Retailer Innovator 2014 Awards: Gary Schwartz on innovation 2:30 min interview.
Retail Innovator 2014: Gary Schwartz on “Who drives innovation?” If you focus on technology you lose the retail mission of connecting to your customer. One minute interview at the Retail Touchpoints’ Retail Innovator Award. June 18th 2014
HEDNA.org Brussels Conference, June 2014 Keynote by Gary Schwartz on the Internet of Things and how it impacts your hotels and the relationship you have with your guests.
While the phone will continue to connect people to people, it will increasingly connect machine to machine. The new phone will amplify, control and navigate the world around us. Many call this the Internet of Things (IOT).
The IOT is about how to talk to your washing machine as your friend. Maintain a relationship with your baby as if you were beside them in the crib. It is about finally having the basketball tell you how it thinks you have played and could improve your game. It is about having plants talk to you and shoes become your eyes. It is about clicking, signalling calling, texting, waving, approaching inanimate things and making them into digital, active, responsive stuff.
The digital app store is expanding to a new app store of objects for our home, work, and travel.
New York City 2014: The Science House (45 minute keynote)
When Cisco’s CEO, John Chambers, took the stage at CES in Vegas this year and announced that there was a difference between The Internet of Things (IOT) and the Internet of Everything (IOE), many cried “semantics”. But there is a difference and one that ripped across the US to the National Retailer Federation (NRF) Big Show at the Javits Centre in New York.
IOT, according to Chambers, is made up of billions of connected objects; however, IOE are the smart networks that are required to support all the data these objects generate and transmit. What will help move the IOT into the IOE and drive what Chambers predicts to be a $19 trillion in new revenue by 2020?
IOE requires a universal solution to tie the billions of sensor data into an intelligent device and system agnostic solution.
To our detriment, we are so focused on the idea of a hardware (IOT) solving all our problems that we neglected that simple insight that all these hardware solutions require a method of managing the people and service behind them.
The industry needs a wireless domain (DNS) naming solution that can provide profile, tools and privacy controls to enterprise and the consumer.
When I was invited to sit on a panel at the launch of the new wireless registry (www.wirelessregistry.com) at the NRF show and I realized that this registry could be the silver-bullet platform.
50 Billion Things
When Cisco, Qualcomm, IBM and other set up shop at NRF to talk retail, the IOT verse IOE discussion continued. Brand agencies such as Ogilvy were pitching a solution using Qualcomm’s wireless Gimbel platform to solve retail engagement in the store. Qualcomm’s Gimbel platform is essentially an IOE riding on Apple’s IOT’s iBeacons? Mobile Location Analytics (MLAs) companies that collect consumer behavioural analytics, are a big data IOE play riding on the IOT emitting from the phone and anchored to its MAC address
There are a proliferation of IOE solutions using different technology that require different CAPEX and resources.
Presently there are an estimated 10 billion sensors globally. This is predicted to grow to 50 billion sensors by 2020. Imagine the wireless noise we can anticipate as we move from city to city, street to street, aisle to aisle.
There are barriers everywhere:
- On the consumer side we have option paralysis but more importantly simple human inertia.
- On the retailer and brand side we have incumbent investments and IT budgets to navigate.
- On top of all this stasis we have the DC beltway privacy folk crying “do-not-track”.
How will the consumer navigate this noise? How will the retailer, brand, entertainment provider select from the exploding list of vendors selling various solutions using LTE identification, WiFi MAC identification, Bluetooth MAC, IMEI, etc.
My Wireless Name
The phone in 2014 is becoming less of a Cracker Jack container that acts as a repository of millions of sundry apps, and more of an intelligent device that performs as a server that can manage our world through smart profiling and APIs.
Think about it. We have been hoodwinked by the OEMs to believe that an application store tethered to a phone can deliver any service, entertainment, widget. The app store was a marketplace to the world: clocks, measuring tapes, cash registers, coupon dispensers, shopping lists, ad infinitum.
Google’s acquisition of Nest is good example of the changing landscape where the app will live in the IOT and the device will simply be the profile and the auto-controller. The 94Fifty smart basketball, the Sensible Baby smart sensor monitor, the remote Vibeasy vibrator: all use the phone as the remote control manager.
A service such as The Wireless Registry can offer a naming protocol that can work agnostically with all the in-market sensor solutions and offer a central repository for a retailer, brand, and entertainment provider’s identity. Any existing wireless signal (SSID) that a coffee shop or a big-box retail transmits can now have a name (Starbucks, GAP, Walmart) with an accompanying sophisticated profile. A consumer that has a phone, tablet and PC can now attach a personal name and wireless profile to their MAC addresses.
When the retail and consumer wireless signals bump in the proximal world, the consumer profile can do a simple look up can see what offers, services, commerce is available to them based on their specific identity. The consumer can also block unwanted solicitation answering Jules Polonetsky and the Privacy Commission’s concerns around “do-not-track”.
Now the consumer is in full control of their identity and the phone becomes an intelligent server interacting with the world of wireless signals based on that consumer preferences.
While this solution can interface with existing apps on the phone, ultimately the profile and preferences can be baked into the OS as part of the devices DNA.
Until later. Yours truly from my MAC address aka “MOBILEGUY”
There must be the equivalent of Moore’s Law for the speed of turning mobile intent-into-action and mobile path-into-purchase. Technology and patents are rippling through the marketplace that drive measurable efficiencies for brands, retailers and their consumers.
This week Amazon predicted that small, unmanned drone aircraft could be delivering packages within a year. Many have viewed the fun look-see video showing a web purchase and immediate dispensing of a 2.3 kilograms box into the carriage of a buzzing drone and after a short flight, a smiling kid waiting for the package at the doorstep.
(And before we tackle any ensuing U.S. Federal Aviation Administration regulatory issues of landing a package in a backyard ball hockey game or logistical issues such as possible “drone chasers” who maybe on the hunt to pick up drop offs nationally, let’s talk bras. . . )
While Bezos was pitching Drones, Microsoft announced research on sensors built into female lingerie, which collects EKG activity near the heart that predicts a “cookie snack attack” and sends a notification to the smartphone.
The month before, Motorola joined other patent holders such as Nokia/Microsoft that are positioning epidermal haptic feedback tattoos to speed up the connection between wanting-to-connect to the phone and connecting.
All of the above future-facing ideas are attempting to do one thing: anticipate intent and eliminate barriers.
In short, these solutions optimize the process of turning mobile intent-into-action and mobile path-into-purchase.
From purchase to delivery, from munchies to mobile warning, from tattoo sensor activation to phone activation is ideally all one blink, no needless hesitation, no undue thought.
In The Impulse Economy book, I spent 300 pages discussing the value of impulse. All mobile action is predicated on a paving a smooth path. Any bump en route drives precipitous drop off and abandonment.
Intent to take action (such as buy, opt-in, download) is a fragile thing and on a mobile device this dance between the seller and the buyer is even more perilous.
A Better Mouse Trap
The entire purchase process is like designing a good mouse trap. We see a call-to-action (trap well positioned at the mouse entrance); the good price or value proposition (cheese); quick ramp up to the product (platform) and a fast trigger mechanism to close the deal (hammer).
While our response may be based on previous advertising or experiential conditioning the sale is all based on how well the brand has built the process. Many brands focus on the pickup and well they should but sitting pretty on the physical or virtual shelf is not good enough. P&G labeled the sitting pretty moment: FMOT – the “First Moment Of Truth”.
(No not “Follow Me On Twitter”)
This is the moment when the customer sees the product and in a 5 x 5 (5 seconds by 5 foot) moment throws that product into the shopping basket. But we know that many shoppers will leave their shopping baskets and exit the store if the line is too long or the checkout is too cumbersome.
Moreover, shopping is not a linear process. We may research the product in what Google calls the ZMOT (zero moment of truth) and only rebuy the product if the product performs in the kitchen, livingroom or bathroom. (What the FMOT folk at P&G call the Second Moment of Truth)
Coining a new efficiency law
But for all this shopping science, the consumer is very grounded in decision and reward. To close a deal, buy a product, opt-in to affinity programs, the industry needs to find ways to speed up the purchase cycle.
We know the famous Moore’s Law shows that the number of transistors on integrated circuits doubles approximately every two years. Martin Cooper coined the mobile spectrum equivalent of Moore’s Law that spectral efficiency has doubled every 30 months since Marconi patented the wireless telegraph in 1897.
There is a mobile path-to-purchase law to be coined.
Intent-to-action efficiency doubled every X months. As an industry, ideas that work are the innovative ideas that drive this efficiency, optimize process and speed up the loop from call-to-action to action.
What is X?
Part II: Wild Turkeys (continuing from the Nov 26th post)
Here are three tips on identifying elusive innovation and finding a black swan. I had just returned knobbly kneed from a trip through South Asia and Russia. I attended three conferences and was just decompressing on Thanksgiving and felt obligated to continue the turkey analogy from the previous post.
1. Bottling Innovation
On the road at various industry events, the keynote always seems to start with innovation. The word has been peppered into panels and keynotes as in the place of the term “technology.” It is as if by magically by using the word “innovation” it will prime the techno-entrepreneur’s pump.
This is not a bad thing. It certainly gets the attention of the patriarchs. The Moscow Open Innovation Forum was keynoted by Dmitry Medvedev, prime minister of Russia, accompanied by the prime ministers of France and Finland. The World Summit Awards in Colombo, Sri Lanka, was opened by the country’s president, Mahinda Rajapaksa.
Innovation is associated with fresh ideas and out-with-the-old. At each event, the youth innovators are marched out bushy-tailed and bright-eyed. Mr. Medvedev and Virgin founder Sir Richard Branson posed smiling with the winning youth delegates.
The challenge is that while we all want to celebrate innovation, it is a difficult to bottle it. We find it hard to present it as a formula. Disruptive innovation is central for businesses that want to survive and stay competitive.
Incumbent players such as the wireless carrier want to appear light-footed and on the next wave, but the discussion generally gravitates to bemoaning the OTT competitors – that are never in the room – and proposing that the ecosystem is not sustainable.
There is unquestionably innovation, creativity and energy in the room, but we tend to present “wow,” and not the ingredients to cook up the same “wow” at home.
We chase mobile ideas to improve our retail business when, in fact, the sexiest thing about innovation is the resulting customers, sales and EBITDA.
2. Digital Inequality
Clearly, innovation is fueled by connectivity. I met with the Nikolai Nikiforov, Russian minister of communications and mass media and the youngest person in that country’s history to take over a ministerial position at the tender age of 29.
We talked about “digital inequality” in Russia and as well as other nations and how this is one of the biggest inhibitors of innovation. How can Russia future-proof its mobile network infrastructure to allow for universal access to high-speed Internet for the data-dependent business, education, health and entertainment services that will appear over the next decade?
“Electromagnetic spectrum is the crude oil of last-mile connectivity.” Mr. Nikiforov wants high-speed fiber with wireless relay into every community of 500 and above. The challenge is finding the funds and partnership.
When Peter Diamandis, the charismatic cofounder of Singularity University, took the stage, connectivity became a firebrand. “We have not started.” In ten years distance will mean nothing.
“Where you live and where you work do not need to be the same,” Mr. Diamandis said.
3. Crowd-Sourcing Innovation
So, for those of us that cannot cook up innovation, we know there is abundant creativity out there that we can tap into and global access and connectivity is making this possible.
Apple has shown us that by creating a marketplace for ideas, developers have risen to the challenge. The app store is a case study in innovation: The smarts of Steve Jobs to provide an SDK and audience and the smarts of app shops globally in designing for every possible user need.
So there is much talk about how to best crowd-source innovation globally. After all the discussion of innovation and digital access, we can focus on harvesting business ideas that work.
Mr. Diamandis showed how his first X-Prize challenge of $10 million to build a reusable rocket to take humans into orbit generated more than $100 million in R&D.
This ability to link innovation with connectivity allows entrepreneurs such as Sascha Haselmayer, CEO of CityMart, to build a crowd-sourcing engine for more than 80 cities globally. His engine allows for ideas to be vetted and adopted all through a remote online process. Sascha’s engine is a blueprint for crowd sourcing retail innovation.
So innovation has a retail formula and it is:
Black Swan innovation = connectivity for all + a readily accessible global market place
Part I: Tame Turkeys
On the return flight home for Thanksgiving this week, I read Nassim Taleb’s book The Black Swan and decided that tis the season to draw profound parallels between innovation and poultry.
Here are my insights:
- Chickens: Bertrand Russell’s wrote an anecdote about the benevolent farmer in 1912. The fat and happy chicken thinks the farmer is a benevolent protector until it is hauled away to the slaughter house.
- Turkeys: Nassim Taleb, in his book The Black Swan, says that the same holds true for the Thanksgiving turkey. However, he adds that the surprise for a turkey is not a surprise to its butcher.
- Swans: So the black-swan question for the marketing community is: How do we play the role of the butcher not the turkey?
Moving your retail business from a step-by-step evolutionary growth to revolutionary, black swan transformation is not easy. In fact, it may be impossible. Corporations find it difficult to reinvent from within. However, to be aware of the nature of outliers and revolutionary innovation is a good first step.
You can rename your CIO: Chief Innovation Office, your CTO: Chief Transformation Officer and your CDO: Chief Disruption Officer. However this is all for nought if they cannot identify swans or at least the turkeys.
Look to social media. There is a succession of ever faster black-swan innovations starting with email and ending in SnapChat’s self-destructing messaging. Microsoft did not anticipate Google search, Google did not anticipate Facebook communities; Facebook did not anticipate Twitter micro-blogging; the same holds true for Instagram’s social picture publishing or SnapChat’s peek-a-boo messaging. The same applies to retail as well as broadcast, payments, health, advertising to name a few rudely disrupted verticals.
Retail payments is a classic chase-the-tail solution mashup. But payment vendors have been more astute. The FIs ran a two-sided business to establish MasterCard and VISA credit services. The FIs have fought to be a part of any POS and prepaid activity in retail. With the emergence of digital payment, payment incumbents have aggressively invested and acquired companies in the mobile POS space (VISA/Square) and as well as in the cloud (VISA/Playspan).
VISA’s purchase of PlaySpan was particularly forward thinking. PlaySpan allowed gamers to buy virtual swords and pumpkin seeds for their virtual battle grounds and farms without leaving the game. Frictionless commerce engineering: meet VISA’s present day V.me.
But even leviathans like VISA and MasterCard have been sidelined to commodity commerce rails.While they make nice transactional revenue, Amazon, iTunes, PayPal and Playstore and other consumer commerce portals have made the card credentials second fiddle. They discount the interchange and grab the CRM and big data.
Shopper marketing, Shopper engagement all follow similar twists. But not always evolutionary:
SMS was the black swan technology revolutionizing communication for the unsuspecting (but delighted) wireless carriers. We all thought QR codes, mobile apps and NFC would supplant this messaging channel. WhatApp, Skype and Viber all have eaten away at the peer-to-peer traffic; however, for brands, SMS, and for some successful apps, the notification channel, remains the main opt-in and content delivery channel of choice.
Black swan on the horizon? iBeacons, WiFi Direct or LTE Direct? Maybe.
Proximity engagement is essential for a brand or retailer to drive path into purchase. Shopkick and Beacons are valuable but are ultimately broadcast solutions. Future solutions such as LTE Direct promise to extend the retail network and add more intelligence and peer to peer interactivity to this engagement.
However, in all the above cases it is difficult, if not impossible, to identify one strategy, vendor, agency that will bring revolutionary black swan ideas.
When attending events whether speaking or listening, it all seems so easy. Innovate they say. . .
Well so my friends, the innovator’s dilemma maybe just to avoid becoming the turkey.
Bill Gates stood on the stage at the (now-defunct) Comdex show in Las Vegas in 2000 with his schoolboy smile touting the new “tablet PC.” Penned on the tablet in Bill’s handwriting was “Tablet PC is SUPER COOL!” Behind the stage a backlit sign read “experience the evolution”.
Microsoft evolution never became a revolution because the company’s disparate and factional divisions failed to work together to vision and implement a turnkey experience.
The revolution happened in 2007 with the launch of the iPhone.
(As with most industries) evolution is often interrupted by black-swan revolutions. Sound (voice communications), touch (pinch and zoom navigation), sight (Heads Up Display [HUD]) all changed the way consumer used the phone and is one of the gating factors in technology adoption.
Knowing what technology will help us evolve and what technology revolutionizes is more of a human insight that a science. Ergonomics help us rearrange the digital furniture; however, changing the way we connect with this communication device is profoundly human. What is beyond touch, what is the next revolution?
A Short History of Touch
Although Gates told reporters off stage in Las Vegas that how excited everyone was in Redmond (Developers were checking the tablet out to play with – “a very good sign,” he said) 6 months later warehouses were still full of the Tablets. Q2 shipments had plummeted 25% with a meager 100,000 total units sold. Mike Magee, technology writer for the Inquirer wrote despondently that “This is another classic case of IT firms thinking they know what technology people will like, and failing to take off the blinkers.”
Touch appeared back in 1971 over a ten year period began to appear in the form of infrared technology (such as the Hewlett Packard 150) which show up in various military applications. The IR matrix of beams are used to detect a finger touching the screen.
But the IR technology was expensive and the technology gained more mainstream adoption was “resistive touch”.
It was a simple concept. Resistive touch screens were built using two layers of conductive material (Indium Tin Oxide). The two layers were separated by a small pocket of air. An action was triggered when a stylus, or other object, pressed the top layer into contact with the bottom layer.
The limitation was it was like a pin board. You could tell the device where you were move the point of contact. But it did not have multi-touch functionality essential to pitch and zoom navigation.
Mass-market adoption was not an option:
- The screen wore out
- Required a stylus pen for accuracy
- The air pocket made the screen appear hazy
- OEMs had to build a clunky hole in the casing (as the top of the resistive sensor had to be exposed to user’s input)
This is the technology that Bill Gates was holding up at Comdex in 2000*. The unit’s resistive touch stylus was used to input into clunky dialogue boxes to input text and commands. The entire project was “resistive”. The Office team refused to build for the unit adding to the painful UX.
*[A technogeek aside: Microsoft's Surface touch solution uses Frustrated Total Internal Reflection (FTIR)]
Meeting Andrew Hsu
In 2013, I ran an event on connect screens in New York. I wanted to tell a story about the importance of the screen in the evolution of mobile phone design and adoption. I invited Professor Donnell Walton from Corning Glass, as well as representatives from Microsoft’s Surface team, Google Glass and was looking to find a speaker to explain “touch”. Maybe I could locate someone from the scuttled Apple Newton team?
I found, much to my surprise (like an anthropologist that finds that we did not evolve directly from monkeys) that the precursor to the 2007 Apple iPhone was a skunk works project headed up by an engineer called Andrew Hsu.
Andrew developed and patented a capacitive touchscreen suitable for mobile devices way back in 1999. He developed a system which computes the location of a user’s fingers based on how they change the capacitance values of an invisible matrix of electrodes. The capacitive touchscreen did not suffer from the various user experience drawbacks of the resistive touchscreen – it does not wear out, it does not cloudy the underlying display, and it does not require a big hole to be cut into the device casing. But most importantly, it enables natural finger input.
This capacitive touch is not a mouse click. It is not a data poke with a Stylus. Andrew Hsu’s touch allowed us to communicate in a very human way with pointing and pinching space.
Don Norman is often quoted about touch.
“We’ve lost something really big when we went to the abstraction of a computer with a mouse and a keyboard, it wasn’t real . . . swiping your hand across the page . . . is more intimate. Think of it not as a swipe, think of it as a caress.”
While mobile success is almost always based on interface and usability, it took seven years for Andrew Hsu to convince the industry to adopt the technology. Revolutions come in simple packages: text messaging, Apple’s mobile application SDK, gesture-based gaming.
We talk about the consumerization of technology; touch was the humanization of technology. In a world where data appeared cerebral and uninviting, we suddenly can interface in this data and content as we do with real object. The physical world became extensible and less scary.
From Click to Pinch & Zoom
In 2006, handset manufacturer LG trialled launched capacitive touch with their designer Prada phone. The LG phone had all the correct ingredients – capacitive touchscreen for intuitive finger input, high resolution display, and one of the first graphics co-processors in a handset. Prada brought style to the table and LG brought the insight that touch that would ultimately inspire the new mobile consumer.
But we had to wait one more year.
When Jobs returned to Apple he shut down the Newton project. This legacy 1993 technology had poor handwriting recognition and had little traction in the market. But Andrew Hsu’s capacitive touch appealed to Steve Jobs UI sensibilities.
As a post Newtonist, Jobs once said “we are born with five styluses on each hand”.
When he introduced the iPhone, we knew that being able to move large format data on a small screen with a pinch and zoom changed the way the consumer saw their mobile device. Where Steve Job went further than touch was his insight in designing a full edge-to-edge screen that had the dimensions of a letter size piece of paper. The screen called out to be touched, worked on and paged through.
Although touch revolutionize the phone and lines weaved around the block for new product releases of Apple new “human” interface, the consumer was still nose-to-screen, bumping into lamp posts while elegantly navigating data a hundred miles away.
“Bump” (the file exchange application recently acquired by Google) and other application including NFC payment extending this love of tactile interface by promote social touch between other phones and public devices such as POS.
Gesture: Moving Beyond the Cool?
While touch is an important sense, sight is essential for navigation. The next revolution is to make data come to live seamlessly in the real world.
When we talk about HUD, we think of the new Google Glass and the opportunity to integrate data into our line of site. In parallel, see the world and the data behind it. Integrated cyborg solutions like Google Glass and future visions of embedded epidermal circuit (seen in Total Recall).
Microsoft had the lead in a new HUD interface using gesture. XBOX Kinects was the one product that Microsoft was seeing growth in the consumer sector. However, the leviathan was unable to make this a multiscreen strategy fast enough.
Moving gesture elegantly to PCs and window phones never happened. There is a Kinect for Windows but it lacks the software for controlling the interface.
The Leap motion controller is a step forward. A small multiscreen sensor box not tied to console in the dean but with the ability to tether like a dongle to a wide variety of screens and deliver better sensitivity to Kinect. It has multiple commands down to finger level accuracy.
Andrew Hsu still believes that touch is less ambiguous on the consumer navigation intent. “How can you disambiguate between “accidental” and intentional gestures. The beauty of touch interaction is that you basically get user intent for “free” – a user typically only touches the device when he/she wants to interact with it. The cases of accidental activation are much lower and easier to reject.”
Arguably HUD is a solution looking for a problem. Like the inspired Seque cycles, the inventor’s goal was to develop an urban consumer transport vehicle but he failed to get significant adoption. The Segue has now found a home with urban tourist touring groups and airport police. Why? It provided an elevated view with minimal multitasking: Ideal for tourists and law enforcement.
Andrew agrees: “What these technologies really need to address is what sort of “problem” they are trying to solve. That is, with capacitive touchscreens, there were certainly a number of value propositions that arguably were superior to the previous (resistive) solution that helped transform/enable touch input. Natural gestures (HUD) is still looking for a compelling value proposition”
Google Glass is a platform without a certain home. Will “super cool” it has not inspired the consumer. We have not seen the “a-ha!” that Jobs brought to the touch. We know new more intuitive human interfaces are coming. But we need a Steve Jobs to take the technology and humanize it for intuitive consumption.
Gary Schwartz is the CEO of Impact Mobile. Having been at the frontlines of the mobile industry for over a decade, Gary is the author of two books, “The Impulse Economy: Understanding Mobile Shoppers” and “Fast Shopper. Slow Store: A Guide to Courting and Capturing the Mobile Consumers,” both of which highlight the current state of the mobile commerce space and chronicle the significant impact that mobile is having on consumers, retailers and brands. Gary is also a chair emeritus for the Interactive Advertising Bureau and the Mobile Entertainment Forum NA and global director of the Location Based Marketing Association.
- Positive: Twitter is NATIVELY mobile and will not have the same questions that FaceBook had on its IPO – i.e. What is your mobile strategy?
- Positive: Twitter has an owned-content advertising model which is less impression based and more brand ENGAGEMENT.
- Challenge: Twitter is an social aggregation hub. We see lots of auto-twittering without visiting the social platform from third party sites. (See page 61 in their S-1 filing) Referred to as blind tweeters (syndicated from other sites), these are a big slice of their user base. This is an impression-based advertising challenge.
- Challenge: Twitter is an advertising company. Specifically, mobile advertising with 65% of the revenue coming from small screen. The mobile advertising space is in a bubble. Same old story: Big growth in revenues, but no profits. The breaking bubble is evident in Jumptap’s exit to Millennial Media.
- Challenge: Although the US is Twitter’s home it needs global growth. There will be global pressure from competitors like SINA WEIBO in China and LINE in Japan.