Category: Innovation

Building tomorrow’s markets

As technology evolves, it gets harder to predict what customers will want in the future.

“If I’d asked my customers we’d have built a faster horse,” is a quotation often attributed, probably incorrectly, to Henry Ford.

The point of the quote is that asking today’s customers about tomorrow’s market is pretty pointless when new products change consumer behaviour.

Just as the farmer of 1906 had no inkling of how the motor car, truck and tractor would change their business, the cellphone user of 2006 had no idea of how the iPhone would change the way they used a phone and communicated with the world.

Which brings us to Nokia.

The Sami Consulting blog discusses how Nokia lost their lead in the cellphone business as the market migrated the Apple and later Android smartphones.

Nokia’s problem was they spoke to their customers about their existing mobile phone use rather than considered how the technology might evolve.

When the inventors of the touchscreen approached Nokia, the company carefully evaluated the technology, consulted their customers and decided it wouldn’t work for their products.

What does this story tell about foresight?  First, it shows that innovation creates futures that are fundamentally unpredictable. We do not have facts or data about things that do not exist yet.  When a mobile phone becomes an internet device with sensors, touch screens, and broadband access, it becomes a new thing.  If you ask your existing customers what they like, the answer will always be about incremental improvements.  When you ask about the future, the answer will always be about history.

In many ways Nokia were the beneficiaries of a transition effect, they took advantage of a brief period of technological change  and were caught flat footed when the technologies evolved further.

To be fair, it’s hard to see that change when you’re focused on incremental improvements.

The motor car turned out to define the Twentieth Century – even Henry Ford couldn’t have foreseen how the automobile would change society and the design of our communities.

Both the motor industry and smartphone industries are going through major change, particularly as the internet of everything sees the two technologies coming together.

One thing is for sure, how we use our phones and cars over the next fifty years will be very different to how we use them today.

Similar posts:

  • No Related Posts

Who will win the race for wearable computers?

The race for computers that work in glasses is hotting up and there’s no guarantee Google will be the winner.

The news that wearable technology company Recon has secured funding from Intel and shipped fifty thousand devices reminds us that it’s not just Google who are in the market developing glasses that work as computers.

Other companies competing with Google include Glass Up, an Italian startup that’s teamed with Australian company Nubis to provide a wearable device that’s controlled by a smart phone app.

It’s tempting to think that the battle for wearable technology will be won by Google as they are biggest and best funded company, but history shows us size and incumbency don’t always guarantee success.

Google themselves have failed many times when they’ve tried to enter new markets, regardless of the money and resources they’ve thrown at the market.

The best recent example of this is Microsoft’s forays into smartphones and tablet computers during the Windows XP period – A decade ago it was obvious to everyone that Windows based phones and tablets would dominate those markets.

As it turned out the clunky and awkward to use devices scared customers away and it was Apple and Steve Jobs who ended up being the dominant players.

So it may well be that a company we’ve written off – maybe Microsoft – who might end up being the leader in wearable computers, although it’s more likely an upstart like Recon or Glass Up will eventually be the leader.

It may even be that glasses don’t work out as wearable computers at all.

Similar posts:

  • No Related Posts

Offshoring, the internet and the future of business

Outsourcing sites like oDesk, elance and Freelancer are changing recruitment and labour markets in ways that big and small businesses need to understand.

One of the big changes in business over the past thirty years has been outsourcing offshore – offshoring – as labour markets around the world have opened, communications have become cheaper and trade barriers fallen.

As the global war for talent accelerates, offshoring may be one of the ways many businesses deal with labour shortages in their home markets.

For most of the last thirty years, offshoring was only really available to larger businesses who had the resources to manage overseas suppliers and service providers.

With the internet becoming accessible services like eLance, Freelancer.com and oDesk started appearing that established virtual labour exchanges where smaller businesses could connect with individual contractors.

As part of the Decoding The New Economy video series, I had the opportunity to speak to Matt Cooper, Vice President of Business Development & International at oDesk about how the global workforce is evolving.

oDesk itself came about in 2005 when its founders Stratis Karamanlakis and Odysseas Tsatalos wanted to engage developers in their native Greece while working in North America.

That project turned out to be a business in itself and now the company now has over three million freelancers registered with the service.

Addressing the global skills shortage

Cooper sees oDesk’s big opportunities in areas such as developers, e-commerce and customer service.

“If you look globally there are very acute shortages in certain geographic areas and certain skills,” says Cooper.

Looking ahead, the company sees new skills coming onto the market with larger companies adopting oDesk and similar services.

“We’ll see new skills come onto the marketplace with increasing liquidity and depth with this longer scale of skills,” says Cooper. “We’re also seeing increased demand from enterprise companies. Of the 600,000 clients using oDesk have been traditionally small companies, entrepreneurs and startups. Now we’re seeing increasing demand from the enterprise companies.”

Managing remote workers

Regardless of the size of the company, managing a global workforce of freelancers presents challenges for management and Cooper has some advice for those businesses looking at engaging workers through his service.

“Managing an online, distributed workforce is different to managing locally,” says Cooper. “You have to be much more specific, you have to document your expectation and you have to make the investment in getting your team up to speed.”

One common problem Cooper sees with engaging workers through services is like oDesk is employers thinking they can throw their problems over the fence, “you can’t just throw your project over the wall and hope it comes back.”

Cooper also suggests businesses “try before they buy” with engaging potential freelancers to do smaller trial tasks to see if they do have the skills needed.

“If you need one person, hire three and keep one.” Cooper says, “create a very small and very discrete project that closely replicates the long term role that you want and see how they perform.”

The threat to existing businesses

Services like oDesk present a number of opportunities and challenges to industry, in some ways they threaten existing service businesses which have relied on providing skilled knowledge work to local markets.

Now cheaper workers are to anyone with a computer and a credit card, there’s a fundamental shift happening in the small business sector.

How the small business sector, and larger corporations, use services like oDesk and Freelancer.com while reacting to the threats these sites present to their businesses will determine how many of them will survive over the rest of this decade.

Similar posts:

Rebuilding American Manufacturing

The US textile industry’s recovery is an economic story of our times, it’s also one of our future.

US manufacturing is undergoing a resurgence, just without the jobs reports the New York Times in its story on the textile mills of South Carolina.

The decline and recovery of US manufacturing is a story of our times – the industrialisation of Asia, trade treaties such as NAFTA and China’s joining the World Trade Organisation all saw Western producers move their operations overseas.

A weakness with that business model are the extended global supply chains as goods spend months on ships following long manufacturing and design lead times, the exact opposite of what modern consumers are looking for.

Coupled with domestic manufacturers’ increased investment in automated systems which makes labour costs a smaller factor and the sums start adding up for making things in the United States.

Unfortunately for the workforce, those automated plants don’t require anywhere near the staff older factories employed and the skills required in today’s mills are substantially different from those needed in those of earlier times.

Most industries are encountering the same change and new technologies make the modern factory very different to that of a few decades ago.

The jobs aren’t going to come back in the numbers that were once employed, as the New York Times story illustrates with the decline in the working population.

US-employment-changes-by-industry

Despite the recovery in US manufacturing, today’s industry is very different to what it was last century, something that’s missed by those advocating a return 1950s style government policies to protect jobs in sectors like car manufacturing.

Even if they are successful in rejuvenating local car factories, cotton mills or coal mines, the days of these plants employing tens of thousands of grateful cloth capped workers are over.

Those politicians whose ideology is based on the old model, or businesspeople who want to work in the old ways, are going to find the modern economy very difficult and challenging.

Image of cotton threads on a weaving machine through jbeeby on sxc.hu

Similar posts:

Microsoft’s continued evolution

Microsoft are evolving to a changed market, but can they evolve quickly enough to beat their competitors?

Today’s investor briefing by software giant Microsoft shows the company’s evolution as their markets shift.

Microsoft Chief Operating Officer Kevin Turner broke out the key numbers for the company’s revenues which illustrate just how the company’s business model is changing.

Over half of Microsoft’s revenues are coming  from enterprise customers and of the product lines, Office unit makes up just under a third, Server and Tools slightly more than a quarter while Windows has fallen to 25 percent.

Despite the decline in Widows’ revenues, there’s no doubt about Microsoft’s determination to drive the PC upgrade cycle through the retirement of Windows XP as Turner explained.

We have a giant XP install base. But guess what? We’ve made so much progress on that XP install base. It’s down to 21 percent worldwide, and we have plans to get that number to 13 percent by April when the end-of-life of XP happens.

A big part of the change is the shift to the cloud with Turner claiming two hundred percent growth in Microsoft’s Azure services.

Despite the change in Microsoft’s focus, the threats remain with Apple releasing both iOS7 and their new range of iPhones along with Google making their QuickOffice mobile app free to iOS and Android users.

While Microsoft are steering their ship around, the incumbents in other sectors are protecting their positions. In an evolving world, survival is not guaranteed.

Similar posts:

Fashion’s move to digital commerce

The fashion and retail industries are undergoing radical change as ‘digital commerce’ takes hold according to Dasault Systemes’ Susan Olivier.

How does 3D design change the fashion industry? Susan Olivier of Dassault Systemes sees ‘digital commerce’ driving fundamental changes to fashion and retail businesses.

For slower retailers and fashion houses, this move to digital commerce threatens their very existence.

‘Digital commerce’ is more than just e-commerce in the view of Olivier, Vice President of Consumer Goods and Retail of the French 3D design software house, it’s a bringing together of technologies that alter the relationship between customers, retailers and designers along with the manufacturing and logistics companies that bring the products to market.

Retail’s two big challenges

Olivier sees the two biggest challenges to the retail industry as being the 2009 downturn of the global economy and the rise of the connected consumer.

The downturn forced manufacturers and retailers to examine their supply chains, product design and manufacturing to squeeze out inefficiencies along with understanding consumer sentiment better.

Designing for inner beauty

“They found they could work differently with suppliers, how do I design for cost?” Asks Olivier, “how do I work on designing for what we call for ‘inner beauty’ and maybe change the inner design to take out costs without hurting performance or visual performance?” Olivier asked.

“Those brands who survived are those who learned to do both things very well – work better with consumers and work better with their supplier base.”

Who has the power?

“Consumers on the other hand found ‘we have the power’ coming out of the down global economy,” says Olivier. “When consumers buy on price then brand loyalty gets strained.”

The connected consumer also adds further risks for retailers as customers are now better informed than ever before.

“If retailers aren’t careful, she knows more about the product than the poor staff on the floor does and she knows which stores have it in inventory than the poor staff on the floor does.”

Bringing together the digital continuum

One of Olivier’s areas of expertise is in Product Lifecycle Management (PLM) – planning the design, manufacturing, marketing and retirement of various products.

A notable feature of modern the modern consumer goods industry is the compressed life cycle of products, “it used to be a life cycle was 18 months,” says Olivier. “The goal was to get it below 12 months, for many brands it’s now 12 weeks.”

A scenario Olivier gives is the design process where a rapid virtual prototype can be shared across manufacturers, store managers and focus group.

“I can create models in 3D and look at different options,” says Olivier. “How’s the outsoul of this shoe going to perform with this upper? Is it comfortable if I make changes? I might send a sample to a 3D printer before I make the mould.”

“I can share it with my visual display teams and my store managers and I can share it before I commit to production and get feedback from my stores and I can share it with my consumer focus groups. ”

“Now I have the power to do that weeks or months in advance before having to put the knife to the goods.” States Olivier, “that’s a completely different way of connecting the way companies think about product, bring it to life and bring it to market.”

“Those are the kinds of things we’re enabling when I talk about bringing together the different points of the digital continuum.”

“Now I’m in store I want to take the same images to educate my sales staff. I want them to take a tablet device and show the consumer what is in inventory, not just in this store, and I can have it shipped to their home within 24 hours.”

“So that’s why I’m saying ‘digital commerce’,” says Olivier. “It could be online, it could be a kiosk in the store, it could be an iPad the sales assistant has in front of them.”

Susan Olivier’s digital commerce model is the present day reality of retail – today’s merchant has to be across consumers’ sentiment along with working closely with suppliers to get products to get products to the customer quickly. The old ways of selling goods, particularly fashion, are over.

Similar posts:

  • No Related Posts

Farewell to the knowledge economy

The promise of the knowledge economy isn’t being delivered as knowledge becomes a commodity worth less than data.

One of the mantras of the 1980s was the future of western nations lay in becoming ‘knowledge economies’, unfortunately things don’t look like they are turning out that way.

As the developed economies moved their manufacturing offshore – first to Japan and Korea, then Mexico and finally China – the promise to displaced Western factory workers was the replacement jobs would be in vaguely knowledge based industries like call centres and backoffice computer work.

From the 1990s on, those jobs also started to go overseas  to lower cost centres in India, the Phillipines and other countries.

When the internet became ubiquitous in the developed world in the late 1990s, the creative industries – musicians, artists and writers – found income dried up as their work became commoditised by digital distribution channels.

Now the professions are being affected by combination of offshoring, artificial intelligence and automated processes. Many of the jobs that were done by highly paid accountants and lawyers can now be done by computers or in places not dissimilar to those that took away the call centre jobs twenty years ago.

So it turns out the knowledge economy isn’t the key to riches after all and the future turns out to be more complex than what we thought in the 1990s.

Similar posts: