I was recently invited to attend an Executive Education Series for a Global Leadership Community of Chief Executives with approximately 29,000 members in more than 130 countries.
The sessions are conducted in partnership with a leading private technological university and place a heavy emphasis on Digital Transformation.
This event was kicked-off by an alumnus of the university who introduced the Dean of the university’s Office of Digital Learning. This professor is an icon in his field, a renowned IoT expert and a distinguished professor of Mechanical Engineering at the university’s Department of Mechanical Engineering.
He was invited to talk about Innovation and IoT in the context of Digital Transformation and he was joined by three panelists who were members of the Leadership Community.
To launch his presentation he asked the panel, if IoT was a technology, a platform or a solution and then introduced the concept of IoT as a design language.
To illustrate his point, he offered an analogy that compared the impact of the internet on business with the impact that electricity had on architects:
Without electricity, architects could use only windows as a source of light, instead of light bulbs, and steps instead of elevators. The invention of artificial light changed the language of the architect. Through this simple analogy the professor illustrated the need for business leaders to focus on “a rethinking of their business narrative.”
That rethinking is centered around an obsession with understanding what consumers really want. It also involves understanding how new technology can change the delivery of a product or service offering in this era of the experience economy. Again, he illustrated his point with a simple question:
“When people buy a drill, do they want a drill?” No, they want a hole!
Coming back to the world of IoT, he declared Uber as the ultimate IoT company with GPS sensors connected to the internet, your smartphone and the car. Other car companies thought consumers wanted a car and hadn’t obsessed enough with the question of what consumers really wanted. Unless you’re driving a Ferrari, which is obviously all about the driving experience, you are likely interested primarily in transportation. People are getting frustrated with parking, speeding tickets, insurance premiums, running out of petrol, skidding on ice, etc. and Uber exploited that insight.
Amazon rethought their business narrative numerous times. When they sold books, they knew it wasn’t about books, it was about access to content and information so they developed the Kindle. Then it wasn’t about the Kindle, it was about the e-reading technology service that they took to Apple, and the Kindle app transformed the business with the launch of the iPhone. Amazon didn’t stop there. They discovered that consumers’ need for reading may be a need for having a narrative in their ear and that insight created Audible and then Alexa.
The professor mentioned that Jeff Bezos (whom he knows personally) wanted to own the experience. Owning the experience requires “the peeling of the onion”, another analogy that refers to discovering the core, the consumer’s need, the stuff that people really want. The outer portion of the onion is the product not the experience.
“Did you really buy a CD because you wanted a CD or because you wanted to have the music on the CD play in your ear?”
Apple is successful because they have always changed their business narrative. From the iPod, to iTunes to the iPhone and the Apple watch – and they will change that narrative again when they launch Apple Glasses.
However, you don’t have to be Apple to change the narrative. Now is the time to really think about your ideas and consider them as being valid. Talk to a friend, get advice, consider it deeply. We’re in a time where things are changing massively and your idea might be totally relevant.
He continued his talk with more examples: “What does a door do?”
It keeps people out from getting inside and let’s you go outside from inside. But if you rethink the narrative of the business of a door, it also lets shipments come in, it lets your nanny or your dog walker come in and that insight created the smart door with a smart lock and a smart doorbell that allows you to do more with your standard door.
“What does a mattress do?”
It provides better sleep, more comfort, better refreshment the next day, etc.
EightSleep exploited that and leaned on neuroscience research that indicated sleep was important to achieve those objectives. The fearless and creative mind of the inventor of the product was key to this.
Most people are unaware that Rolls Royce pioneered the concept of moving towards an experience economy where the needs of the customer is central, instead of the product. When they sold aircraft engines, their true interest was in a service economy where planes anywhere in the world could be serviced by dedicated Rolls Royce partners. They use a satellite system that recognizes when a plane lands in Boston, for example, and then connect the airplane for relevant service or maintenance with a service partner in the Boston area.
The professor provided more examples of service economy players such as Solar City (a service beyond solar panels) and then describes how a turnkey solution/offer creates high margins but also requires high investment. Exceptions are companies like Uber and Airbnb that have managed to offer turnkey solutions without the investment into tangible assets and people, which makes them particularly successful.
Amazon invested in the cloud as they recognized businesses’ need for computing, not computers.
Netflix produces great content because they constantly analyze viewer data and insights. Big data is becoming more important and with that privacy concerns rise. One way of addressing this is to create synthetic data whereby banks, for example, can create data sets from real transactions with all records being anonymous.
The power of the idea is the most important aspect and is the key to technological advancement. While new technologies used to land in sequence with one major ripple coming out of an invention, these days technological impact is exponential. It’s like a storm with rain drops falling on a still pond creating multiple and overlapping ripple effects. It’s the intersection of ripples where the exponentiation of technology takes place.
For example, the AI revolution comes from the technology overlap of neural networks that have existed since the 80s, and GPUs in gaming and the internet. Cell biology, genetics and chemistry has led to Crispr. Quantum computing is the combination of quantum mechanics and computing. Cryptography and distributed ledgers came together and created blockchain.
Electricity and motors existed for a long time but lithium batteries and railroad magnetic motors enabled the electric car revolution. Radar existed for a long time. As vision and computing took off, the three technologies overlapped to enable self driving cars.
These are all examples of intersecting circles. We’re in an era where the magic of technology is changing many things. This should encourage us to consider our ideas deeply. The professor recommends giving them a thought and discussing them with people.
The third aspect of today’s technological landscape is the growth of Jedis. These are founders of companies who have pioneered change. The so-called PayPal mafia who were people that initially worked and later left Paypal to create major innovation are an example of this. It shows that you can learn from one other and become a Jedi. Ideas and leadership are the difficult part, not the technology.
For example, Kiva Systems was invented by an inventor who had the vision that the product in the warehouse should come to the picker not the other way round. It was this idea of a different workflow that changed the game. The inventor sold the company to Amazon which is now rolling out the system across their warehouses nationwide under the name Amazon Robotics.
The fourth aspect is the great Covid acceleration that will likely create a “new abnormal” with Zoom Inc now worth more than all leading airlines combined.
Even without Covid, there would have been a new way of working that would have seen greater virtual activity.
The professor concluded his talk with five key takeaways:
- Understand the need you are serving. What does your consumer really want? “The peeling of the onion.”
- Constantly scan for other ways of serving that need. “A door is not just a door.”
- Find a client that champions your new offering.
- Prototype to quickly get to market. When Amazon launched the Kindle, Barnes and Noble responded quickly with the Nook but Borders didn’t and went out of business.
- Be a Jedi!