I had the opportunity last week to talk with executives in the cars classified ads market. They let garages, as well as private car owners, pay to advertise their cars on their website, which drags a sizeable audience. This is what we call “classified ads”, applied to cars.
These executives intend to enter a mature market, with two customer segments:
professionals, usually garages
private individuals
Differentiate!
Anyone with the task to enter a market should be looking for differentiation.
Obviously, the market dynamics are very different on the two segments: garages tend to operate through a flat-fee, yearly subscription, and may not churn that often. On the other hand, private individuals do not sell cars everyday, therefore it is important to be visible to them, as they may place their ads on any platform without prior knowledge, while proposing a one-shot fee for an ad.
The advertiser remains blind
Meanwhile, “classified ads” is a double-sided business model: ads attracts audience, and audience attracts ads. Therefore, it is striking to see that, on the studied market, no single site advertises about their actual audience. The advertiser remains blind. Differentiation opportunity #1.
Also, for the car hunters (the “audience”), it is easy to see how many results are returned for a search, except that you need to actually know what you are looking for. It can be inferred that, should differentiation be the key to success, this particular point was a low-hanging fruit.
Asking for the right question
Typically, a cars classified website asks the visitors what kind of car they want. A sedan? An SUV? A coupé ? These are all wrong answers to the wrong question. As the user comes with a particular usage in mind. Therefore, it should be possible to ask: “What would you use your next car for?”. It may be : “Go to work”, “Bring kids to school” (how many?), “Go on extended vacation” (and carry 3 luggages, 2 kids and drive 6 hours in a row), “Go to IKEA and carry pieces of furniture”, etc. Then, the added value of the site would be to score the cars for the above-mentioned usages. Differentiation opportunity #2.
Car classified ads is pretty much the same in every country. It is striking that little has been done to meet the customers’ needs, and avoid copying others. The visitors have to manage their own needs, with very little help. As such, let’s hope that someone comes with a better solution for all future car buyers.
It has been over 22 years that an executive from SUN Microsystems stated that “The Network is the Computer”. However, I would infer that this statement only made sense when applications started to move into the Cloud. With that transition, the “Network” has become what supports applications, i.e. an Operating System. It is therefore relevant to consider the Network as a Platform, which is what all successful OS have become. And this is the exact positioning that telcos have been looking for in the digital game.
Today’s networks work like single-purpose computers
If you would like to set up a corporate network today, and would like to avoid running it over the Internet, your preferred telco will sell you a single-purpose network custom-configured to your needs. This is pretty much the same as when editors were buying typewriters, which were essentially single-purpose computers: hard to upgrade, operating as standalone, just waiting for deprecation.
This is what a typewriter looked like (c. 1994)
Now that your corporate network is set up, optimised for your needs and budget, try to add a cloud application:
most will settle for VPN or https connections to the chosen cloud provider. But if you send your data flows over the Internet, why have a corporate network in the first place ? This is where the threat really lies with OTT (Over-the-top providers).
the richer ones will buy dedicated links to the cloud provider, and run a 6-month integration project to get an exclusive network-engineered access to their beloved cloud application. Expensive and not really easy to setup. Add such access to another 4 or 5 cloud providers, and you’ll have fun, guaranteed.
use a Cloud Exchange. Almost there, but they come with their own set of drawbacks.
A Cloud Exchange is like running MS-DOS
A Cloud Exchange is basically an enhanced router that will link you to a vast number of Cloud providers on-demand. Companies such as Equinix took care of connecting to hundreds of such provider. You just need to connect to the exchange, access the management console and configure the link between your network and the cloud provider.
Although a cloud exchange is a great step forward toward using the network as the platform supporting your Cloud applications, it is not quite perfect:
you usually need to buy a hosting service in the same datacenter as the exchange, before being able to access to it;
you still need to engineer the data flows yourself, and it is easy to create a bottleneck if you settle for just one connection point;
There is a limited number of IT managers who can configure the cloud exchange for their company. not great when a business unit just wants to access their cloud application — they might not tell the IT department and will end up with insecure access clogging the Internet gateway;
last but not least, you are still the integrator: you configure the exchange, you order your cloud service separately, you pay two separate invoices (one to the cloud exchange provider, another one to the cloud provider), and of course you are the ping pong ball between the two providers’ customer support centres.
This is what MS-DOS looked like
All in all, Cloud Exchanges feel a lot like using MS-DOS, for those who know what it meant (c’mon, it’s not that old). Lots of configuration tweaking and debugging nights. Let’s say it is a glimpse to what Network as a Platform could do.
Putting the user experience back in the game
As a corporate user, all I would like is to subscribe to a cloud service, and let the network configure itself “auto-magically”. Obviously the telco’s and the IT department’s network and security rules could be taken into account, if any.
Let’s say that I am at the office using Salesforce. It is not hard for the network to recognise my session as a Salesforce session, and route it adequately over a telco-operated Cloud Exchange. Technologically, there is no reason why this cannot be done. Indeed, Network as a Platform is all about partnerships and strategic vision.
Implementing Network as a Platform
To implement Network as a Platform, all it takes to a network operator is:
to define a wholesale API that cloud providers can use to trigger a network reconfiguration whenever the business customer asks for it. There are secure ways to do so and it allows secure connectivity on-demand between the corporate network and the cloud provider.
to leverage existing routing capabilities in the MPLS backbone, and later with SDN, to route the flows to each Cloud provider as required.
to convince the cloud providers to interconnect to the telcos’ networks. This is arguably the hardest part, as Cloud providers don’t like to deal with network access. Large telcos will have an edge in convincing the cloud powerhouses to open up. Others should get access to the datacenter without much effort, but might have to pay for a long distance link to reach it. Either way, the associated costs will ultimately be factored in into the wholesale services sold to the Cloud provider, and paid for by the end customer.
Network as a Platform is the way to avoid network commoditisation
As explained before, there is little incentive to run a corporate network when all the apps are accessed through the Internet. Therefore, if telcos want to avoid consumer-grade pricing of their corporate network services, they should market it as a platform, much like the Operating System of the cloud: provide interfaces (API) to cloud services providers, and get out of the way when the customers wants to access an app.
Note to myself: were I in charge of a telco’s future, I would rest uneasy realizing how little the effort to standardize my network interfaces with cloud service providers.
PS: telcos like acronyms — let’s talk about NaaP : Network as a Platform. 🙂
According to car manufacturers or large software companies, the self-driving cars are around the corner. What was still a science-fiction research field 15 years ago — my university had such project, led by AI guys walking bare feet and called “the crazy guys” — is now meeting massive capital influx, mindshare from top scientists and consumer momentum. Such cars are being testedlivein real roads in California, and now even Switzerland.
But as always in innovation, there are adoption barriers, and they do exist for the self-driving car. Assuming the technology will ultimately work, the main remaining barrier is probably the law: in most countries, you are supposed by law to remain in control of your vehicle. This is a key principle for insurance companies to assess responsibilities in a crash. Easy to overcome, you would think ? not quite. For even technology-mature solutions that over-perform established ones may not make it because of regulations.
Side mirrors are an artefact from the past
As an example, every car has a artefact from the past which should no longer be here: side mirrors. If they had to be invented today, side mirrors would probably not make it to market.
Imagine that side mirrors don’t exist. Drivers need to turn their heads to look at what is coming up behind. A marketing manager identifies it as a customer pain, and asks engineers to find a solution. One comes up with the side mirror — but it comes with its own collection of issues:
it will decrease the performance of the car, as it increases the air-penetration ratio. So, the gas consumption will have to increase, say, by 0.5L per 100km.
it will impact manufacturing, which will find it more difficult to hold a mirror on the side of the car, rather than having a flat surface.
Mirrors will break regularly, generating other sets of customer pains.
oh, and by the way, there will still be blind spots, so you will have to put a disclaimer about how poorly it is addressing the issue.
Obviously the marketing manager will ask the engineering team to reconsider. Needless to say, small webcams would be much more efficient to solve this issue — as is the case for going backward in some cars. Some concept cars already support this solution.
So, why are side mirrors still very present in cars ? Because they are compulsory. The law says that cars must have side mirrors. And law has the single biggest kind of inertia that can be. From such regulation, e.g. insurance companies built their processes, defined ways of dealing with others and, ultimately, to cover the risks.
Side mirrors show us what could happen to self-driving cars
The side mirror gives us a glimpse of what it means to have a technology-mature solution that don’t make it to market because of the law. And this could very well be the case with self-driving cars. Actually, you can read more about what happens with side mirrors and regulations at this page.
With that said, we are not even accounting for the difficulties for regulators to certify self-driving algorithms (imagine Apple with a great algorithm, Google with another one, but when put together the cars end up making incompatible choices that end up in crashes). And once you find out how to certify them, which will probably a lengthy process, how do you deal with software updates every once in a while to fix a security issue?
So, it won’t be before long that you see self-driving cars : regulation need to change for this to happen and this typically takes a lot of time. Actually, we don’t even know how to even regulate self-driving cars. This requires to make choices about people’s safety, and this is the last thing that regulators and politicians like to do.
One of the key skills that innovators need to develop is empathy. Empathy is needed in innovation to understand your customer’s pains and reasons to adopt such or such behavior. At the individual level, empathy is triggered by what scientists call the “mirror effect”: when exposed with someone else’s situation, it triggers the same part of your brain as if you were actually living the scene. But how do you create empathy at the organisation level ? The trick is simple: if you want to innovate, do your clients’ job !
Parrot is well know for its best-selling AirDrone, but it is primarily the world leader in OEM hands-free modules for car dashboards. Its products are so good that they are almost ubiquitous: best sound quality, great design, easy to use… but is that all it should be ? Well, to figure this out, Parrot management actually asked its R&D to develop car dashboards. Does it actually SELL dashboards ? No, as it would be competing with its customers (the car manufacturers). But developing car dashboards is a way to go through all the process its customers are going through, and understand the place of its OEM bluetooth modules in the process. So its OEM modules are also the easiest to integrate, because Parrot understood what its customers are going through.
Now, a lot a people believe that Apple is about to sell a car. Obviously, there is evidence that Apple is BUILDING a car. Does it mean that it will SELL cars? I doubt about it. As Apple bacame a platform company, all it probably wants is to understand how car manufacturers will integrate its platform in the most-elegant possible way. Corporate empathy at its best.
In a panel I organized about innovation, a major bank’s innovation director explained how the risk for failure had to be borne by the organization itself, not the individual. This raises the question of leadership in innovation, and I would like to illustrate this concept by a concrete example.
Company A is a leader in its market, having internally developed a solution which gathered several awards from recognized institutions. It is widely believed in the company that this solution is key to the commercial success it experiences on its market. So, at the end, everyone feels good about this cost center.
Since company A is so proud about this solution, one considered selling it to other similar companies in different (read: non-competing) geographies. Minimal resources are allocated for over a year to that purpose, and actual revenue objectives given to a business unit. Finally, one day, “out of the blue”, a large company’s top management contacts A to know more about this solution. Their financial advisers had told them about it — always consider investors’ presentation as a marketing tool for your know-how. Company A joins the RFP bandwagon, gets short-listed, and now feels that things are getting serious.
As deal closing gets close to real, everyone at A gets nervous:
the “international” business unit needs to write a contract
the lawyers need to back a deal in a foreign jurisdiction
the technical team worries about committing on a project in someone else’s technical environment
the operations team is wondering how they will work with the customer’s employees and how they will share responsibilities for failures
the CFO needs to deal with a foreign currency and country risks
a “domestic” business unit, whose revenue depend on company A’s solution, fears that it might lose resources and control over the roadmap — with no upside potential.
All this is crystallized when the deal needs board approval as per A’s governance rules. Risks suddenly get over-estimated, and everyone hides behinds the uncertainties. In short, people are telling the board why this new business should be dismissed, instead of explaining how work could be done. So A is in a situation where it spent resources during over a year on a new kind business, but finds itself reluctant to get real when it finally gets a potential customer.
What is needed in this situation is an actual leader.
The role of a leader in innovation is two-fold:
reassure the teams that s/he will be responsible for what will be done. This means protecting the careers of those who will contribute, as well as giving them the right excuse to change the way they work with others. In this case, the domestic business unit has a roadmap and an existing business based on the solution. Having another company profiting from the same technical team means that the engineers will have to priorize some of its requests. These engineers need this leader to explain the hard truth to the domestic business unit, in the company’s general interest. Same thing when/if a feature gets broken as part of incremental software development.
create a team spirit around an ambition. Large structures tend to consider employees as disposable resources, but in this case key resources need to be motivated about this new development. Key contributors need regular updates about the project, a proper kick-off and a good story about where they are heading. Otherwise, why would they bother trading their comfortable, deterministic life against a new set of issues?
As is usually said, leadership is not a given: it has to be taken. Company culture plays an important role in having someone stepping in and be the leader. For example, you may have already seen freshly-nominated directors pretending “to have done that great thing”, much to the deception of the actual do-ers. But when real leadership happens, the impossible gets done: contributors will work smarter and harder to make everyone in the team succeed. Not a given, and not possible in every company, but a clear signal for success.
Doing more with less requires an innovation process
