Change Drives Us to Twists in Road

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Welcome, this industry newsletter shares key market changes, in a twice-monthly publication, curated by Jeremiah Owyang, Founder of Crowd Companies™, you can subscribe to the email newsletter on the footer of the homepage.

A Trump Tax Cut Could Bolster IPOs
If President-Elect Donald Trump follows through on his campaign promise, the plan to slash the corporate tax rate from 35% to 15% could be a boon to unicorn startups. While the uncertainties of his other assertions certainly warrant due diligence, Trump’s tax break would likely lure billions back from overseas and flood balance sheets with critical cash flow. Analysts have specifically called out Snap, Uber, and Airbnb as likely beneficiaries, with many more to follow. Read more about how Trump’s tax policy would affect startups and future IPOs on Fortune.

Learn From Digital Transformers Who’ve Gone Before
Digital disruption is running rampant across the business world, but corporate leaders too eager to rush through a major transformation risk leaving their employees and company cultures behind — to the detriment of the entire organization. Learn how early pioneers of corporate transformation have navigated the frontier, whether they ramped up and plugged in savvy new digital divisions, retrained and reshaped their leadership around digital experimentation, or reimagined their customer experience in light of a new normal. In the end, they all relied on listening, learning and failing fast. Read all about the 12 lessons learned from GE, Domino’s, and Scotiabank from Hewlett Packard Enterprise insights.

Sharing Economy Challenged With Keeping Momentum
The novelty and excitement surrounding the sharing economy is already starting to wear off, and suddenly there are concerns about the road ahead. New research from the JPMorgan Chase Institute separates perceptions from real performance, and it shows that half of everyone who’s tried Uber, Airbnb, or other sharing economy platforms to make money has ultimately ditched their ride or closed the door on their rental opportunity. Whether the pay hasn’t materialized or they’ve given up their gigs for better jobs, there are obvious new roadblocks to success on the horizon. Read more about the data and its implications on Quartz.


We want to hear from you! What are the market impacts of this week’s news stories? Email Crowd Companies™ Founder Jeremiah Owyang directly to share your thoughts.


Image from Pexels used under Creative Commons license.

Cheers to Otto’s First Autonomous Truck Delivery: Beer

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Welcome, this industry newsletter shares key market changes, in a twice-monthly publication, curated by Jeremiah Owyang, Founder of Crowd Companies™, you can subscribe to the email newsletter on the footer of the homepage.

Cheers to Otto’s First Autonomous Truck Delivery: Beer
Uber’s self-driving truck division, Otto, recently completed the world’s first autonomous truck delivery, shipping 50,000 cans of Budweiser across Colorado from Fort Collins to Colorado Springs. The only caveat is that the fully Level 4 retrofit was only engaged while on the interstate. Otto’s self-driving strategy is to leave the local driving — the few miles to and from the interstate — to humans. While on the highway, Otto’s engineer was freed up for paperwork, exercise, or sleep. Otto’s six-truck fleet is still focused on smoothing out the ride and tweaking its software, but the technology is capable of being retrofitted onto any truck with an automatic transmission. Read more about the historic drive on Wired.

Conventional Banking Finally Tries Blockchain Trade
The financial technology that has driven efficient international bitcoin transactions since 2009 has finally been tried out by conventional bank leaders. Wells Fargo & Co. and Commonwealth Bank of Australia recently facilitated the first international blockchain transaction between banks for a shipment of cotton. The web-based technology that cuts out the need for third-party verification in order to process and settle transactions makes trades faster, more accurate, and more efficient, and the traditional transaction processing industry is “ripe for disruption.” Read more about the blockchain breakthrough from Reuters.

 

Airbnb Lightens Its Eco-Footprint With SolarCity Rebate
Environmentally friendly home sharing is headed for an ultra lightweight footprint through a partnership where Airbnb hosts and guests can get up to $1,000 off a SolarCity solar power generation system for their homes. On the flipside, all SolarCity customers can receive an $100 Airbnb travel credit. The partnership capitalizes on the growing move toward climate-friendly travel and aims to tap solar’s largely untouched millennial market segment, especially with SolarCity’s zero down financing. Read more about the innovative collaboration between Airbnb and SolarCity on TechCrunch.


We want to hear from you! What are the market impacts of this week’s news stories? Email Crowd Companies™ Founder Jeremiah Owyang directly to share your thoughts.


Image from OTTO

So Who’s Really Going to Own Autonomous Cars? There’s Four Scenarios.

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Above: Mercedes Benz Autonomous Car

Two mega trends are coming together: The Collaborative Economy and the Autonomous World, which means shared mobility from self-driving cars.

Early this year, we published a research report on the Business Models of Self-Driving Cars, and we’ve presented our findings at a number of industry events. A commonly asked question is: “In the future, will we even own cars?” I want to share a few scenarios that are likely to emerge.

Today’s 3-year-old toddlers are unlikely to ever learn how to drive. With autonomous cars already making their debut now, and then en masse in 2021, per Ford and others, these toddlers are unlikely to require driving skills in the year 2031.

Here are four scenarios of car ownership that could play out:

  1. The on-demand model, a.k.a. “Uber/Lyft” model. In this model, autonomous cars would be like a “utility” where most don’t own them, certainly in cities; they are summoned on demand.  John Zimmer, the CEO of Lyft, put forth a visionary piece where most city dwellers do not own cars in cities by the year 2025. Uber’s executives paint a future where mobility is like any other utility, where at a “twist of the tap,” mobility can flow out of a nozzle. In urban areas, home garages could be converted to living space (or Airbnb rentals), and large multi-story garages could be converted to green spaces.
  2. The shared car model, a.k.a. “Zipcar” model. A group of cars are available in a convenient regional area, where many can share and own these cars. For example, some progressive apartments now have shared vehicles in their garage for renters. In this model, a group of neighbors could invest in the commonly owned costs of these cars, and share insurance, car ownership, and maintenance costs. We’ve seen a growth in P2P insurance models, which could further enable this market.
  3. The wholly owned model, akin to current ownership. Just as we currently own most vehicles, we could continue to own vehicles in the future, but they will self-drive. This makes the most sense in rural areas and, to some degree, in suburban areas. Some people with families that have specific car seat or mobility needs (the elderly, those with wheelchairs, etc.) may require their own self-driving vehicles. Others we have spoken to suggest that human-driven cars will only be owned by the very rich — or very poor — similar to how horses are owned today.
  4. Autonomous cars own themselves. Also called a distributed autonomous organization (DAO), self-driving cars could become sentient creatures in the radical future that can not only self-drive and self-charge, but also then take themselves to be repaired at a local garage, and pay for it on their ownership. In this future, the excess profits generated from these self-driving cars would enable them to purchase an additional vehicle, expanding themselves from one car to eventually a fleet. All of this, in theory, could occur without human intervention and without human ownership.

In the end, there won’t be one single model. We’ll likely see a mixture occurring, just as we see this occurring now. Below, the models are broken out into a grid.


Matrix: Scenarios of Future Car Ownership

Mobility Model Who’s Likely to Adopt Who Will Own Business Model
On Demand Urban areas will embrace Uber, Lyft, car manufacturers On-demand service
Shared Car Urban areas, suburban Enterprise, Avis, private owners offering cars on Getaround, Turo Subscription, pro-rata
Wholly Owned Car Wealthy, young families, special care Individual owners Ownership/lease
Autonomous Cars Own Themselves An advanced artificial intelligence that can self-manage a fleet Cars will own themselves Computer-owned “corporation,” an undefined model, or a nonprofit akin to Wikipedia

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Above: Tesla’s Autonomous Car

Tesla showed its hand by prohibiting customers from sharing.
Recently, Tesla made an unusual mandate, that its own customers cannot enable their privately purchased self-driving Teslas to be listed on Uber or Lyft. This is a strange mandate considering the cars were purchased outright. It, of course, forebodes a few future business models that we’ll see from Tesla; it’ll likely offer a service model where the owners, or Tesla themsleves enable their autonomous cars to be made available to others as a service.

When would human-driven cars become obsolete?
While Elon Musk suggests that manually driving a car may someday be illegal due to human error and safety reasons, such vehicles won’t go away anytime soon. There would be a significant economic bottom if so many owned assets were quickly depreciated by a government decree. But looking decades forward, when autonomous cars become dominant and common, we will see a social and perhaps government cry for human drivers to be curbed. Perhaps if it’s not illegal, the insurance costs of manually driving would become too high.

To summarize, autonomous vehicles will not only significantly impact how we will be transported, but also the very business models in which our economy operates and how cities will change.

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Above: BMW’s Autonomous Concept Car

Self-Driving Vehicles Steer Talk of Future Economy

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Welcome, this industry newsletter shares key market changes, in a twice-monthly publication, curated by Jeremiah Owyang, Founder of Crowd Companies™, you can subscribe to the email newsletter on the footer of the homepage.

Uber’s OTTO Takes Autonomous to the Assembly Line
Bringing the latest in autonomous vehicles indoors, Clearpath Robotics has put a self-driving cart in between factory assembly lines and the stacks of materials needed to manufacture today’s goods. OTTO can map its own route and recharge itself, and now an extra $30 million is set to take OTTO into many more factories, warehouses, and distribution centers — as well as develop the next generation of “profound” innovations for the global supply chain. It’s a start toward the technology that industry forecasters predict will replace 7% of American labor by 2025. Read more about self-driving vehicles in factories on Futurism.

Next:Economy Touts the Reign of Humans in a Robotic World
The gradual rise of robots in the economy of the future will enhance and empower — not eliminate — the human race, according to some of the top minds pioneering the Autonomous World. Their thoughts took center stage at the recent Next:Economy conference in San Francisco. Among the takeaways were the observation of a shift to tribal, tech-powered neighborhoods; the way ahead for social good companies as opposed to corporations that don’t return capital to the economy; the coming efficiencies of cooperation with AI; the challenges of economic depressions and authoritarian leaders; and Silicon Valley’s need to engage with regulators. Read all about the Next:Economy perspectives and Crowd Companies’ initial take in Founder Jeremiah Owyang’s live notes.

Insiders Spy Google’s Self-Driving Minivan Prototypes
The first prototypes from the partnership between Google’s self-driving system and Chrysler Pacifica hybrid minivans were recently spied in a Mountain View parking garage. Google has announced plans to equip 100 Pacificas, which have an electric range of 30 miles and a “robust electrical architecture” well-suited for the integration of autonomous driving technology. The prototypes feature a roof-mounted sensor suite and fender-embedded sensors. Once fully deployed, the 100 minivans will dwarf the rest of Google’s self-driving fleet, which currently features 24 SUVs and 34 other vehicles. Read more about the prototype discovery from electrek.


Image from Pexels used under Creative Commons license.

Crowd Companies Future Events and Upcoming Research

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By Carl Bohlin and Jeremiah Owyang

Technologies empower customers faster than companies can adapt. To help businesses keep up with that pace of change, we host thought-provoking events, bring in the right speakers, and publish relevant research. In everything we do, Crowd Companies connects corporate leaders to the right innovation resources, thus enabling timely and effective action.

Crowd Companies provides members with up-to-date information on the technologies and customer behaviors that are driving business model changes. We do this by staying abreast of trends, conducting and providing member-directed research, involving thought leaders and startups in the ongoing conversations, and providing our members with the ability to learn and share in confidential, in-person meetings and teleconferences.

Crowd Companies is hosting two physical events coming up in October 2016 at which we plan to hear from Council members and thought leaders. It is always inspiring to gather at these events and share in a private setting some of the most pressing challenges and opportunities we face as a Council. And in the midst of new business model changes, it’s great to validate initial thoughts, share collective learning, and discuss with peers promising strategies to address common internal challenges.

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October 6th, 2016, in San Francisco: Join us for our Meet, Learn, and Tour event, one of the few opportunities for those outside the Council to experience what interactions in Council settings can be like. We will highlight the corporate innovation research initiatives that Crowd Companies currently has underway, as well as hear from the cutting-edge experience of Nestle, and take a tour of its Innovation Outpost. 

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October 25th and 26th, 2016, in NYC: Our Main Event, hosted by MasterCard, will be the highlight of the year, featuring presentations by MasterCard, Statoil, Wells Fargo, Migros, Sparks and Honey, General Assembly, Robert Scoble, and more, along with the findings of proprietary member research.

What’s up for 2017? We are adding more!

Council members love the in-person engagements and networking. Therefore, Crowd Companies will be providing more opportunities to foster discussions and increase knowledge and awareness. We are adding gatherings at top industry events and expanding our European events. To date, our 2017 lineup includes:

January 5th: Member Gathering in conjunction with CES, Las Vegas

March 11th: Member Gathering in conjunction with SXSW, Austin, Texas

April 26th: European Summit, hosted by Philips, Amsterdam

June 15th: Spring Summit, hosted by AARP, Washington, D.C.

September: The Main Event, San Francisco

October: European Summit, TBD

**Plus more under consideration

Crowd Companies also continues to grow and expand our research. The Crowd Companies Corporate Innovation Report is underway, with previews of the research scheduled to be delivered on October 6th at the San Francisco Meet, Learn, and Tour, and full delivery to our membership planned for our October 25th Main Event in NYC.
What’s next for research? After we complete the Corporate Innovation Report this fall, we’ll begin research on the Business Models of Blockchain to find out how all industries and verticals are impacted by cryptocurrencies.

A New Vision for Hospitality, Infrastructure, and Business

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Welcome, this industry newsletter shares key market changes, in a twice-monthly publication, curated by Jeremiah Owyang, Founder of Crowd Companies™, you can subscribe to the email newsletter on the footer of the homepage.

A World Without Drivers Changes the Game for Businesses
As new technologies reshape how we collaborate and move, the entire foundation of traditional business models will be reconfigured. Crowd Companies’ research into the coming Autonomous World points to a society where autonomous vehicles give way to radical reductions in costs for logistics and transportation, followed by a revolutionary paradigm shift for businesses. Beyond auto companies, airlines and hotels will adjust to mobile offices and entertainment experiences, insurance companies will be forced to reinvent product offerings, predictive inventory management and distribution will dominate logistics and delivery, retail storefronts will become showrooms or warehouses, and communities will gravitate toward designing for walkability. Learn more about Crowd Companies’ research by watching Founder Jeremiah Owyang’s speech at Analytics Experience 2016.

Airbnb Welcomes the World’s Hosts to Re-Envision Hospitality
A celebration of hospitality and innovation in hosting is bringing some of the friendliest people from more than 100 countries to Los Angeles Nov. 17-19 to inspire, enlighten, and re-envision the future of hospitality at Airbnb Open LA. The three-day festival and conference aims to “explore unique neighborhoods, spark lasting friendships, and exchange best practices with fellow hosts” and a blockbuster lineup of speakers from all facets of the industry, including the Airbnb co-founders, Ashton Kutcher, Gwyneth Paltrow, James Corden, Attorney General Eric Holder, Philadelphia Mayor Michael Nutter, author Elizabeth Gilbert, futurist Jason Silva, and many more. Get more info on Airbnb Open LA.

Lyft Imagines a World Built for People, Not Cars
Take a look around at the immense waste of space that’s dedicated to a world which revolves around the automobile. Empty, parked cars everywhere. Now join Lyft in re-imagining what that space could be if all those vehicles were gone. Such is the epiphany of Lyft Co-Founder John Zimmer, who believes a new transportation revolution will lead to the demise of private car ownership by 2025, thereby removing the burden of parked vehicles, streamlining the nation’s infrastructure, and transforming the space in which we live. Read much more of Zimmer’s thoughts via Medium.


We want to hear from you! What are the market impacts of this week’s news stories? Email Crowd Companies™ Founder Jeremiah Owyang directly to share your thoughts.


Image from IDG Communications

Startups Test the Throttle of Market Leaders’ Innovation

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Welcome, this industry newsletter shares key market changes, in a twice-monthly publication, curated by Jeremiah Owyang, Founder of Crowd Companies™, you can subscribe to the email newsletter on the footer of the homepage.

Established Corporations Striving to Keep Up With Startups
Lightweight and nimble, startups across America and the globe are taking the business world to exciting new places — in hopes of augmenting their brands and products into the daily lives of customers, much like what established companies have already done. Crowd Companies has identified the ways startups differ most from their market leaders, thereby distilling the necessary ingredients for an agile modern corporation to most effectively foster a culture of innovation that keeps its brand at the forefront. Read all 11 ways that startups are known to outrun established corporations and weigh in on the discussion on our blog.

A Robot Takeover on the Horizon
Fearing a robotic takeover of the workplace in the coming years, the White House assembled its economists and concluded that the rise of industrial technology provides an 83 percent likelihood that workers who make $20 an hour or less will be replaced by robots, along with a 31 percent chance that those making $20 to $40 per hour will lose their jobs and a scant 4 percent risk to those earning more than $40 an hour. Those economists also credit technology with further polarizing the gap between the rich and the poor, and though new technologies no doubt present unprecedented opportunities and efficiencies, they may just displace more jobs than they create by 2025. Read more about the White House’s economic forecast from the Huffington Post that published a few months ago, but we felt it was timely to surface again.

Self-Driving Buses Turn the Corner in Finland
Taking advantage of laws that only require supervision of autonomous vehicles, not a physical driver, Finland’s Metropolia University of Applied Sciences has put a pair of 12-passenger electric Easymile EZ-10 buses on a fixed route through the streets of a Helsinki neighborhood for a month-long test that’s one of the world’s first. For good measure, Metropolia has included an onboard supervisor and is throttling the buses down to just 6 mph. Helsinki has made it a public goal to get rid of all personal cars and provide complete public transportation solutions within a decade. Read more about the self-driving buses on Curbed.


We want to hear from you! What are the market impacts of this week’s news stories? Email Crowd Companies™ Founder Jeremiah Owyang directly to share your thoughts.


Image from Pexels used under Creative Commons license.

11 Ways Startups Outrun Established Corporations

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The purpose of this post is to list out how startups are bypassing established companies so that incumbents glean the best tactics and apply them to their own corporate innovation.

Tech startups are designed, built, and managed differently than established companies, giving them a competitive edge against incumbent corporations. This post outlines startup advantages, including cultural differences, business models, and business strategies. But, established companies aren’t sitting around idle; they’re adopting these same strategies in order to compete, emulate, or lead in their market. See how corporations are deploying ten types of innovation programs.

In our work at Crowd Companies, we’ve observed that big, established companies possess advantages in their tremendous resources, trusted brand names, and experience in their field, they are also plagued with gears that are slow to turn.


11 Ways Startups Outrun Established Corporations:

 

Startups have unique cultural differences:
Herein lies the greatest difference between a startup and and an established corporation: The core ethos of the organization is built differently.

  • 1) Smaller, faster. Smaller in size, startups can quickly redirect employees in nearly any direction; there are fewer minds to change and fewer levels of management to get through. Additionally, startups hire innovators who are focused on new ways of doing business, which also enables them to quickly shift in unorthodox directions.
  • 2) Embraces failure. Because startups have less at stake, they foster a culture that’s not afraid to fail. You’ll hear mantras that encourage “Fail Fast” or “Fail Forward” risk-taking in exchange for the potential of innovation. Meanwhile, established companies can be hesitant to pivot and disrupt their existing revenue streams.
  • 3) Attracts high-risk/reward workers. Unlike stable career positions, entrepreneurial minded professionals are attracted to the startup lifestyle. This encourages wilder career moves in long shot startups, with the equity promise for high financial gain and industry fame.
  • 4) Attracts skilled talent. Startups often attract top talent due to their sense of purpose and passion, quality of work life, perks, and promise of making it rich through equity packages rather than a salaried job at an established company.
  • 5) They’re younger. As a whole, startup employees and founders, at least in tech, tend to be younger; they can afford to take more career risk, often with fewer family, health and financial commitments. Although controversial, Mark Zuckerberg claims they’re just “smarter” than older cohorts as they may have the latest skills, or can be easier molded.

Startup business models are setup differently:
Startups are set up differently as business entities than established corporations, giving them additional advantages to take down their target markets.

  • 6) VC funded. Ample VC funding enables radical innovation and encourages high-risk business models, often designed to disrupt incumbents through the use of networks, technology, and new methods of going to market.
  • 7) Privately held. Startups have more freedom to disrupt an existing market, as they’re not exposed to the scrutiny over quarterly earnings like public companies are. As a result, these startups answer only to their executives and board, and they can plan beyond the next quarter.
  • 8) Growth over revenue. Startups are not held to the same standards as publicly traded corporations. Startups are often focused on market penetration and adoption rather than just revenue. To avoid upsetting users, Facebook didn’t turn on its “mobile advertising” engines until post-IPO.

Startups have an unorthodox business strategy:
The way startups deploy their day-to-day businesses is different than established companies; they move faster, with greater risk, and are able to quickly ship product.

  • 9) Tackle niche, then grow. Startups can attack small markets, then grow them to compete with established companies. Established corporations often don’t have the appetite to defend smaller markets, giving startups the ability to gain footholds as they expand.
  • 10) Faster than the law. Startups often challenge existing rules, laws, and regulations. They’re able to move faster than regulators, then reshape the discussion to their benefit, like Airbnb, Uber, and Lyft have.
  • 11) Quickly ship product. Startups are known for the practice of “shipping fast” in their product releases: releasing versions daily if not hourly, and are taught that shipping a product when it’s 90% or even 80% finished is acceptable — rather than perfecting it like an established corporation would.

Looking at across these 11 different ways that startups are able to outrun established corporations, you can see that the very core makeup of the culture, business setup, and their strategies are often different than older established companies.

Established companies aren’t standing still, waiting to be disrupted, they are either weighing whether they should build similar features or purchase the startups outright, or emulating the same characteristics of startups. Established companies who don’t move faster, run the risk of being blind sided from a young market competitor.

We’ll build on this in an upcoming report on corporate innovation and explain how established companies are starting to act more like startups and make their corporations more agile.

(Credits: I shared a short list on Twitter, and received some insightful suggestions, including from: Serena Ehlich, Julian, and Caleb Parker. Image from Pexel)

Autonomous Cars are coming to a street near you — changing the rules of the road

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Welcome, this industry newsletter shares key market changes, in a twice-monthly publication, curated by Jeremiah Owyang, Founder of Crowd Companies™, you can subscribe to the email newsletter on the footer of the homepage.

Uber’s Self-Driving Cars Ready to Hit the Streets
Capitalizing on the information-rich 100 million miles per day logged by current Uber drivers, the leading ride-sharing company is teaching its cars to drive themselves, and the first “student” drivers are ready to pick up regular customers in downtown Pittsburgh — for free. The bold experiment is expected to hit the streets in late August with safety “drivers” watching from behind the wheel, ready to take over at the sound of a warning tone. Uber plans to put 100 self-driving Volvo SUVs into service by the end of the year, and it is racing to full automation as soon as possible. Its $300 million Volvo partnership aims to deploy a fully autonomous car by 2021, and driverless trucks are in the works with the pending acquisition of Otto. Read more about the latest developments in self-driving cars on Bloomberg.

Ford Building Self-Driving Fleet With No Human Controls
Wary of the pitfalls of driver re-engagement (or lack thereof) in semi-autonomous vehicles, Ford is taking human error out of the equation. Showcasing confidence in its autonomous technology, the automaker just announced it is designing a fleet of self-driving taxis without steering wheels and pedals for use beginning in 2021. But without the human fallback option, Ford’s autonomous cars will only drive in geofenced urban areas and in favorable weather conditions. En route to that fully-automated day in 2021, Ford is revving up its test vehicle numbers this year to attain the largest fleet of any automaker. Read more about Ford’s 2021 self-driving taxi project on Business Insider.

Self-Driving Cars Steering Their Way to Your Business Model
While the first stop for driverless technology may be a ride-sharing or taxi service, the next stop might be much closer to your business model. Self-driving cars are speeding up the advent of the Autonomous World, which would make inroads to industries as diverse as travel and hospitality, insurance, logistics, retail and municipal government. Crowd Companies has analyzed the implications of intelligent technology on the rest of the business world and integrated them into an insightful infographic and a members-only full report focused on the role of humans and robots as well as the business strategies required to compete in this coming Autonomous World. Check out the infographic on our blog.


We want to hear from you! What are the market impacts of this week’s news stories? Email Crowd Companies™ Founder Jeremiah Owyang directly to share your thoughts.


Image from Uber via Bloomberg 

Corporate Innovation Impacts Customers in Four Ways

Rather than arbitrarily throw around the “innovation” word, understand how it impacts your customers, and be specific. Innovation comes in four flavors: product innovation, operational innovation, customer experience innovation, and business model innovation.

Corporate innovation isn’t easy. Stefan Petzov, an innovation professional at Swisscom, a Crowd Companies member, has outlined the many challenges that innovation programs inherently face. In particular, the first challenge he lists out is that companies struggle because “the expected outcome is not clearly defined.” Clarity is paramount.

One way to solve this top-level challenge is to ensure your company and innovation partners have a standard nomenclature for how innovation is used. We looked at structuring this language around products, business units, or functions, but found it would be most helpful to structure it around customer benefit.

First, some qualifications on the scope of this discussion: The following is focused on how innovation is done within a company, not about external activities like partnerships, investment, acquisition, accelerators, and more. In a recent post, we identified the ten types of innovation programs, which goes into a bit more detail.

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Corporate Innovation Impacts Customers in Four Ways:

Innovation Categories Description Examples Benefits to Customers
1) Product Innovation Often led by R&D, product features are enhanced, or new products are developed based on the product roadmap. Nike evolved beyond shoes to Nike Plus, expanding its offerings. Also, new product lines like Nestle’s launch of Nespresso grew a loyal customer base. Continued improvements on product features and benefits, as well as new product lines.
2) Operational Innovation Often led by operations, new processes increase productivity and efficiency, or reduce costs associated with employees, partners, and the supply chain. In the ‘70s, Japanese automakers like Toyota and Honda increased the efficiency of auto production and reduced overall costs through kaizen. Products emerge faster, with more consistency, and often at a lower cost.
3) Customer Experience Innovation Often led by marketing and customer care, new services, interfaces, and channels are developed to improve customer interactions, while the product often stays the same. Hugo Boss partnered with Uber for product delivery, transportation, and concierge. Swisscom launched “Friends” so customers can self-support. New services beyond the core product offering, including supportive media, communications in new channels and mediums, and white-glove service.
4) Business Model Innovation Often led by innovators or strategists, companies identify complete new revenue streams from existing core capabilities. BMW launched ReachNow, enabling customers to rent vehicles on demand — rather than buy — packaged with parking services, insurance, and more. Core product and service offerings are provided in new ways that meet shifting customer expectations –reframing customer relationships in the face of disruptive technologies.

 

With new technologies emerging at a rapid pace (who knew Pokemon Go would be a top app within just a few days), companies have no choice but to accelerate their rate of innovation. Unfortunately, most companies focus exclusively on only one or two forms of corporate innovation, forgetting others that could be a key competitive advantage to satisfying the ever-changing expectations of customers.

Most companies focus on Product Innovation, which can quickly escalate into a race amongst competitors towards a commoditization that churns out less-than-useful new products rather than true innovation that revolutionizes the way customers live. In recent periods, I’ve also observed companies redeploy attention on Customer Experience Innovation as they scramble to reach customers in a multitude of digital and in-person channels.

An area we focus heavily on at Crowd Companies is how companies tap into the power of people and technology to unlock new revenues by serving customers in new ways through Business Model Innovation, whether that’s in the Collaborative Economy or the Autonomous World, where robots take the wheel, and whatever comes next.

To maximize customer satisfaction — and ultimately competitive edge companies must innovate in all four of these areas, as well as ensure that the innovation management team is coordinating all efforts toward a single goal.

In closing, when you’re using the word innovation, be clear about which of the four types you’re referring to, as it impacts your company, employees, and customers in significant ways.

(Credit to Jairo Venegas for the focus on operational innovation, and Jamie Sandford for the link to the Science of Innovation.)

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