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The business impact of extended reality

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Following digital revolutions in communications and computation, the next transformation cycle involves human and machine convergence. This challenges organizations to use extended reality, or XR, to bridge the physical and digital worlds to create opportunities for new business outcomes, competitive differentiation, and sustainability.

The benefits of XR derive not from machines replacing humans but rather from machines complementing human work, according to MIT Sloan senior lecturer  who teaches an executive education course about the business implications of extended reality.   

XR technologies allow organizations to deliver immersive experiences, introduce new ways of working, and drive higher business value through enhanced productivity, employee engagement, and collaboration.

Making the most of it will require organizations to experiment with new applications while recalibrating the roles, responsibilities, relationships, and realities of how humans and machines work together to evolve teams, organizations, and society, McDonagh-Smith said.

“We have the capability to play around and create things really easily — you no longer have to be a programmer to create applications or an artist to create graphical art,” he said. “With this comes a responsibility for each one of us to be creative. The bridge has been built to connect the worlds of physics and silicon with carbon existence. It’s not going away.”

Extended reality technologies and digital experiences include the following:

Augmented reality overlays digitally created content onto a user’s real-world environment. AR is highly conducive to the emergence of new forms of immersive training and marketing experiences.

Virtual reality creates a digital environment that represents a user’s real-world environment. VR is also useful for training applications and new forms of immersive collaboration, in addition to enabling designers to engage with products or new environments before they are physically built, which saves time and money.

The metaverse builds on VR capabilities to create an entire virtual world where users can interact with other users and their surroundings as avatars. Applications are evolving, but initially, the metaverse will have the most impact on marketing, training, and collaboration use cases.

$111.50B

The global XR market is expected to go from $40.1 billion in 2023 to $111.5 billion in 2028.

360 video refers to immersive, spherical videos in which a view in every direction is recorded simultaneously to immerse viewers in an experience as if they were there. This is best suited for marketing, training, and teaching scenarios.

Digital twins are high-fidelity digital models of physical systems and environments. A product digital twin, currently the most common type, serves as a complete digital representation of an item before it’s built, enabling engineers to simulate its performance under various scenarios to optimize its design. Digital twins also provide a virtual space to design products for better reliability or safety prior to manufacturing.

Nonfungible tokens act as unique digital identifiers recorded on a blockchain (a distributed ledger). They are used to certify ownership and authenticity and can’t be copied or substituted. NFTs can represent ownership of digital goods in the metaverse and unlock new revenue streams or new experiences that promote community and relationship-building with consumers and customers.

There is already interest in XR technologies. According to a report, the global XR market is expected to grow from $40.1 billion in 2023 to $111.5 billion in 2028, a compound annual growth rate of 22.7%.

With XR, “we have the opportunity and potentiality in front of us today to create almost compound innovation, where we bring together a number of different elements from different areas with a singular set of goals — that is, to drive immersion and engagement, and create inspiration and aspiration to move toward new places,” McDonagh-Smith said.

Bringing XR to life

As organizations explore how to integrate XR technologies into their existing and future business models, McDonagh-Smith suggests keeping the following things in mind:

Steer the organization toward a consilience mindset. XR’s promise comes from a unified reality, and enterprises need to embrace that mindset. Some basic steps include elevating institutional knowledge by creating teams of teams with multidisciplinary skill sets and connecting and collaborating across diverse communities.

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Cultivate a culture of experimentation. Organizations should apply creativity to XR use cases, leveraging small core teams to frame problems and create innovative solutions using agile methods. McDonagh-Smith advises course participants to think clearly about the problem, identify small experiments where results can be clearly measured, and use the results to define and determine next steps.

Practice responsible XR. As organizations build XR experiences, it’s important that they do so with diversity, equity, and inclusion in mind. Respecting the rights and privacy of users is critical, McDonagh-Smith said, and companies must hold themselves to the highest levels of data management and governance standards when exploring potential XR use cases and applications.

Embrace gamification. XR provides an opportunity to explore an idea, product, strategy, or tactic in a safe way. Through XR-enabled gamification, organizations can practice skills, gain a sense of their limitations, and find inspiration and a path toward making improvements.

“Games offer a number of opportunities to improve the way we work, interact, collaborate, and improve our strategies so we can create competitive advantage and differentiation as well as a sustainable, productive future for our organizations,” McDonagh-Smith said.

Read next: What Second Life and Roblox can teach us about the metaverse

For more info Sara Brown Senior News Editor and Writer