innovation playground Idris Mootee

Disruption Is Less About Technology. It's About Customer Experience. Disruptive CX Strategy Needs To Get Emotional.

Why do some companies make so much profit and command price premiums while some continually  struggle to make minimum margin and gain market share despite spending good money on advertising, buying channel presence with some even having a better designed product?

The secret is very simple. Though these different high performance companies operate in very different industries and face different challenges, the major reason for their success comes down to one thing. They understand it is all about the customer experience. And they don’t even have to do it for everyone. At least not initially.

They are putting their customers at the center of their universe; they also understand that not every company can do that (including their competitors who are many times bigger and with big marketing budget) because it will be difficult or too expensive for them to make that work for everyone.

The secret is that you should start with ‘not everyone’ and identify those ‘someone who cares’. Those someones who appreciate the extra things that you do and will ultimate tell everyone about it and essentially those become the most tangible evidence of your brand promise. The declining effectiveness of advertising is well evidenced and many marketers are still doing that despite their value propositions which are unclear, and customer experience is underwhelming. And instead of spending time and resources on the latter, they take the easy path and buy more display advertising, it is not going to work.

Smart companies understand that success depends most fundamentally on a few core customers and if you can tailor your customer value propositions to them and then design the experiences just for them, you’re on the right track and can achieve a new level of performance and differentiation. These customer experiences are not about a $50 rebate, or a free something or many thank you emails. These are things that consumers take for granted and believe you’re doing it to get their business as the cost of doing business.

Customer experience needs to get emotional. This is how our brains are wired and this is when design thinking comes into play. You need to map the customer journeys and engineer happy accidents. Not a business process exercise at all and don’t mix them up. Walk their shoes in their everyday life and constantly invent new ways to apply the best value propositions on minimal scale. Remember customer experience is not about being well said, it is about being well done and it is not a published rule book. It is embedded in your culture and how your brand dictates your behavior.

7 Important Business Lessons You Can Learn From a Bank Robbery

During a bank robbery in China, the bank robbers dressed in fake Hugo Boss fashion, carrying AK47s shouted to everyone as they rushed into a bank: "Everyone don't move. This is a robbery. The money belongs to the People. Your life belongs to you. Your designer handbag we will not take. We don’t take your IDs and we are not identity thefts, that’s not ethical at all. We will take only the money from the bank."

This is called “Staying Focus!”

The older robbers shouted “Don’t do any tricks. I know them because I used to work in a bank too. Just do as you are told.” One guys asked. “Which bank did you work for?”. He replied “The Sperm Bank. But we never had a robbery while I worked there.”

This is called “Domain Knowledge!”

Everyone in the bank got down on the floor. One woman was looking at her smartphone and noticed one of the robbers showed up on her Tinder app and shouted hey you look good and is that a real picture! The younger robber said, “We are only here to do work, not looking for a date. Perhaps after. Now I am busy?" The big brother yelled at him ”You should have turned that off!” And then everyone in the bank started looking at their smartphones.

This is called "Avoiding Distraction!”

Then one of the bank’s staff started asking the robbers. “What are you going to do with that much money? You guys should know investment is risky if you don’t know anything about it. You don’t want to risks your hard earned cash. We have different investment vehicles and the money can be placed in Switzerland and safe even if you got caught.”

This is called “Risks Management!”

When the bank robbers returned home, the younger robber told the older robber: "Big brother, let's count how much money we got" The older robber said: "Don’t bother, the news will tell us. Too much work and let them do the job. I'd rather spend the time look at stocks we want to buy with the money. The market is a good buy now.” The young robber said “Ah yes! Let them do the job!”

This is called “Opportunity Cost!”

Right after the robbers were gone, the bank manager held a meeting. But the supervisor said to him: "Shall we add the $10m that we have lend to our friends and families so we can write them off! Perfect timing.”

This is called “Opportunity Mapping!”

The next day, the TV news reported that $100 million was taken from the bank. The robbers counted and counted and counted, but they could only count $10 million. The robbers were upset: "We risked our lives and only took $10 million. The bank manager took $90 million without doing anything. That’s not fair. I guess that’s what happened when people understand business”

This was adapted from a joke I was told when traveling in China and dramatized.

In Algorithms We Trust. Do We?

Let's try to paint a likely not-too-distant future. In this future, everything around us will be managed by algorithms. They manage and recommend what we want to watch; they control traffic of our driver-less cars; they control those drones which deliver our pizza; predict for you which one of your friends will become your future spouse, etc. They will make our life effortless and predict what things will happen next or what's best for us. We all wish that it is that simple.

As we are picking up massive data every second, algorithms are critical to how we make sense of them and our reliance on algorithms is growing by the second. But how much faith should we put into those algorithms, and how reliable they are depends on who you talk to. The accuracy of the algorithmic differentiation (automatic differentiation) is key in dealing with data volatility in many complex cases where accuracy of data is critical to the final outcome. I don’t know when we can have statistical evidence comparing how often driverless cars mistakes and how often human drivers make mistakes or how well a software program investing in stocks makes mistakes and human making investment mistakes.

We need to develop programs to check whether algorithms are working as they were intended and monitoring algorithms by the results they produce based on machine performance metrics. Vetting algorithms in advance isn't practical at all as many are too complex for their outcome to be predicted. Algorithmic differentiation is used to fine tune algorithms that are complex to optimize. We will be placing our faith into the accuracy of these algorithms and trusting that they will deliver. I think we may be over-optimistic and mining a lot of data using statistical analysis still has a very strong random component to it. To optimize these models we need algorithmic differentiation and sometimes it feels like a scientific random number generator. The more data we have, the more simulation is needed and the more reliance on the significance of data, and significance means sensitivities. We’re in the midst of a transformation when industries are exploring how to use big data to create new business models.

There’s one certain thing in big data, it’s that all algorithms are not created equal. The biggest question is how many jobs will disappear when algorithms take over human jobs? People ask the same question during the first industrial revolution when machines started making goods a lot faster and cheaper. Are we entering a world in which the algorithms themselves will be competing with humans? Honestly, I just don't like it when algorithms make decisions for us. They can help me analyze my options and probabilities, but not making a decision until they prove that they can think smarter than me. And so the game begins…

Virtual Reality Is The Next Big Thing. Beyong Shocking And Disruptive. It Will Create Tens Of Billions Of Value. Who Will Win This Game?

The world is becoming crazier and more exciting as Virtual Realities are becoming more real and the lines between our physical world and virtual word are fast becoming blurred. Next year 2016 will be an important year as companies are finally making virtual reality real with only 2 main players participating on the race: HTC/Valve, Facebook/Oculus will be making VR products available. Microsoft is partnering with both Valve VR and Oculus while Sony is pushing hard not to miss the bandwagon with Morpheus.

The user behavior of VR has yet to come to shape and will be evolving for the next 5 years, the idea of information conveyance is interesting and playing a special role in the realm of virtual and augmented reality. We are learning to design cues in the VR world to tell users where to move or go or to touch. This is still a challenge as don’t think about it that much in the physical world. We walk into a room assuming the chairs are moveable and the cabinets are not. That sense of reality has changed in the VR world. Anything can happen to everything. It is like living in a dream.Those who have experienced the HTC/Valve Vive were completely fascinated by the experience. HTC Vive is clearly ahead of the game.

For VR, unlike 2D gaming or in the real world, we have arrows and signage to tell people where they can go. In the VR world when user is wearing a head-mounted display, the users are actually operating in two realities – the real, knowing that the user is wearing these gears and the virtual, which is so immersive (more so for the HTC/Vive roomscale technology that allows you to walk around the room) and therefore difficult to find a frame of reference.

The question is do we want user to have the feeling of wearing a space suit or simply feeling they are acting as normal with no gears on them? The awareness of wearing a suit will remind people they are in a VR world unless the suit is a normal suit. While body motion sensing is great when body movements are being interpreted by motion sensors as perceived input and turns it into commands and controls. Basically, with this technology, you are the controller.

KOR-FX is making an interesting gaming VR vest that uses acoustic feedback that, in turn, is processed into haptic feedback. Its software analyzes the feedback felt by the user, depending on what’s going on with the on-screen and what the user is doing it with. The controller “acousto-haptics” is to define acoustic feedback that is being felt.

Sixense is another company currently developing a wireless solution to hand input in virtual reality with the STEM System making use of alternating current (A/C) electromagnetic field to accurately track body movements in terms of position and orientation within a radius of a stationary base.

In designing VR experience, the haptic side of things is perhaps the most difficult to address. Oculus has yet to demonstrate an “official” control mechanism for the Rift, instead letting each developer use the peripherals they find most suitable. I am speculating they may end up figure out a visual hand-tracking technology from a front mounted camera. So what is the best way to navigate in the VR world? Input is still a key challenge for VR as a pure look-based movement (turning your heads) supported with some analog input (mouse in your hand as an example) but sometimes the head is looking at a different direction and the hands are not in sync. This can causes problems as if the system is receiving two very different commands.

Expanding information conveyance is still early in the usability learning curve and we are a few years away before arriving at a dominant model. There are still many creative options we can explore and they are not mutually exclusive either. A voice based system guiding the user as an example. Once we start adding social interaction in shared virtual environments, it will explode. Social VR means social presence and this is a $20 billion dollar business at a minimal.

The inevitable evolution of inputs in some form of controllers will keep coming. Xbox and Playstation will need to think how to migrate their current controllers to take advantage of the new requirements (not easy) and we can expect to see more innovation from start-ups including companies such as Razer Hydra from Sixense, or camera-based systems which are limited by the camera’s line of sight. HTC/Valve is also working on some cool solutions aiming to provide the best and not just the first.

Immersive VR systems that alter your sense of physical reality can give user the illusion that you are located inside an unreal virtual environment – or a telepresence - the ‘sense of being there’ or ‘feeling of being there’. In the early 1990s this idea was transplanted to virtual reality, where instead of being at the remote physical environment, the participant was in a virtual environment with a sense of being at the place depicted by the virtual displays.

A Swiss healthcare hybrid MindMaze announced its pioneering move into the VR and gaming spaces with MindLeap. Combining headset-mounted neural sensors and motion-capture cameras, the system is designed to “facilitate neuro-powered immersive virtual and augmented reality” on consoles platforms as XBOX, PlayStation and Android. This is still in development and I am not sure if it can be done soon. They leverage technology developed by the company for a range of medical applications in treating neurological deficits, such as helping amputees control robotic limbs. Neurologial control is still a bit of science fiction and will be a long way before it can be mass commercialized. I like to dial my HTC M9 with my brain some day.

For now, we will be sticking with head-mounted and handheld controllers. They are enough for us to re-create boundaries and rethink presence. Every time you pick up a HTC Vive,  you are about to enter a virtual boundary that didn't exist before. Exciting and also scary!

There Is A Difference Between Business Turnaround and Business Transformation. It Is Easy To Tell Which Is Harder.

All companies go through some kind of crisis at some point but what does it take to get out of it? There aren’t many successful turnarounds in large companies and the bigger the company and the longer the history, the more difficult it is for any turnaround and its success rate is lower. 

Harley Davidson in mid-life crisis when Richard Teerlink joined the company in 1981 as CFO, the company had US market share of 15% and reported a loss of $15m. The company was killed by its strong Japanese competitor led by Honda. In 1989, he took over as CEO and returned the company's focus to increasing quality, improving service and producing world-class heavyweight motorcycles. In the end it is the product that turned the company around. Harley Davidson recovered its U.S. market share to 50% and posted annual sales of more than $1.7 billion. Teerlink left his post as CEO in 1997, and served on Harley Davidson’s board of directors for another 5 years. He did a great job as a turnaround manager.

The story of IBM’s brush with bankruptcy is another greatest business comeback of all time. IBM’s problem was that it was quickly becoming irrelevant and experiencing zero growth. The company had also made some bets that didn’t work out. Lou Gerstner took control in 1993 and created more focus in the company. He did a great job as a transformation manager.

One lessons here is not mix up a turnaround with a transformation. It’s very important to distinguish between a transformation and a turnaround.  A turnaround involves a company that has fallen off the rails and has executed poorly and still competing in the same product/market space. It takes a tough driven executive to make it work.

A transformation is truly a lot more difficult and takes a lot more deep wisdom with execution playing a secondary role. The company must fundamentally change its mental and operating model. It is a reinvention and companies who are used to doing things their way find it difficult to start doing things differently. This is not a 3 or 6-month initiative. It’s very, very strategic, foresight driven and problematic.

For any successful transformation, it takes leadership rather than management. “I hire people brighter than me and I get out of their way” as Lee Iacocca puts it. I am not sure who said something like “Inventories and supply chain parts can be managed but people must be led.”

I’ve both architected and supported quite a few successful turnaround behind the scenes as strategic consultant in my career, my simple advice for transformation leaders is people don’t just care what you know unless they know that you care.  You need to earn that by caring and then knowing.  It takes inspirational motivation to motivate managers to commit to the vision of the organization no matter how hard it is to achieve the vision. It also takes intellectual stimulation to foster innovation and creativity to challene the groupthink or yesthink. It is as much an intellectual undertaking as much as an executional exercise.

The world is not ending. Winning for tomorrow requires a vision. Brilliant strategies don’t show up spontaneously particularly for complex and fast moving industries. It comes from strategic dialogues, strategic foresights, options, even failures and mistakes. The ability to see the problem as a whole and then integrate a variety of perspectives and not simple quick fix. There is no simple quick fix.

Eight Most Common Marketing Mistakes That You Should Avoid Making.

Every one is an expert in marketing these days. And with social media, everyone is an ad critic. Not entirely a bad thing, but as marketers you need know how to filter the noise. People need to understand the difference between STRATEGIC MARKETING, MARKETING COMMUNICATIONS and CHANNEL MARKETING. These are three very different things. The first one is strategic and is tightly linked to business strategy and decisions are made based on what and how to invest, the second one is about advertising (there is no social only advertising or no advertising only social..either way that's where we're going) and the third is about activations and promotions in the field.

I am writing this blog post while shopping at a Prada store. It is a good place to write about marketing because luxury goods companies such as Prada understand building brand equity, communicating brand desire and staging customer experience. I bought my new Prada briefcase and shoes for three reasons in the following order: 1/ Brand 2/ Product 3/ Experience. I see many great design but their brand is never part of my consideration. Product is great and I need to like it. The experience makes me feel like buying more stuff.

There are many myths in marketing despite it is a relative mature practice and companies are still making the same common mistakes. Every senior marketers and CMOs can benefit from reading this:

Marketing Mistake #1: Marketing is all about driving sales. 

Many people still confuse marketing with sales. Selling is only a part of the marketing function, but marketing is much broader than selling. It is not one is more important than the other. Marketing begins before a company design or conceptualize an idea or design or engineer any products or services. Marketing continues throughout the whole product’s lifecycle. Its mandate is the continued discovery of new ways to create, communicate and capture value. Marketing is not and should not be considered a cost; in fact it is an investment. Imagine if a business stops investing? If marketing cost is linked as a ratio-to-sales, them company will eventually enter a stage of stagnation and eventually decline (I am not saying there shouldn't be discipline in marketing resource management). But like any investments, it must provide a clear idea of how and when it will deliver a return on that investment. So marketing is a number of strategic investments and not just a cost item. The truth is any marketing dollars that are linked directly to sales improvement most likely are sales promotions that leads to discount and sometime brand erosion. The best marketing build brand equity and create demand. Field promotions, discount programs, sales incentives etc. are not marketing, these are sales operation expenses.

Marketing Mistake #2: Marketing is a department.

This is another common mistake that marketers make and that is to view it as a department within the organizational structure. And therefore marketing is the sole job of the marketing department. It is true that marketing is a function that’s organized within a marketing department. But if marketing thinking only happens within this department, I believe the company would not do well. Marketing is far too limited if it is left only to the marketing professionals. Progressive companies need to get all their departments to be customer oriented and focused. Marketing must be an integrated part of the entire organization, rather than a specific function. Successful marketing is the true integration of marketing, engineering, design, customer service, community management and operations beyond simply putting a multi-disciplinary team together. The team must be supported and managed effectively in an environment where each discipline respects and appreciates the perspective of others. Look at some of the most successful companies today and see who in the organization sets the marketing direction for those companies. More and more, it’s the CEO who’s also becoming the CMO while not officially although they do not usually carry that title.

Marketing Mistake #3: Marketing is all about the big idea and the marketing mix.

Marketing is often being marginalized to just coming up with the big idea and then managing the marketing mix and communications. Gone are the days of the Big Idea (Leo Burnett’s in the 80s). Many executives today still believe that marketing is about getting the “big idea” from their agencies and spending money effectively on the advertising and promotional mix. In another words optimizing your advertising dollars, will lead to a successful marketing campaign. It doesn’t matter what products they are marketing, many executives believe that the key to a successful campaign is to work with their advertising agencies to come up with big ideas to differentiate their product in the marketplace and win a few advertising awards along the way. The traditional marketing model is obsolete and many clients and agencies are still operating this way. Marketing is not about mix, it is about telling your story in the most authentic ways and the best way to do that is from their leaderships. The big idea is not about the advertising, the company itself should be the big idea! They missed it completely. And the marketing mix is not about the media, it is about orchestrating both mass and individual social conversation at scale.

Marketing Mistake #4: Try as hard as you can to sell.

For brands to sell they have to stop selling. Unless you’re on DTV or doing a tactical DM campaign. For brands to win the hearts and minds they so crave and to engineer brand desire, they must first earn those hearts and minds and tell people who you are and why you’re here. What is your purpose? Where does your company’s passion lie? What are your greatest capabilities, and what do you have to offer? What need do you see in the world that you are operating in? And you must earn your relevance through a view of the world and a perceived role within it that is a clear break from the bygone advertising practices of the 80s. Sell hard by selling less. Any advertising that tries too hard to sell will not work.

Marketing Mistake #5: Listening to your customers.

Today’s technological advancements have given companies the ability to target and talk to customers in a more precise manner. Yet, the new technologies allow us to listen to whatever is going on out there. Failing to use these tools effectively will result in companies totally disconnected with their customers. Social listening is not an option; it is the core of marketing intelligence. Don’t waste money on useless focus groups.

Mistake #6: Not listening to your customer.

This is the key difference between “Market Drive” and “Market Driving. Customer input is valuable in helping companies develop incremental innovation. However, customers are usually unable to conceptualize the benefits of revolutionary products, concepts and technologies. No market research will tell you what’s the next big idea. And no customers or your trade partners can tell you how you should do your marketing. Your customers can tell you the things that are broken and they want you to fix it. Listen to them. Make sure they know you are listening and make them happy. But they won’t create the future roadmap for your product or service. That’s your job. No you listen to your customers but you should never ask them what they want. They will tell you they want a car that self-drive and can fly.

Mistake #7: Making everything a CMO problem.

The average tenure of a CMO is 12-16 months these days and is getting shorter. No one wants the CMO job. The shortness of the typical CMO’s tenure is a tangible manifestation of corporate management's frustration with the inability of marketing to create economic value let alone the inability to drive change and transformation. Good marketing not only transforms customers but it should first transform the organization itself. Many CMOs are traditional marketers who are usually great advertising tacticians. Trained for years in traditional advertising, their primarily focus was in marketing communications activities to build brands. Many lack the strategic thinking and CMO must also relentlessly focus on unifying the disparate functions of marketing, operations, sales, service, and technology. For most companies, such integration suggests an unholy alliance of warring fiefdoms and silos, and that's precisely why the C-suite needs an individual with the power and authority to deliver the results. Marketing is about the customer experience.

Marketing Mistake #8: Marketing is a pure science.

Marketing can become over obsessed with logic and lost sight of the magic. Marketing has always aspired to be an “accurate science” status and has been searching for the best formula. Sometimes people are using fake science although data is becoming more and more important for marketing these days thanks for big data. Even with those data, we should not lose sight of the most important of marketing: magic, mystery and mastery.

 

Robert Parker's Wine Scoring System Can Be Applied In Business Too.

Robert Parker is the most widely known and influential wine critic in the world today. His popular wine scoring system was the first simple way to determine the quality of wine. Parker is known for his preference for powerful reds from Napa and the Rhone and has inadvertently made becoming a wine critic almost impossible, since— in part because of the success of his scoring system. That takes a lot of fun away. Can you imagine we have scorecards for wine, food, paintings, music and dance? We can do that for business but not for art. Wine is art. Well perhaps business is art too!

Getting 90 points means a wine is of superior quality and character and is something you can share with confidence with friends and clients. And they don’t necessarily have to be expensive and sometime can be within reach. If a 90 point wine costs $30 then it is a smart choice. But it should not automatically means that you will like it? Same thing for business, an outstanding business model that delivers above average return may not necessarily be the right business model for you.

Wines rated 95-100 are considered classics, the best of their kind. Less than 2% of the 20,000 wines we review each year earn “classic” scores. Wines rated 90-94 are outstanding examples of their types. Wines rated 85-89 are “very good,” and under 80-84 are “good,” that is, they are clean, balanced and enjoyable. Anything below 80 points are generally not recommended.

I am not a wine expert. But I pick wine for all my best friends. But I think wines can be both good and good value at any tiers. I can recommend good wines that are ranked under 80 and bad ones over 85. For example, if I want a bottle for a weekend dinner with friends, an 85-point wine at $25 to $30 may be a better choice or good enough choice than a 93-point wine at $75 wine that requires five years in the cellar to reach its full potential. There is something call good enough. And it applies to wine, design, marketing and engineering. Over design, marketing or engineering often achieve the opposite results.

You need to understand the wine descriptors and understanding which wine embodies which traits. Scoring is only for general guidance. I find these traits can equally effective to apply in scoring of business strategies and models.

BALANCE

Wine like Pinot Noir needs to achieve a balance between the acidity of the grape against the flavor and texture. For business, you need to look at the business strategy to ensure a balance between investing for growth and delivering earnings. To avoid underinvesting that can cause a downward spiral. Yes you still need to deliver a P&L at an acceptable level in terms of earnings and ROICs but should never be at the expense of staying relevant and jump starting growth.

Recommended: Montecastro, Ribera del Duero, Northern Spain Red.

STRUCTURED

Structure is the framework that supports the elements of flavor, tannin, acid and sugar. The structure dictates the first taste to mid-palate to the finishing flavor. For business, a proper structure ensure there is a flow from ideation of new business opportunities to understanding what market it is trying to serve to the final go-to-market planning. The first taste of excitement of an innovative idea needs to be executed flawlessly and it takes a good structure.

Recommended: Louis Martini, Sonoma County Cabernet Sauvignon.

FRUIT FORWARD

Remember that first sip of wine provides you with the flavor of fully ripe fruit. That’s the kind of wine I like. The fruitiness rushes into your mouth. Fruit forward wines are primarily about the grape / varietal expression, over the expression of either place (i.e. terroir) or winemaking practices such as the use of oak, lees contact or managed oxidation. This is the same for business, customers need to get the sweet taste and delight in the form of customer experience when they first encounter your brand. Companies that do a good job in creating a memorable delight can be ahead of its competitions. In business, it means Delight Forward. Unboxing is a good example.

Recommended: Dehlinger, Sonoma County’s Russian River Valley.

BRIGHT

A wine can be visually bright, have bright aromas, or flavors. In each instance the wine is perceived vividly with high clarity. A business can be bright, it is when the company successfully create a culture of “brilliance” – a lot of common sense in how decisions are made by mid-level management. Bright is independent of experience. The ability to think quick, to look at options, to compare and synthesize—all these skills are particularly important to build a culture of "brilliance". The cycle of exploring, mapping and reasoning, asking the right questions, is really what builds organization capability to think critically and be brilliant. The best companies are always in pursuit of brilliance.

Recommended: Frei Brothers Reserve, Russian River Valley Chardonnay

There are two more attributes in the scoring system: Creamy and Fine Tannins. Anyhow, these scores make it simple for some to look at a wine, But it is actually quite difficult to pin down. Is an 89 good, very good or great? Is there really a difference between wines rated 91 and 93? Knowing that there are inconsistencies, prejudices and palate differences so wine needs to be re-tasted every couple of years. The same case for business, a business strategy that is working needs to be revisited every few years.

"Nothing makes the future look so rosy as to contemplate it through a glass of Chambertin" -Napoleon Bonaparte

The “Internet of Useless Things” or IuT Is Everywhere. Not Every Player Has A Plan.

The CES is a good one this year. Everywhere is IoT. And honestly I am little tired of hearing IoT or “Internet of Things” which is estimated to become a $7 trillion industry where thermometers, clocks, garbage cans, toilets, washing machines, watches, smartphones, fridges, baby monitors, garage doors and coffee makers are all connected digitally, allowing seamless interactions and smart living for us. Sensors are cheap and can be deployed everywhere collecting data, unnoticed. Data on how you move around in your home or office, in the gymn, on bike around your community, in a car, in public transit etc. How much water and electricity you use, and when; how much garbage you produce and dispose. And these reams and reams of information will make everyone of us overloaded with big data.

The biggest opportunity is Data Spam Management (just invented an industry). These data streams will drive us crazy eventually if we don’t know how to use them. Might as well turn all of them off. For those who are afraid of cookies that track them on line, it is going to get worse and much worse. When it comes to monitoring individuals and collecting details about their lives, privacy is over. Many people are still uncomfortable and remain to having their data tracked and analyzed. It is hard to define what privacy means in the world of big data. Imagine how much one can find out about you by going through you trash, in this case, your digital trash from sensors and devices that surround you 24 hours.

The world of hyper-connectivity is creating man opportunities for us and also is close achieving the top of a hype cycle. Perhaps itself is a recycled product of formerly known as the Smart Home or Smart Appliances. 90% of new products are merely solutions looking for problems and there are no unmet needs. Nest is a lucky case and there are not that many lucky cases for people to hit the Jackpot. When people enter this industry, they first need to understand the emerging behavior as a result of big data and what does it mean to have them.  And how it can shape our behavior? And what is the behavioral economics at work? What industry will it power up and who will benefit from it? Who owns the data gateway? I can go on and on for a day.

I am not an early adopter but I buy all these tech junks for my friends to try. I am really not interested in the thermostat. I am not interested in an Internet enabled door lock and for this one, I am sure I will be the last adopter. To create devices that can connect is easy and anyone can enable any objects with some kind of connectivity be it Bluetooth or Wi-Fi. But it takes some strategy to make sure you have a real customer value proposition.

The business opportunities for IoT are undeniable, but most of the visions out there were either overly simplistic or flawed and ultimately unworkable. The number of connected devices is expected to grow 18% each year for the next seven years and people couldn’t wait to have their “things” get connected. Beyond the hype, most will question the value and will understand the total costs of ownership. Buying an old fashion clock, toilet or door lock is easy. We can be sure that they will not break (most of the time) and needs very little maintenance. But when these become electronics, it will be a very different game. There is a cost to maintain (making sure they remain connected and receive update etc.) and needs to be replaced in a shorter period as technology moves fast. Way faster than they redesign your toilet or old fashion thermostat. The true value comes from larger companies designing integrated architecture so the orchestration of these appliances large and small can create a new level of convenience and delight. The oppotunties are not for everyone. The rest are just playing in the IuT game.

The Come Back Of Hardware. Is Software Becoming A Commodity?

The world is suddenly obsessed with smart technologies and this time around it seems unstoppable. Our everyday electrical and mechanical industrial object will now be occupied and ran by software and connected to the cloud. It also means each object (as small as some smoke detectors and as large as automobiles) will now be equipped with tons of sensors and can be able to adapt to different environment and individual needs.

It is essential that the next wave of industrial revolution will make us more efficient and empowered (and more human I hope), and data will be at the heart of this revolution. That's another big conversation. All the Nest, GoPro and Beats received multi-billion-dollar valuations through private investments or acquisitions and everyone is wondering why these hardware companies suddenly in such high demand. Because hardware and software are going through different commodity lifecycles and now software is becoming a commodity. They used to be difficult and expensive to develop and even to deploy, that that is changing. It is hard for software company to get into hardware much as hardware companies struggle to get into software. Hardware cannot be done by a few geeks in the basement, and involves massive R&D and specialists including megatronics engineers, electrical engineers, industrial designers, wireless engineers and usually takes a longer time to develop.

Software you can fix it with a download, and hardware you can’t. They are massive supply chain challenges when it comes to logistics and component supplies. The value of firms who can marry software and hardware will have a competitive advantage over their competitors. Essentially everything we use today will be fitted with some sensors, processors perhaps, and may be a screen and will recarnate and become of Internet of Things. For the last three decades, software engineering has advanced to a state that sophisticated codes can be embedded into machines. And the availability of cheap sensors and super powerful processors is powering this cycle of data revolution. All of a sudden, software, hardware and communications infrastructure are advancing us into a new era. Old world manufacturing + low cost computer processing + ubligious computing + cloud = smart new world and many cool products.

It sounds like the Apple story all over again, does it? The hardware and software integration capability of Apple, the ecosystem, the brand and user experience are now not only inspiring consumer gadgets company, not it’s influence is beyond its own industry. I know this is an overused story, but he Apple influence is still here, and perhaps it will be here for a long time even when the company stop creating great stuff one day. Microsoft ex-CEO Ballmer saw that coming in 2012 in a letter to shareholders. "It's important to recognize a fundamental shift under way in our business, we see ourselves as a devices and services company." Microsoft had the strategy right but couldn’t execute it fully with the exception of X-Box. Microsoft’s future revenue will still be coming in from software and it isn't going to change anytime soon. The transformation from software to hardware is harder that you think.

The idea that hardware is now the new software is pretty real. There is a business model implication here. These hardwares are mostly priced between $100 to $250 and they a gateway and great way to sell software. We are seeing a revival of hardware and this time, it is hardware first and software and then date on the cloud, it will bring new technological advances in cloud-powered hardware that boosts productivity, efficiency and manifests as beautifully designed objects that fit into our hands and homes.

The Best Kept Secrets Of Breakthrough. Everyone Should Start Practicing Them.

Everyone is looking for a breakthrough. The massive shift in generation differences in consumer behavior and rapid technological shift are casuing many companies to fail.... and it will happen fast. Companies that are stuck in their old mental model cannot breakout for many reasons. It is usually a combination of all that causes them to be irrelevant. It includes leadership’s blind sight, organization legacies and lack of foresights and the list goes on and on...

How often companies can act swiftly and not taking a wait and see attitude? All the time. It takes strong leadership to take bold decisions even though they feel fear while making these decisions. Here are a few ideas, which I often make accessible to a my select clients. How do breakthroughs happen? It is not just luck or strategic thinking. Can they be engineered? Are there preconditions? Or is it a skill that we can develop and learned? When companies are stuck whether in an old paradigm of doing business or a legacy business design, they need breakthrough.

Exploring the “Grey” area. The central core of organizations contains beliefs that were built up over the years and a value system that provides us with perspectives of the world and forms the grayscale of our personality. Seeing the world in black and white is terribly dangerous. Sticking to your core does not mean you should not understand the ‘grey’ around it. Making explicit attempt to push the “grey” area of what consider your core.

Anticipate and Leverage Moments Most breakthroughs don’t happen through excessive rationalization or planning. In fact, almost all breakthroughs are sparked by “moments.” This is one of the things I teach people about looking for breakthroughs. The process of finding any breakthrough – whether in business, technology or design – often involve immersing oneself in large amounts of data and extensive debate and synthesizing information. Most people fail to see the moments when they happen or fail to capture them. I have a long list of things you can do to maximize it happening.

Expand Awareness through Emotions. There is so much myth about emotions; we often associate them with the extreme cases when we overreact or how they prevent us from making the right decision or making us too aggressive with the things that we want. These are all true, but emotions also have a positive side – if you know how to use them. Emotions are our inner sensors at work, sending us weak signals from the outside. It triggers our desire to heighten our senses as our whole and even affect our brains in memory, basically expanding the operating parameters of our cognition. It helps us take in more information, store them in a deeper place inside our mind, hold multiple ideas in mind at once, and layers a feeling over objects and situations.

Imagineering as Daily Ritual. Unless you’re in the business of creative production such as film, animation or video gaming, most likely you don’t have a need to use imagination in your daily work. But imagination is not a tool we can call up on demand; we need to practice it every day in order to maintain our ability to imagine. Imagination is a major part of how we frame and solve problems. The practice of applied imagination (or imagineering) can increase the number of creative options available for a specific problem that we’re trying to solve. Imagination is part of our subconscious way to assist with idea generation. You’re not so much thinking of specific ideas of how to solve a problem, but rapidly and randomly envisioning what might be, what could be, and what couldn’t be. It's very easy to compare creativity and knowledge in an abstract, metaphorical sense – but we know that our imagination is developed from the knowledge we gain in the experiences of our daily lives and little encounters.

Practice Design of Meanings. Try to design a breakthrough project or pilot activity for yourself as experiment. Some breakthroughs are sparked by eureka moments based on insights – but far more are based on design. Design-driven innovation is spurred by thinking about possible breakthrough features, meanings and product languages that could emerge in the future. This cannot be done by talking to consumers or looking at current user behaviors. Consumers can’t really imagine radical futures, as they are anchored and invested in the current one; thus they are not helpful in anticipating possible radical changes in new product meanings. Big breakthroughs don’t necessarily come from disruptive applications or advanced functions; sometimes it’s new meanings that shift the universe. Think about how every one of the everyday objects that we see around our home can be transformed: instead of being simply functional, consider how to turn them into symbolic objects of irony, desire and affection.

Does Social Media Makes All Of Us Phenomenologists?

It is every designer’s dream to design a chair. I have yet to meet an industrial designer that doesn’t want to design a chair or a car. It is designer’s dream for those who study transportation design is to design a car and I get it. Chairs and tables? The reality is how often designers get a chance to design their own chairs? And every transportation designers ended up doing is styling a car that was designed by a computer. There are disproporationately large amount of chairs being designed than to other objects and products.

Any object whether it is chair, a table, a smartphone, or a coffee maker does not exist in a vacuum and are part of a informal system that links to a complex set of interactions both human and machines. And even a complex layer of meanings for a relatively simple object – a chair or a functional tool – a smartphone. For some, the term “phenomenology” is only restricted to the characterization of sensing qualities such as seeing, touching, hearing, etc.: what it is like to have sensations of different kinds that forms a human experience. But our experience is normally much richer in content than mere sensation.

Sensational experience is great but short-lived. To create meanings is the ultimate human experience. To design, in phenomenological terms, is to address the meaning of things or objects have in our own experience, in our own “life-world” and how we "experience" them. Just ask any designers if they see their discipline this way? Mostly not and 90% of designers’ effort are on aesthetics and not phenomenology. Is there a discipline called "design phenomenology"?

Phenomenology is the examination of the structure of various types of experience ranging from a broader and deeper perspectives and including deep diving on perception, thought, memory, imagination, emotion, desire, and volition to bodily awareness, embodied action, and social activities, linguistic activity etc. We need to apply that before we strategize a new business concept, a new service design model or an innovative new product.

It is what we need to understand context of anything. The structure of these forms of experience typically involves what Edmund Albrecht Husserl (German philosopher who established the school of phenomenology) called “intentionality”, that is, the directedness of experience toward things in the world, the property of consciousness that it is a consciousness of or about something and this is what makes the jon fun. It is not for someone without imagination. It is all about seeing “intends” as well as “jobs-to-perform” and “concepts of the world”. The idea is studying the units of consciousness is like “giving voice to” and these units of consciousness are called intentional acts or intentional experiences. It is basically the most human centric approach to understanding human experiences.

When designers try to design experiences, perhaps they should need to first consider phenomenology. It is not really a rocket science, for centuries poets, writers, painters, film producers are born phenomenologists. I think most of us are born phenomenologists particular in the days of Facebook and other social media where we share everything, we understand very well by means of words, videos and images, our insights with our friends — we are all practicing phenomenology without knowing it.

It's a Bird! It's a Drone! It's Amazon's 3-D Smartphone? It Displays 3D Images, 3D Maps And 3D Gaming!

Amazon has been working on a number of cool devices for a while. The temptation of playing the hardware game has always been there beyond just the e-reader. This month they will finally be unveiling a new device and there are plenty of rumors out there on what it actually is.

It is most likely going to be a Smartphone. Mostly made by Foxcom. Most like not producing any profits for Amazon. Most likely supported by a suite of Amazon Cloud based services. Most likely to be below the standard set by Apple, Samsung or HTC. But it will be a Smartphone that has some distinctive features, including 3D capabilities projecting 3D objects as part of its interactions. It will be using gyroscopes, accelerometers and other sensors to power the experience. Most likely mid-range specs such as Qualcomm Snapdragon 801 processor and 4.8 inch display (keeping cost down) and many advanced camera functions; likely using 3-4 cameras and a Sony sensor. It will be a futuristic experience with 3D gestures controls. Gimmicky or not, we will have to see.

Smartphone adoption has reached its maturity but everyone is pushing new ways for consumers to use mobile devices. Average prices will drop a further 15-20% and the top end will come under pressure. Android market share will stabilize around 70%-73%. Amazon certainly thinks it is not too late to play the game. Every player will not give up on it and will try innovative ways to jump-start a new S-curve for the Smartphone. Even Apple is struggling. What new applications and new interaction paradigms can they think of that are considered unthinkable today? We are working hard 24x7 on these ideas.

Back in 2010 there were around 180 Petrabytes a month of data moving through the networks from a single user and it was mostly voice, and today with streaming video, social media use and mobile gaming - now averages 1,900 Petrabytes a month and is expected to grow at least 40%-50% every year thanks to additional wearable devices. It means by 2020, in a week’s time, five Exabytes of information will be sent by the average Smartphone user. Traffic problem ahead.

On June 18th we will find out. And suddenly everything makes sense.

Will 2014 Be A More Exciting Year For Consumer Electronics? Consider 2013 Was A Disappointing One. More Next Week.

2013 was a disappointing year for consumer technologies. The 3D television push was as I've expected a disaster and who on earth would walk around at home with 3D glasses and the lack of 3D programming etc. created all barriers necessariy for mass adoption. And for smartphones as there were lack of any real innovation from the industries.

Perhaps the dominant design pioneered by Apple is really reaching the end of its S-curve, even the iPhone 5S has only incremental changes (ok a better processor) in design and software. I am ready to bet that the fingerprint sensor will be dropped within 3 years. What is so great about a fingerprint sensor? It is so old school whether it is finger print or facial recognition. The iOS still remains the most polished, stable, and well-designed operating system for smartphone. May be people aren’t even expecting more from smartphones at all. The camera needs some improvement for sure. And the screen size is an interesting discussion.

China is watching and Lenovo is gearing up for the next game or the world game. Lenovo, currently the second largest smartphone vendor in China and aspire to become market leader. Apple is at threat and at this point they may not be afraid of any. They are at its peak. And they are busy with the new headquarters, refreshing the retail experience, designing the iWatch and finding the next color for iPhone whether it is blue silver or rose gold.

Android now accounts for more than 80 percent of smartphone sales, while iOS is down in the mid-teens. Apple need to change the game or someone will. Smartwatches is still a toy category. But that could change when Apple fixes many of the challenges. They will and can. And it will cost $300-$350 and people will buy. It is easy one from a strategy perspectives but also a lazy one. Have they run out of industries to reinvent? At the Consumer Electronics Show this week, I think Samsung will have the biggest, most new products and most populated booth. Apple’s main threat is Samsung, Microsoft, Google and Lenovo are all attacking Apple from behind. The whole wearables will be driving the new game and 2014 will be a more excited here. I do believe that we will see wearables showing signs of becoming mainstream this year, and we've been monitoring and prototyping all kind of ideas for 20 months. 2014 I expect te see different dominant designs emerging, there will be no winners anouncement this year, not until 2016 earliest. But I already know who definitely won't work.

What Is Happening To Sony? Can Sony Be Saved?

2013 was a good year and a very busy one for me. Having been on the road for over 120 days; delivered some great projects and worked with some of the smartest and most creative people around the world was all fun and also exhausted. Now is the time to think about what the future holds?

I really don’t know what to write these days, I want to write about a lot of things from economics to politics and from luxury brands to consumer electronics and from rethinking management to education, so much to do and so little time. I hardly find time to write for my own magazine these days.

2014 will be a year of big change or beginning of one for many.. We’re seeing most dominant designs of our everyday technologies reaching the end of the S-curve and it will hard to see any breakthrough unless we change the way to look at the industries. Some big innovation is needed to create demand. Not speakers and headphones and other accessories although it helps retailers a bit.

Innovation is hard to come these days and most innovations today are mostly incremental in nature. In the world of consumer technologies, from smartphones to tablets and PCs or digital cameras to TVs, everyone one of them is facing serious challenges whether you’re the market leaders (defenders) or followers (attackers). It is hard to drive new behavior and predict on their adoption rate and the low end is flooed with commodty players. On the other side of the coins, opportunities are plentiful. Microsoft, Sony, HP are all in the process of rethinking their business strategies.

Sony was once the most loved and most innovative company. The company is both strategically vertically and horizontally integrated; once designed and produced the best TVs, video cameras, music players, home audio systems and game console, today they are struggling on all fronts. Sony was my no. 1 brand for a long time. For many, Sony is already dead or what turned into I call a zombie brand. It might seems like an overly pessimistic view given the size of the company and they still have a lot of good products, strong brand (in some markets) and a lot of technological innovation, but then what went wrong?

Sony used to be the synonymous with Japan and innovative products. They even considered buying Apple at one point and decided it not worth acquiring (Can't imagine if they've done that and there would be no Apple today). In 2012, Sony’s net loss of almost US$6 billion mainly came from heavy losses in its TV business. Of all eight divisions, only music and financial services units managed to boost a little profit from a year ago.

When I visited Sony stores the last time a few weeks ago, they were so 1990s even though some of the products are pretty impressive. In fact, I was very impressed with the latest camera line-up and I use a RX100 along my Leica M. I am not sure if good products are enough these days.

Sony have made a lot of mistake including alienated smaller retailers, limit itself to internal innovation capability insteadn of using outside consultants to come up with new ideas and heavily rely on local markets (30% of their sales) and as a result ignore what’s going on out there. Sony CEO Kaz Hirai has proclamed that Sony must chart a new course, his quote: "I believe Sony can change." So far it is not happening.

This Japan's technological prowess, wowed the world with the Walkman and Trinitron TV and PS2 and PSP is now struggling to stay relevant. Is it just Sony or "Japan Inc." that is in trouble?  They missed the while digital music wave, missed the smarphone wave, missed the tablet wave, missed the social face and now probably will miss the next whatever wave. Even Google missed the social wave and left the door opened for Facebook and Twitter, but they do have a few wins such as Android.

And for Sony, my advise for you is to stop behaving like a Japanese company. Adopt new practices and move fast. Speed kills. The world has changed and you need to wake-up. Play catching up is not enough and you’ve been doing a good job producing a decent tablet, a nice phone and a set-top box, a not so smart smart watch and whatever, does it matter?

You don’t have a strategy. You want to win in every product category and that's impossible. You should get rid of at least 50% of your product lines. And at least make 10% of your product spectacular ones - iconic. Rethink if you want to play in the smartphone game, may be you should exit it for now.  Your strategy of “One Sony,” will not work, it is an ideal strategy only on power point or paper. Apple works with “One Apple,” but if you consider the context of Sony's situation, it may not be the best move for now. Sony needs to think different and should not make the mistake of try to replicate Samsung or Apple, those two companies are unique in their own ways. The two will own the market (already did) and eat you dinner, since they already took your breakfast and lunch. 2014 is a critical year for Sony.

Can't Wait For The Day That We Can Make Calls On A Flight. But Don't Want To See Everyone Doing That. Perhaps A 5-Minute Rule Should Apply.

The job of the air-stewards will be tougher as the Federal Communications Commission considers give a green light for the use of smartphones on airplanes above 10,000 feet. They are now seeking public opinion but will likely to be welcomed by most. The agency has already lifted restrictions for devices, such as e-readers and tablets to be used during take-off and landing. Next you can make calls and check emails as long as the plane is above 10,000 ft. I can’t imagine 50% of people talking and shouting into their phones and suddenly the cabin will be turned into stock market trading floor.

Gogo Text & Talk will launch early next year and Gogo is working hard testing the applications before its first major release next year. This service is not likely to be cheap. For 24 hours of continuous access on the same airline, Gogo charges $14 per passenger. For unlimited monthly use of Gogo Wi-Fi on any Gogo-equipped flight, Gogo charges $50. If initial access costs $14, Gogo will likely to charge those users an extra $10 or more to annoy their fellow passengers by talking and texting. It can make travelling very productive and honestly no one wants to be off the grid especially for long flights. But no one wants to listen to other speaking while you try to get some sleep. It is the traveller's dilemma. We need something like a 5-minute rule for each call. Social etiquette needs to be developed and adopted, otherwise flight experience will be far worse than today's.

In Europe, the European Commission last week adopted new rules to allow people to use devices with 3G and 4G data connections. Previously, the agency only allowed 2G wireless services to be used aboard flights above 3000 meters. They will next decide whether talking on your smartphones will be allowed. It won’t stop here. We will have people walking around with googleglass, go-pro cams and all kind of wearables and suddenly flying is never the same again. I can’t wait to see that.

Here’s an innovation opportunity for this unmet needs, design a head-set with microphone that works like a helmet and once you put it on no one can hears you talk. It is kind of a like wearable personal phone-booth like the one below. We've been working on one for years.