bilateral and multilateral diplomacy. But while governments can take a leading role in addressing corruption, other stakeholders also need to step forward, including civil society organizations, businesses, the media, and ordinary citizens, so we can collectively take action to fight the root causes of graft.

That is why, as we mark International Anti-Corruption Day, I want to bring attention to a critical weapon that is gaining recognition in the fight against corruption. This is the principle of corporate liability, which can play a key part in ensuring international business is conducted in an aboveboard manner, free of corruption and bribery.

Corporate liability ensures that companies and corporations can be held responsible for the illegal actions of their employees. In other words, companies can be held just as liable for wrongdoing as the individual officers, employees, or agents involved in the offense.

When a legal system embraces corporate liability, the effects can be profound. For example, in the United States, the U.S. Foreign Corrupt Practices Act (FCPA) authorizes regulators, including the Department of Justice and Securities and Exchange Commission, to hold corporations liable when their employees engage in foreign bribery.

Because corporations are on the hook for the actions of their employees, they have a real incentive to discourage employees from engaging in bribery or other corrupt behavior. In effect, this makes corporations themselves instrumental agents in the fight against foreign bribery.

In addition to our country's enforcement of the FCPA, I am pleased to note that because of the Anti-Bribery Convention - the world's foremost international agreement to address foreign bribery - and the peer review of the Organization for Economic Cooperation and Development (OECD) Working Group on Bribery, many countries have adopted corporate liability laws for the first time.

This is real progress considering that 16 of the 41 Convention Parties had no established system for corporate liability prior to the Convention. And while the Convention obligates its Parties to establish corporate liability only for bribery of a foreign public official, many Parties have either adopted a broader form of corporate liability, or started with foreign bribery and then widened the scope.

These developments are helping to foster greater corporate responsibility in a range of areas, including environmental, tax, competition, and customs law. And thanks to the concerted efforts of the United States and the other Parties of the OECD Anti-Bribery Convention, we are deterring crime and allowing more businesses to do what they do best: create jobs and economic opportunity around the world.

ADHD makes for better entrepreneurs

Entrepreneurship researcher Johan Wiklund of Syracuse University was alerted to the link between ADHD and entrepreneurship after family experiences led him to learn more about mental health issues. This encouraged him to look at how ADHD can be a positive influence. We spoke to Wiklund about his research.

ResearchGate: What inspired you to study ADHD and entrepreneurship?

Wiklund: I have been involved in entrepreneurship research for 20 years. A couple of years ago we had some mental health issues in the family for the first time. This opened my eyes. After learning more about mental disorders, I began to see links between ADHD and entrepreneurship. I asked some psychiatrist and psychologist friends and they thought it made sense. I conducted a case study with 16 entrepreneurs who all had a formal ADHD diagnoses. This case study confirmed many of my hunches and set me off on the course I am now pursuing.

RG: What makes a good entrepreneur?

Wiklund: It is virtually impossible to define what makes a good entrepreneur, because as an entrepreneur you can choose to do whatever you want, for whatever reason you want. So, first you need to have your own definition of what a 'good' entrepreneur is. But fundamentally, you must be willing to try out new things even if you are uncertain, be willing to accept failure, and to get back up when you fail.

RG: What are your results so far? What is it about ADHD that could benefit or lead someone to become an entrepreneur?

Wiklund: Hyperactivity and impulsivity among people with ADHD can be positive for entrepreneurship. Impulsivity is particularly interesting because it is such a negatively loaded word. But it is impulsivity that triggers people with ADHD to act and take risks where other people would wait and see. They also tend to look at the potential gains rather than fear the potential losses, which helps them keep going and to keep coming back.

RG: Are there downsides as well?

Wiklund: The attention deficit aspect of ADHD is negative unlike the impulsivity and hyperactivity aspects. It seems that people high on the attention deficit dimension shy away from entrepreneurship.

For practicing entrepreneurs with ADHD, organization is a problem. Every person that I have spoken to with ADHD hates bookkeeping and has a very hard time with it. This is why they need people around them for support.

RG: Does this apply to people who medicate their ADHD symptoms?

Wiklund: ADHD symptoms can be difficult if they become too extreme. If this happens medication is of course helpful. However, from what I have seen, entrepreneurs with ADHD typically don't medicate when they want to be creative and generate ideas, but do medicate when they meet with customers, or need to be focused on tasks that they consider boring.

RG: Are there any famous entrepreneurs that have ADHD?

Wiklund: Yes, there are several famous entrepreneurs with ADHD. It is hard to get confirmation on who actually has a formal diagnosis, but it seems that David Neeleman of JetBlue and Richard Branson of Virgin do have confirmed formal diagnoses.

RG: Are there other examples of disorders benefiting a person's pursuit?

Wiklund: People with dyslexia are also attracted to and can do very well in entrepreneurship. But the link between dyslexia and entrepreneurship is less straightforward. There is nothing directly related to reading difficulty that makes you suited for entrepreneurship. It may be other neurological differences that matter, such as creativity.

RG: What studies have you done so far?

Wiklund: To date I have carried out three primary studies. The first was a case study of 16 entrepreneurs with ADHD diagnoses. This helped me get a basic understanding of how ADHD symptoms manifest in entrepreneurship and develop a conceptual model. The second study was a survey of MBA alumni. The third study is a survey of successful entrepreneurs. Preliminary results suggest that ADHD symptoms are directly linked to behaving more entrepreneurially within their organizations, and positively linked to growth and performance. Very interesting findings!

This interview originally appeared on ResearchGate News. For updates on this research, follow the project on ResearchGate.

9 Office Gift-Giving Dos And Don’ts

Keep the occasion jolly by following these nine rules of office gift-giving etiquette.

1. If you give your boss a gift, make it a group effort. Doing so allows everyone to participate at a lower cost per person while providing a more substantial offering than any one individual could (or should) give on their own. If you must do it alone, opt for something heartfelt (a holiday plant or baked goods) rather than expensive and overly personal.

2. Participation is key. If your office has an exchange, plan on being a part of it. If you sit on the sidelines for any reason, you could be viewed as a Grinch. The cost is usually minimal, and it opens the door to build holiday goodwill.

3. Give discreetly to work friends. If you have a small present for a few select colleagues, swap gifts outside of the office. Otherwise, you risk other people finding out and wondering why they were excluded.

4. Remember your team. The holidays provide an opportunity to say thank you to the people who support you year-round. If you supervise a small team, (say, less than five) consider a token of appreciation for each. A gift card to a favorite restaurant or retailer you know they like is a welcome treat.

5. Aim for the sweet spot on price limits. No matter the spending guidelines in an organized office event, there will always be someone who exceeds them. This holiday blunder can inadvertently cause problems, making the appropriately priced offerings look meager by comparison. Conversely, don’t underspend, either. Purchase something near the top of the recommended range.

6. Wrap it up. Embellish your package with pretty paper, gift bags and bows. The extra effort makes the person receiving the present feel special – and that’s what the season is all about.

7. Don’t overdo it. Resist the temptation to go overboard. Avoid using the holidays as a time to show off, or ingratiate yourself with an over the top gift to impress. Clients can read through shallow attempts of grandeur. A modest gift showing gratitude is a far better holiday choice.

8. Smile and say thank you. This is the correct response when a co-worker (or anyone else, for that matter) presents you with something but you don’t have anything for them. You are not obligated to buy a present in return if you had no intention of doing so. The only requirement is to offer your sincere thanks for their thoughtfulness.

9. Remember extraordinary acts of kindness. If your mentor gives you guidance or a colleague goes out of their way to help you succeed this year, now is a great time to recognize them. An act of appreciation doesn’t have to be fancy – a pretty mug with a bag of chocolate-covered espresso beans and a gift card to a nearby coffee shop is perfect. The holidays provide extra room to acknowledge their acts of thoughtfulness.

For more of Diane’s etiquette tips, visit her blog, connect with her here on The Huffington Post, “like” The Protocol School of Texas on Facebook, or follow her on Pinterest and Instagram.

The Single Most Important Question You Can Ask Your Employees

As leaders, we are always looking for the right questions to ask our people. When our employees are faced with a challenge it's tempting to give them advice or to tell them what they need to do, but by doing so you impede their growth and cheat yourself from getting some potentially fresh and powerful ideas. Plus, you don't want to be responsible for every decision that needs to be made. You need to save your energy for more critical decisions.

THE POWER OF ASKING, NOT TELLING
Asking, instead of telling, is one of the hardest behaviors I've had to change as an entrepreneur. Asking the right questions allows your employees to go deeper. It allows them to answer their own questions through a process of self-discovery. It also allows them to take responsibility for what they are accountable for. By working on asking versus telling I've noticed a decline in the number of problems that cross my desk on a daily basis. That simple change alone has had an incredible impact on my business and has allowed me to have more time to focus on the things that matter.

A good leader is constantly engaged in the habit of giving feedback to his people rather than engaging in the de facto method of simply telling, directing, or commanding them. We encourage our employees to be open to feedback because, after all, it's a way we see our blind spots. We encourage them to solicit feedback from their peers, and from their managers so they can be open to the things that others may know about them, but they may not be aware of themselves.

THE MOST POWERFUL QUESTION YOU CAN ASK EMPLOYEES
When was the last time you asked for feedback, and I mean powerful, honest feedback about your performance, work ethic or management style, from your people? Despite the fact that we may think we already know what we need to work on, I guarantee that you still have some blind spots of your own. Remember, even professional sports stars, musicians, and even politicians have coaches. None of us can see all of our weakness. In fact, what we may see as a "strength" others see as a fault. With this in mind I decided to take a leap of faith and started experimenting with my team with what I believe is the single most important and powerful question a leader can ask his or her people, which is:

"What's one thing I could stop doing (or be doing differently) that would make it easier to work with me?"

Ouch. If that doesn't make you cringe try reading it again. It's painful. But it's powerful! We have to be willing to touch the place that hurts in order to discover the areas we need to adjust. So take a deep breath, embrace the idea of being vulnerable, and create a safe space that allows them to answer with honesty. Be careful - if you ask for sincere feedback but you become defensive, angry, or hostile, you will have burned a bridge of trust that will take months or years to rebuild with your employee. In fact, they may never, ever be honest with you again and there may be a time in the future where their feedback could save your company. You asked for it so shut up and take it! Respect the other person for being brave enough to take you up on your question. You're the boss, remember? It's intimidating for them to answer you honestly.

LEAN INTO THE DISCOMFORT
I challenge you to lean into the discomfort and ask this question often. Regardless of your opinion, the feedback you receive will always contain a nugget of truth if not an entire harvest. We all know there are things about ourselves we need to work on. We're not fooling anyone, including ourselves when we pretend there's not. If you're not growing personally you can't expect your employees to grow. Whether you see it or not, they look to you to set the example. Why not take some time to discover more about yourself and how you impact others around you? Ask more than one employee, too. Try asking everyone you work with. If you're not quite up to a face-to-face meeting with potentially painful responses, try email, or use a company that specializes in free, anonymous feedback, like https://www.suggestionox.com/. Get a variety of answers from a variety of people so you can really get down to business and make the proper adjustments. The temporary pain will be well worth it.

To Bot or Not to Bot. Here Come the Chatbots

Donna Peeples, CCO, Pypestream

How intelligent automation can improve the customer experience for brands

The bot economy has arrived. These days, chatbots are on the tip of everyone’s tongue and at our fingertips. Easier to build and distribute than mobile apps, bots are invading the mobile messaging platforms of choice for consumers today.

While it’s still early, thousands of bots are now available. Consider the fact that Facebook Messenger had zero bots in February of 2016 and by November of this year had over 34,000. Today bots allow consumers to do everything from call an Uber, book a flight or make a restaurant reservation, to review an e-commerce order or ask for the latest news or weather forecast.

While many bots are more annoying than helpful, 2017 represents the turning point where we’ll see more companies leverage bots for customer service and to aid consumers in making buying decisions. That could mean fewer Google searches for consumers in the future, allowing them to get the information or help they need directly from brands in a more conversational and engaging way.

Chatbots offer brands a chance to be where consumers are: messaging. While smartphone owners only use a handful of apps, messaging apps are the platform of choice for consumers with more than 2.5 billion global users this year. And this trend is set to continue, with messaging apps now outpacing social media networks in growth.

Without a doubt, mobile messaging is a channel brands absolutely must embrace. And chatbots, if done the right way, offer businesses an opportunity to create a better real-time experience for customers. That said, not all examples of chatbots we’re seeing right now are good ones.  In the case of Microsoft’s Tay earlier this year, we saw how disastrous an open-ended AI bot system can be. Tay showed us what can go wrong when there are no guardrails in place to prevent comments outside the scope of what would be helpful to a customer.

As we head into 2017, one of the biggest misconception about chatbots is they can answer anything and everything. The belief that automating conversations in an open-ended way will in itself add value for customers. The reality is the most effective bots are purpose-built to solve very specific problems for customers–making common customer service requests and commerce easier, while ensuring customer privacy.

In other words, less is more. The focus of any bot should be intelligent automation of existing business processes delivered in a conversational way. And it’s critical to keep the customer experience in mind.

Delivering a great experience through intelligent automation

At the end of the day, chatbots should improve customer service, save customers time or help them with their buying decisions - such as customizing a product order or helping with a specific request. The experience and use case has to make sense and add value to the conversations customers are already having. How will a bot relate to customers? What specific problems will it solve? How will it improve existing processes for customer service, communication and commerce?

The ideal approach is to analyze customer communication and transactional processes, then identify areas where automation is both easy and effective. An example of this is the range of frequently asked questions that require a repeated and often scripted response from a live agent. Instead of having the customer go through the process of speaking with an agent, a chatbot can easily handle this conversation and transform an otherwise annoying experience.

Solving for these low-hanging-fruit issues first with bots allows brands to learn how to effectively automate their business, and over time they can increase the complexity. But keeping it simple is key, initially. We’re only just starting to see the ways in which chatbots can improve customer relationships. Any new technology needs to be implemented strategically and mastered over time, in gradual increments. Trying to do too much, too soon, often results in poor customer experiences.

Our approach at Pypestream reflects this philosophy. When we deploy bots for businesses we assess specific conversations and look for the repeatable interactions and apply business rules that a chatbot can handle with ease. From there, we grow and expand the chatbot’s capability using both business and behavioral data. Eventually, the chatbot can handle the majority of conversations allowing for lightning fast interactions and happy customers.

Customer service: the sweet spot for bots

Customer service is a natural for chatbots. Most often we see about 80-90% of customer service inquiries are for the same issues and require the same responses. These repetitive interactions are easily automated and streamlined with chatbots. The desired result is a reduction in operational costs for businesses while improving the speed and efficiency of customer service. In addition, chatbots can be triggered to proactively address real-time issues avoiding the costs of inbound calls. For example, alerts to a cable outage with instructions on how to reset the modem; where is my insurance claim in process and when can I expect my payment or storm notifications with safety instructions around down power lines and updates on when power will be restored.

Given how fresh chatbot technology is right now, the best outcomes are those that combine bots with humans. This is particularly true for customer service interactions. It’s difficult to predict or plan for every potential customer inquiry. Therefore, live agents are still needed to field the questions and inquiries that fall outside of a chatbot’s parameters - the more complex, higher touch interactions.

Overall though, for customers, the ideal experiences with businesses are intuitive and easy. The less friction, the better. That’s the central idea for the use of bots: convenience. When customers send a message to businesses to resolve problems, schedule appointments and make secure payments, the customer service experience is streamlined, frictionless and, well, easy.

Expect chatbots to continue to grow in popularity

Mobile messaging is steadily becoming the most popular means of communicating, as indicated by the staggering number of people on WhatsApp, Facebook Messenger and other p2p applications. Chatbots offer a way for businesses to enter the messaging era and join the conversation. New platforms will emerge to support issues of privacy and security that are so essential to customer communication. But ultimately, as investment in the technology increases, we can expect to see more companies ditching traditional communication models for messaging.

If done the right way, conversational technology and bots have the potential to make a dramatic and positive impact on the customer experience, but only if brands take the right approach through intelligent automaton.