When entering the area of innovation there seems to be no single best way to do it. All over the business landscape we see companies with traditional R&D departments, skunk projects, incubators, venture capital-departments and so on. I would like to introduce you to what they call a ‘living lab’. Embraced by firms like WalMart and McDonalds, but also IBM and the Santander Group. So what is it?
A user-centred, open-innovation ecosystem, often operating in a territorial context (e.g. city, agglomeration, region), integrating concurrent research and innovation processes, within a public-private-people partnership.
That sounds awesome, but how do you set this up? As said, there seems to be no Holy Grail. Vijay Govindarajan and Chris Trimble came to a similar conclusion while writing ‘The other side of Innovation: solving the Execution Challenge’, in which they stated that having employees dedicate a fixed amount of time to innovation, handing out bonuses for innovation or having a ‘playbook’ for innovation seems to encourage incremental innovation more than disruptive ones. However they did find that companies need to build so called ‘innovation machines’, which should embody a clear set of rules:
- Attract people from outside the company, and doing so without constraints, makes them hire rule breakers instead of perfect stereotype employees
- Be free of some of the metrics that dominate the rest of the corporation. Though so called ‘skunk works’, small autonomous units, should be avoided.
- Maintain integration with the rest of the company, incorporating e.g. some staff to allow them to tap in to other company resources and departments.
- Create dedicated management rules: generic company management rules might not be applied, e.g. accountability should be on the amount of lessons learned or ideas generated instead of budget control.
If you truly want to start innovating from within, the general thought has to change from innovation = ideas towards innovation = ideas + leader + team + plan. In which we identify that the disruptive innovations come from the best ideas, but need to be managed by someone who steps up and drives the execution continuously. Next to a leader you will need the right project team, which will enable you to actively develop and improve the (business) plan.
Still, if you have these innovative machines, why choose a living lab instead of your ‘regular’ R&D department? Living labs have proven to be a more ‘hands-on’ approach to development. They aim to involve users earlier in the process allowing them to search for deeper customer needs and discover new user cases. It bridges the gap between technologic development and the development of services and products, through the participation of all relevant stakeholders (companies, governments, research institutions and citizens). Meanwhile given them an easy understanding of the social and economic consequences of the introduction of innovative products and/or services.
And it might be for these reasons that we have seen increased corporate activity throughout the years in the area of this innovation machine. And though, as stated earlier, the Holy Grail is yet to be found (question remains, is there such a lab setting?). Mr. Pallot found that specifically living labs should be based on four other principles: co-creation, exploration, experimentation and evaluation.
- Co-creation should be aimed at bringing together different points of view, sustaining ideation (e.g. new scenarios, concepts and related artefacts).
- Exploration requires stakeholders to exploring the product or service usages and behaviors in live (or virtual) environments.
- Experimentation on a large(r) scale should be implemented to collect data that could be analyzed later on during evaluation.
- Evaluation of the ideas looks at various dimensions (socio-ergonomic, socio-cognitive and socio-economic) that should be addressed. In each, observations should be made on the potential of adoption of the newly found concepts.
Besides these four principles, living labs should be a place of open innovation. It relies on the assumption that companies cannot rely solely on their own R&D because knowledge is so widely spread.
Well, there you have the methodology. But if you want it to be effective, who should you incorporate. Most of the time you see a combination of the earlier mentioned four different stakeholders, including end users, corporates, educational/knowledge institutions and the (local) government. But what do they gain? End users often want to influence the development of products they use themselves, while companies try to make their road to innovation shorter by directly receiving feedback and thus creating a product that satisfies customer needs. Often theory is not put into practice, and that is why institutions that focus on the gathering of knowledge are often heavily involved in these labs. While governments often gain the same knowledge, they try to use this knowledge to cut costs. To see if there are any innovations out here that might make executing public services more efficiently. What do you think should be the objective of a so-called living lab?
Govindarajan, V. and Trimble, C. (2010). The Other Side of Innovation: Solving the Execution Challenge. Harvard Business Review.
Pallot, M. (2009). The Living Lab Approach: A User Centred Open Innovation Ecosystem. Webergence Blog.
Technology Innovation Management Review (2012). September 2012: Living Labs. Carleton University
After our lecture on digitization versus disruption by BCG’s Peter Burggraaff, I started thinking about the impact of these trends on the consulting business. As stated by McKinsey and Company’s Dominic Barton (Global Managing Director) in an interview with the Harvard Business Review, they “value the judgment, not so much the analytics”. This related to the X-axis of disruption in consulting, in which one can separate the difference between projects/processes that are highly repeatable (and thus attractive for automation) and those that are non repeatable (currently
Meanwhile, according to prof. Clayton Christensen (author of “Consulting on the cusp of disruption”) the Y-axis of disruption in consulting is the size of the problems, often related to bigger companies.
A research by ‘the Emerging Future’ tells us that intuitively we think that in 6 years, the advancement of technology will be 32(!) times compared to what we currently can. If that is even remotely the case the capabilities of Artificial Intelligence/Cognitive Systems, combined with analysis of tremendous amounts of data, will more and more equal the thorough analysis of consultants. The advancement of technology, majorly subject to time (not if, but when), is therefor noted as the Z-axis of disruption.
So combining all this: let’s see where existing companies are situated in the ‘matrix’.
- This is where large software companies are growing their business, often in combination with a consulting practice. They have certain Intellectual Property (IP); either generated by the company or in collaboration with clients, and integrate these in software products (e.g. SAP, Oracle etc.).
- The position of large ‘consulting firms’. They deal with big problems that are very specific. Because of there nature, as stated by Dominic Barton: they are relying on judgement, as (currently) analytics fall short.
- Although difficult to label, this might be where all SME oriented consultants earn their money. They face similar non-repeatable issues, but the number of parameters that influence the issue are limited and thus less complex.
- This part of the landscape is crowded; it consists of SMEs that work on analytics and startups that deliver cutting-edge solutions for your every day problem.
With the advancement of technology, we will see that the area of the number 2’s will become more and more narrow. The number of problems that can be solved with automated solutions will become bigger and bigger, IBM Watson is just a start of what is possible with cognitive systems. Meanwhile startups are starting to attract business that is not interesting to the leading firms and will gain more business in the consulting-landscape if they proof to deliver sufficient solutions. Despite the fact that consulting firms are aware of these disruptors and are preparing themselves for the digital age, e.g. McKinsey Solutions, it has proven though for major firms to disrupt themselves. I guess time will tell.
While thinking of all this I noted that my ‘graph’ is far from what a consultant may call ‘MECE’. Look at it as a conversation starter. Which factors do you think will influence the disruption of consulting? Will they be smart enough to stay ahead or will we be one of the last generations of BIM students looking at consultancy?
Since the night of October 2nd, 1951, when the first Dutch TV-show was broadcasted to 500 TV sets in the Netherlands, the way we consume TV has changed. Especially since the initial introduction of Apple TV in 2007 and UPC Horizon (now Ziggo) in 2010, the landscape in digital TV has changed significantly. The Apple TV has since developed to a device that turns your regular TV screen into a smart TV with a single purchase, while the Ziggo Horizon mediabox is a so-called ‘multimedia gateway’; delivering both traditional and digital media on a subscription basis.
Although the goal of these two products seems similar, when comparing these two new ways of delivering content to the consumer, there are differences that should be noted. The offering of Apple is based on hardware, in combination with the promise of an ecosystem. Ziggo offers a subscription, which includes a hardware component. An advantage of Apple TV is that it allows for integration with other Apple devices, delivering an omnichannel experience. For Ziggo the main competitive advantage is the integration of traditional TV in its offering, as it gives them the opportunity to gain market share through their current clients and business model.
Fig. 2: The strengths, weaknesses, opportunities and threats of Apple TV and Ziggo TV
As it comes to the future of these two ‘information goods’, we foresee the impact of three high-level trends. The evidence shows (fig. 1) that young people view less traditional TV, demonstrated by a 17% decrease over the past year among youngsters aged 18-24. Although indirectly and limitedly available, almost all TV channels have developed their own (web)apps, providing traditional content online. Simultaneously, the providers of TV-signal (like KPN, Ziggo and Telfort) are moving towards new business models that allow for more customization.
Fig. 1: Consumption of Live Broadcast vs. Online TV services in the United States (MarketingCharts, 2015)
Our prediction for the future is that devices such as the Apple TV will become dominant over a product/service such as Ziggo’s Horizon media box. Anticipating the following main characteristics as of why people adapt to a new way of receiving their content; increased importance of ease of use and installation, customers want freedom of choice; they want to watch what they want, when they want, and the availability of content.
To conclude on our comparison and future prediction; the question to Ziggo should be to both compete with Apple and create their own ecosystem by collaborating with third parties, or to become a subscription based app that offers live television on devices such as an Apple TV, and compete with apps such as KPN’s ‘Play’. Because of Apple TV’s ease of use and installation, the freedom of choice it offers and the possibilities created by its ecosystem, we predict that Apple TV becomes the dominant way of watching TV. Where Ziggo digitalized watching TV, Apple will disrupt the way of watching TV. To wrap up, we agree with Apple: “the future of television is apps” (Apple, 2015).
Do you agree with Apple’s vision? And do you think other trends will impact the way we consume video content in the future?
Apple (2015) The future of television. Accessed on 27 September, 2015, retrieved from Apple: http://www.apple.com/tv/
De Beeld en Geluid Wiki (2013) De eerste landelijke televisie uitzending. Accessed on 26 September, 2015, retrieved from Nederlands Instituut voor Beeld en Geluid: http://www.beeldengeluidwiki.nl/index.php/De_eerste_landelijke_televisie_uitzending
MarketingCharts (2015) Youth Say OTT Video Challenges Live TV in Weekly Consumption. Accessed on 27 September, 2015, retrieved from MarketingCharts: http://www.marketingcharts.com/online/youth-say-ott-video-challenges-live-tv-in-weekly-consumption-41545/
Reijerman, D. (2015, June 24) KPN gaat 22 zenders en Chromecast-ondersteuning aanbieden in testversie Play-app. Accessed on 26 September, 2015, retrieved from Tweakers: http://tweakers.net/nieuws/103886/kpn-gaat-22-zenders-en-chromecast-ondersteuning-aanbieden-in-testversie-play-app.html
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