Ged Carroll

Category: innovation | 革新 | 독창성 | 改変

Innovation, alongside disruption are two of the most overused words in business at the moment. Like obscenity, many people have their own idea of what innovation is.

Judy Estrin wrote one of the best books about the subject and describes it in terms of hard and soft innovation.

  • Hard innovation is companies like Intel or Qualcomm at the cutting edge of computer science, materials science and physics
  • Soft innovation would be companies like Facebook or Yahoo!. Companies that might create new software but didn’t really add to the corpus of innovation

Silicon Valley has moved from hard to soft innovation as it moved away from actually making things. Santa Clara country no longer deserves its Silicon Valley appellation any more than it deserved the previous ‘garden of delights’ as the apricot orchards turned into factories, office campus buildings and suburbs. It’s probably no coincidence that that expertise has moved east to Taiwan due to globalisation.

It can also be more process orientated shaking up an industry. Years ago I worked at an agency at the time of writing is now called WE Worldwide. At the time the client base was predominantly in business technology, consumer technology and pharmaceutical clients.

The company was looking to build a dedicated presence in consumer marketing. One of the business executives brings along a new business opportunity. The company made fancy crisps (chips in the American parlance). They did so using a virtual model. Having private label manufacturers make to the snacks to their recipe and specification. This went down badly with one of the agency’s founders saying ‘I don’t see what’s innovative about that’. She’d worked exclusively in the IT space and thought any software widget was an innovation. She couldn’t appreciate how this start-ups approach challenged the likes of P&G or Kraft Foods.

  • Green labels + more news

    Green labels

    There are more than 450 meanings behind “green” labels – Eco-conscious shoppers have probably noticed hordes of new “green-approved,” “100% natural” eco-friendly goods—claiming to be “certified” by some organization or other—popping up on store shelves. Green labels have many problems. One of them is that environmentalists can’t agree on what’s green so green labels are challenged. Let’s take take hybrids versus old cars on carbon footprint – since most carbon release is in manufacture, yet the hybrid cars would sell on green labels. Or electric cars overall, we don’t understand the energy requirement to recycle them yet they will get green labels. Ands thats before you look at how electricity is generated where they are being sold. Chinese electric cars may get green labels, but the majority of China’s electricity generation comes from coal-fired power stations.

    Business

    I, Cringely Amazon’s cloud monopoly – I, Cringely – Bob Cringely provides some interesting insights into the market position of Amazon regarding cloud services. It also highlights the challenges that Alibaba, IBM, Microsoft, Oracle and SAP in addressing Amazon’s cloud monopoly

    Yahoo, NHL Ban Employees from Paid Fantasy-Sports Sites | WSJ – ethics (paywall)

    Consumer behaviour

    68% of Chinese men are smokers—and millions will die because of it | Quartz – most of the cigarette brands are owned by state owned firms and China has a surplus of males to females. More China related posts here.

    Innovation

    Weekend edition—The lure of Mars, citizen Schmidt, lobster mysteries  – Hot on the heels of the release of the action movie The Martian—and the discovery that the red planet still has liquid water—NASA has unveiled a bold three-stage plan for getting humans to Mars – interesting lessons in messaging and storytelling from this

    Marketing

    adam&eveDDB, Temptations Dress Up Cats for the Holidays – Ad Week – blatant link bait

    Has Essena O’Neill signalled the end of influencer marketing? | Econsultancy – probably not, influencer marketing is too much ‘on trend’ but it does beg the question are the fees worth it?

    Online

    WeChat reading rates are dropping. How much, and why? – In mid-2015, the number of views of WeChat subscription accounts started to decline. Some popular accounts saw a decline of more than 50% in readership. More on WeChat here.

    product insights from wechat — Medium – interesting WeChat insights

    Technology

    Will You Ever Be Able to Upload Your Brain? – NYTimes.com – so your cryogenics is probably wasted

    Web of no web

    Watch How to Eat a Virtual Cookie | MUNCHIES – how is a virtual cookie possible? By altering the taste of food with different visual cues using virtual reality techniques – literally creating a virtual cookie.

    Wireless

    iPhone Vs Samsung: Apple is still the marketshare leader | BGR – Apple still commands more than 90% of all the profits in the smartphone market

  • Learning machines discussion

    Why learning machines? Simply because I don’t want to get into an argument of what an AI actually is, so hence the title change – but interesting watching.

    The Churchill Club manage to get top drawer panelists for this session on learning machines

    • Yoshua Bengio, Professor, Department of Computer Science and Operations Research, Universite de Montreal
    • John E. Kelly, Senior Vice President, Solutions Portfolio and Research, IBM

    The panel was moderated by long time New York Times technology journalist  John Markoff.

    Key takeouts for me were:

    Cycle since the 1950s of over-promising and under delivering that drove nuclear winters and booms. Current cycle goes back to the DARPA autonomous vehicle competitions of the past decade. Neural networks weren’t seen as ‘AI’, they went out of research fashion in the 1990s and research picked back up in 2005. Deep learning is basically layers of neural network – more layers = ‘deeper’. Deep nets are now the standard for learning machines. Object recognition improved in 2012 and both industrial and media interest took off.

    Performance has been helped by improved hardware, which has driven the breakthroughs.

    Learning machines still need a lot of human guidance, unsupervised learning isn’t doing as well. It probably explains why IBM has so many people working on Watson projects. This also explains why Watson is externally seen primarily as a ‘marketing concept’.

    Rate of change in semiconductors. Moore’s Law is likely to top out at 5nm. Carbon nanotube devices will be the new silicon in semiconductors. Quantum computing will drive performance in certain types of calculations by a factor of 20. Graphene is better for analogue devices, nanotubes are better for switching. The cost of transistors has stopped falling, which has an implication for new disruptive industries.

    We’ll get performance and density, the cost of which is more uncertain. Computing power is important for learning machine technologies. Power consumption (computing power per watt) is tremendously important. IBM Watson on Jeopardy used 85,000 watts to beat two 20 watt humans.

    Back propagation allows the use of lower power processors. Speech and vision are areas of a big push, but the most exciting area is language recognition and understanding with recurrent networks – implications for conversational interfaces and services.

    IBM think cognitive computing is a wider area than ‘machine learning’. Cognitive computing is what IBM think will transform ‘digital transformation’ through learning machines.

    AI has a definition problem due to fashion and academic quarrels.

    Watson was originally designed to deal with massive unstructured data rather than building an AI. Data was growing faster than IBM could develop for. Watson had a data centric focus. It sounds rather like the vision I once heard articulated for both Autonomy and Palantir.

    Consumers will see Watson as ‘insights’. Watson as a learning machine focuses on comparing and contrast to try and find patterns.

    Interesting that IBM went in so hard on healthcare as an example, given how they eventually retreated from the sector after scandals over unsafe diagnosis.

    UPDATE: October 6, 2020 – report on AI progress here.

    More technology related content here.

  • On innovation

    Before I start to reflect on innovation, let me tell you story from my my old agency days. Back in the day I used to work agency side on the Microsoft account. Unlike a lot of my colleagues who worked on it full time, my workload was usually tangental to everything else that I had going on. My senior colleagues had worked on the business for a long time and became what you might term institutionalised. They had a definite dogmatic world view, which I was wasn’t comfortable with as I felt it lacked the objectivity required to give good client counsel.

    That world view was baked into the descriptor of the agency, that we provided ‘innovation communications’, that is focused on communications programmes for innovative organisations. For certain people innovation became defined purely in terms of what Microsoft was doing at that time. For instance, winning a client that had a new business model would challenge mainstream ‘gourmet’ food brands like Kettle brand crisps (chips in US parlance) – saw colleagues berated over e-mail by senior leadership for bringing the wrong kind of innovation into their consumer brands part of the business.

    Businesses change, no more so than the technology sector and agencies with anchored positions are left behind in spite of their loyalty as clients need fresh ideas.

    Steve Jobs (WIRED Japan - August,1995).

    I was thinking about at their dogmatic view of innovation when I read this quote from Steve Ballmer talking about Microsoft’s landmark investment in Apple back in 1997.

    They’ve done a great job. They’re a company that’s done a great job. If you go back to 1997, when Steve came back, when they were almost bankrupt, we made an investment in Apple as part of settling a lawsuit. We, Microsoft made an investment. In a way, you could say it might have been the craziest thing we ever did. But, you know, they’ve taken the foundation of great innovation, some cash, and they’ve turned it into the most valuable company in the world.

    It probably would have been enough to make a couple of my former colleagues extremely uneasy to say the least, especially given Steve Ballmer’s hard charging reputation. One thing that Ballmer misses is that even though Microsoft couldn’t vote with those shares, it was potentially as well-made a deal as Jerry Yang buying into Alibaba – if Microsoft had held those shares for long enough. Regardless of this, the Office unit of Microsoft more than made up for this investment with the amount of profit they made over the next few years on versions of Mac Office.

    More information
    Steve Ballmer: Microsoft investing in Apple ‘might have been the craziest thing we ever did’ | BGR

  • Mac vs PC + more news

    Microsoft and partners revive Mac vs PC ads — without mentioning Mac – CNET – This is all a bit odd. If you’re going to do a competitive comparison you have to mention the competition. That and the humour was why the Mac vs PC ads worked. Not mentioning them looks like Voldemort like fear in this context. Yet the ads seem to be run more like a PR campaign where you don’t mention the competitor. More Microsoft related content here.

    Taking Stock With Teens – Fall 2015 – US only research, OTT video increase is no surprise, what is how far Hulu has fallen

    The subprime ‘unicorns’ that do not look a billion dollars – FT.com – Michael Moritz calling out unicorn businesses due to their risks, negative sentiment to Silicon Valley boom. No big deal except that Moritz is a former journalist who knew the likes of Steve Jobs well. He then moved to Sequoia Capital and funded businesses like Google, Yahoo!, PayPal and Zappos (paywall)

    Is Tencent leading the way or lagging behind Facebook? | Walk the Chat

    The CEO of one of South Africa’s largest mobile networks thinks Whatsapp is a freeloader | Quartz – interesting that WeChat clocks in at 7% usage for South Africans

    HKMA warns banks about security loopholes with NFC credit cards – the Hong Kong Monetary Authority (HKMA) ordered banks Monday to conduct a thorough review of the security of their credit cards

    Hong Kong Luxury Stores See Worst “Golden Week” Ever – overly dramatic but interesting

    New-media firms shift attention to TV  – online a training ground for media mainstream?

    The DraftKings Crash | Slate – Nevada gaming laws may make Overseas expansion a ‘do or die’ requirement

    Lenovo nixed idea of selling Microsoft’s Surface Pro tablet – CNET – interesting that HP and Dell will sell it

    Why mass market VR won’t come soon | GigaOM – assuming you have to run at 4K, HD would be good enough and the content could be immersive but passive like film rather than games. More on web of no web experiences here.

    WSJ: NX could launch in 2016, will be Nintendo’s most powerful console ever – this is a high risk play given how the last console did

    IBM Allows Chinese Government to Review Source Code | WSJ – (paywall)

  • The return of Radio Rentals in the smartphone era

    I haven’t thought about Radio Rentals and its ilk in years. But I started to think of them again with this post. The idea came out of a couple of conversations that I had over the past few months.

    Sony Trinitron TV

    What is Radio Rentals?

    Radio Rentals is one of a number of brands (Martin Dawes, Granada, Radio Rentals DER and Rumbalows), who used to rent TVs and video recorders. Globalisation made TVs discretionary items and technology made them more reliable.

    Maturation of the smartphone market

    As of February this year Apple was sitting on a cash hoard of 178 billion US dollars, most of which is kept outside the US to ensure it doesn’t get taxed. It has made the bulk of the money from the iPhone.  However the smartphone market is changing, the growth in mature markets is slowing down dramatically, as has smartphone growth in China. The growth in developing markets is being driven by smartphones priced so low that margins are razor thin. Things are so tight that component suppliers have gone under.

    Apple is at the premium end of the market but other players are trying to migrate in that direction to which means that the middle of the market and premium products are very similar in terms of industrial design.  So if one had a cheap source of capital it would be advantageous to come up with a way to stitch in clients and making it easier to onboard clients from the competition. Rather like the TV rental business of old.

    So when Apple launched the 6S range of handsets, this wasn’t much of a surprise

    Exclusively at Apple’s retail stores in the US, customers can choose their carrier and get an unlocked iPhone 6s or iPhone 6s Plus with the opportunity to get a new iPhone annually and AppleCare+ on the new iPhone Upgrade Program with monthly payments starting at $32 (US) and $37 (US), respectively.

    From a carrier point-of-view this presents a set of mixed blessings, it decouples the handset upgrade path from the consumer’s mobile carrier plan. On the one hand carriers no longer have to foot the high cost of iPhone purchases, but iPhone customers have less of an incentive to sign up to two-year contract with the likes of Verizon or Sprint which will make their cashflow less predictable in the longer term as consumers churn contracts and carriers will have get more creative with their contract incentives.

    We may see hybrid deals of content, voice minutes and data – rather like cable companies or BTVision. Of course, having those kind of OTT bundles has implications for for their networks and the likes of HBO are probably not likely to commoditise their product prices so that bandwidth and be saved from a downward spiral.

    Apple’s move has some advantages, but isn’t without risks:

    • Moving consumers to a lease model means a degree of predictable revenues
    • It provides with a modicum of control over the market for pre-used handsets, if they use it. This huge. Think about the roles that smartphones play in our lives for a moment; they aren’t just communications devices but give an idea of status and self expression as well. Just because cheap smartphones are for sale in the developing world doesn’t means that consumers don’t want the real thing. Apple could tap into a pre-existing informal market of channels to sell pre-owned smartphones into these markets and make their competitors hurt a lot more. It would effectively dig a trench between mid-market and premium handsets and force competitors to go to lower price points
    • It raises competitive barriers against competitors. Not that many competitors have the access to easy cheap money in order to finance this kind of scheme. If it could be done profitably by third parties; we would see the  likes of ICBC and the Bank of China setting up subsidiaries to finance Huawei phone purchases. There is little to no margin in the financing itself. For investors the opportunity cost wouldn’t be worthwhile.  Given its lack of profitability the leases can’t be securitised easily to palm the risk off on institutional investors – which was how the likes of MBNA grew their consumer finance businesses. Third parties would need to get involved in areas that aren’t their strength such as a superior supply chain and channel strategy to that held by the wireless carriers to bring down the cost per handset and ensure that the handset was available near the consumer. Apple doesn’t need to make a profit on the leasing business, it just needs to not make a loss

    The risks in this move are:

    • Increased amounts of handset repairs. Many consumers today put up with cracked screens rather than having them repaired due to the cost and inconvenience involved. Going to the leasing model puts all of that back on Apple. If a third party were  to attempt it, there would be a whole service network which they would need to build out
    • Leasing agreements like this will be a magnet for organised and disorganised crime. There will be small but significant loses of handsets from false address fraud to ‘fake thefts’, Apple will be facing the kind of persistent criminal problems that face catalogue retailers to credit card companies
    • What happens when the US economy tanks and Apple faces default payments on its handset leasing programme?
    • The strategy relies on consumers seeing a continued value in regularly upgrading their handset. What led to the demise of TV rental companies was: more reliable televisions with the move from discrete components to integrated circuits, real cost reduction of TVs as they became more popular and a lack of compelling reason to upgrade once they had a colour TV. When we think about smartphones, the cost of a handset is being reduced  (at least in the Android eco-system), they are generally pretty reliable – the weak points being the easily damaged screen and chemical life of the battery and there hasn’t been significant new use cases from successive generations of handsets

    More information

    CCS Insight cuts global handset forecast | TotalTelecom
    SMARTPHONES: Price Wars Topple Huawei, ZTE Supplier
    Apple Introduces iPhone 6s & iPhone 6s Plus

    More on Apple here.