Customers 2.0, Networked, Connected and Interactive

I’m back after a short and very unconnected holiday in St Lucia, an island I am very fond of for many reasons. I’m looking forward to getting back into the swing of writing more frequently and developing the other project I hinted about in a previous post. Stay tuned.

Lastly, I hope the title renaming doesn’t throw you off guard too much. To keep some consistency, I’ve titled this issue as planned with “Issue XX” removed. 

This week is all about the customer and their impact on our Digital Transformation. Today’s customer has changed and is changing, and you need to me mindful of this and adapt. Let’s get in to it.

Onwards to the issue.

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Source: Merriam-Webster

Continuing the series and picking up from where I left off, the next lever for Digital Transformation is a laser sharp focus on your customers. Customers are the make or break part of any enterprise, ask any business leader. Don’t get this confused with the oft repeated mantra that the “client is king”, this may have been true some time ago, but it is not entirely relevant today. The best way to think about your clients today is to remember that your clients have a choice. 

Wealth is not about having a lot of money; it's about having a lot of options. - Chris Rock

I don’t know when Chris Rock made this insightful comment, but in today’s increasingly digital world, customers are exposed to more choice than ever before, and it is up to you to entice them to use your products and services. This exposure changes the way in which your potential customers act when making buying decisions, and how they go about “hiring” something to allow them to do the job to be done (JTBD).

Customer 2.0

Aside from the important generational differences, there is now a common set of attributes to today’s customers that affects all types, generations and segments. It is precisely because digital and digital services are so ubiquitous that this is true. In all but the most underdeveloped nations in the world most of the population own a smartphone with — and most importantly — a reasonable data plan. Which explains why the first attribute is so true.

Today’s customers are networked and this is the first attribute! They are permanently connected to their cell phones using them multiple hours per day (see graph below), and when they’re not using their phones, their computers or tablet computers are connected to the Internet as well. This is a fundamental shift in behaviour and the last 5 years or so, and has had an enormous impact on their behaviour. Customers are literally a less-than-one-second-search away from getting the information they want. I recently found an object I’d never seen before in the washing machine — it had come out of one the pockets of my son’s clothes — and the name on the item didn’t give me much of a clue. I searched it, and within less than 10 seconds I knew exactly what it was, what it was for, how much it cost, where to get one and plenty of other (mostly marketing) details about why its the best at what it does. The same will be true for your products and services.

This affects how customers behave in their consumption and how they discover new things. Here in the Caribbean, word of mouth is still a strong discovery tool, but it is becoming less and less relevant when we’re consuming more products and services online. The search engine has rendered word of mouth a secondary validation tool. Today, customers search first, then ask peers and online forums for recommendations. They leverage the network they have, which in many cases spans to many hundreds of people and in some cases many hundreds of thousands. Formerly, it was your immediate entourage of a few tens of friends and family, most of whom had no idea on the subject you were researching. And so, communication itself has fundamentally changed not only in type, but in scope.

Source: https://www.statista.com/statistics/319732/daily-time-spent-online-device/

Another attribute of Customer 2.0, is that they are incredibly connected. The paradigm shift that the network brought to discovery, expanded to all users of the network, making them link together to create huge dynamically connected groups where information and experience is there for all. They no longer live individual experiences; they share their experiences with anyone and everyone. They create new networks with the explicit purpose of sharing information and experience down to the minute details using todays platforms like Twitter, and in some cases they build new platforms solely to partage this knowledge with others. You’ve no doubt noticed the abundance and impact “Influencers” are having on brand awareness. Some brands have chosen to ditch lucrative contracts with celebrities, and have substantially reduced costs and increased control by using Instagrammers to get their message across. They have understood that modern marketing is not about persuading their potential customers, it’s about inspiring purchase through association to a better lifestyle. The customer has the control and sway, it is no longer you or your business.

Shared experiences, although being available to all, are consumed at different times or in different contexts, giving the impression that we are unique. Previously, we would all watch or listen to the same film or series the day it was diffused to the mass market via the established media networks. We would then all talk about it the next day at school or in the office, the spoiler alert was virtually non-existent. Nowadays, we consume not only at the time or in the context we choose, but we consume at the pace we desire. Netflix started releasing all episodes of their exclusive series on the same day, changing consumption habits of those that would like to watch several episodes in one sitting instead of waiting for next weeks’ diffusion.

This connection additionally gives rise to the creation and sharing of niche information on a much larger scale than was previously possible. You can look for the most obscure topic using today’s search tools, and you’ll almost certainly come across a YouTube video about it or a huge Reddit thread of enthusiasts pouring over minutiae. Places like the Caribbean were previously shut off from participating in “fan” groups, through very real world hinderances such as distance, time zone and sheer expense. This is no longer the case.

Which leads me to the third and final attribute of Customer 2.0. They are interactive in a way that we have never seen before. We’ve all seen the freephone numbers on the biscuit packet asking for feedback if something is displeasing, these were however, rarely or if ever used. The reason, friction! Remember when I talked about the JTBD, I mentioned that an important aspect to not lose sight of, was the amount of friction not takes a customer to get the JTBD finished. If your solution involves more friction, customers are likely to look elsewhere, even if it is more expensive. This is because today’s digital society has spent much time reducing the friction at each step in the customer journey. Customers today have very little friction to contact you directly using Twitter, and they use it liberally too. Not only do they use it, but they expect a rapid response and a rapid resolution to their query. I’ve had interactions with companies that were resolved quicker and more accurately than by plodding through traditional “support” channels.

I was recently on a trip and had phone issues meaning I couldn’t use the phone apart from when connected to Wi-Fi for messaging through WhatsApp or iMessage. Using the browser on the phone I requested help through their support page, a mistake. I received a response two days after coming back, by email, terribly worded and incomprehensible in terms of resolving my actual problem! I’m looking to move operators in the next few months.

Strategies in a digital world

When looking at how we can reach our potential customers and we look at how the world used to be compared to today’s landscape, we see that customers are no longer a mass-market segment and they are part of an ever-changing network. They no longer are susceptible to mass-market communications over mediums like television and radio (or at least not in the same way as before). Today’s customers want to be part of the experience, but more importantly have direct influence on the process. We see this in some of the more progressive brands today, employing Instagrammers to participate in the prototyping stage, allowing both the brand to benefit and the influencer to expand their reach.

Perceived value is another important factor that the modern customer innately thinks about, and more importantly, judges your products and services. I recently listened to a podcast where the topic of discussion centred around VR and AR. One of the guests had conducted a study — being the lead researcher for his company — and he noted that currently, commercial AR applications like Microsoft’s Hololens are used on average around 40 minutes per day. Businesses and users are evaluating the value of the product, calculating that several thousand dollars of investment are only providing a couple of tens of minutes of use. So you need to be mindful of not only the JTBD, how you can make that frictionless to “hire”, but also, once hired does real-world use provide perceived value?

It’s a lot to think about, and a lot to measure and analyse!

The strategies you need to develop must address all these points and try to answeer basic questions like these:

• What are the types of information that my potential customers are looking for related to my products and services?

• How do they discover this information and though what mediums?

• What are the JTBD?

• What attributes are they looking for to solve their JTBD?

• What do they not like and why?

• How could we include potential customers early in the cycle?

• What would customisation of our products and services look like?

As you can see your customers or potential customers are a big part of the Digital Transformation process and one of the most important (of not the most important) lever to tackle when developing your Digital Transformation strategies.

I haven’t finished developing the ‘how’ of the strategies required in this article and it is already very long! Next instalment will discuss in detail some of the things you can do to build out those strategies. Look forward to seeing you next time.

I hope this helps you with your own Digital Transformation process. If you have any questions or want to discuss your own projects, please let me know, I’d be only too happy to help out, click to email me at info@dgtlfutures.com.

Reading List

Le quotidien France-Antilles menacé de disparition ? - Martinique la 1ère

For the non-French speakers amongst my audience, the local and highly regarded newspaper for the FWI, France-Antilles, is in severe financial trouble. They recently redesigned the paper and heavily invested in a new printing press in a move that can only be described as rearranging the deck chairs on the Titanic. This is almost certainly not the only example around the Caribbean, and it is a topic I’d like to address in a future article, but one I haven’t quite found the angle as of yet. Suffice to say however, that the old media business model of advertising, once lucrative and a competitive advantage, is now a competitive liability… Disruption Theory and Aggregation Theory.

Annual Conferences | CANTO

This is a good resource for researchers like me to get a feel for Digital Transformation throughout the Caribbean and further afield. You’re welcome.

Older People Need Rides. Why Aren’t They Using Uber and Lyft?

One of my pet subjects — ride-hailing services and public transport — this NYT article looks at the older generations’ use and how other services like health and occupational therapy are linking up with Uber and Lyft to provide better services to those in need. A clear opportunity for the Caribbean if we could just unlock the potential, come on banks, give us a bone!

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Digitally transforming digital organisations | Autonomous vehicles and the Caribbean

To start, some housekeeping. I’ll not publish this Friday as I’ll be taking a last-minute vacation for a few days this week. I’ll mostly be offline for well-deserved rest. Back to a normal schedule next week. Lastly, I’ve decided to ditch the issue number system before it becomes too unwieldy. Imagine Issue No. 14159265: ... Not good! It is for a good cause, however. I have something new I want to test over the coming weeks/months. I’ll let you know soon.

On to the quick update.

Can digitally native organisations transform, digitally?

Source: Evening Standard, UK

This is a topic that has been on my list of things to write about for a long time. I have some initial thoughts and I would like to share them with you here.

If you remember, in Issue 5: Why Digital Transformation is different from standard IT, I said that Digital Transformation is really about change management:

As you’ve no doubt spotted the biggest difficulty for an organisation is the resistance to change, which is why I personally believe that Digital Transformation is essentially one big change management exercise. Bringing people with change management skills in to the organisation — even if on a temporary basis — is key to succeeding in Digital Transformation.

I think we’re witnessing a company that is currently grappling with this in a very public way. To be fair the company involved could not be more public. Apple Inc.

What lead me to this ? The recent announcement that Jony Ive was leaving Apple to focus on his own projects, and has setup his own design company called With Love From got me thinking. I couldn’t stop wondering about the “why?”. I read many articles from journalists and bloggers alike. Some with great insight and some with links within Apple, but I’m not convinced anyone has hit the nail on the head yet.

So to try to do this, I’ve thought about it from a Digital Transformation and change management perspective. Let’s look back at Apple’s track record in change management. The upcoming departure of Steve Jobs through illness back in 2010 necessitated a succession plan to ensure that — unlike many companies run by strong leaders — Apple would not face insurmountable difficulties. Disney was probably its model at that point having had its own transition by the icon Walt to todays’ management, Apple put in place a smooth transition plan that has sent Apple further and further up the corporate charts, with Tim Cook driving this forward.

Jony Ive’s leaving was planned and implemented long before anyone got wind of it, both inside and outside. Yes, there had been rumours for a while, but this plan was almost certainly instigated before that.

So why did Jony Ive leave then?

Apple has slowly been turning the ship towards services and pinning future growth and revenue on them, in lieu of more iPhones. Remember, iPhone revenue has been the driver of revenue for many years. To design and build an iPhone takes a very special set of skills, skills that Jony Ive was/is exceptional at. However, to be blunt, those skills are useless when it comes to designing and building software services. It’s just not the same skill set.

I suspect that when Jony Ive took over all design in Apple, which ended in the leaving of Scott Forstall (an incredible software designer), there was a hope that Ive’s sensibilities would produce excellent software and services, the new place the puck was supposed to be. That didn’t happen quite as well as Apple had hoped. I’m not going to list all the areas that software got a little worse, but there was an overall feeling that things got worse, and the commentators were vocal about it over the years.

So to me, what this is, is a change management situation where a resource that is no longer suited will need to move on or do something else within the company. This is not a judgement on that resource and should never ever be viewed in that way. It is simply a strategic choice from Apple to move away from hardware towards software.

They are doing Digital Transformation of their products and services. Hardware will not go away, I don’t think that for a minute, but evidence shows us they are moving in that direction for the foreseeable future. This is why I think Jony Ive’s agency is a strategy to keep Jony Ive included where it is still needed without him getting in the way of software design. Time will tell if this works, but I think it’s very intelligent and could be the basis of new growth impetus within Apple.

You may find in your own transformation that current key ressources will either want to or will need to move on to other things. Plan your change management for this eventuality.

Autonomous Vehicles and the Caribbean

Source: Uber

Another topic that is of much interest to me is vehicle autonomy. Like almost everyone, I can’t wait for the day I can ride (safely) in a car whisking me to my destination, whilst I can get on with other things and paying zero attention to the road, traffic etc,.

I am however, realistic about its eventual implementation in the Caribbean. Like may things, the Caribbean is a pretty (very pretty) special place, but its road infrastructure is not on the postcards.

There’s reason, and it’s not just underinvestment and neglect, there are very real environmental conditions that render the concrete and tarmac fragile. Hot and humid conditions with the sun beating down all day then being deluged by rain (cooling it somewhat) then heating up again, sometimes several times a day cause these materials to become fragile. Add to this the near constant moving of the earth, through tectonic movement that sometimes results in earthquakes (hundreds a year in some islands) and simple land movement from, what are young land masses built from volcanic activity, Barbados excluded, this alone hinders current technology from fully “understanding” the road it is on.

If you’ve lived or visited us here, you’ll also note that there are some periods in the year the sun is low in the sky but blindingly bright. In those circumstances, even humans have real difficulties seeing enough of the road, often leading to less than optimal conditions for driving, and in some cases causing fatal accidents.

Let the technology cut its teeth on the easy, straight and sell-maintained roads of Las Vegas first. I’m guessing we’re probably around 15 to 20 away from Level 5.

I'll write about the autonomous levels sometime soon as a complement and follow-up to this article.

Reading List

Source: wikipedia

 A history of humankind’s enemy number one 

This is a book recommendation from the Economist. I’ve not read it, but it’s on the wish list. Living in the tropics this little pest is a constant source of frustration. I’ve had dengue fever — it’s called break bone fever here in the Caribbean not incorrectly — and a couple of the other mosquito-borne pleasantries. But like so much in nature there seems to be a positive too. From the digital angle, technology is working to curb the mosquitoes’ deadly impact whilst preserving its role in nature. Time will tell.

“They will fight well at first, but soon they will fall sick and die like flies,” predicted Toussaint Louverture of the Frenchmen sent to end his slave revolution in Haiti. He was right. About 85% of the 65,000 soldiers deployed to the colony died of mosquito-borne illnesses, and Haiti won its independence.

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Democratising and demystifying how to do it: Value Proposition Design

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In trying to explain Digital Transformation to organisations that are interested in it, we technical people tend to lose sight of the big picture and confuse business leaders by burying the discussion in technical jargon, this is direct feedback I’ve received recently. In order to deal with this, I thought I’d try to demystify the subject, this is my first attempt.

On to the issue.

In the previous issue, Issue 24: Part 7 …, I continued outlining the Digital Transformation methodology I use to help my clients structure their strategies for Digital Transformation. I hope this gives you insight for your own journey. Let me know if I've missed something or you would like me to discuss your own projects.

In issue 24, having exposed the staged methodology, I contextualised the segmentation and targeting process that is really about trying to understand your customers better in order to identify opportunities for Digital Transformation looking at it from their point of view. This is important in the sense that it approaches the problem from the opposite end of traditional product/service design — remember products and services can be internal projects in their scope. Too often we think of the buying customer and not the internal customer who is, in my mind, crucial to a well-functioning business — by investigating ideas for improvement that would illicit interest from them. We do this by identifying the JTBD (Jobs To Be Done) and testing where digital technologies can improve, speed up or lower the cost of “hiring” your product or service.

The issue then introduced the 5 levers of Digital Transformation and introduced the innovation process. Innovation goes hand in hand with the segmentation and targeting stage and is in fact a continuation of essentially the same process. I separated it out in its own section to emphasise the importance and outline the step-by-step process, points 1 to 11.

This is all hard work. It is slow, and it takes a lot of effort to get to the innovation stage. Don’t be discouraged though, starting the process and revisiting it after a short pause almost always produces new ideas for exploration. Take extra care in the data collection process though. I recently came across a case that I’ll write about in the future, but suffice to say that, decisions on data collection and rationalisation now can have profound impacts in how you can later exploit that data. As one of the levers is all about data, I'll go in to it in more detail at that point.

This issue continues from where I left off discussing the next lever to Digital Transformation, the Value Proposition.

Source: visionedgemarketing

Value Proposition

Hopefully you’ll note that this lever is again, a continuation of the previous one, that’s deliberate. Your value proposition is there to make your clients understand quickly and simply why they should use your products or services as opposed to your competitions’.

In dealing with companies over the last few years, a businesses or products’ value proposition is not always well defined or well-articulated. Often, the value proposition is simply a bullet list of why our product is cheaper than someone else’s. I hate to pop the balloon, but this is not a value proposition.

There are a number of things that a value proposition should be, but to get a better hone on that it’s important to understand what it is not. I’ll outline a few examples here to get a feel for where I'm headed.

The VP should not, under any circumstances, be a list of how much better than the competition you are. Sure, it’s ok to point out differences and point out that you are in fact better than the competing product. It should be done by highlighting the real advantages of your product or service, full stop. For example, don’t say that your product is cheaper or faster than a competing product, highlight where your product will enable the client to get a JTBD faster and more efficiently. Saying you’re cheaper only tells your clients you are, well, … cheap. Ugh!

Avoid listing technical jargon where it concerns your products. That’s so 1990’s (/sarcasm). It's true that to sell a PC in the 90’s, it was important to list the processor type, model number and clock speed to differentiate yourself from the competing builders. But as we saw back then, this only has limited impact, because before long, a competitor can list the same things and possibly even better specifications than you. This is a zero-sum game.

Additionally, don’t list your honesty and integrity as a selling point, no one cares when it comes to digital transactions. A slogan is a slogan, not a value proposition. And lastly, don’t write your CV. You’d be surprised!

This of course, begs the question “What is a Value Proposition?”

Putting it simply, it should intrinsically detail the value you propose to deliver to your potential clients. The value being the effect your product or service has on the clients’ ability to get his or her JTBD faster, easier, cheaper, more elegantly etc. It should additionally explain in simple terms how using your product/service it solves their specific problem. Lastly, it details how you deliver those specific benefits and it explains to your customers why they should use your services.

A good example of this is the privacy-oriented search engine DuckDuckGo. DuckDuckGo highlighted a number of years back that the incumbent search engines were using the fact that discovery is central to Digital Transformation to track your internet usage in order to either sell ads against that collected knowledge or sell that information to those that would attach ads. The result of their engineering and value proposition design, resulted in the following value proposition:

DuckDuckGo. The search engine that doesn’t track you. Switch to DuckDuckGo and take back your privacy. We don’t store personal info about you. We don’t follow you around with ads. We don’t track you. Ever.

The value proposition is targeted (segmentation) at an audience sensitive to the fact that they were being tracked and targeted by ads based on what they’d searched for. Their promise, no ads, no tracking and good search results. That’s it, simple, concise, and accurate. This VP is simply a statement of what, how and what value the offering is, behind it a team of designers and engineers built a product that respected these values to the letter. That’s the lesson from developing your own VP. Design it to address the needs identified — A problem looking for a solution if you will, rather than a solution looking for a problem!

Developing your own VP is, like the other steps, a continuation of all the work you’ve done up until now. You’ve understood your potential customers through the empathy map, you’ve selected a segment that aligns with them and you’ve extracted the JTBD and classified them according to importance. The value proposition design is largely a brainstorming exercise in ideating what products and services could fulfil the requirements of the JTBD to provide value to them.

After proceeding through the earlier stages in the Digital Transformation methodology, you should have identified a number of areas in which either your current products and services can be bettered digitally or identified entirely new opportunities for business. Once you have this classified (by importance) list of products or services ideas that address the JTBD model, you then need to test them. I briefly talked about prototyping in issue 24, but here it is more critical in determining the next steps.

The first step is selecting one of either the pain points or the gain creators identified and prototyping that solution with your intended target. A very rough cut which addresses that need is all that is required. This will not be the complete value proposition, as it only addresses one of the areas in which your new offering can help. This process is repeated over and over to build up a more complete solution with each iteration being tested.

Testing can take multiple forms and it doesn’t have to be an actual development of an application or the build of a basic prototype, you can rely on today’s digital services that are both easy and relatively cheap to use. For an application, several app building websites exist that throw up a convincing mock-up very quickly allowing you to get it into the hands of your target audience for direct feedback. As mentioned previously, access to 3D printers has been completely democratised, again, allowing you to build a rough model to touch and feel, inciting physical feedback responses from your testers. It doesn’t stop there either. Recent advances in Augmented Reality provide an excellent platform for designing and building test model and placing them in the “real world” for manipulation.

This feedback should be noted, analysed and assessed. It is important data that will need to be revisited both immediately, and in the future, when you go through this cycle again — historical data generated helps understand current trends and helps avoid old mistakes.

At this stage you have enough data and feedback to make a decision on what to keep, what to put aside (perhaps because its needs maturing) and what you should outright reject. Which leads us to the last step which is to write down in unambiguous terms — like we’ve seen in the DuckDuckGo example — an expression of your value proposition. It is really important to keep in mind that we develop this from first principles looking at the Jobs To Be Done from the clients’ perspective and not your own, and we gradually build up one, two, then more “solutions” to these identified pains and gains your potential clients a looking to alleviate and benefit from.

You can either use a value proposition template, you’ll find thousands of them online, or simply get right to the point like DuckDuckGo. Here’s a couple of other examples.

Evernote (Note taking applications and cloud services)

Remember Everything. Capture Anything. Access Anywhere. Find Things Fast.

Square (Online payments)

Start accepting Credit Cards today. Sign up and we’ll mail you a free card reader.

One last point before I leave you, your Value Proposition will ultimately become old and stale as both your product or service matures and changes and when your competition evolves possibly catching up or surpassing your offering, so Value Proposition Design is an ongoing process that needs to be done regularly, from a fresh perspective each time. Remember, nothing exists in a vacuum.

Get in touch. I can help you through this process painlessly and enjoyably.

I hope this puts in to perspective and helps you start your own process. If you have any questions or want to discuss your own projects, please let me know, I’d be only too happy to see how I can help out.

Reading List

Photo by Jonas Jacobsson on Unsplash

The Radical Transformation of the Textbook

FOR SEVERAL DECADES, textbook publishers followed the same basic model: Pitch a hefty tome of knowledge to faculty for inclusion in lesson plans; charge students an equally hefty sum; revise and update its content as needed every few years. Repeat. But the last several years have seen a shift at colleges and universities—one that has more recently turned tectonic.

Nice article from Wired about the Digital Transformation of textbooks and the opportunities and downsides.

Microsoft catches Russian state hackers using IoT devices to breach networks

Microsoft researchers discovered the attacks in April, when a voice-over-IP phone, an office printer, and a video decoder in multiple customer locations were communicating with servers belonging to “Strontium,” a Russian government hacking group better known as Fancy Bear or APT28.

I’ve not yet discussed IoT (Internet of Things) and the role of the technology in Digital Transformation, but its on my list. This is a sobering example of the dangers, however. Enjoy.

We've had Generations X, Y and Z: Meet Generation Alpha

I love this article and articles like these. Whilst not strictly Digital Transformation, they are very informative of the next wave to come and should provide insight when you are doing what I’ve discussed in this issue and the previous ones in the series.

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Firstly, my apologies! Last weeks’ issue was prematurely sent due to my error. I hope you didn’t mind too much. I’ll strive to ensure that it doesn’t happen in the future. I value enormously the privilege I have to communicate with you directly and I would be horrified to learn I over stepped the mark.

Whilst I’m on the subject of apologies, I incorrectly spelt Pohoiki Beach in Issue 23 , but since corrected it on the website.

As a bonus by way of making it up to you, here’s a quick follow-up on the Intel article.

I’ve been thinking of publishing more often, writing a longer issue for the Friday/Weekend and 2 or 3 shorter articles in during the week. Let le know what you think.

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Follow-up to Intel’s Pohoiki Beach

The basic premise of that issue was to introduce disruption theory and how we see it affecting businesses all around us. Disruption theory is a specific set of notions and understandings that allow us to understand when it is happening to us or even predict its eventuality but looking at ourselves from a different perspective. We often throw out the phrase disruption without fully understanding what it really means, so this was my attempt at defining the term.

The other reason for the article was to give a concrete example in the modern world of disruption and how it came to be, my example of Intel pushing further up the quality/price chain as its low-end is being eaten up by the (initially) good-enough products from the various ARM licensees.

This morning I read the blog of a very prominent and very opinionated (but always an excellent read) Apple commentator, Daniel Eran Dilger over at Roughly Drafted. In this article about Apple and Intel, Daniel pretty much confirms, from his point of view the same thing, in that Intel is being disrupted out of the commodity chip business. His argument centres on a few things; Apple’s superiority in chip design, the abstraction of OS and applications from the underlying processor architecture and Intel’s own lack of capacity to innovate the x86 architecture. This is precisely because the commoditisation of the architecture is inevitably driving margins towards zero for Intel.

In disruption theory, we can see that there is a constant fight between integrated and modular systems. New technologies often follow a pattern whereby they provide functionalities that eventually outstrip the pace of the users to fully exploit them. In doing so, the technology providers have to shift strategy from full-throttle innovation, to a strategy of providing just what the customer needs and time it to when its needed. This shift creates a different mindset in the technology provider, forcing them to extract more and more value from the value chain, eventually modularising what was once proprietary and integrated. This inevitably opens the door to disruption by the “just good enough” competitors to start eating away at market share.

However, there is at times, a shift in customer expectations that resets the capacity of the final users to utilise a new technology, that forces the technology providers to embark upon break neck innovation, the cycle restarts!

Source: The Innovator’s Solution, Clayton Christensen

Apple buying Intel’s modem chip business is potentially one such scenario. Remember Apple recently settled with Qualcomm over disputed contract details regarding the supply of modems for Apple’s iPhones and iPads. Apple tried to reduce its exposure to the, very stiff, Qualcomm contracts by dual-sourcing Intel and Qualcomm modems, but that subsequently back-fired with Qualcomm cutting Apple’s supply completely off in 2018. Apple eventually settled out of court and then went on to buy Intel’s model business for 1B USD, announced on the 25th of July.

I’m guessing Apple has seen the possibility in owning the model business to reset the disruption cycle and extract great value from owning the design for its proprietary hardware, namely all of its own iOS devices. This neatly falls in place with the debut of much faster cellular services (read 5G) being deployed (slowly) around the world. Perhaps Apple has some interesting plans in how cellular services can be further integrated in to its hardware driving even further differentiation in a market where commodity wins — if we’re talking about shipping numbers.

Apple doesn’t play the game of selling the most units. Apple plays the game of selling something fully-baked at very high margins. Apple’s gross-margin in the latest quarter’s result … between 37.5 and 38.5 percent. Yes, you read that! To put that in perspective, utilities companies typically have 9%, energy suppliers 14%. Only tobacco provides margin in excess of 20-odd percent.

Reading List

One bonus article to read too … My, my! I’m spoiling you this week 😉

Apple joins Google, Facebook, and Microsoft in data-sharing project

With data becoming central to business use, central to B2C use, it’s only inevitable that some form of universal governance of data will happen. The GDPR goes some way towards that, but it doesn’t address extremely difficult technical issues, only preferring to penalise businesses of sloppy data usage. The Data Transfer Project hopes to help in this regard. My only frustration is that Facebook is included given their track-record of bad data handling (to say the least), but I suppose it’s better to have the bad actors included, rather than separated where they could do much more damage.

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Digital Transformation in action in the Caribbean

Hello everyone. Hope you enjoy this, slightly different issue.

After appearing on the ICT Pulse podcast, and writing about public transport in the Caribbean, I met up (online) with the CEO of RIDE Caribbean after writing about it. RIDE Caribbean is a startup hoping to do some of the things I’ve been talking about, and more! This week is an interview with Greggar Deterville, where we discuss some of the issues surrounding start-ups in this category, in the Caribbean and what the opportunities and difficulties are in reality, on the ground so to speak.

I’ll let him introduce himself and his project, but before I do and for transparency, I’ve lightly edited the discussion for clarity. We’d love your feedback so don’t be shy!

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On to the issue.

MC: Can you introduce yourself to let us get to know you better?

GD: I am Greggar Deterville a British National and Citizen of St. Lucia in the Caribbean where I have made my home and place of work. I’m a lover of Technology and the many possibilities it can bring to traditional ways of doing things.

Tell me a little about your background and how you got to where you are currently?

I am Entrepreneur with a 26 year background in Media Management, Sales, Advertising, Marketing, Social Media Management and Information Technology. I was the former Marketing Manager for a National Radio Station and decided that I would look into setting up my own online based Radio Station and from there moved to Online and Cable TV where I pioneered live broadcast of local events in St. Lucia something which did not exist at the time. With the advent of many social media companies offering free options for persons to go live online I needed to find another venture which services where not being offered. I decided that Ride Sharing was the best and most innovative. Thus RIDE Caribbean came about. 

Yeah, I recently came across what you’re trying to do with RIDE Caribbean and I thought it was an interesting concept, that is different from the standard Uber copies that are springing up all around the world. Are looking to roll that out soon in St Lucia, can you tell me a little more about what RIDE Caribbean is and what it is you’re trying to achieve?

RIDE Caribbean is a Multi-Service Smart Transportation and Mobile Payment Service which offers various Ride Share, E-Commerce, Delivery and Mobile Payments via one Mobile App. So therefore a user has the option to request his/her desired type of ride, browse through various Food, Grocery or Retail stores purchase items and have it delivered or use the Payment Wallet to make in store payments via a QR code scan or send money to another user.

So, if I’m understanding this correctly, you are a multi-service ride/delivery-sharing platform, is that correct?

Yes, all that but more; our platform will offer:

• Carpool options via Cars and Mini Buses

• Private and Luxury Ride Share

• Food, Grocery and Retail Item purchase and Delivery

• On Demand Package Delivery

• Mobile Payment Wallet Services

All from one mobile App.

You mentioned a payment wallet, which is the bit that piqued my interest from looking at your website. I understand that Blockchain is an important part of that. Can you explain what you are using Blockchain for and how it enables what you’re doing with RIDE Caribbean?

We will be incorporating Blockchain Technology not only for our Mobile Payment Wallet but also for other aspects of our app. Using Blockchain in our app will enable:

• Facilitating Payments via Smart Contracts

• Processing crypto-payments and Utility Tokens

• Processing of our future Initial Coin Offering

• Preventing Data Theft and Abuse

• Secure Peer to Peer Ridesharing

• Transparent Rider/Driver Identification

• Near Real time Tracking

What would you say have been or currently are the main challenges?

I have been able to cover most of the requirements to get the business to a level that would now require specific funding to launch such a unique product. The past year or so the focus has been on Fund Raising. So I would say the main challenge is acquiring the funding needed. 

In terms of structural challenges, what have been the most difficult to overcome, and how did you overcome them?

There are no proper sources of adequate Grant, Angel or VC Funding available in the Caribbean. Banks don't fund start-ups based on Business Plans and Projections no matter how good and proven your venture is. Banks are not allowed to take equity as collateral.

Governments seemed more interested in attracting Foreign Investment instead of putting things in place to nurture and encourage local Entrepreneurship. Finding suitable international funding sources is time consuming.

Why don’t you think that Caribbean Banks don’t fund local start-ups, is it a trust issue, a confidence issue or do think its more of a deeper-rooted strategic plan? I’m asking you to get in to trouble here obviously, but I hear this so often, and as of today I still haven’t gotten a better understanding of this. I have however, noticed a recent change in discourse from the likes of the Caribbean Development Bank, where they seem to be more serious in investing in the digital opportunities in the Caribbean, do you have any insight on that?

From my talks with some Banks, they have indicated that it is a risk to provide debt financing to a new business and new business owners based solely on a Business Plan and 5 year projections no matter how good the plan.

• Banks would require a high percentage down as collateral. 

• Most Entrepreneurs are not able to come up with the collateral.

• Banks are not allowed to take equity ( percentage of the business) as the collateral.

• Most new Businesses cannot afford to go into debt from day one.

• Banks don't offer a grace period for payments.

With regards to the CDB, I have read articles indicating the move to a Smart Caribbean and making available access to funding for viable businesses moving in that direction. But any funding/financing from the CDB will come via respective island government agencies or Caribbean funding agencies, and in my mind this is where the issues arise. 

In my opinion and from experience, the funding amounts are very limited and one is subject to a rigorous eligibility criteria and waiting periods to acquire this funding. You are asked to provide confidential business information and are subject to questions/comments and advice on changes to your business which are not relevant to acquiring funding. In the end you are told sorry we cannot fund you. What then happens to the confidential information you have provided?

So there are two distinct issues here. First the chicken and the egg problem, how do you the initial funds to get the larger funds to finance the initial project. The second, being an issue of reciprocal trust, or lack thereof. To answer the first issue, it seems that the Caribbean is crying out for angel investors that can initially get a project like yours in to a state that it is, shall we say, sexier to organisations like the CDB and Island Institutions. The second issue feels like a power play from the banks, they hold all the cards and therefore apply the pressure to be in large majority in their favour, if I am understanding this correctly. If true, then the banks need to adopt a model more akin to the Andresson Horowitz model. Did you know that 6% of their investments actually make 60% of their profits? Over half of them are loss makers, but they are profitable overall.

In the case of RIDE Caribbean the budget for our MVP is so high that we need investment funding or a convertible note. But it is necessary to develop a proper product that would scale and attract further investment thereafter. So therefore yes the Caribbean needs proper Angel Investors and/or a Large Investment Fund from the CDB, EU or any International VC Company who can see the gold mine that is the Caribbean. The governments of the Caribbean who have access to these agencies to create these funds prefer to concentrate on other areas of interest instead of creating a proper Entrepreneur Eco-System.

Going back to operational matters, getting a startup off the ground not only takes a lot of time and passion, but finance is clearly needed, where are you with that at the moment?

My daily focus is souring and reaching out to potential investors. There is interest but most want to see an already working MVP which in my case is very costly.

I am reaching out to International Investors and Companies on a Daily basis who have interest in pre-seed and early stage ventures. I am unable to find any proper funds in the Caribbean. I have been in touch with IADB, IDB Invest, IDB Lab, CDB, Compete Caribbean, Carib Export, and a number of other agencies who claim to provide funding/financing to Latin America and the Caribbean. Most only work through other agencies or governments or member countries only.

OK, accepting that, what is it that you need to get to the next step, i.e., to allow you to develop your Minimal Viable Product? I’m assuming that your plans are to get the basic app and platform off the ground, expanding upon its services as and when it gains traction, pretty much following the disruption model I talked about in Issue 23 - Intel’s Pohoiki Beach and Disruption Theory?

My current daily focus is acquiring the necessary funding required to get my MVP up and running for a period of 12 months. This will require quite a bit of funding based on my business model and budgeted requirements.

One last question Greggar, do you think crowdsourcing could help you and/or other entrepreneurs in the Caribbean get over that first step to better financing, or do you think that the Caribbean isn’t quite ready for that model?

Crowdsouring or Crowdfunding as it is commonly known, can help based on the product and/or venture. But, it requires that you have a physical product to offer as perks. If you are looking at going the traditional crowdfunding way you will have to be quite innovative with your perk offering as per ours on indiegogo, which is not doing well similar to other ride share crowdfunding campaigns.

The other option is Equity Crowdfunding but you must have your business registered in the US or UK with a bank account.

Another option which can be considered is an Initial Coin Offering which is Blockchain based and a bit costly to setup. One must also have an innovative product to justify the ICO and use of the Tokens.

Excellent insight in to the life of a startup in the Caribbean. Thank you so much for taking the time to answer my questions. I’m looking forward to following your business as I believe there is scope for this type of development in the Caribbean and with a little luck, it will definitely help in the development of the local economy. One thing is for sure, mobility provides fuel for growth in an economy, the more we can do to make that easier, more efficient and cheaper, the better it is for the country. I’d like to check in on you in a few months or so to see how it’s going. Let’s keep in touch.

I am passionate about his venture and know that it will change things in the Caribbean for both local, visiting users, merchants and service providers. I thank you Matthew for the opportunity to speak on what I am working on and about to launch in St. Lucia for the Caribbean.

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