New York City 2014: The Science House (45 minute keynote)
Part I: Tame Turkeys
On the return flight home for Thanksgiving this week, I read Nassim Taleb’s book The Black Swan and decided that tis the season to draw profound parallels between innovation and poultry.
Here are my insights:
- Chickens: Bertrand Russell’s wrote an anecdote about the benevolent farmer in 1912. The fat and happy chicken thinks the farmer is a benevolent protector until it is hauled away to the slaughter house.
- Turkeys: Nassim Taleb, in his book The Black Swan, says that the same holds true for the Thanksgiving turkey. However, he adds that the surprise for a turkey is not a surprise to its butcher.
- Swans: So the black-swan question for the marketing community is: How do we play the role of the butcher not the turkey?
Moving your retail business from a step-by-step evolutionary growth to revolutionary, black swan transformation is not easy. In fact, it may be impossible. Corporations find it difficult to reinvent from within. However, to be aware of the nature of outliers and revolutionary innovation is a good first step.
You can rename your CIO: Chief Innovation Office, your CTO: Chief Transformation Officer and your CDO: Chief Disruption Officer. However this is all for nought if they cannot identify swans or at least the turkeys.
Look to social media. There is a succession of ever faster black-swan innovations starting with email and ending in SnapChat’s self-destructing messaging. Microsoft did not anticipate Google search, Google did not anticipate Facebook communities; Facebook did not anticipate Twitter micro-blogging; the same holds true for Instagram’s social picture publishing or SnapChat’s peek-a-boo messaging. The same applies to retail as well as broadcast, payments, health, advertising to name a few rudely disrupted verticals.
Retail payments is a classic chase-the-tail solution mashup. But payment vendors have been more astute. The FIs ran a two-sided business to establish MasterCard and VISA credit services. The FIs have fought to be a part of any POS and prepaid activity in retail. With the emergence of digital payment, payment incumbents have aggressively invested and acquired companies in the mobile POS space (VISA/Square) and as well as in the cloud (VISA/Playspan).
VISA’s purchase of PlaySpan was particularly forward thinking. PlaySpan allowed gamers to buy virtual swords and pumpkin seeds for their virtual battle grounds and farms without leaving the game. Frictionless commerce engineering: meet VISA’s present day V.me.
But even leviathans like VISA and MasterCard have been sidelined to commodity commerce rails.While they make nice transactional revenue, Amazon, iTunes, PayPal and Playstore and other consumer commerce portals have made the card credentials second fiddle. They discount the interchange and grab the CRM and big data.
Shopper marketing, Shopper engagement all follow similar twists. But not always evolutionary:
SMS was the black swan technology revolutionizing communication for the unsuspecting (but delighted) wireless carriers. We all thought QR codes, mobile apps and NFC would supplant this messaging channel. WhatApp, Skype and Viber all have eaten away at the peer-to-peer traffic; however, for brands, SMS, and for some successful apps, the notification channel, remains the main opt-in and content delivery channel of choice.
Black swan on the horizon? iBeacons, WiFi Direct or LTE Direct? Maybe.
Proximity engagement is essential for a brand or retailer to drive path into purchase. Shopkick and Beacons are valuable but are ultimately broadcast solutions. Future solutions such as LTE Direct promise to extend the retail network and add more intelligence and peer to peer interactivity to this engagement.
However, in all the above cases it is difficult, if not impossible, to identify one strategy, vendor, agency that will bring revolutionary black swan ideas.
When attending events whether speaking or listening, it all seems so easy. Innovate they say. . .
Well so my friends, the innovator’s dilemma maybe just to avoid becoming the turkey.
Bill Gates stood on the stage at the (now-defunct) Comdex show in Las Vegas in 2000 with his schoolboy smile touting the new “tablet PC.” Penned on the tablet in Bill’s handwriting was “Tablet PC is SUPER COOL!” Behind the stage a backlit sign read “experience the evolution”.
Microsoft evolution never became a revolution because the company’s disparate and factional divisions failed to work together to vision and implement a turnkey experience.
The revolution happened in 2007 with the launch of the iPhone.
(As with most industries) evolution is often interrupted by black-swan revolutions. Sound (voice communications), touch (pinch and zoom navigation), sight (Heads Up Display [HUD]) all changed the way consumer used the phone and is one of the gating factors in technology adoption.
Knowing what technology will help us evolve and what technology revolutionizes is more of a human insight that a science. Ergonomics help us rearrange the digital furniture; however, changing the way we connect with this communication device is profoundly human. What is beyond touch, what is the next revolution?
A Short History of Touch
Although Gates told reporters off stage in Las Vegas that how excited everyone was in Redmond (Developers were checking the tablet out to play with – “a very good sign,” he said) 6 months later warehouses were still full of the Tablets. Q2 shipments had plummeted 25% with a meager 100,000 total units sold. Mike Magee, technology writer for the Inquirer wrote despondently that “This is another classic case of IT firms thinking they know what technology people will like, and failing to take off the blinkers.”
Touch appeared back in 1971 over a ten year period began to appear in the form of infrared technology (such as the Hewlett Packard 150) which show up in various military applications. The IR matrix of beams are used to detect a finger touching the screen.
But the IR technology was expensive and the technology gained more mainstream adoption was “resistive touch”.
It was a simple concept. Resistive touch screens were built using two layers of conductive material (Indium Tin Oxide). The two layers were separated by a small pocket of air. An action was triggered when a stylus, or other object, pressed the top layer into contact with the bottom layer.
The limitation was it was like a pin board. You could tell the device where you were move the point of contact. But it did not have multi-touch functionality essential to pitch and zoom navigation.
Mass-market adoption was not an option:
- The screen wore out
- Required a stylus pen for accuracy
- The air pocket made the screen appear hazy
- OEMs had to build a clunky hole in the casing (as the top of the resistive sensor had to be exposed to user’s input)
This is the technology that Bill Gates was holding up at Comdex in 2000*. The unit’s resistive touch stylus was used to input into clunky dialogue boxes to input text and commands. The entire project was “resistive”. The Office team refused to build for the unit adding to the painful UX.
*[A technogeek aside: Microsoft’s Surface touch solution uses Frustrated Total Internal Reflection (FTIR)]
Meeting Andrew Hsu
In 2013, I ran an event on connect screens in New York. I wanted to tell a story about the importance of the screen in the evolution of mobile phone design and adoption. I invited Professor Donnell Walton from Corning Glass, as well as representatives from Microsoft’s Surface team, Google Glass and was looking to find a speaker to explain “touch”. Maybe I could locate someone from the scuttled Apple Newton team?
I found, much to my surprise (like an anthropologist that finds that we did not evolve directly from monkeys) that the precursor to the 2007 Apple iPhone was a skunk works project headed up by an engineer called Andrew Hsu.
Andrew developed and patented a capacitive touchscreen suitable for mobile devices way back in 1999. He developed a system which computes the location of a user’s fingers based on how they change the capacitance values of an invisible matrix of electrodes. The capacitive touchscreen did not suffer from the various user experience drawbacks of the resistive touchscreen – it does not wear out, it does not cloudy the underlying display, and it does not require a big hole to be cut into the device casing. But most importantly, it enables natural finger input.
This capacitive touch is not a mouse click. It is not a data poke with a Stylus. Andrew Hsu’s touch allowed us to communicate in a very human way with pointing and pinching space.
Don Norman is often quoted about touch.
“We’ve lost something really big when we went to the abstraction of a computer with a mouse and a keyboard, it wasn’t real . . . swiping your hand across the page . . . is more intimate. Think of it not as a swipe, think of it as a caress.”
While mobile success is almost always based on interface and usability, it took seven years for Andrew Hsu to convince the industry to adopt the technology. Revolutions come in simple packages: text messaging, Apple’s mobile application SDK, gesture-based gaming.
We talk about the consumerization of technology; touch was the humanization of technology. In a world where data appeared cerebral and uninviting, we suddenly can interface in this data and content as we do with real object. The physical world became extensible and less scary.
From Click to Pinch & Zoom
In 2006, handset manufacturer LG trialled launched capacitive touch with their designer Prada phone. The LG phone had all the correct ingredients – capacitive touchscreen for intuitive finger input, high resolution display, and one of the first graphics co-processors in a handset. Prada brought style to the table and LG brought the insight that touch that would ultimately inspire the new mobile consumer.
But we had to wait one more year.
When Jobs returned to Apple he shut down the Newton project. This legacy 1993 technology had poor handwriting recognition and had little traction in the market. But Andrew Hsu’s capacitive touch appealed to Steve Jobs UI sensibilities.
As a post Newtonist, Jobs once said “we are born with five styluses on each hand”.
When he introduced the iPhone, we knew that being able to move large format data on a small screen with a pinch and zoom changed the way the consumer saw their mobile device. Where Steve Job went further than touch was his insight in designing a full edge-to-edge screen that had the dimensions of a letter size piece of paper. The screen called out to be touched, worked on and paged through.
Although touch revolutionize the phone and lines weaved around the block for new product releases of Apple new “human” interface, the consumer was still nose-to-screen, bumping into lamp posts while elegantly navigating data a hundred miles away.
“Bump” (the file exchange application recently acquired by Google) and other application including NFC payment extending this love of tactile interface by promote social touch between other phones and public devices such as POS.
Gesture: Moving Beyond the Cool?
While touch is an important sense, sight is essential for navigation. The next revolution is to make data come to live seamlessly in the real world.
When we talk about HUD, we think of the new Google Glass and the opportunity to integrate data into our line of site. In parallel, see the world and the data behind it. Integrated cyborg solutions like Google Glass and future visions of embedded epidermal circuit (seen in Total Recall).
Microsoft had the lead in a new HUD interface using gesture. XBOX Kinects was the one product that Microsoft was seeing growth in the consumer sector. However, the leviathan was unable to make this a multiscreen strategy fast enough.
Moving gesture elegantly to PCs and window phones never happened. There is a Kinect for Windows but it lacks the software for controlling the interface.
The Leap motion controller is a step forward. A small multiscreen sensor box not tied to console in the dean but with the ability to tether like a dongle to a wide variety of screens and deliver better sensitivity to Kinect. It has multiple commands down to finger level accuracy.
Andrew Hsu still believes that touch is less ambiguous on the consumer navigation intent. “How can you disambiguate between “accidental” and intentional gestures. The beauty of touch interaction is that you basically get user intent for “free” – a user typically only touches the device when he/she wants to interact with it. The cases of accidental activation are much lower and easier to reject.”
Arguably HUD is a solution looking for a problem. Like the inspired Seque cycles, the inventor’s goal was to develop an urban consumer transport vehicle but he failed to get significant adoption. The Segue has now found a home with urban tourist touring groups and airport police. Why? It provided an elevated view with minimal multitasking: Ideal for tourists and law enforcement.
Andrew agrees: “What these technologies really need to address is what sort of “problem” they are trying to solve. That is, with capacitive touchscreens, there were certainly a number of value propositions that arguably were superior to the previous (resistive) solution that helped transform/enable touch input. Natural gestures (HUD) is still looking for a compelling value proposition”
Google Glass is a platform without a certain home. Will “super cool” it has not inspired the consumer. We have not seen the “a-ha!” that Jobs brought to the touch. We know new more intuitive human interfaces are coming. But we need a Steve Jobs to take the technology and humanize it for intuitive consumption.
Gary Schwartz is the CEO of Impact Mobile. Having been at the frontlines of the mobile industry for over a decade, Gary is the author of two books, “The Impulse Economy: Understanding Mobile Shoppers” and “Fast Shopper. Slow Store: A Guide to Courting and Capturing the Mobile Consumers,” both of which highlight the current state of the mobile commerce space and chronicle the significant impact that mobile is having on consumers, retailers and brands. Gary is also a chair emeritus for the Interactive Advertising Bureau and the Mobile Entertainment Forum NA and global director of the Location Based Marketing Association.
by Gary Schwartz (06/08/2013)
The newspaper business is tough. Over the weekend the New York Times Company sold The Boston Globe and its other New England media properties to John W. Henry, principal owner of the Boston Red Sox for $70MM. It bought the asset in 1993 for 1.1BB.
When Jeff Bezos, the CEO of Amazon, agreed to purchase the Washington Post newspaper (affectionately called WaPo by its readers) for $250m, was he buying a viable business or and the glory of 80 years of traditional media leadership.
With a net value of 20BB, Jeff Bezos can buy many things. Does he see this as an extension of his internet empire or as a way this new-age business genius can secure an old-world trophy and a media legacy?
Amazon Publishing, Amazon Studios . . . but this is different
Bezos has taken on incumbent media business before. He has single-handedly changed the publishing world. Amazon Crossing, Amazon Publishing’s imprint acquired Pötzsch’s Hangman’s Daughter series and translated it from German into English and launched it in audio and print. The series became a #1 bestselling Kindle book and in June 2013, the book reached the platinum one million copies sold.
Amazon Studios is now developing movies and TV series, and recently announced five new video-on-demand program pilots. It has started a crowd sourcing campaign soliciting 2-15 minute long shorts to pitch a feature-length film idea. Amazon Studios evaluates each submission, and will seed some of the submissions with $10,000. The studio then grooms the development funding successful scripts through to the theatrical release incentivizing film makers that get their ideas from paper to the silver screen $400,000.
But the Washington Post is different. He did not purchase the Post’s other online assets: Slate magazine, TheRoot.com, and Foreign Policy. The flagship Washington Post newspaper purchase seems more of a personal acquisition and less a vertical strategy. Bezos will become an owner taking over the Graham family title. Does Bezos what some old-world legacy to place on his media mantel?
Post chief executive, Donald Graham has known Bezos for about 15 years which most likely helped this transition easier. He told FT.com that “He [Bezo] is a very patient, long-term investor.” He will need to be. Despite the paper’s move into digital publishing, the Washington Post has seen a decline in circulation (6.5% in the last year alone) and the trick down pain of declining advertising sales.
What Bezos is buying is the paper’s white-glove media position only rivaled by The New York Times. The paper hold its place as the seventh most popular daily newspaper in the US. Many in the industry is watching closely and hoping Bezos can bring his magic to the ailing publishing business.
Journalist Carl Bernstein who broke the Watergate story with the Post, told Politico that this change of power is “recognition that a new kind of entrepreneurship and leadership, fashioned in the age of the new technology, is needed to lead not just The Post, but perhaps the news business itself”. Bernstein’s partner and Post associate editor Bob Woodward, said on MSNBC. “I think in some ways, this may be the Post’s last chance to survive, at least in some form of what it was.”
So with the world watching what will Bezos do? Will he launch 3D printing with this property? Will he connect one-click commerce to this new newspaper install base? Maybe he will simply use this blue-chip Washington company as entree to the DC Beltway and all the value of being a Washington insider.
While Bezos will surely add innovation to the paper, he will be careful not to vanquish Katharine Graham’s family-run papers legacy and maybe happy to simply keep the association with grit journalism at its best.
In Dubai talking to agencies and brands about “digital velcro”. How linking content seamlessly between one screen plus other consumer screen equals a multiple of value for a brand. 20 mins – view here.
I was speaking with David Epstein, the founder of The Unreasonable Institute, the brainchild of Unreasonable at Sea, the Google sponsored innovation ship that is presently sailing from port to port globally.
“The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man.”
The Unreasonable Institute, based in Boulder, Colorado and is working to bring entrepreneurs, innovators, thinkers, and investors together for social change. He now has these same folk on a ship sailing the world with that disruptive mandate.
What Mr. Epstein is championing, and what Mr. Shaw posited over 100 years ago is applicable, if not essential, across all verticals today. In the 2010’s, when industry after industry is being rudely disrupted, we may need to be more unreasonable about our search for solutions and our adaptation to the new status quo. We have to become superbrands.
Man and Superman
Music, retail, media buying, broadcast, publishing are all incumbent industries that have, or are, about to pivot in a profound and irreversible way. Many extant business models will dry up. Many old revenue streams will become commodity channels or be circumvented over-the-top by new technologies or new business models.
Telecommunications, more than any other industry, has profoundly impacted businesses. Some bemoan that “mobile” innovation has horizontally cut many companies at the knees.
Telecommunication innovation and disruption is not new. The history of telecommunications is the history of open systems and the invisible hand that attempted to close these systems: From RCA closing down FM Radio and early television. It is the same recent history of Apple disintermediating the wireless carriers with an “internet device” and then turning around and using the same iPhone to shut down the Mobile Web with a closed App Store.
What is new about telecommunications in the 2010s is the pervasive nature of the technology, the democratization of information and access, and the liberation of the consumer.
The new entrepreneurs, innovators, thinkers, and investors that are sailing on Epstein’s ship are the crew of innovators that needed to rethink the way we communicate with this new consumer.
And this requires a motley crew.
Chief Unreasonable Officer
Labels, Retailers, brands, publishers, and broadcasters cannot simply open innovation labs in the vain hope that they can reinvent their business from within. Forces are at play in the mall and in the media houses that will require some unreasonable thought. The walls of our store are porous (Mike Duke) and the internet cloud is in our malls to stay.
To paraphrase Mr. Shaw: The reasonable person adapts to the world; the unreasonable person proactively turns the tables.
How do new-age brands become unreasonable?
- Industries need to understand their new world and their new consumer. This world is made up of consumer moments across their connected-screens during the course of the day. Ten years ago, you never needed to follow these consumers; now you need to plot their screen journey in minute detail.
- The value may not lie exclusively on the screen but in connecting these screens. In a world where (according to Google’s Multiscreen Report) over 90% of people use more than one screen to accomplish a single task, brands need to focus on the “digital Velcro” to connect these screen experiences. One screen + another screen = a multiple of value: (1+1=3)
- Stop relying exclusively on third parties and social networks to find your consumer. “Dating services” are important . . . but you need to get out more. Forge a direct relationship with this new connected consumer.
- Be unreasonable. Believe that your consumers can love your product and can share a common dialogue with your brand on their private and personal screen.
- This maybe simply the ability to shop for a brand seamlessly across their screens understanding the needs of the consumer at that moment of the day on a particular screen form factor.
- This maybe establishing a common interest (wellness, nightlife, etc.) and become part of their multiscreen narrative.
The new Chief Digital Officer needs to create superbrands, and to do that she needs to be unreasonable across all her consumers’ connected screens.
I am content chair of the MultiScreen Summit in NYC, June 11th and 12th.
June 11-12, 2013
125 West 18th Street
New York City
“The Incredible Shrinking Barnes & Noble.” This was the LA Times‘ blog post yesterday. I like it and I have stolen it. It speaks volumes to the future of the mall. Entertainment centers for browsing shoppers are shutting down.
Barnes & Noble sees 30% fewer stores in the next decade. The bookseller had 726 stores in 2008, 689 stores in 2012 and in 10 years this will drop to 450? Perhaps this is optimistic? The certainty is that there will be much shuttering.
Barnes & Noble’s projected closings and Target’s new price-matching policy are all signs of retail in distress. The trend toward mobile shopping is likely to have a lasting impact on the retail landscape.
The physical bookstore could become a thing of the past.
With the mobile consumer in mind, a yoga studio could sell books about spirituality and enable customers to tap their phones to order a physical or digital book in a context-rich environment. The same is true for a doctor’s office, a movie theatre and other locations.
Barnes & Noble executives are undoubtedly aware – as Borders executives before them – that the 2010s are eerily reminiscent of the music industry in the 2000s. Books, reading, and commerce behaviour has changed.
The relationship between shopper and store has changed.
Does this mean good riddance to bookstores, publishers, agents? Perhaps there is a new, more efficient order in town? Perhaps a new, streamlined business model would be both good for consumers and good for the industry long term?
Unquestionably the market and mall is primed for new disruptive models. Amazon coming in with Apple-like book genius bars? New purchase, delivery and consumption models that live between the store and the Amazon cloud?
Just published an excerpt from my recent book Fast Shopper, Slow Store in the Retail Touchpoints publication.
As a post script to this chapter, the 2013 election underscored the value of digital BIG DATA. When President Obama hired an analytics war room that was five times the investment in his 2008 campaign, we knew where the focus would be.
Pointedly President Obama’s team hired a supermarket sales promotions “Chief Scientist” called Rayid Ghani. His team rated PERSUADABILITY. . . the art of knowing who was likely to “swing” blue.
Mr. Ghani knew where to target. This data helped them target media and played perfectly into the mobile (personal) opt-in strategy that the Obama team excelled at throughout the campaign. It allowed them to successfully knock on BLUE doors not RED and target BLUE (and possibly BLUE) phones and steer the vote.
I like to draw a parallel between politics and retail as it illustrates that tactics in one vertical as applicable cross-industry. I would say it is essential for banking, publishing, and entertainment verticals to understand that they are not alone.
The connected screen and the new (painfully) independent shopper are disrupting all incumbent industries.
Many people in the business of connecting to retail customers are busy reworking their game plan. It may reassure the reader that no one is immune to digital disruption, which has left most industry folk, from brands to broadcasters, from publishers to politicians, questioning the way they engage with their audiences.
The 2012 U.S. presidential election was a perfect example of brands desperately seeking buyers. As the candidates claw for positioning, it is evident that the election process is (surprisingly or not) similar to selling a product in a hugely competitive retail market. Each electoral cycle demonstrates the challenge of courting an increasingly digital public.
The techniques that President Barack Obama and Mitt Romney used to market their platform and gather votes are the same as those embraced by brands to manage their market presence, build engagement, and move their audience to a sale. All the challenges of chasing the itinerant mobile public are the same as those facing bewildered shopkeepers.
In the following interview I discuss with Wayne Hurlbert, the preeminent business blogger (Blog Business World), that retailers need to embrace new strategies to reconnect with their customers. We discuss:
- Strategies to win back customers who have left the malls, big box, and other retail outlets for their mobile devices.
- How the behavior of mobile shoppers is different from both tethered online customers and from the traditional in store consumer.
- Techniques for winning back those customers, reconnecting with them, and regaining their long term loyalty.
- How to embrace mobile technology as a competitive advantage for your business, and place yourself in the forefront of the mobile shopping revolution.
The agreement is a blow to Apple, which was also named in a DOJ antitrust suit brought this spring alleging that the technology company and publishers fixed ebook prices. However, Amazon is likely to benefit by being able to sell competitively priced ebooks and attract consumers to its new ereader and tablets, which were introduced last week.
“Based on this ruling Amazon.com will undoubtedly grow its market share,” said Gary Schwartz, “But this ruling is a soft push down a slippery slope for the book industry that dates back to 2007, when we saw the first Kindle. This was the harbinger of a new power game and more important, a new relationship with the digital consumer.
“My concern is that Amazon.com is simply using books to build its m-commerce empire? It is a stepping stone to developing a commerce checkout for sectors such as apparel and electronics and the quality of the bookshelf will suffer.”
The publishers are also required, as part of the settlement, to phase out any contracts with retailers still using the agency model and bans them from imposing similar restrictions on prices for two years.
“Amazon.com says it is ‘pro-consumer’ but you cannot take the agent/publisher out of the value chain and expect the ecosystem to thrive,” Mr. Schwartz said. “The number of self-published titles in the United States has tripled over the past few years and will continue to grow.
“However, by cutting out the agency and publisher, the industry has made the online and mobile storefront into the Wild West,” he said.
“Publishing has become the easy part. Selling and driving profit for authors has become difficult.”