Why also non Digital Brands will eventually become Platforms

It’s been quite a hectic period during Xmas break, and the year started big with a superb workshop session in Barcelona. Indeed I had the chance to run the third workshop about the Platform Design Toolkit, this time again with more than 50 participants. It was a great experience that spurred new ideas and feedbacks I’m going to incorporate soon in the Toolkit.

[A picture from our Foxize School Workshop, credits to Albert Canigueral – CC-BY-SA]

While the analysis on Platforms still goes on also thanks to the collaboration with other OuiShare team mates, also merging with some spectacular quantitative analysis coming from Javier Creus, I’ve been caught in thoughts about how this overall thinking framework can be beneficial in analysing the tangibles, goods economy.

Accidentally, I’ve been recently asked to write a chapter for a new e-book that italian association Make in Italy, will dedicate to the opportunities and perspectives due in the manufacturing and product industry in this exponential era. This book aims to explain the landscape that the manufacturing industry will face in the coming years, as well as the roles and phases that will arise in product lifecycle, among other topics.

I’ve found that the research tools (such as platform thinking, digital evolutions, community design, etc…) that we are used to apply to digital and semi-digital markets (eg: consumer electronics) can be applied, with a bit of additional analysis, to almost all vertical markets in manufacturing: from automotive to consumer electronics, from fashion to furniture. The fact that these markets are also, at some extent, merging (think of the adventures of IKEA in consumer electronics) should make us think about the convergence in processes and all.

  

The Componentization and Softwarization of the Economy

First of all, let’s just reflect a bit on how the trends we are can already spot in the digital market, will unfold in manufacturing. Due to basically shared dynamics (such as competition) we can see similarities: these will be useful to understand how the framework will unfold into the, increasingly digitizing, tangible economy. 

If it is true that software is eating the world as Mark Andressen says, the explosion of the software economy is generating in many markets a feeling of post-scarcity: just think of the knowledge economy or the  entertainment industry today, there’s much available for free (or almost for free). On the other hand is true that we will continue to have the need for more tangible goods, and this market will inevitably be attached to growing constraints as it’s involving access to environmental resources.

I personally like very much Simon Wardley schematization of the technologies transformation cycle as it’s very powerful and easy to understand, as long as you don’t get scared too much at the very start. The classification he offers gives a good picture: is a cognitive tool that I often used to explain partners and customers market dynamics both digital and in the tangible economy.

Narrowing the theory in a few words, it models the evolutionary story of a technology through four stages: the creative (“uncharted”) innovation phase – that of the startups – a following one, in which the technology is available through several proprietary implementations that are unique and ad hoc (the “make” phase); a third phase called “product/rent” phase in which competitive products arrive on a more defined and growing market (matured in terms of requirements for example) plus a following and final state, that of the “utilities” where you spot consumption patterns where competition is primarily based on price, speed and, in general, “essential cost of doing business”. Your business, at this stage is commoditized and you should better think to something new.

Illustration Simon Wardley Competition

An example will help understand: think of computational capacity. All started from mainframe computers, the size of a room, created ad hoc (think of the well known Eniac).Over time, solutions started to packetize in modules, up until the the arrival of the so called racks. In parallel, the emergence of renting (managed hosting) and outsourced, managed services paradigms reached the market. Today we finally have access to a computational capacity in the form of a utility, provided by major players such as Amazon or Google, which you can enjoy in Pay As YouGo.

The Red Queen Effect

Despite these mechanisms appear to be related to the peculiarities of digital resources, these are broadly applicable to any industry, and this trend is altogether justifiable simply reflecting on some forces that act in a very clear manner, in all markets.

When technologies mature and wider markets emerge, market leaders require core components and supplies at lower and lower price and with more and more standardization (to multiply the potential suppliers). In this way they create the conditions for the emergence of their own competitors and thus to push the bar higher and higher towards more modular and affordable supplies.

When a company competes on price (lower cost of doing business), is time for a company to look to other value streams, and generate new products on top of what they are already able to offer. This effect of continuous competition and co-evolution between players, that let only those who are able to innovate continuously to stay relevant in the market is called the “RedQueen effect”.

In a curious anecdote from Lewis Carroll’s “Through the Looking Glass”, sequel to the best-known “Alice in Wonderland”, the darling is in a curious realm precisely that of the Red Queen, in which everything constantly moves back and to stay in the same place you just have to run.

Now, here, you see, it takes all the running you can do, to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that!”

This anecdote it’s indeed very effective in explaining the world of today’s super accelerated technological innovation: to stay relevant, companies constantly need to question assumption and run into something new and better.

The error that is to be avoided, is to look at this paradigm as only applicable in digital. In fact, the forces that govern the technology maturation processes – essentially competition to access increasingly complex customer demands and the push for raw materials and components to become cheaper, more modular and standardized – exist in every industry.

 

What is happening in manufacturing

Only a few months ago, Motorola announced project Ara, an interesting project in which the goal is to create a modular phone, whose parts are interchangeable. The project is so ambitious that aims to put an end to the concept of planned obsolescence, the expiration date embedded in every consumer products we buy. The life of these objects has a variable duration: a car has a life expectancy that may be longer than that of a phone, but all are substantially limited and suitable to facilitate the opportunity for the manufacturer to sell, to a loyal consumer, a new product later on.

Not surprisingly, Motorola was the first to get to this project (followed by ZTE, the Chinese giant shortly after, once again think about it). The American company, recently focused hard on the aspect of user customizability: Moto X, their latest product, become famous for being the phone that is the most customizable by the end user (click on Moto Maker  or just see screenshot below).

moto-zte-modular

It was therefore probably its ability to intercept such an emerging trend (the need of users to be able to customize their product) to push Motorola to question concepts such as the modularity of it. Probably Phonebloks campaign success just did the rest to convince the managers (or perhaps the reference shareholder, Google) that a decisive turn in this direction would have been necessary (I had the chance to interview Dave Hakkens founder of Phonebloks here).

What if the user becomes the designer and the brand?

If anyone before others understood this phenomenon of innovation decentralization – from the hands of the producer to those of the user – was Eric von Hippel of MIT, creator of the concept of “User Toolkit for Innovation” to describe a set of, digital and contextual, tools to allow the user to support the same manufacturing company in search of new propositions for innovative value. In the words of Von Hippel these tools allow manufacturers to:

“abandon their attempts to understand user needs in detail in favor of transferring need-related aspects of the development of products and services to users, with an appropriate toolkit”

Today we already see many contexts in which producers create tools for users to enhance, customize and innovate products. Beyond the most captivating experiments, often carried out by means of the web (again, the environment customization Motorcycle Maker it is a perfect example) a fascinating incarnation that is effectively to be considered is, for example, the design area, in all IKEA shop. In this controlled environment, created ad hoc, customers in create their own solutions to their problems of space organization and generate a continuous quantity of information that the company’s employees are able to pick, analyze and potentially embed.

Examples, however, are numerous and represent different incarnations of this vision: if you didn’t already, I suggest you to check my Future Proof Design presentation here

To which extent will the user be the designer?

Building a consistent vision it’s still not easy but we can surely make some assumptions about how these processes will eventually unfold in manufacturing. It’s particularly difficult to understand where the limit between what is visible to the user and what’s not (pertaining to the manufacturer) will be. How much of the modularity and configurability will be under the control of the end user? Beyond color or shape, will I be able to actually create my products with my own personal brand by combining different components? Will my freedom to create as user be complete?

MotoMaker

What is still not clear is exactly whether the user will be able to just configure products through tools designed for the purpose – as it’s today with most of the Softwares as a Service – or whether as a user I will be able to directly access a marketplace of individual components and assemble them with ease to create unique products with no particular constraints. This is, more or less, what happens with Free and Open Source Software. Nobody knows now: it’s likely we’ll see different approaches all playing on the market.

As you may understand, this is an important matter since the very concept of the brand, as we know it today, would be fated to transform, in relation to this transformation. Nowadays, brands are responsible of product design: this is the phase where the importance of intangible value is bigger: it is the direct contact with the user, the apex of the value chain.

As pointed out by Adam Arvidsson, in the recent book The Ethical Economy, about 70 percent of the value of the companies listed in the S&P 500 today is related to intangibles value such as reputation and brand. Brands are so important that sometimes they even characterize the infrastructure of production, distribution or marketing: a very clear example is again the Swedish giant IKEA, where all is brand, from individual products to food sold in restaurants interior.

ikea

Against this background, however, we know that the basic infrastructure of production are changing. China’s Shentzen ecosystem built his fortune on a knowledge that is a distributed, accessible and cheaply priced: lot’s of competitive players are now able to manufacture and assemble (and, increasingly, design) electronic and mechanical hardware of all kinds. Distribution is completely componentized, thanks to the web, and couriers around the world. These are the causes – and effects – of a technological progress that is ever more users driven today, and which pushes producers towards a global competition.

At the same time, our overall ability to discuss, connect and quickly form groups that are capable of creating knowledge and wisdom, is giving dozens of communities around the world a new power to set new standards, for productions that are in the interest of the community itself (think of the enormous social success of the Phonebloks Thunderclap campaign with almost 400 million supporters).

If the user becomes the designer, she collaborates, she doesn’t neglect the externalities for the benefit of the financial and speculative requirements. Communities seek balance and resilience.

In the FabLabs and Makerspaces around the world, a small but exponential trend (someone said that these spaces are growing according to Moore’s law) is paving the way to a manufacturing re-localization which is perhaps our only hope when it come to overcoming the environmental impasse in which we live. At the same time these spaces and communities make room for a new kind of creativity, which deals with the real needs and can be customized to the millimeter.

A new Role for the Designers: From Products to Platform and Co-Design

With this perspective in mind is pretty difficult to understand what future we could expect for brands at today: is likely that designers around will soon begin to deal more with the very same process of co-design and the different tools used in it. These will be the new form of products. Co-Value-Creation platforms.

Products will therefore also be attached to more complex experiences (starting from user customization): final products will be designed to make possible that not just the needs of the individual user, but also the talents and peculiarities of other players in the community, will unfold during all its lifetime, making the products suitable of continue evolutions and use case innovation. No doubt, the app economy can give us some glance of what we are going to expect in manufacturing as well: niche markets, economies of scope, indie producers that compete with the big ones.

It’s just all written in the dynamics of evolution and componentization.

Today every brand has a calling: switch from monolithic and static products where one creates and the others consume to the platform perspective, where the producer enables value creation and the community creates and exchanges it.

Several experimental data, some of which are public, while others still have to be published, show that companies acting as platforms, allowing users to take several different roles (designers, curators, producers or even simple consumers) are the companies that grow faster, confirming a consideration which, after all, is quite intuitive (multi linear / multi sided should grow faster than linear / mono sided).

Even if this trend today is showing up faster than anything in the world of digital services and P2P Marketplaces (like Ebay or AirBnB), I see it fast taking over the world of tangible products: in case you don’t believe in the future of ambitious Project Ara than think of the present of Arduino and how it created a whole new market out of literally nothing.

Perhaps this will be the new role of design today: to help communities in creating value, to support support capitals that strategically decide to give birth to production processes that are more inclusive and cooperative like the one Motorola is putting together for its phones.

P2P - brands- modules (4)

I feel that smart, later cooperative, capitals and a good deal of co-design practices can succeed where the purely peer-to-peer approach failed. Indeed an historical lack of interest in governance and design harmed the penetration of such collaborative systems as radically open, inclusive and purely p2p projects. Today, instead, a resurrection of interest of design thinkers towards large scale P2P dynamics seems really encouraging in terms of the results we may soon achieve, by producing products and services that are holistically designed, co-created and, sooner or later, co-owned by communities.

The role of the designer as architect of cooperation is perhaps going to be the role of the next decade.

[IKEA picture by Ian Muttoo – CC-BY-SA]

Advertisements

About meedabyte

Strategist, Consultant and Collaborative Pathfinder

One comment

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: