Emerging metaverse technologies have equally passionate evangelists and skeptics, making it hard to separate hype from reality. Facebook was the subject of buzzy media headlines when it rebranded to Meta, but now faces plummeting stock and mass layoffs. At the same time, investors continue to pour billions into metaverse-related technology and optimistic experts predict that, within ten years, the metaverse could change the way we live, work and communicate.
For business practitioners, the metaverse raises many questions. What, if anything, is fundamentally disruptive about these technologies? What challenges and opportunities do they present, and how can they be leveraged to spark innovation?
At the Mack Institute’s Fall 2022 conference, Leveraging the Metaverse for Innovation, we brought together experts from industry and academia to discuss these questions. Below are eight key takeaways from our participants, including Wharton faculty and representatives from industries ranging from healthcare to software.
1. Experts generally agree there’s not one single definition of metaverse.
What is the metaverse? As academic director of Wharton’s certificate course in metaverse technologies, Kevin Werbach (Professor and Chair, Legal Studies and Business Ethics, The Wharton School) has had to think deeply about this question.
“We were putting together this course and realized that we didn’t have an answer to this seemingly basic question,” said Werbach. “Anytime we converged on a definition, we realized we missed something.”
While Werbach stressed that the metaverse can and should be explored through different frameworks and perspectives, he emphasized two key aspects: 1) making virtual interactions feel more “real” through engagement of senses and emotions and 2) the next logical step in the progression of internet and digital technology.
“The metaverse is the internet, only more so,” he quipped. “Take what makes the internet and digital technology different, valuable, or interesting and push it forward. To me, that encapsulates what the metaverse is.”
“The metaverse is the internet—only more so.”
2. But, despite the lack of a singular definition, metaverse technologies have common, identifiable elements.
Werbach and other speakers identified four critical elements that distinguish and characterize metaverse technology:
- Interconnectedness: While today’s digital spaces are “siloed” (you might check Facebook, then play Wordle, then attend a Zoom meeting — all sequentially and separately), many speakers predicted that the metaverse will create a world in which spaces and platforms converge into a “network of networks.”
- Experientiality: The metaverse seeks to create an immersive experience that goes “beyond 3-D” photorealism, engaging multiple senses and tapping into deep-seated emotional and psychological connections.
- Sociality: The metaverse presents new ways for people to bond, meet, and represent themselves. Yet despite these possibilities, the metaverse also poses challenges to our laws and social codes, presenting new opportunities for deception, fraud, and crime.
- (In)Tangibility: The concept of property rights will be expanded as it becomes easier to buy, sell and own property in the metaverse – and society will have to reckon with what it means to own something that is, as Werbach says, “technically a bunch of pixels.”
“The metaverse seeks to create an immersive experience that goes beyond 3-D.”
3. Some experts are bullish about metaverse adoption, predicting that “every business will be a metaverse business.”
Accenture’s David Treat, a Senior Managing Director focused in part on Extended Reality and Blockchain, represented this perspective, comparing today’s lackluster metaverse technology to the “brick” cellphones that birthed the modern smartphone.
“Speaking from an innovation pathway perspective, many people in the late 80s and early 90s thought the cell phone wouldn’t take off—it was too big, heavy and inconvenient,” said Treat. “Now we all have smartphones in our pockets. That pace of progression is going to happen much quicker with metaverse. In 3-7 years, we will have something that is natural to wear, that you don’t have to carry or pull out of your pocket.”
To prepare for this change, Treat encouraged businesses to think of all physical consumer goods as having a potential AR/VR component or experience. He argues that companies which prioritize developing digital versions will be the winners as metaverse devices and wearables gain wider adoption.
“Every physical object now has the potential for AR,” he said. “That’s going to be a huge point of differentiation—who can develop the better AR experiences for their physical products to enhance the experience of using the product, extend the customer relationship, or lead to the purchase of the next product?”
Yaad Oren, Head of SAP Innovation Center Network, urged firms to pay attention to the “practical, even boring” aspects of the metaverse: “When it comes to the metaverse, we see a lot of hype out there.”
Oren says firms are excited about “hybrid business operations,” in which a new, digital form of business operates alongside the older, physical one. But he argued that businesses need to think deeply about what that means from an operations perspective. For example, how does a finance department deal with a business that accepts both fiat currency and crypto? Oren believes that the firms who succeed in the metaverse space will be those who tackle these quotidian questions first.
“The pace of technological progression will happen quickly with the metaverse: as quickly as 3-7 years.”
4. Others have a more cautious, wait-and-see attitude to metaverse adoption.
John Paul MacDuffie, Director of the Mack Institute Program on Vehicle and Mobility Innovation and Wharton Professor of Management is still calibrating the potential impact of metaverse. He drew on frameworks developed by Steve Barley and the economist Robert Gordon to posit two possible outcomes. Metaverse technology might be what Barley calls “infrastructural,” meaning that it will have ripple effects with wide-reaching social changes. MacDuffie named electricity, indoor plumbing, the internal combustion engine and the Internet as examples of “infrastructural” technologies.
However, the counterpart to “infrastructural” technologies are “substitutional” ones. These technologies make a big difference in the way certain tasks are done but don’t have widespread or long-lasting social impacts. Examples include moving from pens to pencils, or CDs instead of vinyl records. MacDuffie says it’s yet to be determined which category metaverse will fall under.
“When we go from Zoom to metaverse-based meeting platforms, is that substitutional or is it something that will have a more transformative effect over time?” he asked. “When we go from YouTube instructional videos to 3D training, is it substitutional or is it potentially infrastructural?”
“Part of what also makes it tricky is almost all new technologies appear as substitutional at first, even if they end up being infrastructural. It’s very hard to anticipate exactly what things will ramify and have larger effects.”
“It’s very hard to anticipate exactly what things will ramify and have larger effects.”
5. Metaverse is already making a big splash in education and skills-training…
Whether it’s adding an experiential component to an elementary school lesson about dinosaurs or creating realistic simulators for pilots and police officers, instructional design will be a major adopter of AR/VR technology.
“Giving people experience in the real-world matters,” said Ethan Mollick, Academic Director of Wharton Interactive. “We know surgeons who use simulators train faster and have fewer accidents…With VR, we have huge ratio increases from everything from driving trucks to working in dangerous situations. It’s clearly an area that we should be investing in.”
As director of Wharton Interactive, Mollick studies games and how they can affect learning. He says simulators and other gamified, immersive experiences can help people understand and navigate complex systems and situations.
“I think too much of the conversation about metaverse focuses on a narrow idea like ‘Let’s go on a tour of Ancient Egypt,’” he said. “That’s much less interesting than trying to think deeply about the engineering of educational experiences and how we train. It’s not just about producing realistic things. It’s about all the other subtle elements included.”
At Wharton Interactive, Mollick and his team design “alternate reality courses” (ARCs) like BlueSky Ventures, a 90-minute game which combines real subject matter with “hyper-immersive interactive fiction.”
“If you put [all that information] into a manual, it would be 300 pages,” he said. “But, in a game-like setting, it becomes intuitive.”
“It’s not just about producing realistic things. It’s about all the other subtle elements included.”
6. …but instructional designers caution that we must avoid the “iPad problem.”
In her role as Digital Scholarship Librarian at Swarthmore College, Amanda Licastro facilitates VR and AR experiences that enhance student learning and campus life. She emphasized the need for thoughtful instructional design that takes seriously the pedological advantages of metaverse technology, rather than treating it as a fun novelty.
“This is the give-everyone-an-iPad problem,” she said. “You give everyone an iPad and then what? They’re playing Minecraft. We don’t want to just hand a bunch of people headsets and hope that they learn something. Instead, we’re looking for what educational technologists call ‘entangled pedagogy.’ That’s where students and teachers work together to build content and define values as they explore new technologies and classroom tools.”
One example of this is an experience Licastro helped design for an undergraduate course on representations of war. After students read Anne Frank’s diary, they used VR headsets to take a virtual tour of the apartment in Amsterdam where Frank was hidden in order to enhance the course content through experiential learning.
“We couldn’t bring them to Amsterdam, but we could put them in that space and understand just how confined and immobile Anne Frank was,” she said. “It was a highly effective way to engage the students in critical thinking around the potential benefits and drawbacks of this emerging technology.”
“Students and teachers should work together to build and design content and define their purpose and values.”
7. For widespread metaverse adoption, content production needs to catch up to demand.
A repeated theme of the conference was the need to improve content creation and metaverse experience design. Prasad Joshi, Senior Vice President, Center for Emerging Technology Solutions (iCETS) at Infosys, says most firms don’t hire the talent they need to be competitive.
“One of the things we realized is metaverse requires a combination of creative skills and enterprise technology skills,” he said. “Enterprises today don’t have the kind of creative skills that metaverse requires. They don’t hire artists. They don’t hire visualizers. They don’t have art directors. Those are essential elements of an experience of this kind.”
Kirthika Parmeswaran, Founder & CEO of Vital Start Health, which uses VR technology to improve health outcomes for expectant mothers, spoke about this issue from the perspective of the VR healthcare space. While she’s working to become a leader in VR healthcare content creation, she notes that performers, writers, designers need to “start from scratch” and understand highly niche topics.
“There’s no Adobe stock for healthcare,” Parmeswaran said. “We are literally going to have to license this content from different providers and hospital settings. There’s going to be that need to build a creative space for healthcare.”
This problem is compounded when firms working in medical and other highly regulated fields are subject to outside measures of compliance. Parmeswaran says that many emerging VR therapies and treatment require FDA approval and clinical trials, which can be slow and difficult processes.
“Enterprises today don’t have the kind of creative skills that metaverse requires.”
8. Privacy is the number one barrier to adoption, and firms must be aware of potential security risks.
Joshi emphasized that mistrust and privacy concerns about metaverse are a major concern of the public and cautions that they won’t necessarily be overcome with greater advancements in security.
“Trust is the biggest folly that we will have to overcome, and it has got nothing to do with technology,” he said. “It has to do with society…It’s possible to create technology that successfully confirms who we are, but is still not trusted by the public.
“The objective security of a product and people’s trust in it are different things,” he added. “Metaverse requires societal change for adoption, not simply advancements in technology.”
A Former US Treasury Senior Official at US Department of The Treasury, spoke about the global security risks and opportunities as nations and non-state actors stake their claim in the emerging metaverse. He cautioned against dangerous collaborations between unscrupulous firms and authoritarian regimes.
“You have to call them out,” he said, citing the debate about TikTok and Huawei as one example. “There needs to be greater intelligence-sharing between the private sector and government so that we can call out bad actors. It wouldn’t surprise me if the next iteration of our guardrails includes a metaverse sanction list.”
Still, the former secretary is confident that the security of the metaverse can be improved through innovation.
“I think you’re going to see an industry develop, just like KYC [Know Your Client] developed after 9/11,” he said. “At all of the major institutions, KYC budgets went up, and you’re going to see the same thing in this industry.”
“It wouldn’t surprise me if the next iteration of our guardrails includes a metaverse sanction list.”
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