Perspective 06

SPRING 2020

ISSUE 06

Mobility & Technology

STEPPING BACK FROM THE NOISE

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Meet the authors Product-service strategy

Editorial: Kevin McCullagh, Editor Tim Abrahams, Deputy editor Design: Celina Lucey Irina Massmann James Scott Joel Hayes Print: Baker Goodchild

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Kevin McCullagh

James Scott

Founder

Consultant

Product strategy & capability building

Consumer behaviour & technology foresight

Andy Fayle

Joel Hayes

Senior Consultant

Planner

Proposition development

Design research & mobility

Tim Perry

Tim Abrahams

Director

Associate Editor

Proposition development & portfolio strategy

Urbanism & editorial

A LETTER FROM THE EDITOR : Kevin McCullagh Founder, Plan

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hen we launched Perspective five years ago, I wrote in the introductory letter of our first issue that ‘it’s never been more apt a time to step back from the “Cult of Now” and sift the signal from the noise’.

Five years on, we continue to focus on real opportunities, while side-stepping the hype and wishful thinking. Over the past year we have applied that clear-eyed focus to product and service strategy projects in trains, planes and automobiles, as well as scooters, healthcare and telecoms. Some spin-offs of these projects have fed into this issue, alongside other topics we’ve started to think about.

Tim Abrahams has taken Sidewalk Labs’ proposals for The Quayside in Toronto as a test case, to take a deep look at Big Tech’s bid to design and build an operating system that the authorities can use to run their cities. We also give some insight into the regulatory environment that they and other actors must address within cities, as well as the economic reality that is driving micromobility – one of the proposed solutions to changing transport needs.

The personal interests and experience of our researchers and strategists here at Plan gave birth to fascinating investigations into the future of two

product worlds which may, at first sight, seem straightforward. However, Joel and James’ articles, on digital photography and gaming respectively, show how other technologies are breathing new life into these worlds. Another pair of articles

by Tim Perry and Andy look at how integrating services can help companies navigate the big online retailers which are now dominating their sector and promising sustainable growth.

We also have our regular elements, such as Killer Stats and Eyecatchers. We call these ‘filters’, as we sieve through huge amounts of material to find the most striking examples. It’s a good shorthand for our editorial process, so we hope you find as much in these familiar slots as in the longer pieces. We are lucky to have received a great deal of feedback down the years; positive comments and counterpoints as well as enquiries off the back of specific articles. Have a good look through and do get in touch.

Finally, for all those design leaders among our readers, look out for a sister publication of Perspective called Focus, which will give an in-depth analysis of how to win support for, develop and execute an Experience Strategy. www.plan.london/subscribe perspective@plan.london www.plan.london

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Review Major developments in 2019

Facial recognition: watching the watchers In August pro-democracy protesters in Hong Kong attacked smart lamp-posts in the city, some of which contain cameras. In London – to a subsequent outcry and step-down – owners of a prime shopping development revealed they had operated a limited facial-recognition security system since 2015.

Meanwhile in the USA, the American 4

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Civil Liberties Union (ACLU) stepped up their campaign against the use of facial recognition technology by law enforcement agencies. In 2018, they exposed the unreliability of Rekognition – Amazon’s face recognition software – by running mugshots of 535 members of Congress through it; Rekognition matched 28 to individuals who had recently been arrested. Last year the ACLU showed that in Florida alone,

law enforcement agencies make up to 8,000 facial recognition searches per month. The public backlash, which has pointed to uncomfortable parallels with China’s use of the technology, has clearly surprised the authorities. How far privacy concerns over facial recognition in public space will spread to its use on private devices such as smartphones and in services such as banking, is yet to be seen.

Cities on the front foot with scooters After being blindsided by scooter start-ups, cities are becoming more proactive in controlling if and how they are used on their streets. Nashville is one US city that banned e-scooters outright in 2019. Others such as Columbia in South Carolina instigated a year-long ban. Elsewhere cities

Auto alliances to avoid car crash Fiat Chrysler and the owner of Peugeot struck a merger deal at the end of 2019 to create the world’s fourth-largest carmaker at a time of sweeping change in the industry. As well as consolidating, auto titans are deepening their collaborations in the face of falling sales and enormous R&D costs – particularly in developing Electric Vehicles (EVs), driven by stiff emissions targets. Investment in Autonomous Vehicles (AVs) and Mobility as a Service (MaaS) is being wound back. In July 2019 Ford and Volkswagen expanded their alliance to share IP and development costs on EVs and AVs. In early 2019 BMW Group and Daimler AG merged their free-floating carsharing services DriveNow and Car2Go into Share Now. Later that year they pulled

have deployed different measures to control e-scooter usage. In May, bosses of scooter firms were summoned to the Mayor’s office in Paris to sign a good conduct agreement and threatened with a ban if they didn’t cap scooter numbers and ensure parking improved. In Copenhagen, authorities erected temporary city centre roadblocks over the summer so that e-scooter users could be breathalysed. Meanwhile, the UK’s approach is to define scooters as motor vehicles and track best practice in cities before introducing regulations at a later date. Micromobility companies not only face the challenge of finding profitable business models, but also an uncertain and highly localised legislative environment.

the carsharing service out of cities such as London and Stockholm, plus the whole of North America, and wrote down the book value of their mobility services by approximately €300m (£250m).

Expect more defensive moves in the year ahead as players aim to share the risk and costs of managing the transition to smarter and cleaner mobility, in the context of stiffening legislation and uncertain consumer demand.

Huawei surfs Trump’s wave of chaos 2019 was the year that Huawei got caught in the chaos of President Trump’s trade war with China. In May it was blacklisted, and US companies were banned from doing business with the company. An immediate result was that new phones could not access Google’s suite of apps or run Android apps from the Google Play Store. In the wake of the ban, Huawei’s overseas smartphone sales fell by 40 per cent. In June, as trade talks improved, Trump softened his stance and agreed that the likes of Google and Qualcomm could sell to Huawei again – on deals not connected to national security. In August, he seemed to contradict this message – ‘we’re not allowing Huawei into our country’. Then in November, US Commerce Secretary Wilbur Ross confirmed that licences to allow Huawei to trade with US companies ‘will be forthcoming very shortly’. The upshot?

In October, the company announced that its smartphone sales were up 26%, compared to the same period a year ago, helped in large part by strong sales in China – even though all Android phones are blocked from accessing Google apps and Play Store there. www.plan.london

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LATEST THINKING In Toronto, the Google subsidiary Sidewalk Labs has given one of the clearest signs yet of Big Tech’s designs on the city.

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IN SMART CITIES : Tim Abrahams November 2019

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01 Quayside site plan 02 Large pedestrian areas at Queens Quay

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he tech giants have disrupted huge areas of human endeavour: communications, media and, more recently, mobility. Now, in the Quayside development in Toronto, Sidewalk Labs – a sister company of Google – is trying to disrupt the way in which we live together.

This small strip of real estate on Lake Ontario offers us an intriguing glimpse into what can be achieved when you integrate technological innovation into the very processes of city building.

Innovation was the key ambition of the quango set up to develop former docks in Toronto, funded

by Canadian government money, when in 2017 they put out a call for proposals from a company who would not just finance and build 800 houses but also act as an ‘innovation partner’. Sidewalk Labs was just two years old when it won the contract. Although the team has construction expertise – it is led

by Dan Doctoroff, New York City’s former deputy mayor for economic development and rebuilding – the main reason Sidewalk won the contract, on top of its financial clout, is the company’s background in innovation.

Even if the development is still at least four years away from starting, and is now unlikely to be fully built, the Master Innovation and Development Plan submitted by Sidewalk Labs in summer 2019 provides some fascinating insights into the latest moves in smart city thinking.

Getting about On the surface, the least assuming area of innovation is mobility. The city government already had plans to extend light rail into the initial development called Quayside. But in Sidewalk Labs’ hands it would be funded through loans based on future revenue and integrated with bike and pedestrian infrastructure, as well as on-demand mobility services. Quayside promises to provide a single logistics hub which would distribute goods locally via a tunnel system. The

Sidewalk Labs will conduct shortterm, pre-development research in the fields of technology and sustainability in addition to making long-term investments in infrastructure and pilot projects.

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hub’s urban consolidation centre on the periphery of the site would collect deliveries and prepare them for last-mile transport via smart containers. These would be placed on self-driving delivery dollies and delivered to their final destinations via underground tunnels and service hatches. In addition, an off-site storage space – an inbuilt Big Yellow – would store goods and have them delivered on demand.

There are the first signs of a smart road infrastructure at Quayside, too. Sidewalk Labs has also been exploring dynamic pavement and moveable street furniture which adapt according to time and season.

For example, on one of the main thoroughfares, a three-metre-wide strip would be reserved for flexible drop-off zones. As demand for drop-offs declines based on the time of day, those spaces could

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be individually reprogrammed as expansions of the pavement, e.g. for café tables during lunch.

When a space is made available for use by pedestrians, it would be clearly marked as unavailable for vehicles through digital signage, and movable street furniture which forms a physical barrier.

Demand-based pricing will be applied to access the kerb, built partly on the work that the Alphabet subsidiary Coord is doing in mapping parking access in major US cities. Users will have to make reservations to access the kerb, be it with their own vehicle or a hired one, and be alerted to any changes or issues. Drivers will incur a higher fee for waiting too long at a kerb and be informed through apps. The aim is that kerb congestion and double-parking which is particularly pronounced in North American cities would become a thing of the past.

The plans also contain proposals for parking areas for dockless e-bikes.

Heated pavements and cycle routes would keep paths clear of ice during the long Toronto winters.

Sidewalk Labs was originally after a much bigger 77-hectare site adjacent to Quayside that it calls the IDEA District but was told it must stick to the small plot in October 2019.

This larger development plot would have offered a greater opportunity to work at scale as well as allow the Google affiliate to explore what a privately-funded light rail system integrated with ridesharing and micromobility would look like. And

' S I D E W A L K LABS WANTS TO DISRUPT THE WAY IN WHICH WE LIVE TOGETHER.'

while critics may point out that many of the company’s innovations operate from self interest, Sidewalk Labs insisted in its plan that it will not give any special priority to sibling companies, such as Waymo. It did say, however, that the planning of transit interchanges and dynamic kerbs was based on the concept that self-driving taxis will become the backbone of the ridehail system in Toronto by 2035.

Most interesting, perhaps, are the carrots and sticks that Sidewalk would use to try to limit car ownership. The amount of car parking space it plans for the first phase is about half of what might be expected, although there will be extra provision of space for car shares. A subscription service for the various mobility modes available would be provided costing around $6,480 a year; a saving on owning a car which, Sidewalk Lab suggests, is as much as $4,000 a year. The integrated mobility www.plan.london

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package includes a discounted transit pass, an unlimited Bike Share Toronto membership, access to micromobility, and credits for car-share providers. One of the joys of starting a new neighbourhood from scratch is that this kind of integration can be built-in and offered as a means of tempting new homeowners in.

Smart Buildings The proposal to integrate innovative hard infrastructure with the digital, enabling the former to work even more efficiently, is perhaps one of its most interesting aspects of the plans. Traditionally structures are assessed at the beginning of their lives, but Sidewalk Labs is promising a real-time building code system which would monitor noise, nuisances, and structural integrity throughout a building’s life. Indeed the company’s ambition to monitor and then recalibrate the whole urban environment is tremendously ambitious. A proposed 10

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active stormwater drainage would retain stormwater and reuse it for irrigation. The system’s status would be monitored digitally, and storage containers would be emptied in advance of a storm to avoid combined sewer overflow.

Again, even if these proposals are put into practice, it should be remembered that Sidewalk is able to make urban environments flexible from inception at Quayside and The IDEA District, if it had happened, rather than through an ICT retrofit.

The plans include proposals for car parks that can be easily adapted into office space when car ownership falls as predicted, and a whole new building system called Loft, which uses modular, timber construction designed to make residential units adaptable. Quayside hopes to include flexible retail spaces which can be quickly combined for large retailers and vice versa. A leasing platform called Seed Space would help small businesses and other retailers book

a wide range of ground-floor space sizes over different time periods.

Elsewhere the smart building technology and smart service monitoring builds on precedent.

South Korea’s smart city Songdo pioneered integrated services, designed as systems. For example, rubbish is pneumatically ‘sucked out’ of houses into a subterranean processing centre and then burned in an incinerator to generate electricity, with all stages monitored using RFID. Sidewalk has a very similar smart disposal chain in its proposal beginning with a set of separate pneumatic waste chutes for landfill, recycling, and organic waste. These chutes transport the waste underground to an on-site neighbourhood collection point for truck removal.

Data Management It is in this sphere that the peculiarities of having a tech giant as both innovation and development

01 Interior walkway at Quayside

partner reveal themselves. On one hand, Sidewalk wants Quayside to be a laboratory of technical innovation. ‘Sidewalk Labs plans to build shared, adaptable programming infrastructure into the foundation of the neighbourhood, creating the necessary groundwork for affordable experimentation,’ reads the plan. It offers a number of scenarios where community users might use the digital infrastructure embedded into the neighbourhood; e.g. an environmental advocacy group could set up air-quality sensors around Quayside and make the data publicly accessible for others to use as well.

The plan describes Quayside as both a place where tech is tested out, but also a place where monitoring – always for the public good, of course – is undertaken. ‘Digital tools that make measuring the success of public spaces easier for everyone, from community groups to municipalities, provide yet another way to encourage local participation,’ says the plan. Sidewalk has created an app called CommonSpace, into which community organisers can enter information they observe about public life, such as what assets or areas people prefer and which they don’t.

The intention is genuine, but the result might be that the inhabitants of the city will become part of an experiment into the degree to which community life can be guided through the provision of specific technology.

To counter any concerns over the ownership of data or privacy of individuals, Sidewalk originally suggested an independent body it calls an Urban Data Trust, which would be charged with balancing the interests of personal privacy.

This public steward would establish a clear process for approving any initiative that involved the use or collection of urban data for all parties, including those proposed

by Sidewalk Labs. The Urban Data Trust would anchor this process around a publicly auditable Responsible Data Use (RDU) Assessment – an in-depth review that is triggered by any proposal to collect or use urban data. It appears that this has been knocked back by the city authorities who will control data usage, although how is still unclear.

Not only has the project started up amidst a backlash against the tech giants but there is localised resistance in Canada to a US company winning a key contract.

Sidewalk work is viewed, certainly within parts of the local population, with suspicion. Thus the status of data produced by the project has been subject to huge scrutiny since tech entrepreneur Saadia Muzaffar resigned from the advisory panel, formed in 2018 to assist the city, because she believed the city should own the data produced by the development.

' I S S U E S O F M O B I L I T Y A R E MOVING AWAY FROM THE CAR AND INTO TRAFFIC MANAGEMENT SYSTEMS.'

Conclusion What does Sidewalk Lab plan for Quayside and the knocked back IDEA District say about the future of cities? There is a very clear sense that issues of mobility are moving away from the car and into traffic management systems. Thought is being given not just into how the digital can optimise mobility, but how hard infrastructure can accommodate digital innovations; e.g. integrating micromobility parking into kerb design. Sidewalk Labs is trying to make the hard and the soft work together, instead of the digital simply re-optimising 100-year-old technologies such as rail and sewage planning.

Quayside has genuine potential to be disruptive, although one should remember it is experimental. Given that it is a laboratory, Quayside may not be the most perfect place to live.

There is also still an inherent contradiction being played out on ownership. IBM – a service provider – defined the term smart city as an urban environment ‘that makes optimal use of all the interconnected information available… to better understand and control its operations’.

Meanwhile an advocacy group like Manchester Digital Development Agency suggests: ‘a “smart city” means “smart citizens” – where citizens have all the information they need to make informed choices about their lifestyle, work and travel options’. Given the prestige of both the project – it is potentially one of the largest in North America – and the parent company, these conflicts will continue and will not be resolved in a perfect technical solution. www.plan.london

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CURBING CARS Cities around the world are increasing restrictions on cars.

Milan, Ban all diesel cars Brussels, Ban all diesel vehicles Copenhagen, Ban sale of combustion cars Amsterdam, Remove 10,000+ parking spaces Bristol, Ban diesel cars from centre 8 hrs/day London, Ban all diesel cars Oxford, Low emission zone Birmingham, Clean air zone in city centre Oslo, Ban combustion car sales Madrid, Ban all diesel cars citywide Madrid, 500 acre city centre car ban Copenhagen, Ban diesel cars from city centre Oslo, Remove 700 parking spaces New York, Ban cars from entering Central Park Paris, Car ban on first Sunday of every month Paris, Citywide ban all ICE vehicles Amsterdam, Only emission free vehicles allowed Rome, Ban diesel vehicles London, ‘T-Charge’ on diesel vehicles Athens, Ban diesel cars from city centre Oslo, Ban all private vehicles New Dehli, Alternative day licence plate car bans London, Ultra low emission zone Berlin, Low emission zone London, Low emission zone London, Congestion charge

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HOW CAN SHARED SCOOTERS TURN A PROFIT? Operational costs

$1.27 Gross margin per ride Average projected profit, excluding cost of scooter

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Rides to break even Number of rides at $1.27 to pay-off the $400 scooter cost (industry average)

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Actual scooter lifespan Average number of rides made before the scooter reaches ‘end of life’

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$3.00

Price per ride

$4.27

If shared scooters are to make a return, the current model has to change.

Contribution margin per ride

$1.27

Potential business model fixes 1/Improve durability Increase life spans with robust designs fit for rental abuse. Skip’s latest S3 promises easy repairs with a modular design.

2/Increase security Guard against lost vehicle costs by adding security features. The Bird 2 features self-reporting damage sensors.

3/Lower operating costs Streamline daily overheads by optimising charging and positioning operations.

Tortoise is developing semi-autonomous scooters that reposition by themselves.

4/Reduce scooter cost Drive manufacturers to provide vehicles at lower prices (without compromising quality).

5/Innovate revenue models Explore more calculable ways to monetise scooter services. For a monthly subscription, Bird delivers a scooter to your home for extended rental.

6/Raise rental price Increase rental prices to help offset rising city fees. Washington’s established providers raised rental rates by an average of 84% in 2019.

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CAMERAS AREN’T DEAD YET : Joel Hayes August 2019

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As smartphones threaten the industry, new formats are emerging to anchor cameras as the ultimate image-making devices.

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he first two centuries of photography saw 80 billion photographs being taken by the Millennium. By comparison, in the age of the smartphone, we took one trillion images in 2018 alone.

Throughout the analogue era, all the way to the inception of digital cameras, photography was subjected to revolutions in key products and services. Now, however, nothing compares to the effect of the smartphone. No device has produced so many images and consequently caused so much disruption as the phone – its evolution correlating with the depletion of whole subcategories of camera (anyone remember pointand-shoot compacts?). And there’s no sign of the smartphone era ending anytime soon. Before we write off cameras, however, it is worth looking more closely at what photography involves: concepts that remain as true today as they were in the 1800s.

There are three core activities: capturing, storing and distributing images. Historically, products which have enhanced these activities have made an impact. In the analogue era, Leica introduced the snapshot experience we’re familiar with today with portability and the ability to shoot 36 sequential exposures. Later, the Polaroid affirmed the appeal of instantaneous image distribution by processing and printing images on-camera. Digital automation

brought screens, enabling live imagereferencing, meaning settings could be suitably adjusted on-the-go to achieve the desired results. Today, who can deny the joys of digital photo libraries, found on our iPhone camera rolls or online via Google Photos, that automatically sort and tag our images with ease?

The digital era has seen the parallel development of miniaturised optics, widespread connectivity and the subsequent rise of image-based social media. This has collectively led to the smartphone, which we all carry in our pockets, becoming the first mainstream digital device to facilitate all three activities. Constantly having a camera to hand has changed the way we use images – photography is a far more ubiquitous communication tool than ever before. Thanks to a shift towards ever-similar all-glass designs, cameras are now becoming one of the few differentiating physical features between phones. An arms race has ensued, visible in ‘Shot

' W H A T I F PEOPLE DON’T WANT DECISIONFREE PHOTOS?'

on iPhone’ and ‘Phone X vs Pixel’ ad campaigns.

Imitation Mobile giants such as Apple, Google, Samsung and Huawei are going all-in on cameras. In just two years, iPhone camera parts went from accounting for 9% of total component cost to 13% and this isn’t predicted to decline.

Tech companies also bring with them knowledge in technological fields previously unknown to conventional camera makers.

AI technology combined with optical development has created computational photography and, through this, smartphones are mimicking sought-after characteristics of high-end cameras.

There has been an explosion of features: depth-sensing cameras, advanced scene recognition modes, super zoom capabilities, postimage adjustable focus, and even controversial ‘beautification’ selfie post-processing.

The pace of development hints that the game should really be over soon for camera makers, with this level of sophistication being applied to cameras in phones, once considered secondary photographic devices. Established manufacturers such as Canon, Nikon, Fujifilm and Panasonic were clearly slow to respond www.plan.london

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01 Hasselblad CFV II 50C 02 Pixii Rangefinder

killing high-end photography, staple social platforms such as Instagram, Pinterest, Facebook, even Airbnb, are becoming more image-reliant and this is creating a demand – both in consumer expectation and brand authorisation – for the highest quality imagery possible. Everyone wants there to be devices which are dedicated to capturing the best images possible and it’s safe to say this gives plenty of space in which new and established brands can play.

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to the smartphone disruption.

Connectivity features such as onboard WiFi and notoriously clunky image transferring apps have been hurriedly integrated to cover oncamera distribution to social media.

New camera makers have emerged over the years such as Lytro and Light; however, they have not been mainstream successes and their seemingly revolutionary technologies (such as adjusting the focus of an image post-capture), have been transplanted into phones. New camera formats fall between two stools. They don’t quite replicate the speed of workflow users can enjoy on a smartphone, but nor do they provide the adaptability of more traditional cameras.

Yet it is possible for cameras to exist alongside the smartphone, so long as manufacturers approach innovation from new angles. In recent years, aided by the launch of more compact high-performing mirrorless cameras (better image quality in smaller bodies), manufacturers have streamlined their portfolios to focus on the higher end. Sony, the first to make mirrorless cameras mainstream, has been dominating this new wave 18

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of cameras. Yes, total sales may still be down for almost all Japanese makers, but removable lens cameras have stabilised at much higher revenues than before whilst outselling fixed lens point-and-shoots. The owners of these cameras are also younger than ever before – and more likely to be female.

Camera craft There’s clearly a stance being taken amongst younger camera owners against ‘decision-free’ photography, as people look to learn a craft and create an aesthetic unique to them, away from the same filters everyone else is throwing over their images. Far from

Recently, a small number of brands have pursued interesting approaches to hardware. Leading lens manufacturer Zeiss has attempted to combine the best of all worlds with the ZX1, its first digital camera which facilitates shooting, editing and sharing on-camera without the need for a smartphone. French startup Pixii is betting on an alternative approach with a minimal screenless rangefinder camera which prioritises getting images onto your smartphone asap.

Traditional brands are also playing with new formats – Hasselblad is a great example. Celebrating slow photography, the retro-looking $5,750 CFV II 50C allows photographers to

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' I N N O V A T I O N W I L L HAPPEN WHEN BRANDS DISSECT WORKFLOWS.' use lenses made as long ago as the 1950s but with a contemporary image processor and touchscreen.

Going where smartphones can’t go, Hasselblad has collaborated with a leading drone manufacturer to get its lenses in the sky. Fujifilm, who enjoyed industry-leading growth last year, has a new Instax camera which brings a digital twist on the current interest with the apparently defunct technology of film photography, by enabling users to view images instantly on their phone or via onboard printing.

Lens-maker Sigma has released the FP, combining impressive specs in a pocketable modular body, enabling photographers and videographers alike to adapt the camera to suit their needs.

Place to play Professional photographers tend to frown upon the multitude of ‘amateur’ photo-sharing platforms, but it seems like a new generation of services is finally coming to their aid. New services such as Meero are emerging to help companies seamlessly commission work by making finding the right photographer for a job simple.

Portfolios can be browsed to help select photographers and the platform hosts all related communication between client and photographers, including image transferring. Unsplash, a user-submitted stock image site, has seen unprecedented growth, becoming the go-to destination for stock images that don’t look like stock images. Unsplash boasts over

a billion photo downloads from a mass of over a million usersubmitted images.

Of course, innovation is also happening in the smartphone space with complementary products such as Moment and Shiftcam emerging.

Both brands provide premium add-on lenses for smartphones, allowing users to create authentic effects as opposed to mimicking them. Determined to make phones better cameras, Moment has cultivated a community around photography. Moment uses its huge social media following to connect with its intended audience, uploading weekly YouTube videos and hosting regular photo competitions. It’s quite remarkable that no camera maker has ever managed to build a photography community that’s so visible, especially when they’re the ones offering the real cameras to ‘real’ photographers.

All these innovations in photography have happened because companies have enhanced one or more of the activities of capturing, storing and distributing images. Further innovation will happen when brands

dissect the workflow of present-day photographers, both smartphone and standalone camera users, to uncover where they can play. To standalone camera makers, the smartphone should be considered as a device to build products around, especially to cater to those who want instantaneous results. Here manufacturers can recognise what users are already carrying around with them (like Pixii).

There’s a saying that the best camera is the one that’s with you, which apparently gives the smartphone precedence. But what if manufacturers think about how to keep the smartphone in people’s pockets by promoting considered capturing through dedicated hardware? What if people don’t want ‘decision-free’ photography?

What tactile controls could elevate the photography experience?

Where could cameras go that smartphones can’t? Cameras can still be appreciated for what they are, designed to enable the capturing of images. The future success of the camera hangs on manufacturers creating products which people are enticed to buy and use. Consumers will continue to want cameras that produce results beyond the smartphone and provide superior photographic experiences.

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Killer stats Numbers that made us think

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Amazon planes Amazon now owns more aircraft than Virgin Atlantic (37). It also employs more staff than FedEx.

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Don’t just drive rentals A significant portion of customers of Japanese car sharing firm Orix Auto Corp use their rental cars for nontransport purposes, with sleeping the number one reason given.

Household vehicle ownership outstripped population growth 2012-2017 Change in household vehicle ownership

Population growth

Seattle Boston Los Angeles Washington DC New York City San Francisco Philadelphia Chicago 0% 20

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4%

8%

12%

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10:1 E-bikes > EVs

European e-bike sales outstripped electric car sales 10:1 in 2018.

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Trips replace cars Researchers have concluded that e-scooters produce half the emissions of an automobile; but in a survey of e-scooter riders in Raleigh, North Carolina, just one in three trips on an e-scooter replaced a car ride.

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: James Scott August 2019

PLAYING TO WIN The cloud, the car and the voice: the three new frontiers for gaming industry expansion in years to come.

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hen it comes to 21st century entertainment, gaming is arguably the biggest game in town, eclipsing the combined market value of the film and music industries. No longer a fringe activity for boys in their bedrooms, gaming has become a mainstream industry with something for everyone. With a total market value of £152.1bn in 2019, it’s no wonder brands are vying for a way to play a 22

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part in the sector’s future. There is all to play for in the future of gaming. Despite the steady pace of innovation in the console sector, the PS4 and XBox One are approaching peak ownership.

Powerful smartphones, AI being embedded in more products, VR headsets and the fanfare around 5G rollout are all familiar tech stories, but their intersection with gaming will create some big changes in the next 10 years.

Discussion about gaming’s future across popular forums such as Eurogamer tends to focus on the thrilling new storylines, ever improving graphics, trending mobile games and, of course, where next for Fortnite and its 250 million registered account holders.

While these are all exciting topics for gaming fans, here are three less debated but influential shifts set to make gaming more accessible, convenient and immersive for all.

On the cloud From Netflix to Spotify, subscriptionbased distribution is now the way we consume music, TV and film where and when we choose. To date, however, problems with lengthy downloads, laborious installs, cross platform interoperability and server issues have stopped gamers getting what they want: immediately available and instantly enjoyable games. The prize has always been the ‘Netflix of video games’, but technical barriers have kept it out of reach – until now.

Cloud gaming promises to bring console quality experiences to a new audience, creating a world where anyone can play any game, anywhere, anytime and – most importantly – on any platform. It became a category to be taken seriously this year with Google’s launch of Stadia. Google heralded a future where high-quality graphics and massively multiplayer games, usually restricted to owners of powerful PCs or consoles, will be playable through tablets, phones and web browsers. One of the most promising features Google plans to leverage is the ability to jump seamlessly from a Youtube video, maybe of a demo or live playthrough, into the game itself.

There have been several failed attempts to make this happen, most notably OnLive which, after issues with network bandwidth and server capacity resulting in input lag and poor uptake, was eventually sold to Sony in 2015 for a fraction of the potential worth of its patents.

Although we are now much closer to making mass cloud gaming a reality it won’t come without its challenges.

With Stadia currently out in the wild, it is yet to be seen if the technology is up to the job. Early complaints have already emerged about the service’s 4k rendering and streaming performance – technical issues Google assures us can soon be resolved.

Another issue is that gamers are still somewhat tied to the idea of ownership. Unlike Netflix or Spotify, Stadia’s model still requires the purchase of games at full price on top of the monthly subscription. With Google’s track record of canning weaker projects, gamers may remain hesitant to take the leap from their familiar PCs or consoles from Sony and Microsoft, both of which are expected to launch cloud offerings by 2021. In the long run, however, the potential for superior power in cloud

graphics processing is undeniable.

As Jack Buser told GamesRadar: ‘You will see games on Stadia that could not be built on traditional platforms and that’s where things get really, really interesting.’ Games developed specifically for the cloud can evolve into another kind of entertainment. Imagine a global gaming event as viral as a Youtube video, as frictionless as streaming an album, but as high quality as playing on a dedicated gaming rig. Whether Stadia takes the lead, or is absorbed into Playstation Now like OnLive before it, cloud gaming is on its way.

It will still require a shift in gamer behaviour, but when the giant user base, increased internet speeds and bandwidth surpasses the relative strengths of consoles, cloud gaming will become the only way to play.

2019 Global Games Market Per segment Tablet games $13.6bn

Console games $47.9bn Smartphone games $54.9bn Downloaded/ boxed PC games $32.2bn

Browser PC Games $3.5bn

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Driving change The automotive industry is facing some harsh realities. From falling demand and emission standards to concerns about a shift away from ownership, car brands are under pressure to find new revenue models and fast.

Tesla’s recent partnership with Netflix, which allows car owners to watch streaming content on the infotainment system, shows how in-car media is evolving. When it comes to gaming, however, existing car infotainment systems obviously have their limits. Small screens and clunky user interfaces make tablets or mobiles preferable, even though they are a main cause of car sickness.

Because gaming represents a huge opportunity for car manufacturers, they are now utilising driving data, 24

Perspective

haptic seats, VR headsets and advanced connectivity to make vehicles double as immersive entertainment centres.

Holoride, an Audi spin-off, currently lets passengers escape to a digital world through a VR headset. Imagine taking an Uber to the airport, but in VR you are flying through an asteroid belt, shooting down enemies in outer space. When your driver veers left towards your terminal, your spaceship responds in turn. The visuals in the headset are matched to the movement data of the vehicle, increasing immersion and, most importantly, eliminating both carsickness and the nausea some people report from using VR devices.

Consumer tests reveal these types of experiences need to be narrative driven – a difficult feat for an

unpredictable car journey. To make this a reality, Holoride’s Elastic Content technology will be able to adapt a story to the distance of the planned journey. Holoride is planning to make this an open platform and Porsche has already tested the technology in its vehicles.

Where things get interesting is when brands decide to personalise these experiences. Porsche envisages brand-specific solutions such as experiences for the race track.

In-car gaming could be a winning combination, and a natural next step for the burgeoning mobility service sector. With Daimler exploring the possibilities of in-car gaming, the competition is on to find new immersive entertainment ideas in cars and buses; getting from A to B could become one of the most fun things you can do.

01 Holoride VR 02 Lego Duplo Stories

Talking time Our smart-home assistants may currently dole out weather forecasts and obscure facts or even play quizmaster for your friends, but custom built games played with voice alone on these devices are coming. On Alexa, there are already fun titles such as Kids Court where the voice assistant will resolve household disputes and deliver a lighthearted sentence to the perpetrator. Reviews online report it as being a lifesaver for sibling disputes and in some cases marital ones.

According to Alexa creator, Dave Isbitski, ‘Alexa, play games’ has been requested billions of times and he sees the development of voice-only games as a natural next step following the 160% increase in spoken games in 2018. At the 2019 annual Voice Summit, Isbitski announced that Amazon had invested in a voice-control gaming tool called Skill Flow Builder, a system designed to help creators of voice games develop narratives. One of the first to use this tool is Vortex, an adventure game from voice-first studio Doppio, which places you in a deep space voyage where you are awoken from a cryogenic slumber to defend your space ship – using only voice commands. This experience can be enhanced with on-screen visuals through an Echo show or Fire TV, although generally the attraction of a voice-first game is the absence of visual stimuli and the reliance on imagination.

' M O R E S U B T L E CONVERSATIONAL INTERACTIONS COULD BECOME A REALITY.' Division Network, which works with Tom Clancy’s The Division 2, giving gamers hints and tips about the deeper storyline in the post-apocalyptic shooter game.

Lego Duplo stories is an interactive experience aimed at kids that gives audio prompts through stories to guide physical play. These types of interactions surprise and delight users and add to immersion.

In addition, while consoles can accommodate an extra player or two, voice games let a whole group of friends play together.

We are unlikely to see the pings and pops of mobile games played in public replaced by a shouting match, but more subtle conversational interactions could become a reality.

Like games played during childhood in the playground, using voice leaves a lot more to the imagination which can add richness, creativity and a sense of community to games across the board. We may wonder one day how our fingers and thumbs ever sufficed.

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Voice can also be used to enhance and build on the experience of other games. For example, Ubisoft created an Alexa Skill called www.plan.london

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Eye catchers New products that turned our heads

Nike Joyride Porsche Taycan The so-called Tesla killer combines Porsche’s design DNA with the most advanced electric vehicle technology and recycled materials.

A multicoloured beaded cushioning system used to enhance comfort and stability across multiple trainer models.

Unu scooter With in-app key sharing and a removable battery, this stylish German scooter is optimised for urban mobility.

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Perspective

Sonos Move Brings the signature Sonos sound and connectivity to a truly portable speaker for the first time.

LG Signature TV A rollable OLED display that descends into the soundbar base, becoming a media screen or disappearing from view completely.

Emeco On and On chair Barber & Osgerby designed these durable and stackable lightweight chairs from plastic bottles to reduce carbon emissions in their transport and lifecycle.

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Big picture A trend from our database

Socio-cultural

Trust crisis

Search for authenticity Culture of emotions

Polarised prosperity Labour imbalances

Urban rennaissance Learning diversity

Retail revolution Austerity culture

Productivity push

Behaviour change

Sustainability tensions

Smart systems

Hardware revival

ic om on Ec Macro trends Developments that transcend specific markets, sectors and demographics Micro trends Particular dynamics with specific impact on certain markets, sectors and demographics

Perspective Perspective

Perpetual contact

Consumerisation of healthcare

Innovation imperative

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New conventions

Te ch no lo gi ca l

Ageing societies

Culture of fear

Mapping different types of trends on a common framework helps us situate strategy in a future context.

MICRO TREND:

DARK KITCHENS

: James Scott December 2019

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Why is it happening?

What is it?

Who is involved?

Like ride-hailing and micromobility, demand for food delivery has boomed in recent years but losses have widened; e.g. Deliveroo’s annual pre-tax loss rose to £232m in 2018. As well as squeezing their self-employed delivery riders in the drive to turn a profit, the industry is also looking to make kitchens more productive. This is generally being done by producing more meals and reducing costs.

Dark kitchens take two forms.

Virtual kitchens are restaurants that offer other menus under separate online brands, as well as their main walk-in restaurant brand. (One kitchen might retail through three or four different online identities.)

Meanwhile, Ghost kitchens are usually sited in low-rent property with no walk-in retail or dining presence and exist solely as a meal preparation hub for delivery orders.

There are three types of players. Delivery brands like Deliveroo, who have opened their own Ghost kitchens. Then there are established restaurants such as McDonalds which have built take-away only locations.

Then there are third party kitchen platforms such as CSS, founded by Ex-Uber CEO, Travis Kalanick, which serve the delivery brands and lease the kitchens to restaurants.

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NAVIGATING THE AMAZON CHALLENGE How brands can manage the risks and rewards of selling through the dominant online retailer. : Tim Perry November 2019

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Perspective Perspective

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verybody knows that Amazon has transformed the retail industry in recent years. But as well as providing new opportunities, the giant retailer also poses fresh challenges to the brands that sell on the platform. How can these brands balance the benefits of Amazon with the potential threats it poses to their business?

As the backlash against Big Tech gathers momentum, Amazon is collecting some bad reviews in high places. Last July, US Treasury Secretary Steven Mnuchin said, ‘I think if you look at Amazon, although there are certain benefits to it, they’ve destroyed the retail industry across the United States so there’s no question they’ve limited competition.’ According to Statista, 45.2 million mobile users accessed the Amazon app in March 2019 in the USA – twice its nearest rival in the retail sector. This market dominance has led to scrutiny of the tech giant by powerful trust-busters

' T H E M O M E N T A CATEGORY BECOMES ATTRACTIVE, AMAZON MAY DECIDE TO OFFER A DIRECTLY COMPETING PRODUCT.'

from the US Department of Justice and the Federal Trade Commission.

Yet Amazon is attracting ever-wider support where it matters: amongst consumers.

Prime numbers It’s difficult to overstate how huge Amazon’s customer reach has become. In 2018, Amazon CEO Jeff Bezos revealed for the first time the number of Prime subscribers – over 100 million worldwide.2 Five billion items were shipped with Amazon Prime in 2017. According to a study published in March 2019, two-thirds of US shoppers start their search for new products on Amazon. By contrast, only one-fifth start with a Google search.

So, for most companies selling through Amazon is a must. And they are encouraged to do so. Many smaller brands use the Fulfilment

By Amazon (FBA) service. Benefits include effortless logistics, potentially unlimited warehouse space, fast delivery at discounted rates, plus customer service and returns management. Amazon typically takes 15% of the sale price, but for many companies this still provides a far more efficient way to sell than going it alone or through traditional channels which usually demand a higher slice of the retail price.

What happens though when Amazon sells its own brands?

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label products. ‘You can be an umpire, or you can be a player – but you can’t be both’, the presidential hopeful tweeted.

With the upsides of using Amazon as a retail partner comes the risk of how it might use insights from aggregated sales data to launch its own products. Whether a sale is made by itself or by a third-party marketplace seller, Amazon gets the data.

The moment a category becomes attractive, Amazon may decide to offer a directly competing product.

This is a pretty scary prospect for small independent sellers. But it’s a threat to bigger brands, too.

Amazon is adamant that it doesn’t engage in such practices and does not ‘use individual sellers’ data to launch private label products.’ It says that ‘Amazon’s private-label products are only about 1% of our total sales.’ However, Amazon’s consumer packaged goods (CPG) brands, which include household, 01

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Perspective

' A F E W B R A N D S H A V E FOUND WAYS TO SELL THROUGH AMAZON, WITHOUT SHARING ALL OF THEIR PRECIOUS DATA.' pet, baby, grocery and health and beauty products, grew by 81% in 2018. Although this growth was from a comparatively low base as a proportion of overall sales, it is an early signal of a growing potential threat to established brands.

in key categories such as batteries, Alexa would suggest Amazon Basics and play dumb about other choices, saying ‘Sorry, that’s all I found!’ when there were many other big brands – Duracell, Energizer, etc – listed on Amazon.com.

One stop shop

Galloway showed how this advantage was pressed home by Amazon Basics batteries being cheaper if ordered via voice, through Alexa. Thus, customers are further encouraged to shop this way and unknowingly steered away from more established brands. It’s not just via Alexa. Amazon’s practice of exclusively promoting its own private-label products on the most prominent parts of its site has drawn the ire of many sellers and brands for being unfair and abusive.

But Amazon continues to double down on growing and promoting its private-label offerings. This is standard practice for big retailers, online or otherwise, though never before at Amazon’s scale and pace.

As of March 2019, Amazon had 119 private-label brands according to research firm Gartner’s L2, almost all of which were created in the past three years.

As well as launching competitive products, Amazon can use its platform to promote them aggressively. In 2017, Scott Galloway, Professor of Marketing at the New York University Stern School of Business, conducted an experiment to illustrate how Amazon was using its voice platform, Alexa, to promote its own brands. He reported how,

02 01 Some of Amazon’s 2000 Basics products 02 Powerdrive 2: one of Anker’s peripherals 03 Bose Connect app and QC 35 headphones

So how can companies and brands navigate the Amazon challenge and successfully sell online?

1. Embrace the benefits Strong brands are best placed to resist the threat of copycats, be they from Amazon or elsewhere. Steven Yang started Chinese electronics brand Anker in 2011 after working as a software engineer for Google in California. Sales of its portable battery packs grew rapidly from 1,000 to 20,000+ orders per day in four years, including over 100,000 in two days during the Thanksgiving season. AnkerDirect is now one of the largest sellers on Amazon.

Yang highlights customer insight benefits: ‘The key to building high quality and innovative products is to listen to your customers.

Amazon reviews are the single most important input to our new product development process’. Inside every Anker box there’s a small square piece of paper that asks customers the big question: are you happy, or unhappy? If unhappy, customers are instructed to contact Anker customer support. If happy, it asks customers to tell their friends or family. Or better yet, leave an Amazon review.

In this way, in addition to utilising Amazon’s sales and distribution, Anker takes advantage of Amazon’s powerful customer review system to help build its brand and lift it to the top of product search listings with ‘happy’ comments. At the same

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time, it collects ‘unhappy’ critical feedback, which helps improve its products, both directly and privately.

In 2018 Apple, perhaps the world’s strongest brand, began selling through Amazon, but used its muscle to promote and protect its brand. When you type ‘apple’ into Amazon’s search bar, the first result is a link to Apple’s official product page. This features all of Apple’s usual branding from its own website, along with a custom header

directing users to other products and accessories, similar to what Amazon does for its own hardware line-ups.

Apple has managed to preserve an experience on Amazon that is very similar to its own webstore.

A further display of Apple’s strength is that since the Amazon deal, only Apple or Apple-authorised resellers are allowed to sell Apple and Beats devices through Amazon’s site. All unauthorised listings were taken down in January 2018. www.plan.london

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2. Forego the benefits and retain control An obvious way to avoid price undercutting and competition from Amazon is to not partner with it and instead sell direct or through other channels. Although Amazon’s distribution scale makes it hard for mass-market brands to ignore, it is an option for higher-end, niche brands, with strong marketing operations, or those seeking to challenge the status quo.

Selling Direct-to-Consumer (D2C) helps companies retain control over their brand story. Recently formed Digitally Native Vertical Brands (DNVBs) like Warby Parker, Bombas 34

Perspective

and Everlane are showing the way.

As well as promoting premium products, they have focused on friendly, ‘for good’ propositions that include a charitable, or sustainable element. A good example is eyewear company Warby Parker’s ‘Buy a Pair, Give a Pair’ programme where, for every pair of glasses sold, a pair is distributed to someone in need.

Staying away from the dominant retail giant helps to strengthen these brands’ independent, challenger positioning. A key component of Warby Parker’s success has been its David vs. Goliath challenge to the dominance of Luxottica, who previously enjoyed up to 80% of

the US eyewear market. Selling to customers directly resonates with the consumer of today’s desire to support the ‘little guy’, rather than dealing with the corporate ‘Man’ that Amazon has become.

Selling direct also allows brands to retain greater control of the end-to-end consumer experience.

Warby Parker took the view that as well as being expensive, buying glasses was a chore. It aimed to disrupt the category by reinventing the experience, attempting to make it more convenient and engaging.

Convenience comes from the playfully titled ‘Good things await you’ free Home Try-On service.

01 Warby Parker – online prescription glasses

By inserting so-called ‘miracle moments’ into its buying and customer engagement process, Warby Parker is attempting to turn first-time buyers into lifetime customers.

When asked for his best advice, Dave Gilboa, co-founder and coCEO of Warby Parker said, ‘Never outsource critical components of your business’.

3. The best of both worlds A few brands have found ways to sell through Amazon, leveraging the advantages of great scale, but without sharing all of their precious data, which would put them at risk.

They do this by integrating services into their offer that build a direct relationship with the consumer and harvest proprietary data, after the retail transaction and fulfilment has been completed through Amazon.

The challenge with this approach is motivating people to engage postpurchase and ensuring that they feel comfortable having their data collected. To ensure this happens, the customer has to feel that they are getting something worthwhile in return. The data harvesting should then be transparent, taking place seamlessly in the background without adding friction to the experience.

The Bose Connect app that accompanies their connected headphones and speakers is a good

example. The visible, value-added benefit to the software is the improvement in pairing between multiple music sources and Bose speakers and headphones. Features include simplified switching between paired devices that would be impossible through traditional Bluetooth pairing. Additionally, in the background, the app collects all sorts of valuable usage data, which is explained in Bose’s Privacy Policy.

This includes information related to playlists, artists, albums, songs, or podcasts, plus environmental data (e.g. noise level and audio frequencies) – presumably captured through the microphones on the noise-cancelling products.

The app isn’t required to use the company’s speakers and headphones. Users can opt out of diagnostic and usage data collection; Bose states that it never sold personal data, nor used it to identify users or anyone else. But it adds enough value to the product experience to motivate many users to adopt it.

Give and take While far from being the only online retailer, it’s clear that few brand owners can afford to ignore Amazon. Even the mighty Apple has concluded that it’s better off selling through Amazon, in addition to its traditional channels.

Of course, companies need to formulate a strategy that carefully

' C O M P A N I E S CAN CHOOSE TO REJECT AMAZON ENTIRELY, ADOPTING AN INDEPENDENT POSITIONING' considers both Amazon’s advantages and potential pitfalls. In broad terms, there are three choices.

They can choose to fully embrace Amazon and all it has to offer, while bearing in mind it is vital to stand out from the sea of generic competitors and resist the threat of a potential Amazon private-label brand. Or companies can choose to reject Amazon entirely, adopting an independent positioning and retaining control of the entire consumer journey.

Perhaps the best approach though, where possible, is to tap into the benefits of Amazon’s reach and fulfilment; but try to ensure that shared sales data alone is not enough to spawn a competitor.

Whatever the option, it’s vital that navigating Amazon is part of any strategy for major online sales.

Regardless of its critics, the retail (and brand) giant is set to dominate the market for years to come. www.plan.london

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THE LUXURY LANDSCAPE : Joel Hayes September 2019

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On-demand

Subscription

Vehicle rental for one-off trips where users desire a certain type of car. Catering for the spontaneous, these services have low set-up times and tend to embed costs such as insurance, roadside assistance and mileage.

Subscription plans cater for customers who consistently want a vehicle to hand but don’t want to shell out a one-off payment. Subscription is becoming more attractive with bundled on-the-road costs and car swapping.

In a bid to provide convenient car access to city dwellers, Jaguar Land Rover has created The Out. Concierge drop off and congestion charge covering mark the main benefits for users of this London exclusive service.

Porsche Passport allows subscribers to swap vehicles at any time. The service consists of two tiers offering access to 8 or 12 vehicles. Average swaps are 2.5x per month and most subscribers are new to Porsche.

Audi On Demand features almost every vehicle in its fleet.

Polestar expect 70% of Polestar 2 sales to be subscriptions.

Perspective Perspective

Volvo’s M mobility brand covers tolls alongside other charges.

Mercedes Collection includes a concierge to hand over new cars.

At the top end, car companies are offering new services to counter a drop in sales.

Experiences

Lifestyle

Luxury brands are using their vehicles as instruments to construct one-off bucket list experiences. From track driving and factory tours to drives along the most interesting roads in the world, brands are showing the best of their vehicles.

The furthest extension of luxury marques is their attempt to remould themselves as lifestyle brands.

Striving to make people feel the same aura as the cars deliver, brands have moved into property and other products.

Bentley Extraordinary Drives sees hosted expeditions that explore ‘the world’s most untamed landscapes’. In addition to driving, top notch accommodation can be expected alongside a mutlitude of cultural events.

Aston Martin has started development on a 66-storey tower in Miami which features a superyacht marina, optional butler service, infinity pools and penthouses which come with a $3 million Vulcan car upon sale.

McLaren experiences showcase the performance of their cars.

Porsche Design Tower features apartment adjacent sky garages.

Rolls Royce offered art tours to connect customers with artists.

Bugatti expands into furniture with its ‘Home Collection’.

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BEYOND THE BOX : Andy Fayle September 2019

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Perspective

Home appliance brands offer an example of how companies might successfully transfer from products to services.

01 Miele Dialog oven with connected recipe settings

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ervitisation’ – the expansion of manufacturing industries into service provision – has been heralded as the key strategic move towards sustainable growth since the term was first coined in 1988 by authors Sandra Vandermerwe and Juan Rada. It promises product-centric businesses a new road to growth, enabled by stronger customer relationships, opportunities to differentiate products and recurring, highermargin revenue streams. Rolls Royce is often portrayed as a pioneer of successful servitisation. It launched ‘Power-by-the-Hour’ way back in 1962, offering aerospace customers engine maintenance costs for a fixed fee per flying hour. Today, Rolls Royce’s digital services minimise flight disruptions with predictive maintenance and generated over 57 per cent of its aerospace revenue in 2018.

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While B2B organisations such as IBM and HP have successfully expanded into services, big brands in B2C and especially the hyper-competitive world of home appliances have often struggled to servitise. Whirlpool, an appliances powerhouse since 1911, launched its first significant move into smart home services in 2013.

The WashSquad app promised

to ease consumers’ lives with a host of Whirlpool-provided digital services. These included wash notifications, remote starting and even a ‘Wash Board’ to track and gamify family members running a load. A year after launch, Chris Quatrochi,Whirlpool’s global director of user experience and connectivity, admitted adoption of their solutions was ‘not at all widespread’, as WashSquad slid to app store obscurity. According to Quatrochi, ‘Trying to understand exactly the value proposition that you provide to the consumer... has been a little bit of a challenge.’

This example illustrates four reasons why appliance businesses often struggle to establish successful service offers: 1. Product-centric organisations Workforces are typically hired and organised to build hardware, and lack digital and service capabilities, as well as more agile ways of working. ‘Traditionally in the technology manufacturing industry, each product and service development is run as separate teams, with nobody overseeing or owning the customer experience, which leads to disjointed results,’ says Alex Brown, a product innovation manager at Samsung. www.plan.london

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The healthy eating system

Consumer to consumer services

Preparation

Human image processing

Social media sharing

Ingredient image processing Storage

Recipe ideas & shopping list

Food retail & delivery

Cooking

Food waste (prepared)

Box up the left-overs

Consumption (meal time)

Additive waste (package/ chemicals)

Appliance end of life (all devices)

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Smart scheduling

Dish washing

‘Teams are tied to the product launch, but there is little chance to develop constantly post-launch like a software company, as the development teams have other priorities.’

pushed to market only to discover irrelevance due to consumer life not matching the technology benefit,’ says Nick Stene, an appliances, FMCG and smart home strategy consultant.

2. Tech-driven value propositions The tech-driven services these teams build can then fail to resonate with customers. ‘Too many smart home and service propositions began life in the R&D laboratory,

3. A DIY habit In their efforts to control proposition costs and maximise profits, businesses aim to own most of the value chain. This often results in longer lead times and compromised functionality, as they get involved in

Perspective

unfamiliar non-core activities such as managing service servers and staffing.

4. Short-term sales focus Persuading consumers to use your service is only half the battle; the next hurdle is monetisation. ‘Even when people love a service, it is often a real struggle to get users to pay extra for it,’ says Brown.

Familiar with launching products that instantly generate transactional sales, manufacturers often close programmes if they fail to make

01 Healthy eating system framework: Euromonitor International / Illustration: Plan

Food waste (raw)

Data events

Additive retail and delivery

money quickly enough, rather than evolving the service and its business model.

Despite these four significant barriers to services transformation, success stories are emerging in this unlikely industry. One legacy manufacturer is already demonstrating the results.

Haier service In the space of two decades, the Chinese home appliances brand

Haier has moved from a low-cost fast follower to an industry leader, acquiring brands such as GE Appliances and Candy. It held the top spot in global sales volume in 2018 with group turnover at over £20bn. Haier is now showing how product companies can overcome the barriers to make servitisation a success. In 2018, it generated an astonishing £328m of its revenue from smart home-enabled services.

These services include appliances that connect consumers with local food producers and high-end clothing care.

Much of this success was driven by the Chinese market, which Brown highlights as ‘a very different market with digitally mature consumers’.

Whether Haier can replicate this growth globally, especially in the fragmented European market, will become clearer in 2020 as it rolls out services based on its Chinese systems, says Stene. So how is Haier overcoming the daunting challenges facing traditional home appliance manufacturers when establishing services? There are broadly four factors behind its success. It has transformed into an agile organisation. It has built its business around customerdriven propositions. It has used the power of platform partnerships, and it has focused on the value of its ecosystem network rather than short-term profits alone.

Underpinning Haier’s success is a

unique model it calls ‘rendanheyi’, which means value alignment between customers and employees.

Championed by Haier’s visionary CEO Zhang Ruimin, it blows away bureaucratic norms in favour of extremely agile innovation efforts led by customer demands. Structured into over 4,000 microenterprises (MEs), each comprising around 10 to 15 employees, Haier, according to Hamel and Zanini in the Harvard Business Review, ‘has turned its entire organisation into a start-up factory’. Thanks to their autonomy, highly-coordinated teams can develop product/service offers and are able to bring in the right capabilities, either from specialist internal MEs or external providers.

After launch, the teams continuously refine service offers, informed

by Haier’s digital platform which provides real-world usage and performance data.

Haier considers the entire customer experience or ‘whole scene experience’. For example, the Xinchu smart refrigerator platform offers services far beyond traditional food and beverage chilling. It can suggest recipes based on stored items, connect with third parties to deliver the necessary ingredients and then show videos to help make dinner while turning the oven on. The company’s experiential approach expands its scope beyond discrete product-centred systems.

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According to Stene: ‘Brands have traditionally sat within their silos, the horizon was near and the size of the universe was limited. Most recently we experience brands like Haier who can clearly see and build propositions for the entire picture; these brands are seeking to facilitate and thereby monetise the entirety of each micro-economy, building strategy at the level of entire consumer systems, not just their older and traditionally limited appliance role within such a system. Relevant examples, in this case, are the Fabric Care and Healthy Eating systems (p40), which we see being approached by Haier’s “Internet of Clothes” and “Internet of Food” platforms.’

Unlike manufacturers who try to create everything internally,

01 01

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Perspective

' T H E O N C E - S L E E P Y H O M E APPLIANCE SECTOR HAS BECOME A TRAILBLAZER FOR THE INDUSTRY.' Haier builds platforms through partnerships. For instance, the Wine Expert cooler offers inhouse services such as wine identification and pairing suggestions, but it also enables third-party services through the cooler’s screen, giving customers personalised offers directly from partner wine producers based on appliance usage data. The model is a win for all parties: Haier receives a proportion of partner revenue generated by the device, winemakers build personalised

relationships with consumers who, in turn, pay less for their wine as direct sales cut out the middleman.

Haier is moving from traditional value metrics such as profits generated by transactional hardware sales to building networks of active users as an indicator of growth. ‘Access to earned and unforced user attention inside its smart home ecosystem is more valuable to them as an indicator of business revenue growth prospects than any other

01 Haier lead the way in smart homeenabled services 02 Miele’s own-label, automatically dosed UltraPhase detergent

metric,’ says Stene of Haier. The company’s Win-Win Value Added (WWVA) statements emphasise the number of active ‘lifetime users’ and the ecosystem income they are generating, rather than one-time product sales. This decision to favour increasing user base size and sales potential is a familiar strategy among internet giants such as Facebook and Uber, but is unprecedented from consumer electronics brands.

The race is on Leading appliance brands are rapidly launching competing services, applying the principles demonstrated by the Haier example. While it’s too early to tell if the results will match the investment, the battleground is taking shape. Samsung is leveraging outside help to bring new unified services to market. In 2019 it acquired Whisk, a ‘smart food platform’ that will allow consumers to find inspiring recipes and shop for the necessary ingredients directly on their fridge, through grocery partners such as Ocado, Walmart and Amazon Fresh. ‘Whisk is an example of Samsung becoming an experience-led business, turning our deep understanding of customers

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into a seamless cooking journey,’ says Brown.

Likewise in laundry care, appliance brands are establishing a regular customer dialogue by developing and supplying own-label detergents that are automatically dosed and replenished through their washing machines. A trend identified by Stene: ‘Miele was the first brand team to learn the benefits of adding FMCG margins on top of its hardware sales. Now seven of the top 10 washing machine brands have a laundry detergent on the market (Euromonitor International).

Combined with services such as Amazon’s Dash Replenishment Service, this is turning into a directto-consumer sales model, which is very hard for FMCG brands to disrupt once established.’

The once-sleepy home appliance sector has become a trailblazer for the wider consumer products industry. The battlelines are being drawn, and the next few years will see to what extent appliance innovators expanding beyond products will disrupt the FMCG, retail, smart home and domestic service sectors.

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STR ATE GY

TO O L

TEAM VISION CANVAS We use this workshop tool in team vision and strategy projects.

: Andy Fayle November 2019

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esign and innovation teams tend to spend a lot more time on developing visions for their product, services and portfolios than for themselves.

Leaders who want to have an impact clearly articulate their team’s value to the rest of the business.

Carving out time to envision where they want to take their function is time well spent.

While product visions are customerfocused and situated in a competitive context, team visions are more business strategy-focused and located in an organisational context.

When we run workshops to envision a team’s future, we focus it around populating this canvas. The company strategy should be pre-filled, as the team’s vision should clearly ‘nest’ under this. There are workshop activities for each canvas cell; the content evolves throughout the workshop and is refined afterwards.

We often customise it for particular teams, but this is the base that we start with and have found it to be an actionable framework for driving internal change.

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THREE BOOKS

TO BOOST VALUE CREATION : Andy Fayle September 2019

All winning products and services present clear and compelling reasons why customers should choose them over the competition.

Articulating a crisp value proposition up-front accelerates your product development process by focusing the team on the key benefits to deliver.

Here are three of the best action-oriented books to use in order to craft killer value propositions, with tips on how to get the most out of each of them.

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Value Proposition Design A. Osterwalder et al Of all value proposition titles, this book offers the most comprehensive overview of the development process.

Made accessible by engaging graphics and a coherent structure, the book covers everything from framing opportunities with an assortment of research methods and creating the proposition promise, through to testing offer prototypes with customers. Focused around a value proposition canvas, the book covers the key elements you need to consider when starting a new project.

Don’t get overwhelmed by its array of tools; figure out the core methods which will suit your team.

The ‘canvas’ offers a framework to structure the numerous facets of a proposition, including analysis of the target customer segment’s goals, pains and gains.

The framework can require modification to eliminate overlap between sections. The ‘Test cards’ and ‘Learning cards’ offer a structured method to validate proposition hypotheses. In practice, you should avoid the cost and time of running a profusion of experiments by concentrating on those hypotheses critical to the proposition’s success, or by combining multiple learning objectives into fewer tests.

Blue Ocean Strategy W. Chan Kim, R. Mauborgne

Running Lean A. Maurya

Written as a traditional business book, this is not as accessible as the other titles, but provides tools that make it an indispensable reference throughout the proposition development process.

An essential read to help product-focused team members expand their thinking beyond value propositions in order to consider the wider business context. If the proposition is about defining value for the customer, the business model outlines how it creates, delivers and captures value for the business.

Blue Ocean Strategy is most beneficial to those looking to refocus innovation on identifying new opportunities, rather than reacting to competitor moves.

It offers a novel set of three frameworks to scope opportunities by looking beyond orthodox market boundaries and addressing customer ‘value innovation’, rather than traditional

competitive positioning, to seek out the uncontested ‘blue oceans’ alluded to in the title.

During the early stages of opportunity identification the ‘Strategy canvas’ serves as a useful diagnostic tool, allowing the reader to capture and evaluate the factors that drive competition in the existing market space.

It takes time to ensure the thorough definition of these factors, but it is worth the effort as later in the process the ‘canvas’ can be used to visually summarise customer reactions to proposition concepts versus competitors.

Ash Maurya has an impressive track record of growing successful businesses and his book provides a leaner, more action-oriented approach to business model creation than Strategyzer’s original ‘Business model canvas’.

While start-up focused, the book’s combination of agile techniques and its ‘Lean canvas’ can be adapted for any type of organisation to systematically build, test and learn about the elements of an early business model and value proposition. The ‘canvas’ should be viewed as a prototype to test and refine through the project, from hypotheses to launch. To ensure the framework’s suitability for each project, consider tailoring the cells to emphasise elements pertinent to your business; for example, brand or key technology.

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Early signals The shape of things to come

Quality not quantity in AI arms race

5G disillusionment The rollout of 5G mobile networks has begun. The promise is of richer video through faster connections and connected everything as it is optimised for the Internet of Things. However, the hype is coming up against some awkward realities. To deliver on 48

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the promise telcos must install millions of new antennae (often in the teeth of local opposition), and users must be outside to access 5G’s high speeds (higher radio frequencies can’t pass through walls). Telcos are investing billions in the hope of charging a premium for access – but will customers pay?

It is unlikely that talk of an AI ‘arms race’ between the US and China will end throughout 2020, it may even gather pace. However, some key assumptions will fall away.

Until recently, many have assumed the size of China’s population will give it an advantage in the volume of data. Of course, Chinese tech companies can tap the world’s largest domestic population, but few of them have succeeded in reaching global users. When they have, it has proved controversial.

When it was discovered that Chinese companies, along with Western ones, had made use of Microsoft Celeb – a database of 10 million faces, scraped from digital images posted on the internet under Creative Commons licences – the database was withdrawn. Although American tech giants have a smaller pool of domestic users, they can draw data from global markets and – so they say – have more sophisticated means of analysis.

Meanwhile, Europe will gun for the ethical edge. Philosophers will be pulled out of academe to write corporate and government policy papers on topics such as AI bias and discrimination, transparency, privacy and data collection. Expect more blacklisting in Europe of Chinese AI on ethical grounds.

Aa

Lexicon New lingo

Privacy becomes a public issue In the USA, expect more privacy legislation such as the recently passed California Consumer Privacy Act at state level and ambitious (albeit likely unsuccesful) attempts to create federal legislation.

In Europe, national bodies will

push for GDPR, largely seen as inadequate, to be refined or updated. Google will join Microsoft and Apple in restricting third party access to cookies and others will offer new products and services such as DuckDuckGo’s fast-growing search engine, to address heightened concerns around erosions of privacy.

CaaS: China as a Service noun The Shenzhen centred ecosystem of design, manufacturing, financing and software development services that nonChinese brands can draw on.

XAI noun Explainable AI in which the conclusions arrived at by the workings of complex algorithms can be explained or interpreted by human operators.

Cathedrals of interaction noun The new breed of tech company HQ, such as BIG & Thomas Heatherwick’s design for Google in Mountain View, which makes great capital of idea exchange.

Overtrust verb The growing tendency of humans to place unwarranted trust in, and defer to, automated technology.

Electric mopeds as the new Micromobility hope As the electric kick-scooter frenzy wobbles and slows, buzz is forming around shared electric moped start-ups like Revel. While more expensive to produce, electric mopeds have longer range, safer

brakes, and are more robust than scooters (see p14-15). Helmets can be stored under the seat too.

Another advantage may be more nuanced; this bulkier and more familiar vehicle type is believed to encourage more responsible riding and parking behaviours.

The Cookie Apocalypse noun When Google announced is was phasing out cross-website cookies on Chrome, marketers mourned the end of a 25-year old advertising model in restrained fashion. www.plan.london

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End notes

Review page 4-5

Shared scooters don’t last long, Quartz, Alison Griswold, March 2019

Alexa, How can we kill brands? Scott Galloway, No Mercy / No Malice, July 2017

Regulator looking at use of facial recognition at King’s Cross site, Dan Sabbagh, www. guardian.com, August 2019

Micromobility Podcast, No. 45, Owned Premium Lightweight Scooters – the Unagi story with CEO David Hyman, October 2019

Amazon quietly removes promotional spots that gave special treatment to its own products, Eugene Kim, CNBC, July 2019

How smart are Hong Kong’s lampposts? AFP Fact-check, September 2019

Bird has positive unit economics with its custom scooter model CEO says, Megan Rose Dickey, TechCrunch, July 2019

Top Amazon.com Marketplace Sellers, Marketplace Pulse, Updated monthly

Amazon’s Face Recognition Falsely Matched 28 Members of Congress With Mugshots, www.aclu.org/blog Jacob Snow, Technology & Civil Liberties Attorney for ACLU, Northern California, July 2018 Nashville Mayor Proposed E-Scooter Ban; Then Council Changed The Rules, Greg Gardner, Forbes.com, September 2019 It’s official: Columbia bans electric scooters for 1 year, Sarah Ellis, thestate.com, January 2019 Fiat Chrysler and Peugeot agree to merge in giant auto deal, Michael Pooler and Joe Miller, FT.com, January 2020 Ford and Volkswagen to share costs on electric and self-driving cars, Peter Campbell, FT.com, July 2019

Photos, Photos Everywhere, Stephen Heyman, The New York Times, 2015 Of the trillion photos taken in 2018, which were the most memorable?, Nicole Smith Dahmen, Business Standard, 2018 iPhone 8+ cameras cost Apple $32.50 in parts, analysts estimate, Michael Zhang, PetaPixel, 2017 Camera shipment results & forecast, CIPA, 2019 Playing to win page 22-25

Amazon now sells Macs, iPads, Apple Watches, and Apple TVs directly through Apple, Chaim Gartenberg, The Verge, November 2018 Beyond the box page 38-43 Rolls-Royce celebrates 50th anniversary of Power-by-the-Hour and 2018 Full Year Results, www.rolls-royce.com/media Whirlpool’s “Internet of Things” problem: No one really wants a “smart” washing machine, Drew Harwell, Washington Post, October 2014 2018 Annual Report Haier, www.haier.net/en/investor_relations/haier Why Haier Is Reorganizing Itself around the Internet of Things, Zhang Ruimin, Strategy + Business, February 2018

BMW, Daimler reverse out of car-sharing venture, Joe Miller and Patrick McGee, FT.com, December 2019

Total Fortnite players worldwide, August 2017 – March 2019, Statista 2019 Global games market per segment, NewZoo

Latest thinking in Smart Cities page 6-11

Navigating the Amazon challenge page 30-35

All the documents outlining Sidewalk Labs’ work in Toronto are available at www. sidewalktoronto.ca/documents/

Amazon has destroyed the retail industry, Maggie Fitzgerald, CNBC, July 2019

Haier’s Win-Win Value Added Approach, Kip Krumwiede, Raef Lawson and Lucy Luo, Strategic Finance Magazine, February 2019

Jeff Bezos finally revealed how many people pay for Amazon Prime, Dennis Green, Business Insider, April 2018

Smart washing and drying, Miele.co.uk

Looking for a New Product? You Probably Searched Amazon, Lucy Koch, eMarketer. com, March 2019

Cover image: Retoka Design and Digital Art

How can shared scooters make a profit? page 14-15 The Promise and Pitfalls of E-Scooter Sharing, Daniel Schellong, Philipp Sadek , Carsten Schaetzberger, Tyler Barrack, Boston Consultancy Group, May 2019 That scooter ride is going to cost you a lot more, Washington Post, Luz Lazo, October 2019

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Cameras aren’t dead yet page 16-19

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Amazon says its private labels are only 1% of its business, Dennis Green, Business Insider, April 2019

The End of Bureaucracy, Gary Hame and Michele Zanini, Harvard Business Review, November 2018

Images

Page 24: Console photograph – Amelia Holowaty Krales Page 30: Amazon photo – Andrew Coelho, Unsplash

Our story We help mobility and consumer tech companies to navigate the early stages of product and service innovation.

Based in Clerkenwell, London and founded in 2004, we are a team of researchers, strategists and designers who have earned a reputation for cutting through complexity to offer clear, independent, frank and friendly advice.

Whether to discuss a pressing challenge or enquire about a speaking engagement, do drop us a line at info@plan.london

We help our clients with: Market foresight

Opportunity discovery

Proposition development

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Anticipate the future by developing a point of view on trends, and the opportunities and challenges they imply.

Uncover and evaluate opportunity areas through deep insights into people’s context, behaviours and needs.

Build compelling propositions that offer differentiated value to customers, their business and partners.

Envision, develop and test product and service concepts, and bring more coherence to portfolios.

Raise the innovation game, through organisational strategy, training and tool development.

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