Google+ | The Impulse Economy

I was speaking with David Epstein, the founder of The Unreasonable Institute, the brainchild of Unreasonable at Sea, the Google sponsored innovation ship that is presently sailing from port to port globally.

Mr. Epstein’s mission statement is borrowed from George Bernard Shaw who in 1903 wrote in Man and Superman:

“The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man.”

The Unreasonable Institute, based in Boulder, Colorado and is working to bring entrepreneurs, innovators, thinkers, and investors together for social change. He now has these same folk on a ship sailing the world with that disruptive mandate.

What Mr. Epstein is championing, and what Mr. Shaw posited over 100 years ago is applicable, if not essential, across all verticals today. In the 2010’s, when industry after industry is being rudely disrupted, we may need to be more unreasonable about our search for solutions and our adaptation to the new status quo. We have to become superbrands.

Man and Superman

Music, retail, media buying, broadcast, publishing are all incumbent industries that have, or are, about to pivot in a profound and irreversible way. Many extant business models will dry up. Many old revenue streams will become commodity channels or be circumvented over-the-top by new technologies or new business models.

Telecommunications, more than any other industry, has profoundly impacted businesses. Some bemoan that “mobile” innovation has horizontally cut many companies at the knees.

Telecommunication innovation and disruption is not new. The history of telecommunications is the history of open systems and the invisible hand that attempted to close these systems: From RCA closing down FM Radio and early television. It is the same recent history of Apple disintermediating the wireless carriers with an “internet device” and then turning around and using the same iPhone to shut down the Mobile Web with a closed App Store.

What is new about telecommunications in the 2010s is the pervasive nature of the technology, the democratization of information and access, and the liberation of the consumer.

The new entrepreneurs, innovators, thinkers, and investors that are sailing on Epstein’s ship are the crew of innovators that needed to rethink the way we communicate with this new consumer.

And this requires a motley crew.

Chief Unreasonable Officer

Labels, Retailers, brands, publishers, and broadcasters cannot simply open innovation labs in the vain hope that they can reinvent their business from within. Forces are at play in the mall and in the media houses that will require some unreasonable thought. The walls of our store are porous (Mike Duke) and the internet cloud is in our malls to stay.

To paraphrase Mr. Shaw: The reasonable person adapts to the world; the unreasonable person proactively turns the tables.

How do new-age brands become unreasonable?

Industries need to understand their new world and their new consumer. This world is made up of consumer moments across their connected-screens during the course of the day. Ten years ago, you never needed to follow these consumers; now you need to plot their screen journey in minute detail.
The value may not lie exclusively on the screen but in connecting these screens. In a world where (according to Google’s Multiscreen Report) over 90% of people use more than one screen to accomplish a single task, brands need to focus on the “digital Velcro” to connect these screen experiences. One screen + another screen = a multiple of value: (1+1=3)
Stop relying exclusively on third parties and social networks to find your consumer. “Dating services” are important . . . but you need to get out more. Forge a direct relationship with this new connected consumer.
Be unreasonable. Believe that your consumers can love your product and can share a common dialogue with your brand on their private and personal screen.

This maybe simply the ability to shop for a brand seamlessly across their screens understanding the needs of the consumer at that moment of the day on a particular screen form factor.
This maybe establishing a common interest (wellness, nightlife, etc.) and become part of their multiscreen narrative.

The new Chief Digital Officer needs to create superbrands, and to do that she needs to be unreasonable across all her consumers’ connected screens.

I am content chair of the MultiScreen Summit in NYC, June 11^th and 12^th.

MultiScreen Summit
www.thescreensummit.com
June 11-12, 2013
Metropolitan Pavilion
125 West 18th Street
New York City

As VISA launches the digital wallet V.me, a “digital wallet” in a bid to be relevant in the proliferation of cloud payment credentials, VISA and other incumbent payment providers should be concerned that in a cloud-based economy, it may lose its position in the market.

Presently VISA owns the lion’s share of credit and debit/prepaid plastic in circulation globally. (VISA 2,400MM vs. MasterCard 1,000MM)

Up-starts such as Square and digital innovators such as Paypal are trying to challenge the status quo and change the way people pay with plastic. Google and Apple continue to disintermediate the card vendors by aggregating large volumes of transactions and pass them back to the banks as “prepaid” with low interchange fees. All in all, new payment players are looking at the old business hegemony of VISA and MasterCard and going OTT (over-the-top).

It is not about eliminating plastic. And it is not really an issue of whether these plastic holders are going the way of vinyl; but more importantly an issue of the business model behind these card and card credentials. Roles are being commoditized.

Cards are simply a way to store and relay banking credentials to the POS in the store and the POS in the cloud. In the US this is no more than a number that is stored on a magnetic swipe and embossed in the plastic. In the rest of the world this number is housed more securely in a chip. A chip that can be emulated securely in the phone chip (or SIM).

It is unlikely that the costly backend systems in the US and Europe that deal with fraud and regulatory issues will be displaced. And that the 2,400MM VISA cards and the 1,000MM MasterCard that use these systems will disappear. (*)

However, as VISA and MasterCard continue to be the trusted brands on every online and physical store they may find that their margins dipping. As banks try to revamp their mobile banking applications and ATMs to be more relevant to their peripatetic customer, fewer value added fees and services will impact their margins.

The question to ask is who owns the customers relationship because it is ultimately this relationship (the final foot) that they can monetize. The emergence of mobile and card-linked offers is making the point-of-sale systems in the cloud and eventually in the store, the new promotional depots for digital deals and coupons. So called “big data” and value added services will ultimately yield the most profit.

*(In emerging markets, where there little infrastructure, companies like M-Pesa service the unbanked via their mobile phone account. VISA has entered these emerging markets through acquisition of Fundamo and MasterCard through a partnership with Telefónica. Similar to the US, these companies are vying for the last-mile relationship.)