The Seventy Million Dollar Question

Bandwagon

 

Just when I thought I was done posting for the week, they suck me back in.

Juicero started lighting up my Twitter feed a little while ago. For those, like me, who have no earthly idea what Juicero is, it’s a startup that makes an “Internet-connected kitchen appliance”:

Juicero’s flagship product is a $699 countertop device that cold presses juice out of “packs” of already prepped fruit and veggies. The packs — reminiscent of the cups and pouches used in single-cup coffee brewers from Keurig, Flavia or Nespresso — cost $4 to $10 each and are available through a Juicero subscription, but not in groceries.

Juicero just picked up $70 million in Series B funding. ‘Cause digital.

There is just one hitch – you don’t actually need the high-dollar hardware to make the juice:

But after the product hit the market, some investors were surprised to discover a much cheaper alternative: You can squeeze the Juicero bags with your bare hands. Two backers said the final device was bulkier than what was originally pitched and that they were puzzled to find that customers could achieve similar results without it. Bloomberg performed its own press test, pitting a Juicero machine against a reporter’s grip. The experiment found that squeezing the bag yields nearly the same amount of juice just as quickly—and in some cases, faster—than using the device.

Fortunately (ahem), Juicero only sells the bags, at anywhere from $5 to $8 apiece, to owners of the hardware. Performance between the device and non-standard hardware (your bare hands) is mixed:

In Bloomberg’s squeeze tests, hands did the job quicker, but the device was slightly more thorough. Reporters were able to wring 7.5 ounces of juice in a minute and a half. The machine yielded 8 ounces in about two minutes.

Almost 5 years ago, I wrote a post titled “The Most Important Question”. In it I stated the following:

The most important question in architecture is “why”. When questioned about any aspect of the design, if you cannot justify the decision, you should revisit it. Being able to list outcomes, both good and bad, and explain the reasoning behind your choices will garner trust from both customers and colleagues. Most importantly, it should boost your own confidence in the design.

With a little editing:

The most important question in architecture innovation is “why”. When questioned about any aspect of the design product, if you cannot justify the decision, you should revisit it. Being able to list outcomes, both good and bad, and explain the reasoning behind your choices will garner trust from both customers and colleagues. Most importantly, it should boost your own confidence in the design product.

Asking “why” could have probably saved some people a lot of money, just sayin’.

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Disruptive Decency

Well, this turned out to be very much a different post than what I’d first thought.

Last Thursday, CIO published an article titled “Your Pebble smartwatch will live on when Pebble’s servers shut down” that had good news for owners of the Pebble smartwatch:

But now that Pebble has been acquired by Fitbit and is presumably nearing the end of its life, Pebble users fretted that their watches would cease to work once Pebble dies. That’s not the case.

Pebble just rolled out an iOS and Android update that frees its watches from cloud-based online servers. That means when Pebble goes offline, your watch will still work.

Coincidentally, this was one year to the day since I posted “Google’s Parent Company is Stirring Up a Hornet’s Nest”, which talked about Nest’s decision to brick the Revolv home automation hub rather than continue to support them. Fitbit’s decision was a refreshing departure from the attitude demonstrated by Nest (and lampooned by xkcd above). The punchline was going to be: basic human decency seems to be a disruptive tactic these days.

And then I launched Twitter Monday morning:

By this point, I would assume Sunday night’s, incident needs no explanation on my part. Details are still coming out, but regardless of what develops, United Airlines is the loser in this scenario. There’s an old saying is that there’s no such thing as bad publicity.

The old saying is wrong:

The tweet above has plenty of company in the twitterverse, none of it flattering to United or beneficial to its share price. Tweets like this haven’t helped:

The perception that sticks is that an older man, a doctor, was violently removed from a plane in order to allow United to get four of its flight crew to Louisville and United’s CEO is upset about having to “…re-accommodate these customers” (not exactly what’s said, but certainly what will be taken away from that garbled message). Additionally, the poor job done on that earlier message completely undercuts the perceived sincerity of the latter one:

Given United’s past problems with customer service, one might expect more effort would have been spent to prevent incidents like this and they would have been better prepared for dealing with the aftermath of something that did go badly.

Wrong on both counts.

An excerpt from a recent interview of Oscar Munoz (United’s CEO) on Business Insider makes the situation all the more egregious:

Here, in Chicago, it’s miserable because if you don’t leave by a certain time, you are just dead. “I’m going to get there and there are going to be a billion people and the damn TSA line.” By the time you get to sit on one of our seats you are just pissed at the world.

So how do we make all of that a little bit easier? This is the thing. You’ve got that broad issue of anger and anti-industry noise. We’ve lost the trust and respect of the broader public, and so every action we take, they don’t particularly like, they see it negatively. We have to work on that broad communication. I am going to do it at this airline and allow myself to differentiate in the flight-friendly mode so that people don’t immediately have that visceral reaction.

Dragging people off a flight (literally) probably doesn’t fit into the mold of a “flight-friendly mode”.

So I will return to my original punch line: basic human decency seems to be a disruptive tactic these days.

A Tale of Two Tweets

Serendipity is a wonderful (and sometimes entertaining) thing.

Monday afternoon, two tweets wound up one after the other in my timeline, one interesting and one “interesting” (I’ll leave it as an exercise for the reader to determine which is which):

and

My favorite definition for the word “innovation” comes from Scott Berkun:

If you must use the word, here is the best definition: Innovation is significant positive change. It’s a result. It’s an outcome. It’s something you work towards achieving on a project. If you are successful at solving important problems, peers you respect will call your work innovative and you an innovator. Let them choose the word.

If you don’t want to jump to conclusions as to which of the two better fits the definition, you can get more information from the news article linked to in the second tweet, or you could judge by some of the responses to the first tweet:

I’m sure everyone’s just laughing with them.

Defense Against the Dark Art of Disruption

Woman with Crystal Ball

My first post for 2016 was titled “Is 2016 the Year for Customer-Focused IT?”. The closing line was “If 2016 isn’t the year for customer-focused IT, I wonder just what kind of year it will be for IT?”.

I am so sorry for jinxing so many things for so many people. 🙂

So far, the year has brought us great moments in customer experience like:

  • Google Mic Drop – an automated kiss-off for email (“you meant to hit that button, right?”)
  • Google/Nest and the Resolv home automation hub – retiring a product by bricking it (“it’s just not working; it’s not you, it’s us”)
  • Apple Music – cloud access to your music and freed-up disk space (“nice little music collection you have here, it’d be a shame if you quit paying for access to it”)
  • Evernote’s downsizing – because when the free plan is good enough for too many people, taking away features is the way to get them to pay, right?

Apple, of course, probably won the prize with their “courageous” iPhone 7 rollout:

Using “courage” in such a way was basically a lethal combination of a giant middle finger mixed with a swift kick in the nuts, all wrapped in a seemingly tone-deaf soundbite. This is the kind of stuff critics dream about.

Because Schiller said exactly what he said, he left the company open to not only mockery, but also bolstered a common line of criticism that often gets leveled upon Apple: that they think they know best, and everyone else can hit the road. You can argue that this is a good mentality to have in some cases — the whole “faster horse” thing — but it’s not a savvy move for a company to say this so directly in such a manner.

Apple then continued it’s tradition of “courage” with the new MacBook Pro models.

So, is there a point to all this?

Beyond the obvious, “it’s my site and I’ll snark if I want to”, there’s a very important point. Matt Ballantine captured it perfectly in his post, “Ripe for Disruption”: “You’re less likely to be disrupted if you are in sync with your customers’ view of your value proposition.” His definitive example:

I think that most of the classic cases of organisational extinction through disruption can be framed in this way: Kodak thought their value was in film and cameras. Their customers wanted to capture memories. Kodak missed digital (even though they kind of invented it).

The quote bears repeating with emphasis: “You’re less likely to be disrupted if you are in sync with your customers’ view of your value proposition.” What you think your value proposition is means a whole lot less than your customer’s perception of the value of what you’re delivering. This is a really good way to poison that perception:

Disappointment, betrayal (perception is reality here) are not conducive to a positive customer experience. Customer acquisition is important, but retention is far more important to gaining market share (h/t to Matt Collins). The key to retention is to relate to your customers; understand what they need, then provide that. Having them pay for what’s in your best interest, rather than theirs (hello Kodak), is a much harder sell.

All Aboard the Innovation Band Wagon?

Bandwagon

 

It seems like everyone wants to be an innovator nowadays. Being “digital” is in – never mind what it means, you’ve just got to be “digital”. Being innovative, however, is more than being buzzword-compliant. Being innovative, particularly in a digital sense, means solving problems (for customers, not yourself) in a new way with technology. Being innovative means meeting a need in a sustainable way (eventually you have to make money). Being innovative means understanding your strategy, not just following the latest thing.

Casimir Artmann published a post this week, “Digital is not enough”, outlining Kodak’s failures in the digital photography space. As digital cameras entered the market, Kodak introduced ways to turn film into digital images. Kodak’s move into digital photography (which, ironically, they invented in 1975), coincided with the rise of camera phones. By concentrating more on perpetuating their film product line than their customers’ needs, Kodak wound up chasing the trend and losing out.

Customers’ cash follow products that meet customer needs (even needs that they didn’t know they had).

Sometimes a product or service can meet a need and still fail. A Business Insider article yesterday morning discussed the weakness of the peer-to-peer foreign exchange business model, saying it only works in “fair weather”. In the article, Richard Kimber, CEO of the foreign exchange company OFX Group, observes:

When you’ve got currency moving dramatically one way or the other, what you can have happen is it encourages asymmetric activity. As we saw in Brexit, you had lots and lots of sellers and very few buyers. That can lead to an inability to transact because you simply have all these sellers lined up and no buyers. That’s one of the reasons why the peer-to-peer players opted out of their model during this period of volatility because it wouldn’t have been sustainable.

While Brexit might be the latest event to expose the weakness of the peer-to-peer model, it’s not the first. The Business Insider article referenced another article from January on The Memo that made the same point. Small wonder, the concept of a market maker is a well established component of financial markets.

Disintermediation, cutting out the “middleman”, is only innovative when the “middleman” is, or can be made, superfluous.

Blindly following a trend can be another innovation anti-pattern. In an article for the Wharton Business School, “Rethinking Retail: When Location Is a Liability”, the authors discussed the pressures on brick and mortar retailers and the need to be “Digital-first”. The following was recommended:

  1. Identify some of your common habits and perspectives about how the retail sector should function, including guiding principles, time and capital allocation patterns, primary skills and capabilities, and the key metrics and outcomes that you track.
  2. Uncover the core beliefs about retailing that motivate your behaviors, and are the priorities of your firm and board. This step usually takes some ongoing reflection and added perspective from your peers. Industry best practices likely influence your thinking greatly.
  3. Invert your core beliefs about retailing and consider the implications for your firm and board. There are many possible inversions in each instance. For example, all retailers should ask themselves, ‘Is digital our first priority? How about our customer network — do we put them in front of merchandise and do we have an entire department dedicated to mobilizing them?’
  4. Extrapolate what implications these new core beliefs, and the various ripple effects, would have for your organization and board. Observe what is happening in your industry and, more broadly, how different core beliefs might help you get ahead of digital disruption by companies like Amazon.
  5. Act on your new retail core beliefs (preferably with digital as the center) by sharing them broadly with your customers, employees, suppliers and investors. Purposely changing your business actions, particularly when it comes to time and capital allocation, is an important part of the process and helps reinforce the changes in mental models you are trying to achieve.

Note the generous usage of “your” (retailer) instead of “their” (customer). Sharing “…your new retail core beliefs (preferably with digital as the center)…” with your customers will only be fruitful if those new beliefs align with those the customer has or can be convinced to adopt. Retail is a very broad segment and a very large part of it needs to be digital. That being said, over-focusing on it carries risk as well. Convenience stores, for example, catering to a “we’re out and need it now” market, is unlikely to benefit from a digital-first strategy in the same way big-box retailers might. Not having a one-size-fits-all strategy is why Amazon is opening physical stores.

We don’t drive customer behavior. We provide opportunities that hopefully makes it more like for them to choose us.

Innovation doesn’t come from a recipe. Digital isn’t the magic secret sauce for everything. Change occurs, but at different speeds in different areas. The future is not evenly distributed. As Joanna Young observed in “Obsolescence: Take With Grain Of Salt”:

I recall clearly in the mid-1990s hearing an executive say “by the year 2000, we will be paperless.” I signed, with a pen, four approval forms just today. Has technology failed us? No. The technology exists to make mailboxes obsolete and signatures purely ceremonial. However the willingness to change behavior and ergo retire old methods is up to humans, not technology.

Innovation is significant positive change, an improvement in our customers’ lives, not a recipe.

Nest and Revolv – Smart Devices, Not so Smart Moves

I’ve made another guest appearance on Architecture Corner. In episode 39, “New and Obsolete”, Greger Wikstrand, Casimir Artmann and I discuss product lifetimes and the Internet of Things.

How could Nest have better handled the end of life of the Revolv device?

Google’s Parent Company is Stirring Up a Hornet’s Nest

On May 15th, my house will stop working. My landscape lighting will stop turning on and off, my security lights will stop reacting to motion, and my home made vacation burglar deterrent will stop working. This is a conscious intentional decision by Google/Nest.

To be clear, they are not simply ceasing to support the product, rather they are advising customers that on May 15th a container of hummus will actually be infinitely more useful than the Revolv hub.

Google is intentionally bricking hardware that I own.

Google, even before it morphed into Alphabet, has a long history of killing of products. While this is annoying when the product is a free online service (yes, I still miss Reader), the impending demise of the Revolv home automation hub raises some interesting questions. Arlo Gilbert, CEO of Televera (which produces medical monitoring software), asked in the Medium article referenced above:

Which hardware will Google choose to intentionally brick next? If they stop supporting Android will they decide that the day after the last warranty expires that your phone will go dark? Is your Nexus device safe? What about your Nest fire/smoke alarm? What about your Dropcam? What about your Chromecast device? Will Google/Nest endanger your family at some point?
All of those devices have software and hardware that are inextricably linked. When does an expired warranty become a right to disable core device functionality?

According to an article on Business Insider, Nest bought Revolv a few months after being purchased by Google. Since the purchase was aimed at acquiring Revolv’s talent, Nest quit selling the $300 Revolv devices, but they did continue to support them. That, however, will end on May 15th according to a recent announcement.

Google’s choice “…to intentionally brick…” this product is important for several reasons. There may be some legal ramifications (as reported in Business Insider, the devices were advertised with a “lifetime subscription”). Gilbert’s question about what happens to the devices he listed should make people (consumers and producers) think.

I agree with Christina Warren’s assertion in her post on Mashable that it’s unrealistic to expect companies to support products forever, particularly where the hardware and its supporting software services have become very tightly coupled. However, producers need to consider the cost to their reputation/good will when they take actions like this. One option floated on Vox:

Of course, it might be a waste of resources for Nest to support a product that only a small number of people are using. But if there aren’t many users left, that means it wouldn’t cost Nest very much to compensate the few remaining users — either by refunding the purchase price or offering to send users a similar product. Instead, Nest appears to be simply leaving them out of luck.

Generating fear, uncertainty, and doubt (FUD) is an ethically questionable tactic when applied to your competitors’ products. When you generate FUD about your own products, then it’s your judgement that comes into question. One way to throw cold water on the excitement around the Internet of Things (IOT) is to unintentionally or cavalierly create that doubt in the minds of consumers. When you’re working on a really big IOT product, something like an autonomous car, do you really want people questioning your commitment to standing behind your products?