Mobile Black Swans and Turkeys

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.

And so while busy stuffing the family turkey I thought about how this all applied to my world of consumer engagement, retail sales and payment.

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.

Happy Thanksgiving!

 

Premature Technology Arousal (PTA) in Barcelona

To sum up Mobile World Congress 2013, I will borrow from Peter Marx, head of business development at Qualcomm Labs. Peter talks about a tendency for PTA or (for those in the know) Premature Technology Arousal in the mobile industry.

Much of the MWC 2013 floor area at the new Fira Gran Via venue exhibited PTA or Premature Technology Arousal. Solutions that are excited about being solutions. Solutions that are too early. Solutions that are missing reach and frequency. Things that are just not simple enough to drive adoption.

Even before 70 thousand executives hit the show floor, there were signs of “PTA”. From the Near Field Communications (NFC) show name tags that tried to emulated plastic (but that few used because you still needed to show the plastic) to tapping on Coke dispensers with cloud-base wallets that are many quarters away for mainstream adoption.

Booth after booth in this 1.01 million square feet techno-playground displayed incredible solutions and screens.  But the real story to follow was how each solution quietly added value to a given business ecosystem. There was an invisible hand playing connect the dots. Here are a few examples:

The Invisible Google Hand

Google was almost absent – unlike the MWC of 2011 and 2012 where Google groupies ran from partner booth to partner booth in search of cute Android pins. But Google was most definitely on the floor. This year the company is wisely playing “powered by Google”. They are the dark silent type. Turn left or right in every hall, Android is the fuel this industry is consuming.

The same holds for Qualcomm. They are the chip manufacture that is quietly taking the lion’s share of the revenue on each global handset. (Intel just cannot seem to create a competitive landscape.) Qualcomm Labs is building in consumer identity and credentials onto its “platform” hoping to not only power the connected device but also own the big data behind the user. When Qualcomm demos a vision of a home of the near future, they power many of the moving pieces.

The Samsung Show

While Qualcomm’s chip and Google’s OS were the main stories in Barcelona, another key and not so silent player is Samsung. (So much so that my hotel concierge asked me if I was attending that “Samsung” show that was in town.)  The word that floated above the white new-age Samsung booth was “innovation” but the innovation is not just the 3D camera or the ubiquity of the new S-Pen. The innovation was in their business model connecting their screen across the consumer journey. The 3D camera sells their tablet and television. The S-Pen and its SDK allows for ergonomic continuity across their new tablets and fablets.

Mozilla is other important story in Barcelona. Using the Firefox browser on lower-end ZTE devices to run the camera, map and  . . . oh ya the browser was a definite tech-turn on. Moving the developer and more importantly the consumer out of the (Apple-invented and dominated) app store into the real world super-app is an inevitable step and fundamental to our mobile evolution. The quicker the industry can move away for relying exclusively on industrial design and the app storefront as the sales tool, the faster we will grow.

2014 Screen Wars

The most important leitmotif was the screen. Not only the proliferation of devices with new form factor and appliance, but the realization that it is in the connecting of these screen that the we can accelerate business models. Samsung, ZTE, Motorola, Nokia all address the consumer journey across all screens and throughout their day. Nearly all marketing VPs had spent their last few months and budget trying to tell this consumer story.

Again while many products had indecent “PTA”, the most important insight was not what was happening on the screen but what companies were doing to connect them seamlessly. The new battle ground this year moving into MWC 2014 will be centered around who can best manage big data, wallet credentials and identity between the screens.

10 mobile predictions for 2013 in under 75 words

1.      Substitute “Mobile” for more inclusive term “CONNECTED SCREENS
2.      Geo-LOCATION crucial to social strategy
3.      NFC continues to be far field
4.      For RETAIL: space between bricks and clicks most valuable
5.      For everyone: space CONNECTING screens most valuable
6.      Mobile viruses push SECURITY agenda
7.      More PRIVACY transgressions, More PRIVACY protection
8.      ANDROID increase the lead in a 3 horse race
9.      Operator CAPACITY drives new business models
10.  Through-The-Middle (TTM) services counter OTT

Why Apple’s New Patents are Commerce Game Changers?

This week Apple added a new patent (US 8,321,294) to its war chest.  The EasyPay patent is worth a closer look. The commerce patent allows mobile shoppers to activate and buy items from physical stores via the Internet connection on their device.

While this seems pretty clear and reflects Apple’s EasyPay trials:  it is far more profound. Combined with Apple’s earlier patent (US 8,290,513) in October using magnetic fields (as a substitute to NFC) this is clearly is Apple’s showrooming and mobile commerce positioning statement.

Why are these two patents so interesting? One, while the EasyPay trail used QR codes, the new patent definition of shopper is far broader:

“Techniques for improved interaction between online retailers and traditional brick-and-mortar retailers that provide patron-accessible networks are disclosed. The location and/or the fact that any given purchase was made from a particular retailer’s patron-accessible network can be tracked for a variety of purposes. The invention can facilitate partnering between online retailers (i.e. online stores) and traditional ‘brick-and-mortar’ business establishments. As an example, the invention can be used to track and give credit for online purchases at an online retailer that are facilitated by a brick-and-mortar retailer.”

Now combine the two patents. The earlier Apple patent in October was for a Method and Apparatus for Triggering Network Device Discovery. This was Apple way of side stepping NFC and using the phones’ compass output patterns (magnetic field signatures).

EasyPay can be expanded to leverage any network device discovery.  This allows any store shelf or walk-by media to be activated via a magnetic field tap and jump into an EasyPay checkout process. Path-to-purchase becomes “PURCHASE”.

Starbucks & M-Payment: Selling an addictive substance on every street corner in America

Starbucks card transactions accounting for more than 25 percent of sales in U.S. stores. $3 billion has been loaded on to Starbucks cards this year. The my Starbucks rewards loyalty program has more than 10 million members, half of whom have opted in to receiving communications from Starbucks. Starbucks recently enhanced its loyalty program in the U.S. and Canada to make rewards fully digital and to make it easier for customers to earn free rewards.

With investment in Square and other mobile innovation, is Starbucks a poster child for other stores to emulate?

I will contend that selling an addictive substance on every street corner in America is probable more of a factor in their mobile success than their technology innovation.

Another factor for their success is their openness to a simple frictionless payment process. Starbucks mobile POS manages prepaid ‘micro’ transactions and thus has the luxury of making checkout painless without much concern for fraud on their system.

Starbucks’ app is a success but other apps in the retail market have languished. The Starbucks app is simple and effective but it success lies in the mass reach.

While MCX and other payment solutions seem to be getting traction with retailers, Starbucks basic 2D scanning system works because of the sheer volume. As NFC-enabled phones are adopted by consumers this year and next, it is possible NFC-based mobile payments will appeal to more companies, possibly even Starbucks. NFC tap and go will inevitably be embraced by Starbucks as NFC is ideal for high traffic, low-value transactions.

Transit and Starbucks are model anchor tenants for contactless adoption.

As Starbucks advocates: pay faster, sip slower.”

Impulse infograph: print + mobile = new proximity media buy

combining mobile with print to drive engagement

Here is a quick infograph based on statistics on AD spend verses TIME spend on media. If you flip mobile on its head, it neatly makes the print imbalance even out. This is not just graphic magic: it makes perfect industry sense.

The print budget is not going away. By using proximity marketing (NFC, QR, TXT) to activate this media, you create a new retail experience that lives between the physical store media and the internet cloud.

Who Owns the Wallet Owns Big Data

MasterCard launched its mobile wallet services at the keynote in New Orleans at the CTIA Wireless Show. Big news? Maybe, if you read between the lines.

The service is comprised of three components. PayPass Acceptance Network, which includes PayPass Online and PayPass Contactless, will help merchants accept electronic payments across multiple channels while giving consumers a simple check-out process. The services will be expanded to the point-of-sale over time, enabling the delivery of targeted offers, coupons and enhanced loyalty programs.

I think there is a battle raging that is not part of the press release. It is a battle to own the financial relationship with the consumer – Apple, Google, Visa, ISIS, all want to be the landlord for the secure credentials. The winner owns big data and all the money that flows from this.

In this scenario, MasterCard is the landlord, Gemalto is the property manager and the tenents are retailers, brands . . .  anyone who needs to leverage the wallets data down stream. Consumers secure credentials come with a full identification profile and of course their purchase behaviour.

Steve Mott and the retailers that are attempting to create their own competitive wallet is in direct response to this exact data scenerio.

MasterCard’s open door policy to third parties is a Trojan strategy to be the gatekeeper — everyone wants this privileged role. The dust has not settled on this two-sided business debate and will not for many years. But remember, the guy who owns the gateway owns big data.

READ FULL ARTICLE HERE

Top Ten round up from MWC (in under 100 words)

Besides great tapas, getting caught in a student protest in Plaça de Espanya and a sea of 70,000 deal-hungry mobile folk, here are the Hill’s Notes of Barcelona:

  1. Google wins best event marketing with Android pins
  2. Look to the Cloud for efficacy and checkout
  3. Windows 8 is a’coming
  4. Battle of the screens fragmented size and form factor
  5. Lots of OTT angst from operators
  6. NFC payment take back seat to NFC value add 
  7. Focus on smart management of network load 
  8. Privacy an issue with no obvious solution
  9. Security is now part of every sales pitch
  10. China, China, China

RFID & Mobile Retail: Moving From Efficiency To Engagement

 

 

 

 

 

 

 

 

By Gary Schwartz

National Retail Federation Show, New York City: This week the old Javits Center in the New York hosted retail folk from across the U.S. and shed some light on a technology play that may define a new industry I call Retail 2.0.

Indeed, the reality of a connected shopping experience with smartphones at the center may not be far off. However, this show was proof to me that we have to get past our focus on technology (and B2B) and walk in the shoes of our customers (understanding that it’s B2C that is really at the core). And, since it is about the shopper experience, it’s clear that winning Retail 2.0 strategies will be the ones that bring CIOs and CMOs to the table.

FULL ARTICLE