Tag Archives: product strategy

Insight from IDEO: How to Prototype a Business

There’s a great post on IDEO‘s website on a topic that is fascinating to me: How to Prototype A New Business (from their Creative Confidence series).

The post is based around an interview (audio below) with Joe Gerber, the MD of IDEO CoLab, which is “a collaborative R&D Lab exploring emerging technologies and its future impact”.

Among some of the useful points, there is a nice lens that can be used to assess new businesses: Viability, Feasibility, and Desirability.

Source: IDEO

Prototyping is a key part of the Design Thinking process and this podcast shows how important it is in Business Design. This is because the hardest thing to predict is the desirability, so you have to test this empirically.

In the podcast, Joe goes into great detail about how you can do this by trying to sell the concept as if it were already a product to see if there is genuine customer appetite (he refers to setting up a “lemonade stand”).

There are some amazing resources linked on there such as Tom Hulme’s Business Model Canvas and a list of Prototyping Tools that can be used (both physical and digital).

Google to acquire Dyson?

Back in 2014/2015, I wondered whether it would make sense for Google to acquire Dyson.

Growth of Alphabet/Google hardware presence

In order to keep their advantage in the search and data sphere, Google (now Alphabet) ramped up their presence in lots of emerging hardware spaces via acquisitions such as Motorola, Boston Dynamics and Nest Labs. Also, Google has developed their own technology innovations at Google X (now simply X), such as the world-leading autonomous vehicle company, Waymo.

In order to fully commercialise such acquisitions and innovations, Google needed to have access to an abundance of world-class hardware product development and marketing experience.

Google made a step towards this in 2014 when they acqui-hired a design firm based in California called Gecko Design. However, I believed Gecko Design was not big enough to fill this void alone.

This left me wondering whether Dyson would be a good fit to help satisfy this need for design engineering firepower.

Dyson’s common interests with Google

Dyson was rumoured to be working on an electric car after it acquired battery company Sakti3 (which has now been publicly confirmed) and also invested £5m with my alma mater, Imperial College, to develop next-generation robots, resulting in the Dyson Robotics Lab.

Given Alphabet’s world-leading autonomous vehicle project, Waymo, and it’s previous interest in robots, I thought that an acquisition of Dyson would give Alphabet/Google a huge advantage with its massive team of 4,800 design engineers.

Dyson and Alphabet have other visions of the future in common. One notable example is Halo (see right), Dyson’s previous prototype of a Google Glass-type device that they built 10 years before Google launched it!

Would Sir James Dyson sell?

As of 2018, a tie-up between the two companies has not yet emerged. In many ways it is unsurprising, as Sir James and his family appear to own 100% of Dyson, so why give up control? (On that topic, there is a great interview with Sir James on NPR’s How I Built This podcast about how he grew his business which explains that surprising fact).

Also, Sir James is a vocal advocate of keeping engineers in Britain and growing British talent to boost industry and our economy.

His leadership on this issue includes launching his own university with a £15m investment, called the Dyson Institute of Engineering and Technology, and his £12m donation to Imperial College to launch the Dyson School of Design Engineering (as well as the previously mentioned Dyson Robotics Lab).

In short, I’m not going to hold my breath for this one. However, it will be fascinating to see how Google and Dyson both fare in the autonomous and electric vehicle markets. Perhaps future collaboration or a joint venture could be on the cards?

MirrorMirror: booth-based 3D scanner for online shopping

During the final year (2007-08) of my Physics degree at Imperial College, we studied a module called Research Interfaces (RI). This was a team-based module that focussed on transforming scientific research into commercial business propositions.

This was a highlight of the degree for me: I loved the collaborative nature of it and the entrepreneurial challenge was much more aligned with how I wanted to live my future life.

Our product design: MirrorMirror

Our team designed a product with the working name of MirrorMirror. It was a booth containing a network of cameras with a central computer that would stitch together the images to create a 3D scan model of the user’s body.

This would then be used to generate an avatar that would help them choose clothes that fit and suit them perfectly when shopping online.

Additionally, they could see their body on a screen in real time with different clothing options projected over the image as if they were wearing it (so-called “Augmented Reality”). This reminded us of the magic mirror from the Disney film, Snow White (hence the name MirrorMirror).

There could also be other uses like tracking weight loss for dieters and muscle gain for bodybuilders (if a new scan was made regularly to show the incremental changes) or the visualisation of the results of cosmetic surgery.

Technical Design

We produced several outputs for the class including this Technical Design Review.

In that document, we estimated the cost to build the prototype of £1.45m, a total future manufacturing cost per booth of £13,900, and a price point of £50,000.

This is exceptionally high and I believe it is a result of the fact that we were not actually required by the course to do any prototyping work. If we had, I think we would have focused on looking for a cheaper way to execute the plan.

Our original design required a screen behind a half-silvered mirror. I think in 2018 this would not be required as screens are not of incredible quality and image processing technology has come on exponentially in the last decade.

User experience

We believed that there are many high-end lucrative markets (such as wedding dresses, evening wear and saris) where a quicker and less stressful garment trial process would greatly add to the shopping experience.

Our team also saw the potential for future uses such as generating an accurate avatar of the person that can be used as a little virtual model for the clothes that are being selected. Imagine being email a picture of yourself wearing the latest items from your favourite designer and a link to buy exactly the right size for you?

We envisioned that booths could be installed in shopping centres, allowing customers to create a 3D image of themselves which they could then use to shop online. Additional lucrative applications could also include high-fashion hairdressing.

Our plan of the user journey is mapped in the image below:

User Journey for MirrorMirror

Business Case and Financial Model

You can see the basic financial model we generated here: MirrorMirror Costing.

When I say we, it was actually me that had the responsibility for putting it together and I could have circulated the draft to my team-mates before the deadline so we could have had more eyes on it before submission. We got our lowest grade by far for this part of the module, so I did feel a bit guilty! However, it was apparently the same for all the other teams, so my guilt was slightly assuaged.

After 10 years working in and around startups and scaleups, here are what I see as the big errors and omissions:

  • No time series for the values (everything is static)
  • Lag time between initial burn and revenue
    • A proper cash-flow model would have helped clarify this
  • Significant errors on the business model (i.e. how we could get paid)
    • For example, would we really want to make money on the hardware, or would we prefer to make money on the service provided by the software (i.e. charge money for every image processed – a digital version of the Nespresso model)
  • No R&D tax credits, Government grants, or other potential subsidies included
  • No marketing and sales budget included at all!

It is quite satisfying to look at old work such as this and compare it with what I have learned since then!

Final Pitch

At the end of the 3-month module, we had to deliver a pitch to a packed auditorium and a simulated panel of investors (made up by the professors from the Business and Physics department that ran the course).

You can see our final pitch document here.

This was a really enjoyable part of the course. I delivered it with 2 other teammates and we got everyone in the team up on stage for the Q&A at the end.

Outcome

We actually won the Elevator Pitch Prize at the end of the module which was a very personally satisfying way to end the project. We all received a good first for the course (>85%) which was very satisfying for all of us.

We entered into the wider university’s Business Challenge entrepreneurship competition, but we didn’t get past the initial screening phase. As a result, we all agreed to disband the project outside of the RI module and did not take it any further.

What didn’t we do?

It is quite telling that we didn’t build a prototype!!!

The reason that we didn’t build anything is that we didn’t have anyone that is super-focused on the tech side i.e. that could be a CTO. I also believe it is because we all saw this as a purely academic exercise and not as a true opportunity to start an entrepreneurial endeavour and make a return with it.

This tinkering on a prototype would have actually helped us see the true costs, challenges around manufacturing, and gaps in the business model. In fact, IDEO’s Design Thinking methodology (diagram below) expressly integrates prototyping as part of the design process. This project was perfect evidence of why that is the case.

I wonder if the Blackett lab requires the students on the RI course to build a prototype as part of the course nowadays?

Design Thinking Source: IDEO Mydhili Bayyapunedi @myd | @Young_Current

WaterAlert: Plant Moisture Sensor

Back when I was 15 years old, I won a Design Technology – Systems & Control prize at my school for my work on the design process around this little product I came up with called Water Alert (see photo, left).

It was a moisture detection probe that was designed to be inserted into the soil of a pot plant and provide feedback to the gardener about when it needed to be watered.

The end result that I manufactured wasn’t high quality as you can see (!), but I remember really enjoying the design process and that enthusiasm, combined with my corresponding diligence preparing the documentation, won me the prize.

Nowadays, you can buy something virtually identical as a toy kit for kids to build themselves. It’s called the Thirsty Plant Kit (see photo, right).

This got me thinking about how I could win a school prize >15 years ago with something so simple as the design for a toy with a circuit that only has 2 transistors.

What sort of amazing school projects can kids build in the age of 3D printing, Arduino, littleBits, Raspberry Pi, and the multitude of online resources and guides?

Amazon and eBay rentals – business model of the future?

Isn’t it amazing that neither Amazon and eBay let users lend and borrow items between themselves? There are plenty of websites chasing the rental market currently, so why aren’t the e-commerce giants chasing it as a business model?

Connectivity = efficiency = sustainability

Connectivity within a system allows for greater efficiency, as it allows different elements of a system to pool resources and reduce the duplication of effort. From a sustainability standpoint, the rise of the internet is incredibly exciting as it facilitates the sharing of resources, meaning fewer items need to be fabricated for human use, which in turn reduces the total amount of effort and investment wasted on items that have a low usage factor.

Prior to the internet, the pool of objects and items that human beings could “leverage” (i.e. use) to achieve their goals without an outright purchase was mostly limited to those held by their within their own network of friends, neighbours and family. This was a pool constrained by the mind’s numerical capacity for relationships, the lack of a complete and quick way to search a person’s hypothetical inventory of items available for use, and also by the ability to convince others of trustworthiness.

Internet marketplaces facilitate sharing

The internet can disrupt this status quo through the use of marketplaces that can be used to connect borrowers and lenders of items. Items could be listed as available for borrowing/renting, and potential users could search for them. Possible features include:

  • rating the condition of an item by both parties before and after the transaction
  • insurance products could be offered to cover the item
  • payment (if needed) could be handled via the marketplace site/app
  • location of the borrowers/lenders could be matched quickly through mobile GPS
  • the option to buy the item could be provided if desired

There are startups working on this very concept as we speak, such as StreetBank in the UK. Watch their company trailer below:

Business case for Amazon and eBay rentals

Given the interest in the rental model by many startups around the world, driven by the fundamental capability shift that has been enabled by the internet, I find it intriguing that Amazon and eBay do not offer their customers the opportunity to search for rentals (with the exception of holiday home rentals on eBay and Amazon’s e-book and online film/movie rentals).

In my mind, allowing customers to lend/borrow in addition to buy/sell would be a source of additional traffic to the site, adding additional opportunity to grow revenue. The rental model itself would also be extremely appealing to the two companies as, in the case of popular items or items rented for long periods of time, it could yield regular cashflow. For example, it would be perfect for those who want to rent big items like TVs or sofas.

This business model would also hedge their position against a potentially disruptive market force and allow them to stay ahead of the curve (and potentially kill any upstarts dead in the water).

But why don’t they want to offer it as a service to clients? There may be a few reasons:

  • They do not want to lose the focus on their primary business model
  • They don’t want to create a new market that could potentially disrupt their current operations
  • They don’t believe their is a real demand for the service
  • They do not believe that the potential revenue streams do not justify the costs of lost sales and investment in their site infrastructure

I believe that the last two are the more plausible ones, as Amazon in particular are not known for shying away from innovation!

One thing worth noting here is the ingenious “Subscribe & Save” feature of Amazon that allows users to create a regular repeat transaction for an item they buy regularly (such as food or toiletries) and save up to 15% of the cost in the process. This is win-win for both parties: customers save money and Amazon gets a regular cashflow. The service is a step in the direction of the rental model and creates much more of a recurring relationship between the parties (making the user of the site a “client” rather than a “customer”).

Disrupting the very concept of “ownership”

Having wider access to use the items around us (i.e. having greater “personal leverage” of your community’s assets) will suddenly change the very concept of ownership. If an item is readily available to be lent or borrowed by thousands of people via an online marketplace, who will really “own” the item? Technology will blur the lines between group and individual ownership and the old definition of ownership being “the moral right to categorically control something” may begin to feel like an anachronism.

The economist and activist Jeremy Rifkin recently wrote an article for the New York Times heralding “the rise of Anti-capitalism”. He argues that the “zero marginal cost economy” being driven by technological mega-trends such as the Internet of Things will increase collaboration. This will reduce the opportunities for capitalists to make profits and increase the relevance of social enterprises and non-profit organisations.

Given how this could represent a threat to megacorporations, this is a concept worth serious consideration.

Business case for rental not sales

In my mind, this highlights the potential business case for companies renting items to us rather than selling. This is the lifetime cost model versus the upfront cost model of a transaction.

Upfront cost model characteristics

  • immediate access to cash = lower risk of cash loss via customer churn or default
  • Lack of cash flow predictability
  • Upfront cost is a barrier to customer acquisition
  • Vendor has no incentive to take responsibility for maintenance or disposal of product = higher margin

Lifetime cost model characteristics

  • Lower initial cost = lower barrier to purchase = more sales
  • High predictability of cash flow
  • Greater emphasis on client relationship = greater emphasis customer service = greater chance of add-on sales/repeat business
  • Responsibility for life cycle of product (maintenance and disposal) = incentive for sustainability = better quality products made and less wastage

Can you imagine a world where, instead of buying a pair of Jeans outright, you would instead rent them? The borrower would sign up for a certain amount of time (say 5 years) and the lender would be responsible for ensuring they last the allotted length of time (perhaps offering a post-back service to have them fixed or tailored).

This business model would reduce the amount of unused, unnecessary items in circulation, would save customers money, and would allow more responsible and competent companies to thrive. I for one would be keen to see this model take off!

Internet of Things: Smart Home Security Systems and Burglar Alarms

Google recently paid $3.2 bn to acquire Nest, the makers of connected smart thermostats and smoke alarms. It is a strategic coup for the company, partly because it brings Nest’s CEO Tony Fadell on board, an engineer with a proven eye for design honed during his time as Apple where he lead the design of the iPod. However, it is also a major move as it positions Google strongly to capitalise on a new frontier: enabling web-enabled devices in the home, more commonly known as the “Internet of Things”.

This is a pretty grand ideal in theory, but what concrete, near term opportunities are there for the company to innovate? Specifically, what are the “low hanging fruit” of the Internet of Things?

Home Security System/Burglar Alarm

A prime example of a pre-digital device that is essentially redundant in its current form is the home security system or burglar alarm. Great though they must have been during an age of tight-knit local communities, the audio signal emitted when an alarm is triggered nowadays is delivered to a largely unconcerned audience. Close neighbours in big cities or even towns are largely unknown to each other, so burglar alarms tend to just add to the cacophony of the urban ether rather than acting as a call to action to apprehend burglars or call the police.

Connected Home Security Systems: the burglar alarms of the future

Features of a smart burglar alarm

A smart burglar alarm would be able to send the signal to the relevant parties by SMS, email or signal to an app on the user’s smartphone, tablet, or other connected device. In addition, GPS trackers on the devices of nominated parties (relatives, friends, and maybe the emergency services) would show the central system of the app when they are near to the house and if they are within a certain response time, they will be also sent an alert by the app so that they can intervene if the householder is too far away to do it themselves.

Nature of pre-smart alarm signal is redundant

Another critical characteristic of pre-smart burglar alarms is that the information carried by the signal is too generic to call for action in a compelling or efficient way. They are binary, with an off state (“silent”) or an on state (LOUD NOISE!!!). This leads to a confusing call to action, as there is too much ambiguity for an actor to investgiate: is there really an intrusion or is it a false alarm? Is the burglar still inside the house? Has somebody already been informed and are they already in the process of dealing with it?

A smart home security system concept

The exponential decrease in the cost of sensors means that a smart burglar alarm could actually convey more specific and hence useful data to the nominated parties, enabling a more effective call to action.

For example, the specific trigger point could be communicated (roof, ground floor windows, front door) so that the alarm points can be investigated quickly and the possibility of a false alarm ruled out in less time. Infra-red cameras could measure if there are people inside the house, counting them and perhaps even identifying them using facial recognition.

The triggering app would allow the user to see who precisely has been signalled, who has acknowledged the signal, who is acting on it, their estimated response time, and their current location.

Competitors and Innovators

Piper’s Home Security System and Mobile app interface

There are some impressive innovations in this field such as Piper and Canary, which are standalone video and sensor units acting as a “mini sentinel” in the home. Piper, which is already available for purchase, also acts as a household device controller and could therefore turn on lights in the home if signalled to do so. They both have the awesome idea of adding video to the equation, meaning that if the motion sensor is triggered, the user could immediately switch to video to see who the intruder is. I imagine the video stream could also be recorded for legal purposes in the event of a burglary.

Home CCTV enabled by Piper

Priced at $239 and $199 respectively for a single basic unit, the issue is that the devices only cover one room each, which makes them an expensive solution for a whole home, although a promising start and a massive leap forward. Canary smashed its request for crowdfunding on IndieGogo so expect to see the first units available later this year.

The miGuard alarm system from Response Electronics uses an integrated mobile phone SIM card to communicate with your phone by GSM/SMS and has a total system cost of £269.95 (about $452). This is a much more attractive price point for a whole-home system, but the technology is not smart enough to capture the full range of possibilities offered by the rapidly decreasing costs of technology and increasing connectivity of web-enabled devices.

miGuard Home Security System – schematic diagram

Other potential players

Of course, this concept is not just a possibility for Nest and the innovators outlined above, as there are other innovative technology companies who are trying to get into the smart home space.

As a Brit and Imperial college alumnus, the most notable example I can think of would be Dyson. My rationale here is that Dyson are one of the great innovators of UK industry and a global pioneer in domestic technology, highlighted by its recent partnership with Imperial College on robotic vision with a view to implementation for autonomous vacuum cleaners.

This is an intriguing partnership, given the promise of Imperial’s recent contributions to the field of Simultaneous Localisation And Mapping (SLAM) in addition to the fact that the unlocked value of Dyson’s disruption of household technology markets runs into the billions.

AlertMe, the British home monitoring controls company could also have a say in the development of this industry on the software side through their Smart Monitoring platform, linking all devices in the home.

Conclusion

A connected home security system is a complex endeavour, given all the possible flows of information and control that are being unleashed by the digital revolution. There is a range of possible ideas already in the market, addressing the various price points that could be considered by consumers.

The advantage that Nest could have if they developed a smart home security device or burglar alarm is that they already have two products on the market that could feed into it, not to mention their experience of successfully designing the necessary user interfaces and hardware for mass consumer uptake. Combined with Google’s expertise with algorithms and handling large data sets, it is a mouthwatering prospect to think what they could do together in this area.

Given the fact that smart burglar alarms will be such an improvement on the pre-digital state-of-the-art, I wouldn’t be surprised if the eggheads at Nest have already been incubating something like this for some time. This guy has even mocked up a great example of how Nest’s existing thermostat interface could be converted into a burglar alarm.

Nest’s Thermostat as a Burglar Alarm

I would not be surprised if there are further acquisitions in this sector in the coming months. These are very exciting times for this emerging technology market.