Paul Wallbank – Brilliant Communications

Category: Innovation

  • Breaking the break-fix business model

    Breaking the break-fix business model

    One of the most profitable areas for many companies has been in fixing broken products, now the internet of everything promises to put an end to that business model.

    ‘Break-fix’ has always been a good profit earner with business ranging from construction companies to washing machine manufacturers making good money from fixing failed products.

    Speaking at a lunch in Sydney earlier today GE’s CEO of Global Growth and Operations, John Rice, described how the Internet of Everything is changing in the industrial landscape.

    One of the big business changes Rice sees is in the ‘break-fix’ model of many industrial suppliers.

    “We grew up in companies with a break fix mentality,” Rice says. “We sold you equipment and if it broke, you paid us more money to come and fix it.”

    “Your dilemma was our profit opportunity,” Rice pointed out. Now, he says engineering industry shares risks with their customers and the break-fix business is no longer the profit centre it was.

    Goodbye to the TV mechanic

    This is true in many other industries as products become both more reliable and less economical to repair – the local TV repairman has largely vanished and the backyard computer support businesses are going the same way.

    For many businesses, this means a change to how they service their customers and the nature of their operations. For many, it means close monitoring of their products will be essential to manage risk.

    Rice also flagged how grid computing will improve the reliability of equipment and networks citing how giant wind turbine talk to each other.

    “Every wind turbine has an anemometer on top that’s used to judge wind speed and direction,” says Rice. “If you had a problem with the anemometer the wind turbine shut down until someone could come out – maybe a week later – to climb to the top of the turbine, diagnose the problem and start the thing back up.”

    “Today the technology is such that the wind turbines talk to each other so if you’re in a wind field of thirty turbines you don’t rely on one anemometer,” points out Rice. “This is a very simple example of machine to machine interface.”

    Wind turbines and the road toll

    Rice’s example of wind turbines talking to each other is similar to Cisco’s scenario of using the internet of everything to reduce the road toll where cars communicate with road signs, traffic lights and each other to monitor conditions on the highway ahead.

    Those machines talking together also give early warnings of problems which reduces downtime and risk for industrial users, it also means less money for businesses who’ve made money from those problems.

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  • Steve Jobs’ golden path

    Steve Jobs’ golden path

    “Today Apple reinvents the smartphone.” Steve Jobs announced at the 2007 Macworld Conference when he showed off the new Apple iPhone.

    As with most of Jobs’ speeches, the iPhone launch was an impressive display combining the man’s talents, vision and technology to rally Apple’s adoring masses.

    Last week the New York Times magazine had an excellent feature on the story behind the landmark launch of the iPhone. It’s worthwhile reading to understand the theatre that goes behind a major tech company’s launch event.

    In the case of the iPhone, a myriad of tricks had to be performed to make sure the still being developed device didn’t fail in Steve Jobs’ hands during the launch – one can be sure the Apple founder wouldn’t have been as relaxed as Bill Gates when a Windows 98 system crashed onstage a decade earlier.

    A key part of Jobs’ presentation was the ‘Golden Path’, a script that would showcase the iPhone’s features while avoiding known problems.

    Hours of trial and error had helped the iPhone team develop what engineers called “the golden path,” a specific set of tasks, performed in a specific way and order, that made the phone look as if it worked.

    Much to the relief of Jobs’ staff, the demonstration worked flawlessly and Jobs’ polished presentation showed why he was one of the most admired, if flawed, business leaders of his generation.

    While most tech CEOs could never dream of emulating Steve Jobs, almost every one has a ‘golden path’ to show off their product in a new light.

    Something we should remember when watching these demonstrations and the press coverage that follows is that most of them are carefully staged theatre and we should hang onto our wallets until well after these devices are on the shop shelves.

    As it turned out, the iPhone was a spectacular success and did re-invent the smartphone industry. Along with being able to deliver a killer presentation, Steve Jobs was also good at driving teams to deliver his vision.

    Steve Jobs image courtesy of Wikimedia.

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  • Building tomorrow’s markets

    Building tomorrow’s markets

    “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.

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  • Who will win the race for wearable computers?

    Who will win the race for wearable computers?

    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.

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  • Offshoring, the internet and the future of business

    Offshoring, the internet and the future of business

    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.

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