Revolutionary Measures

The battle for banking – Amazon enters the fray

In a previous post I talked about how the big four internet companies Google, Apple, Facebook and Amazon (GAFA) had quickly developed their businesses. They’ve all moved beyond the sector they started in, extending what they offer to compete with each other in areas such as ecommerce, social networks, mobile devices and mapping.amazon_logo_wb_2328

How have they done this? They’ve used the four strengths that they each possess:

1. Agility
With the exception of Apple, GAFA was born on the internet meaning they aren’t burdened with long-established corporate structures compared to their traditional rivals. So they can make decisions quickly, unhindered by the warring departments and turf wars that characterise first and second generation technology companies.

2. Data
Rather than purely physical assets, GAFA’s USP is data and what it does with it. From selling our search histories to monetising our personal pages, the four companies have built up extremely detailed pictures of their users and their lives. This allows them to accurately predict future behaviour – how many times have you bought something suggested by Amazon even though you had no idea it existed until the recommendation popped into your inbox? The advent of even cheaper machine learning and potentially limitless cloud-based resources to crunch data means that this is understanding is only going to get more precise.

3. Focus on the customer experience
Even though the majority of interactions don’t offer the personal touch of a bricks and mortar shop, these companies have gone out of their way to create a simple to use customer experience. Compare the Apple iPhone to previous ‘smartphones’ – the only difficulty for users was unlearning the convoluted way you had to access information on Microsoft or Nokia devices. I know, I had one of the first Windows phones – the user experience was terrible. Innovations such as one click ordering, reviews and simple sharing all mark out internet companies from their rival.

4. Scale
The final differentiator is scale – and the speed at which it is possible to grow on the internet. Rather than taking 20 years to become dominant in an existing market, companies can create a sector of their own and expand globally within months. Part of this is down to the network effect, but scale has also been achieved by moving into adjacent markets and just adding them onto the offering for existing users. This lowers the cost of entry for the company with the user base and creates a barrier to entry to rivals.

Taking these four factors into account, banks should be worried about Amazon’s latest move as it builds on all four of these strengths. Amazon Lending will make loans to small businesses in the UK that sell through the company’s Marketplace platform, after the service was successfully launched in the US. The beauty of the scheme is that Amazon knows exactly how the small business is performing as it can track their sales, and then use this data to offer selected companies short term working capital to improve their business. As it handles all the billing and cash collection for Marketplace sellers it can even take repayments directly from their profits, before they it pays them, minimising risk.

Adding to this data advantage, it is also offering the same simple to use customer experience that sellers are already familiar with. Compared to faceless or unhelpful banks, this is just the sort of thing that expanding small businesses are looking for.

The ironic thing is that, on the face of it, there is nothing to stop banks offering something similar. Their merchant services arms handle online and offline debit and credit card transactions, so they have access to data that could be used to work out creditworthiness. They have a network of branches to provide loans through, as well as a significant online presence. But all of these are separate departments and banks don’t have the agility to bridge the silos and provide the one stop shop that businesses are looking for.

In the same way that Apple Pay is disrupting payment services, Amazon Lending will take another bite out of the traditional business of big banks. And, as more and more of such services launch that nibble away at banking profits, then they face being outmanoeuvred by nimbler, more customer-focused and cleverer competitors. It is therefore time for retail and business banks to get joined-up or face becoming low margin commodity businesses in the future.

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July 1, 2015 Posted by | Marketing, Social Media, Startup | , , , , , , , , , , , , , | Leave a comment

Smartphones will eat the world

Commentators are full of predictions that software will eat the world, with jobs, industries and traditional means to doing things swept away by the rise of technology. From automated journalism to connected cars, the claim is that we’re undergoing a transformation in how we work, live and play.

While Apple has not listened to my complaints ...

Software is revolutionising the world around us, but I’d contend that there’s a much more disruptive factor impacting our lives – the smartphone. It essentially provides an always-on, easy to use, ubiquitous interface with all of the software around us. Without it we wouldn’t be able to access the power of technology. So, rather than software eating the world, I’d pinpoint 9 ways that smartphones are making a meal of it:

1. Health
Smartphones have the ability to monitor our vital signs and transmit information to doctors and medical staff in real-time. Whether it is using in-built or external, Bluetooth equipped sensors, smartphones will disrupt the health industry. Apple’s new focus on building a health ecosystem is just part of this trend, which can either be seen as a force for good or as allowing intrusive snooping on our most private moments. On the plus side patients can be monitored remotely, allowing them to remain at home rather than going into hospital for certain conditions, but confidentiality of data remains a worry. What if your insurance company could access your health data and amend your premiums accordingly?

2. Taxis and transport
Companies such as Uber and Lyft are radically changing the taxi market by removing the overhead (justified or otherwise) of traditional operators. Anyone can become a taxi driver – all they need is a car and a smartphone (which can also serve as your GPS, so you don’t need the Knowledge to direct you to the right place). This does raise potential issues about safety, vetting and insurance, hence the bitter battles being fought between traditional cab drivers and the new upstarts.

3. Marketing
At no point in human history has so much data been available about individuals. The combination of ‘free’ services such as Google and Facebook that hoover up our personal information and preferences, with the geolocation data from a smartphone mean that companies have the ability to understand more about their consumers than ever before. The challenge for marketers is twofold – they need to ensure that they have real, informed consent from consumers when handling their private data, but at the same time have to evolve the skills to sift through this big data to deliver personalised marketing that drives engagement. The traditional model of campaigns that take months to plan and implement is rapidly going out of the window – if marketers can’t adapt they risk being sidelined by ever cleverer algorithms.

4. Payments
There is something impressive about a pile of cash – even if it is just one pence pieces. But carrying it around is another story. Replacing pounds and pence with the ability to tap to pay even the smallest amount with your phone promises to turn us into a cashless society. And it also removes the need for a wallet full of credit, debit or loyalty cards. All you’ll need to do is select how you want to pay on your phone and the software will handle the transfer. Could we see traditional banks and financial services companies replaced by Apple Money – or even currencies swept aside by electronic dosh? It is certainly possible, hence Apple’s move into the sector with the iPhone 6.

5. Telephones
It may be difficult to remember, but when they began, mobile phones were for making phone calls or sending text messages (and playing Snake if you had a Nokia). Now the number of calls made and received is a fraction of before, as people move to messaging, email and free voice over IP services such as Skype. Many of us already pay more for our smartphone data plans than for calls and texts – meaning that mobile phone (and landline) operators will need to evolve new services if they are to be part of the smartphone future.

6. Toys
Growing up in an analogue world, toys and games were very straightforward. Now traditional toys are evolving to embrace both full on mobile gaming (think Angry Birds) and half way houses where the physical meets the virtual. Software such as Skylanders combines playing pieces containing electronic chips with fully fledged games to give a radically new experience. And this is just the beginning. As immersive technologies such as Google Glass and Oculus Rift gain traction we’ll find it difficult to tell reality and gaming apart. How long before people embed chips in themselves to become part of the latest smartphone game?

7. Utilities
Buying power is a necessary evil – and the battery life of smartphones does mean we’ll always need electricity to recharge them. Mobile devices, combined with sensors and the Internet of Things provide the ability to monitor and adjust how we use power. From turning smart thermostats up or down, to only switching on lights when the smartphone user is in the vicinity, they can change energy use. Taken a step further, consumers could cut out the energy company and use their smartphone to buy power directly from smaller producers, adding flexibility and potentially bringing down prices.

8. Insurance
The problem with insurance premiums is that they are based on averages, rather than knowledge of your individual circumstances. The data within a smartphone, either directly monitoring your movements, or linked to a sensor in your car, provides a deeper context around your behaviour and habits. Used properly this can help better judge the risks of insuring individuals – but again used incorrectly it will cause a privacy backlash.

9. Pub quizzes
As a Trivial Pursuit expert (and part of the reigning village quiz team champions) there’s nothing I like better than the chance to show off my knowledge. But how can pub quizzes survive in an era when Wikipedia can be accessed from your smartphone in milliseconds? Short of holding quizzes in exam conditions, with no toilet breaks where people can sneak off to check answers on the internet, cheating is going to become rife, making my carefully assembled general knowledge useless.

Research shows that the majority of us access the internet more through mobile devices than traditional PCs. And 20 per cent of young American adults admit to using their smartphones during sex. We look at our phones constantly, panic if they are out of sight for a minute and feel bereaved if they are lost or stolen. If it is true that software is eating the world, the smartphone is the knife, fork and plate responsible for the repast.

September 24, 2014 Posted by | Marketing, Startup | , , , , , , , , , , , , , | 2 Comments

Campus vs College – creating the best environment for ideas

Everyone understands that the bigger a company gets, the more difficult it is to create and nurture ideas. There are a number of reasons. The sheer size of the organisation mitigates against change – it is incredibly difficult to get everyone to understand a game-changing idea and align themselves behind it. You get a fragmented approach and the whole thing can get mired down in bureaucracy and finger-pointing.

Emmanuel College, Cambridge

Large organisations are inherently conservative, with people not wanting to rock the boat, while there is fierce rivalry between different divisions/departments which can lead to ideas being squashed if they seem to tread on someone else’s turf. There’s also a fine line between a strong company culture and having too inward looking a focus. Even successful companies such as Facebook have been accused of a lack of perspective – because they solely use (and love) their own products they assume they everyone else believes they are equally awesome. Step outside the organisation and your obsession is just a minor part of the lives of your customers.

The good news is that the majority of organisations do understand the need for a stream of fresh ideas. After all, the world today is dominated by companies such as Google, Facebook and Amazon that either didn’t exist twenty years ago, or were considerably smaller. Competition in every market is increasing and no-one wants to go the way of Nokia or Woolworths.

So how do you align your company to create the best forum to create ongoing ideas? I’m no management consultant, but I’ve seen a few attempts over the last twenty years and it boils down to three broad types:

1              Innovation silos
In many industries (such as pharmaceuticals), where innovation relies on expensive capital equipment it makes sense to create separate, concentrated, research labs. These have the intellectual muscle and resources but can suffer from their sheer size and distance from the business. They can then hit the same problems as any other big organisation, with divisional rivalry and static corporate culture. Alternatively businesses have focused innovation in standalone business units – either skunkworks operations that are locked away from the rest of the organisation, incubators that support promising ideas at arms length or even smaller companies that have been bought and are run as ideas factories. All of these can work, provided management stay true to their word not to meddle or demand fast results, but there’s still no connection with the wider business and its needs.

2              The campus
You break up your monolithic organisation into a campus style environment, with different divisions occupying their own buildings, but close together. Splitting into smaller teams is good for creativity, and you get the economies of scale of having everyone on a single, but large, site. However the ability to cross-pollenate between groups can be limited – unless you happen to bump into someone over lunch you might be completely in the dark about what other sections of the company are working on.

3              The college
What I think is really interesting about the campus model is that it deliberately mimics the university campus structure. While this makes for a good working environment, it doesn’t help spread ideas. So I think companies need to look at a more collegiate model, similar to that of universities like Cambridge. You have two allegiances/bases – your division (essentially your college) and your actual project (your faculty). So you get the chance to mix with people from other divisions and collaborate on joint projects. Some people may find it disorienting, but if projects are scheduled to last 2-3 years the goal is never that far away.

Innovation is vital in every industry, and the size and structure depends on the sector and the market each company operates in. But I think it is time for more organisations to look at the college structure if they want to nurture and develop a stream of ideas that take their business forward over the long term.

 

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March 19, 2014 Posted by | Cambridge, Creative, Startup | , , , , , , , , , , , | Leave a comment

Nokia and Microsoft – two drunks at the end of the party?

This week’s takeover of Nokia’s handset division by Microsoft is easy to see as a marriage of desperation, or as Robert Peston put it, “two drunks supporting each other at the end of the party.”

English: Nokia N900 communicator/internet tabl...

Wind the clock back 10 years and the picture was very different. Nokia was dominant in the phone market and Microsoft held a similar position in the desktop/laptop market. The first Windows-powered smartphones were being released, but they were incredibly complex (I know, I had an Orange SPV), essentially transferring the desktop Windows experience to the mobile world. There were a whole raft of other mobile handset providers that have since disappeared or lost their independence – Motorola (now owned by Google), Ericsson, and Siemens.

Two things changed all this – Apple came along and made smartphones easy to use without losing their power and in a linked move, the world embraced mobile with the growth of 3G and wifi. As the existing market titans, with enormous user bases, Microsoft and Nokia couldn’t evolve fast enough to change their business models. The same process happened in previous waves of computing as the world moved from mainframes to mini computers and then PCs; few CEOs have the guts to bin their existing cash cow and launch a radically different business.

So could either of them have done things differently? I’ve talked before about Microsoft’s disastrous attempt to innovate with Windows 8 but you can argue that it didn’t invest enough in mobile early on. If it had combined ease of use and access to compelling content with the power of the SPV (which was heavily subsidised) and made it less ugly it could have had a chance of pre-empting Apple’s rise. But it never seemed to be a priority. And Nokia again seemed to view smartphones as a niche market until very late in the day, focusing on the Communicator which was a high end business tool rather than a consumer-friendly device.

All this means the combined unit has a tough job on its hands and is going to have to focus heavily on innovation and marketing to succeed. Ironically given Apple’s perceived lack of innovation and BlackBerry’s woes there is chance to seize the challenger position and become the quirky, cool alternative to Samsung and the iPhone. This does mean being brave and creating something radical that shakes up the market. Microsoft couldn’t do it with Windows 8 – so can an injection of Finnish thinking make the difference?

 

September 4, 2013 Posted by | Marketing | , , , , , , , , , | 1 Comment

Moving marketing into the future

Marketing is at a crossroads. The rise of digital and mobile is providing the ability to get even closer to customers and deliver experiences that meet their needs. But like every change, it can be daunting. The discipline of marketing is moving fast and that means learning new skills and techniques to reach customers. Today’s marketer has to combine being a (big) data scientist and a technologist that can create and run web, mobile and social media campaigns with the more traditional skills of understanding customers and creating compelling propositions to reach them.

Luckily of course, being marketing, there are no shortage of gurus and conferences available to advise on how marketers can make the move to embrace digital. Unfortunately many of them may be well-marketed but are short on actionable content for the majority of businesses. After all it is no point seeing what someone achieved with a multi-million pound budget when you are scrabbling around down the back of the marketing sofa for loose change to pay for your new Facebook campaign.

That’s where the forthcoming Another Marketing Conference (25 June 2013 at the Junction in Cambridge) comes in. Designed to help marketers innovate, it features inspiring speakers and a chance to network with peers in great surroundings. I attended last year’s and found it a refreshing mix of interesting presentations and discussion of the pressing issues affecting marketers at all levels. Most importantly, I’ve used lots of what I learnt last year since then – and not just as content for blog posts. I’m not alone – according to the organisers 91% of last year’s delegates would recommend it to a colleague.

This year’s speakers include:

  • Rory Sutherland, Ogilvy, on multiple models of human behaviour
  • Richard Murphy, Nokia, talking about reinventing the company in the digital era
  • Paul Berney, Mobile Marketing Association, on reaching mobile consumers through content and context
  • Peter Waggett, IBM, discussing big data
  • Julie Roberts, TMW, on making marketing effective
  • Dave Trott, The Gate, talking about unleashing the creative spark
  • Jon Dodd, Bunnyfoot, discussing tapping into human behaviour
  • Julie Strawson, Monotype, on delivering a seamless consumer experience across multiple touchpoints

There are a lot of marketing conferences looking to advise people on what to do next. From my experience last year, Another Marketing Conference is well worth checking out, whatever sector or size of business you are in.

June 12, 2013 Posted by | Cambridge, Creative, Marketing, PR | , , , , , , , , | Leave a comment

Mapping the world

Since time immemorial accurate maps have been crucial to attaining and keeping power. Navigational maps helped first the Portuguese and Spanish, then the English to reach (and annex) new territories across the globe. Later colonialism literally redrew the map of Africa, creating countries where there were none before. Maps are critical in battle and to take stock of your resources and population.

Old military map, in German

So control of maps brings control over your subjects. As we move into a mobile device dominated future this explains the enormous battle to command mapping in your pocket, using the power of GPS and network connections to find out where you are. Nokia spent $7.7 billion on NAVTEQ, while Google StreetView has seen the search giant survey the world at a granular level. It explains why Apple ditched Google and launched its own ill-fated Maps app on the latest iPhone – the company simply didn’t want to give up control of such vital data to a third party.

Essentially knowing where you are enables companies to better understand your behaviour and target offers that fit your location and background. And that’s the positive news – it now only takes four location data points to identify a mobile user according to new research. Something that law enforcement agencies (and criminals) are no doubt very interested in.

But for all its benefits GPS isn’t as accurate as mapping companies (and advertisers) would like. Particularly in large buildings, such as shopping centres, it doesn’t give pinpoint positioning. Which is why Apple has just paid a reputed $20m for indoor mapping specialist Wifislam, which uses ambient wifi signals to offer maps accurate to 2.5m. With this level of data clever marketers could target you with an offer for Costa as you walk into Starbucks while the police could place you (or at least your phone) at the scene of a crime in a crowded city.

Apple isn’t alone in looking at indoor mapping – Google now features 10,000 floor plans submitted by businesses while Nokia’s Destination Maps product has more than 4,000 locations in 38 countries.

I often bang on about privacy and how marketers need to tread a fine line between providing targeted offers and respecting personal space. And the move to indoor mapping, combined with ways of interacting such as QR codes, augmented reality apps such as Aurasma and Near Field Communications (NFC) mean that the possibilities of tracking, understanding user behaviour and tailoring marketing could become ubiquitous. Except in the countryside, where poor mobile coverage means that if you are lucky it tells you what village you’re actually in.

The future is hyperlocal and mobile – marketers need to embrace this, but make sure that they’re getting buy-in from customers or they risk a privacy backlash from both individuals and regulators.

 

 

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March 27, 2013 Posted by | Marketing | , , , , , , , , , , , | 2 Comments