Gift giving season is upon us. You’ve finished all your shopping, right? Right?! Okay, so maybe not. But it’s not too late to find the perfect gift.

Musing over some spice cookies and mulled wine, it struck me that excellent gift shopping shares a lot of parallels with excellent customer research, which makes me a bit of an expert on the subject.

So, as my gift to you, here are my top 4 steps to come up with thoughtful and meaningful gifts:

1. Know your audience. The number one thing is to really understand the person you’re shopping for. As a researcher, it is my goal to uncover unarticulated needs so I can figure out how to meet them. You can do the same thing by keeping a running list of observations—things that the person you’re shopping for says, or more importantly, does. For example, say you have a friend who enjoys the occasional glass of wine but is always shoving the old cork back into the bottle. It’s an okay workaround, so she would never think to ask for a wine stopper, but when you give her one she will love it! It’s thoughtful and inexpensive! If you haven’t kept a list this year, that’s okay, just think back to all the moments you spent together.

 

2. Ideate and iterate. It will be tempting to simply ask the person what they’d like to receive, but as is the case with a lot of research, your audience probably can’t articulate the best way to solve their needs (if they can even articulate their needs in the first place). It’s up to you as an impartial observer to figure that out. So, from your list of observations (which doesn’t have to be long), think of things that YOU think will solve your giftee’s needs.  Then you can test out a few ideas by subtly hinting at the idea to observe reactions.

 

3. Collaborate. Still not sure? Crowdsource it! Run your ideas by your giftee’s friends and relatives. Ask them if they’ve noticed the needs you identified, or if they observed anything different. In research, we buddy up for customer interviews all the time for just this reason—different people notice different things, and it helps to bounce ideas off each other. That’ll keep you from heading down the wrong path, like buying a gym membership for your stressed out girlfriend instead of a day at the spa—both can relieve stress, but one obviously is more likely to land you out in the cold.

 

4. Optimize and package. You’ve heard the phrase, “the medium is the message.” Whether you’re a company selling a product or a generous spirit giving a gift, it’s not just what you give, but how you give it. Does your recipient love surprises? Borrow a receipt for something else from a friend and casually leave it around! Pretty things? Don’t forget the shiny paper and a bow! But most importantly, let the person know WHY this is a thoughtful gift—you really care about them and noticed something and wanted to do something about it. It’s like an effective go-to-market strategy—really, honestly, earnestly engage your customer (or giftee) and they’ll love it.

 
And there you have it. As long as you keep your “customer” in mind throughout the gift-giving process, you’ll give the perfect gift every time. And speaking of time, you’d better get going!

Here’s to happy holidays and an excellent new year from all of us at HSG!

Agile practices are everywhere now. Like the rest of the tech world, I have welcomed the many benefits that practicing Agile offers.

But there’s something missing in all the conversations about Agile: The impact it has not on development but on product management. Specifically, what does it mean for a product manager and how the requirements of that role may have changed due to Agile practices.

Lots of flavors

Speaking to my own experience and what I have heard from other product managers that have not only gone through the transition, but have been practicing for a few years. And it seems clear to me that the product manager role has required some adjusting. It’s also worth noting as I read in Marty Cagan’s book “Inspired,” the origins of Agile come from custom software development where, in fact, there is often no product manager role because the customer provides the custom requirements.

A tough transition

Going back to my past as a product manager when I was introduced to Agile in 2005, I remember exactly how I felt. Having previously used waterfall methods, my initial reaction was negative. I didn’t care if it improved the “agility” of development ten-fold. What immediately affected me was that I had to start thinking in smaller iterations, continuously maintain a backlog, and write user stories instead of requirements.

Frankly I didn’t love thinking in this way. I preferred to think about the entire user experience not just a chunk of it. And I didn’t really like focusing on multi-week sprints either. I was thinking more bigger picture – - focused on the whole product. Plus I was rapidly using up the time that I had set aside for market analysis or customer research to creating a user stories pipeline and backlog maintenance. That one really irked me. Am I not supposed to be focused on my market?

What I went through was likely just the growing pains of implementing a new process and after a while, I grew to enjoy the benefits that Agile practices provide you with (more on that later) and adapted to the process itself. But in speaking with numerous other product managers over the years, I think some of the fundamental issues still exist. Shouldn’t a product manager be thinking out longer than 3 week sprints? How much time and energy should we spend on long-term planning given that we still want to maintain “agility” in our plans? How close can I really stay to the customer when I am so focused on execution? And how do we fit UX into all of this? I would be surprised if most product managers have not asked these questions at some point even if they are working in a company that has figured out a solid, working Agile model.

React quicker to market feedback

On the flip side, as a product owner, Agile gives you the ability to react quicker to market feedback, which means you can more quickly provide features and functionality to make the user’s experience better. For that reason alone, Agile makes so much sense because I always think that delivering a good experience to the user is any product person’s most important job.

My goal is to start a conversation about ways to optimize agile methods and product management’s role in an agile environment.  I look or you comments and experiences as well – please send along your thoughts on what has worked or not in your own companies.

In a later post on Agile, I’ll discuss the benefits of Agile and how to plan in the long-term.

When you take a step back and evaluate BofA’s current situation, you could potentially have sympathy for them.  The failing mortgage business (thank you, Countrywide); the under-performing investment business (thank you, Merrill Lynch); the Durbin amendment (over $2 billion in lost interchange fees) and the Reg E (another couple of billion in lost overdraft fees) (thank you, US government).  It is hard to be the big.  Is BofA the misunderstood Frankenstein monster stalked by the town’s folk?

What is their situation? Quickly attempting to make up lost revenue, BofA hastily announced a plan to charge the very customers  who most value their debit card. But BofA over-estimated the “stickiness” of their customers’ relationships with the bank.  Their most valuable customers began voting with their feet.  Net result: an announced plan to retract the planned fees (with their tail between their legs).

What could they have done differently? Typical research techniques admittedly struggle to estimate real customer behavior change.  Even when customers display outrage, for example, their expressed reactions are often hollow threats.  However, we have learned that customers’ behavior is consistent in one area—they (eventually) treat the bank as they have been treated.  There is sage wisdom in following the “golden rule” (thanks, Grandma): “do unto others as you would wish they do unto you”.  The question is how?

One way is to follow the “Equation for Assessing Fee Tolerance”:

“Ability to charge a customer additional fees = Strength of transactional engagement with bank + strength of positive mental (emotional) relationship with bank”

BofA did not follow this approach.  They would have been charging customers that have only modest transactional engagement with BofA (neither dormant, nor a heavy debit user).  This violates Part One of the equation.  And it’s no surprise that few BofA customers fit Part Two of the equation (high reported satisfaction with the bank).  BofA simply did not understand their customers’ needs, requirements and emotional connections (disconnections) to the bank.

Before taking action, BofA needed to have built some mental space (emotional relationship) within its customers that is based on more than just anger (not an easy task).  Our research shows very strongly that customers are willing to ware quite a lot of “abuse” if they have some empathy for the organization.  While this empathy is not easy to build, it is a very worthwhile investment.  How you build this empathy differs bank-to-bank, and requires getting a very deep understanding of the different types of customers the banks have and what will drive that emotional attachment.

Lesson learned? Better to be safe than sorry.  It is better to invest in understanding your customers’ motivations, emotional connections and “tipping points” (how they will truly react), than to launch a major change and have to repeal it – a much more expensive alternative.

Last week, High Start Group partnered with Allen & Gerritsen to host a half day summit on the future of Location Based Marketing: GEOM2.

The event was part of FutureM week held by MITX. GEOM2 was a uniqe opportunity to discuss insights about the ground breaking opportunities mobile location based services can offer today and over the next couple of years.

Schneidermike and Eric Leist were instrumental in putting together the event. In addition, they authored a great summary of GEOM2 that we are re-posting here.

A&G and The High Start Group Host #GEOM2

A Half Day Summit on the Future of Location Based Technology

As part of #FutureM week in Boston, Allen & Gerritsen and The High Start Group hosted the #GEOM2 event, which explored the future of location-based marketing. This half-day summit brought together leading platforms, strategists and thinkers to discuss the roadmap for the continued evolution of the location industry.

We would like to thank our client Boston.com for being a generous triple platinum sponsor!

Tweet Volume

Throughout the course of the day, #GEOM2 was a lively conversation on Twitter. Participants were tweeting with #GEOM2 over twice as much as #FutureM. What was so engaging on Twitter that kept the #GEOM2 hashtag roaring? We’ve provided a recap here. The following chart tracks tweet volume as it changed throughout the day’s three panels.

The Power of Proximity

The first panel was about the power of proximity. It was moderated by founder and president of Location Based Marketing Association Asif Khan and featured Boris Bogatin, founder and CEO of NearVerse, makers of LoKast; Nataly Kogan, VP of Consumer Experience at WHERE; and John Vajda, Product Manager at Untappd.

Key Takeaways:

1. One of the biggest challenges companies face is changing inherent behaviors of consumers in given locations.
2. Consumers want simplicity, in the way that they use their phones and in the way that they redeem offers.
3. Location technology is not just reserved for mobile media. Marketers MUST consider the integration of ALL media.
4. The best user experiences can come when location technology is passive, but it’s also a hurdle as this affects privacy.

Word Cloud of the Twitter Stream:

Social Loyalty Meets Commerce

The second panel was about social loyalty and commerce. It was moderated by SVP/Director Digital Incubator at allen & gerritsen, Schneidermike and featured Christina Dorobek, Boston City Lead at Level Up; Rob Reed, founder and CEO of MomentFeed; and Andrew Paradise, founder and CEO of AisleBuyer.

Key Takeaways:

1. Check-ins can be approached as “earned media” these days.
2. A powerful thing about mobile technology is being able to narrow down an entire demographic to an individual consumer.
3. Trust and incentive are two important factors consumers consider before linking information, like a credit card, to a brand.
4. Daily deals are a way to incentivize trial, but they may not be the key to generating customer loyalty. Companies are now working to capture both trial and loyalty.

Word Cloud of the Twitter Stream:

Future of Location

The third panel shed light on the future of location-based marketing. It was moderated by Nitzan Shaer, managing partner and co-founder of High Start Group and featured Rene Pinnell, CEO & designer of Forecast; David Spinks, Director of Product Marketing and Community at Zaarly; and Eric Leist, Emerging Technology Strategist at Allen & Gerritsen.

Key Takeaways:

1. Personalization of location involves understanding a consumer’s intent. With continuous behavior tracking, marketers & technology companies are beginning to generate predictions of this intent.
2. Retailers must make content relevant to the consumer in order to achieve the best possible user experience.
3. It’s up to the technology companies to work with the retailers to create valuable consumer experiences, not the other way around.
4. Technology, trust and “unnatural behaviors” are all barriers to LBS adoption.

Word Cloud of the Twitter Stream:

Top 10 Retweets:

Browsers versus apps: RT @allengerritsen: “Nobody wants 10,000 apps on their phone…..that’s why we created the browser” – @borisbogatin #GeoM2

Checkins as earned media: RT @allengerritsen: You can approach a check-in as earned media these days – @reedcontent #LBM #GeoM2

Typical foursquare users: RT @hnmurakami: “I mean, pretty much everybody on foursquare is a coffee guy who goes to a lot of airports” – @schneidermike #GeoM2 #FutureM

Great customer service: RT@allengerritsen: Why are people consistently buying from Zappos? because their customer service is out of this world…that’s how you get retention #GeoM2

Bad lover triangles: RT@anitatandon: LBS platforms want users, users want merchant deals, merchants want the platform control. It’s like a bad love triangle #GeoM2 #futurem

Activating users: RT@tamadear: “Awareness is interesting, but activation is awesome. Can we get people to actually *do* something?” @AsifRKhan #Geom2 #FutureM

Groupon loyalty: RT@tamadear: “How many have used Groupon for a place you’ve never tried?” Almost all hands go up. “How many returned?” Almost all hands go down. #Geom2

Analytics and insight: RT @hnmurakami: Analytics isn’t enough without insight. #GeoM2 #FutureM

Deals and loyalty: RT @mbloomstein: Talking daily deals in context of loyalty programs is the classic “folly of rewarding A while hoping for B.” #GeoM2 #FutureM

LivingSocial deal problems: RT@VictSolomon: #GeoM2 “I went to Whole Foods to redeem the LivingSocial deal and the cashier didn’t know about it. That was huge.” – @natalykogan

#GEOM2 in the news

#FutureM: The Future of Location Based Technology, GeoM2 Recap by Justin Bomberowitz at Boston Innovation

I recently attended a seminar on SaaS best practices. As an executive in the early days of SaaS, I wasn’t surprised by any of the lessons.

However, one speaker, Skip Besthoff, from Castile Ventures noted that “service is in the SaaS title” and that customer experience is everything.

I immediately had two distinct thoughts:

• First, that yes, in my case, customer support and the personal attention that we provided our trial customers was our “secret sauce”
• Second, that a great SaaS app has to be able to stand on its own (even if personal touch points make it better)

Nearly all self-serve SaaS apps offer a free trial experience – meaning that site visitors can turn into trial users and even customers without having any other exposure to your company. Conversely, visitors can bounce in and out (and never back again) within hours or minutes of their first exposure to your service. During their brief or longer “stay” they will experience the many roles  that your service must play.

You may be all thinking to yourselves that it doesn’t matter –  “our sales or service team can cover for our app’s experience.”

Sure, it’s true that the addition of in-trial coaching (via telesales) and toll-free numbers for live support can have a dramatic effect on conversion rates. However, the usability of your app is an important factor and metric – consider it the base from which all other improvements are built (starting at 10 is better than starting at two)!

Your app has to do a lot of jobs you might not have even thought of. That’s what being Chief Cook and Bottle Washer is all about.

Your app is your best (or worst) sales person

In a self-serve model, a visitor will come to your website (a website’s ability to drive conversion to trial or call is a topic for another post) and presumably do what you want them to do – sign up for free trial, use a freemium version of your solution, or watch a demo and call you. The latter option, one employed by companies with more sophisticated (read: difficult to on-board) services is not part of this blog post – but probably should be!

For those who do offer free trial or a freemium product, your app is your salesforce. Is your salesperson friendly and approachable or difficult and off-putting? Is your salesperson knowledgeable or a know-it-all? Does your salesperson understand the sales process (i.e., the best way for your customers to progress along the sales cycle) or does she just blurt out everything at once? Or never at all? And perhaps most importantly, does your salesperson listen to his customers’ needs and respond accordingly?

Your app is your most (or least) responsive customer service rep

How many times have you judged a business by its customer service reps? I’m certain you don’t have to think too long to answer this question! Key factors that come to mind are responsiveness and availability but that is just the start. Customer support has to be effective too. I had a recent, unforgettable (in a bad way) experience with Bank of America’s support line. While the reps were available 24×7, and wait times were not long, I spent hours (in fact, $36K if I were billing them) trying to get to someone who could actually solve my problem. While each and every rep was “nice” and they were clearly coached in customer communications, not one of them was empowered to fix my problem.

Is your in-product support contextual and available? Do your users have to leave their screen to go search through pages of FAQs to try to match their problem?  When they find the answer do you offer them clear and concise help? Do you include videos or tutorials?  Can someone immediately reach a support rep if they don’t get the help that they need?  When someone gets “stuck,” it is a prime moment for permanent abandonment.

Finally, and easy to forget – if your product or the user makes an error (yes, it will happen), make sure that the error messages your users see are friendly and inviting. Tell them what to expect (i.e., a message like “our system is down but we will email you when it’s available,”  a status report, or a guide the user on how to avoid this error in the future).

Your app is a personal trainer

On-boarding may be the most critical experience of a free trial. The number of users who abandon their trial after their first login is a critical metric to capture. Although some users may not need what your service offers, many more probably don’t know how to get started.

Your service should feel like a “personal trainer” for the new user. Your trial experience should include a roadmap and directions for the new user. But make sure it isn’t  just what to do and in what order. Rather, tell the new user what to expect. Set expectations with the user on how much time and effort the trial will be required. For example: You might have a section with a headline that reads, “Sign up 5 new users in 5 minutes.” You could follow that with a few lines on how to sign up new users (depending, of course, on whether you service runs that way!). The upshot here is that you want to show the new user what they’re getting into.

Your app is your business information analyst and usability tester

What I’ve written about so far has focused on the trial users’ actual experience. But I would be remiss if I didn’t talk about the other roles that your SaaS app plays. Your app should collect every possible bit of data it can – so architect it accordingly.

I’ve had many an argument with database architects about my voracious appetite for data. I’ll admit it. I can’t get enough. But in the end, having the data is ALWAYS better than not having it, and the few dollars of storage required pale in comparison to not having what you need when you need it.

• Treat your online product like a website: know where every user clicked, where they abandoned, how long they spent on pages, what mistakes they make.

• Collect data on times and numbers of activities: how many logins, how many times did this or that and last login.

• Match collected data with actual conversion rates and cancel rates. You’ll find roadblocks, best paths to success and more.

So back to Skip’s comment: “service is in the name SaaS.” He’s absolutely right. But it doesn’t end there. Just as Marshall McLuhan said “the medium is the message,” your users’ experience is your app!

These days there are few opportunities to reach across cultural divides in the Middle East. However, Babson Professor Ted Grossman’s program: “Bridging the Cultural Divide Through Entrepreneurship” provides a rare opportunity for young people from the region to leverage their entrepreneurial spirit to bridge such divides. This year, overcoming considerable roadblocks, Professor Grossman brought together 44 Israeli and Palestinian students to take part in this remarkable program, here in Boston.

In this program, the students learn entrepreneurship and create a business that provides a product or service—and they do it on teams with a mix of Israeli Jews, Israeli Arabs and Palestinians. When the students return home, the task is not complete. They run that business for four months. Together.

Earlier this week I helped organize an event for the students to introduce them to members of the Boston entrepreneurial community and provide them with a mentoring session on how to build new products.

Not surprisingly, the Palestinians and Israelis shared similar concerns, questions, and career aspirations. Each of them was passionate about making a difference—solving a problem, blazing a trail, and building a successful company. Many had questions about the best career path to take. And they were all eager to learn how to start a company, how to assemble the right team, and how to finance it all.

Jeff Bussgang, General Partner at Flybridge Capital Partners, who originally introduced me to this program, presented at a similar event a couple of weeks ago. At that event, he effectively conveyed to the students that taking the entrepreneurial path is not always a rational choice. Success, Jeff said, is achieved only by those who have deep passion and conviction. Gil Arie (this week’s host at Foley Hoag and a fellow mentor for the program) eloquently conveyed the core elements required to assemble a successful startup team – a shared goal, diverse backgrounds and a strong desire to make it successful, together.

These lessons ring true for both entrepreneurs and for leaders who intend to bridge a cultural divide.

By joining this program, these young people demonstrated courage, leadership, and vision. I have no doubt that there were many future leaders in that room, ready to take on the entrepreneurial and cultural challenges that lie ahead. The seven weeks they spent together forged partnerships that will last for many years beyond this program.

Perhaps the seeds of a great startup were planted right here in Boston. And perhaps the seeds for bridging the cultural divide were planted here as well.

____

I’d like to thank Gil Arie and Foley Hoag for their generosity in hosting the mentorship event and Samer Haj-Yehia for taking the time to serve as an insightful mentor. In addition, I’d like to commend the participants in a similar event which took place two weeks ago: Jeff Bussgang, General Partner at Flybridge Capital Partners; Lester Fagen, who hosted us at Cooley LLP; Israel Ganot, CEO of Gazelle; and Eyal Shavit from Axcess .The entire program was made possible by the relentless efforts, passion and commitment of Babson student organizer, Noam Maital.

I’ll be the first to admit that I’m an innovation junky. I love being around it, participating in it, and pushing innovation myself. It’s why I do what I do. That’s why I was so excited to be on the panel at The BootCamp Ventures Israel Innovation Road Trip in Boston a few weeks ago.

We participated in a flurry of presentations from companies looking to innovate. They gave us their 30-second elevator pitches, deeper 6-minute presentations. And then the panelists provided on-the-spot feedback.

I won’t go into detail on what I liked, didn’t like, who did best or who struck the wrong notes. But here are a few general notes from the session.

• Don’t innovate for the sake of innovation. “The Big Idea” is often so rapturously engaging to its creators that there is no thought beyond the idea itself. Ideas are often like our children. It’s impossible, to paraphrase Mrs. Seinfeld, to imagine how someone couldn’t like this child of yours. After all, it’s brilliant. Isn’t it? Be thick skinned, and get feedback from the toughest people you know—from within your company and elsewhere. Then find more, tougher people. The lessons you learn from the feedback you get will be invaluable to you. It might sting at first when you find out your little baby isn’t perfect. But it will be worth it.
• Think about your customers—early and often. A smart idea, even a groundbreaking idea, can sometimes get bogged down in development with little focus on the customer. Has anyone tested the idea with people who might use it? If you have, good for you. But has that feedback been given to the development team? Has the feedback the sales people have gotten been integrated into the product development plans? This is all about establishing a communications loop with customers. If your product and company are stealth right now, you can still get this feedback, but it might be a bit less formal than if you have an existing product and customers. If you do have an existing product and the customers that hopefully go along with that, you should have this feedback loop in place from day zero.
• It’s better to do something small that lots of people need than do something big that no one wants. Think back to the dot-com bubble. Webvan was going to revolutionize the way we bought our groceries. Only it didn’t. There are many stories like this. On the surface, huge undertakings can be very attractive. But look a layer or two below and the cracks start to appear. Webvan barely got off the ground, and despite billions of dollars in investments, it was soon one of the biggest flops in history. Thinking a bit smaller, there’s ConstantContact, which I was part of for the better part of the past decade. We saw small businesses as a neglected segment. So we set about, with a small but powerful solution, to help those small businesses communicate better with their customers. Seemingly insignificant at first, this idea gathered steam over time and defined a category. Now ConstantContact is a public company with multiple products lines—all built on one little idea.

These observations lead me to an observation that I’ve discussed with my colleagues here at HSG and elsewhere over the past few weeks. There are two kinds of innovators: those that apply innovation to a customer problem and those that innovate and then search for a customer problem. Which camp do you fall in?

The MIT/ Stanford Venture Lab event Beyond Bricks and Clicks saw a great discussion earlier this week on the opportunities and innovations in mobile commerce for retailers, banks, startups, and brands. Most importantly, what it all means for consumers. It was yet another sold-out event for VLAB, attracting entrepreneurs and investors from all across the valley.

I was fortunate to be moderator of this panel (see my slides embedded at the bottom of this post), which included some of top thinkers in this space: Aaron Emigh, CTO and Co-Founder, Shopkick, Inc. (which has already delivered retailers a boost in sales through their mobile commerce), Ben Hedrington, Director of Web Strategy and Mobile at Best Buy Co. Inc. (one of the most innovative tier-one retailers when it comes to mobile commerce), Matt Weathers, VP Product, ShopSavvy (boasting over 10 million registered users) and Bob Borchers, now General Partner at Opus Capital Ventures and formerly head of product marketing for the original iPhone team— check out Bob rapping about iPhone here.

As I flew back to Boston, I jotted down some of the ideas we discussed at the panel.

1. How big is this mobile commerce thing, after all? The prevailing perspective at the session is that mobile commerce isn’t a subset of e-commerce. It’s a part of total commerce. To give you a feel for the numbers, US e-commerce retail sales are estimated to be $200 billion in 2011. But if we think of mobile commerce as a subset of total commerce, which is estimated to be $3 trillion in 2011, the magnitude of the opportunity begins to be clear. Why is it a subset of total commerce? Because so much of offline commerce will be driven by the information and influence available to consumers via online resources while they are in the retailer’s physical store. Price comparison, consumer reviews, friend’s reviews, up sell and personalized advertising will all impact offline purchases.

Aaron put it best when he said that mobile commerce combines the best parts of e-commerce  with the best of offline commerce.

2. Mobile commerce is impacting every phase of the consumer purchase cycle, including awareness, intent, purchase, loyalty and social recommendations. The panel elaborated on examples for each of these phases, but this framework helps us to think about the various use cases in which mobile commerce will play a major role.

3. Retailers and advertisers have a tough task ahead of them. In many of the hyped mobile commerce opportunities, at the end of the rainbow we found a technology in search of a need. But the consensus here was that the retailers that figure out what consumers truly need and then drive them to a change in behavior will win. It still remains an open question whether consumers will choose retail-driven applications or third-party apps when shopping. The results of this tension will have wide ramifications on the value each of the players will be able to capture in this fast changing value chain.

 4. Another important area in mobile commerce is the idea of curation. Typically, a consumer has 30-120 seconds in an average mobile commerce transaction. So retailers need to curate the selections available to consumers to ensure that they have personalized, highly appealing and enticing offerings. One startling statistic: 56% of consumers rate their mobile shopping experiences as poor. It’s obvious there is much opportunity to be had here.

Overall, I think it’s important to remember that although the potential impact is immense, we are just at the beginning. We’re just scratching the surface. This is TV in 1948.

Back in 2001, Clay Christensen wrote a piece in HBR. The article, entitled Skate to Where the Money Will Be, recounts the story of hockey great Wayne Gretsky, who said the key to winning was to skate to where the puck will be next. Where the puck is now is useless. This story, which I’m sure we’ve all heard in a business context, is an important lesson.

Instead of focusing on the present, we need to think down the road a bit—past the hype and excitement of the present, past the wild forecasts of tens of billions of dollars in revenue, and toward the ultimate goal.

What will mobile commerce be in a few years? How will it satisfy consumers? How will advertisers and retailers drive and take advantage of this major change? The ones who get those questions right will be the winners.

– Nitzan

@nitzans

@highstartgroup

The Durbin Amendment passed a few days ago and will be enacted on July 21, 2011. Senator Durbin was thinking about consumers when he envisioned this law. He wanted to take the money out of the hands of the “evil” banks and give it to the consumers. So, starting in July we’ll all see an annual refund of about $110 right? I mean, that’s our individual share of the $12 billion in revenue the banks are giving back. So we’ll all be able to have a nice meal because Durbin is so magnanimous, right? Think again. Consumers won’t see anything like that.

If we are not going to get an annual check, a reduction in the cost of goods we buy from retailers of 1- 2% across the board might be nice. But the law does not require the retailers to pass along the cost savings to the consumer. It just “hopes that they will.” Hope is not a strategy, as the saying goes. How often is the result of legislation based on hope?

Nonetheless, there is a very strong incentive (and some margin) for retailers to push debit card usage. And they are also able to “punish” users of credit cards by surcharging for the right to use credit cards. Now, credit cards (with interchange rates averaging 2 – 4% of the transaction value) and even cash or checks (due to handling, theft and fraud risks with checks) are far more expensive to the retailers. With the new competitive retail landscape, in addition to competing against each other for the consumer’s attention, they will be competing within the consumer’s wallet – to influence your choice of payment type. This could even go as far as discourage the use of debit cards from small banks, which (technically) under the proposed legislation are allowed to continue charging the retailers the higher fees for accepting debit cards they issue.

This behavior modification in the consumer’s wallet is not new. Ikea has been employing this technique for a few years: It offers consumers 1% of their current purchase as a gift card to be used toward their next purchase—all for a consumer simply using a debit card. This practice has always been frowned upon, and even punished, by the payment schemes (i.e., MasterCard, Visa and Discover) as their main constituent (the banks) make more money off of the use of credit cards.

The reality for the retailers, specifically the major retailers, is that while debit cards are now the least expensive payment type for them, credit cards are still cheaper for them when compared to cash and check handling costs and complications.  This means that retailers won’t want to drive consumers to either of those payment options. They will, however, have to fight the momentum a very large portion of card users have toward earning rewards on their credit cards. This momentum is strong enough to drive these customers away from the retailer entirely.

So what can we expect as the war rages?

Retailers will try to drive consumers to pay with their debit cards using some portion of the 1 – 2% windfall they just received at the behest of the government, while banks will use some of their much larger revenue pool from credit cards to influence consumers to switch their debit spending to credit cards.  Who will win? Will other payment mechanisms disintermediate the entrenched payment types, like mobile payments?

Who holds the power?

On the one hand, retailers can now afford very compelling incentives for debit usage and can leverage strong disincentives to credit usage; while on the other hand Banks are under no obligation to support debit cards as a product.

Retailers need to focus on how to leverage this windfall to generate loyalty rather than short term profitability. Banks need to focus on driving value from the entirety of the customer relationship rather than lamenting the loss of the debit card revenue – a very difficult task given their entrenchment in rigid, product oriented organizational structures. If both of these aspirations come true, then perhaps we were being to hard on Senator Durbin – the consumer could win in the end (along with the retailers and banks).

by Nitzan Shaer

You may not think about innovation all the time. But it’s surrounding us—in the office, on the phone, in the piles of emails you click through every day. Somewhere in there you’ll find innovation. But just what is innovation and what are some of the most innovative ideas around today? There’s no better place to get the answer than TED.com. It’s one of my favourite web destinations. That’s why I set aside some time to find the 10 best TED talks on innovation.

1. Steven Johnson: Where good ideas come from

Steven Johnson notes that most great innovations haven’t arisen from “Eureka!” moments. Rather, they come as people gather around a table discussing their work. Johnson adds that despite his own diary entries, Charles Darwin’s theory of natural selection didn’t come in a sudden burst. A recent examination of those very diaries shows that Darwin had the full theory of natural selection for months before he had his epiphany. This is what Johnson terms the “Slow Hunch.” This, of course, takes time.

http://www.ted.com/talks/steven_johnson_where_good_ideas_come_from.html

2. Charles Leadbeater on innovation

Think about innovation, and you’re often drawn to the notion that it’s for the big minds—the well-known think tanks or universities. Or maybe even the biggest companies in the world—the ones with the vast R&D operations. But contrary to what Leadbeater calls traditional economic theory, many innovations come from elsewhere. Consider the mountain bike. Who invented that? Not a big bike manufacturer. Nor did it come from a single inventor slaving away in a design shop. It came from cyclists, many in Northern California, who were frustrated with racing bikes and big bikes. What they came up with—a combination of parts from racing bikes, big bikes, motorcycles, and mixed and matched parts—were first known as “clunkers.” Then one of the parts suppliers decided to start selling them—maybe 10-15 years before the large companies saw a market. Now mountain bike sales account for 65% of bike sales.

http://www.ted.com/talks/lang/eng/charles_leadbeater_on_innovation.html

3. Jeff Bezos on the next web innovation

It can often be amusing to look at historical views of the future. But it can also be educational. In 2003, Jeff Bezos, with the memory of the just-ended heady days of the dot-com boom still fresh in his mind, took to the TED stage to talk about the boom and what it had in common with the California Gold Rush of the mid-19th century. Then he discussed the early days in the electrification of America. He posits that, in 2003 at least, we were at a stage in the development of the internet comparable to 1908, when the Hurley Washing Machine was introduced. If we accept that, he notes, the negatives can’t bother you. There’s more innovation ahead of us, Bezos says (was the Kindle even a glimmer in his eye then?).

http://www.ted.com/talks/lang/eng/jeff_bezos_on_the_next_web_innovation.html

4. Chris Anderson: How web video powers global innovation

Web video is doing a lot more than bringing America’s Funniest Home Videos into the 21st century. Alongside the many videos of people falling off swing sets and dogs skateboarding, Chris Anderson says there’s another phenomenon at work. He calls it Crowd Accelerated Innovation. Naturally, this requires certain ingredients, the first of which is a crowd—a group of people who share a common interest. The second ingredient is light—what Anderson describes as “clear, open visibility of what the best people in the crowd are capable of.” The third (and perhaps the most critical) ingredient is desire. Without desire, Anderson notes that the hundreds of hours of toiling away at research and practice simply wouldn’t happen.

http://www.ted.com/talks/lang/eng/chris_anderson_how_web_video_powers_global_innovation.html

5. Brian Cox: Why we need the explorers

These are tough economic days to be sure. Spending is being trimmed in public and private spheres. But where should the cuts come—and at what cost? Brian Cox argues that science that pushes the boundaries of curiosity can pay for itself. In fact, the amount spent by governments on what Cox terms “curiosity-driven science,” is but a small fraction of most public budgets. But without it, we wouldn’t have transistors or silicon chips—nor would we have the basics of our modern economy.

http://www.ted.com/talks/lang/eng/brian_cox_why_we_need_the_explorers.html

6. Sebastian Thrun: Google’s driverless car

You may have heard about Google’s driverless car. But you have to see it to believe it. Sebastian Thrun, who helped build it, was driven by his own quest to save lives—after losing his best friend to a car accident at age 18. Watching someone sitting behind the steering wheel of a car that’s driving itself is a bit unnerving. But there it is, forging ahead on busy San Francisco streets, including the famously crooked Lombard Street, and California freeways—even through toll booths. Thrun notes that car accidents (almost all of which are due to human error) are the leading cause of death for young people, but that could be prevented by this kind of technology. In addition, he believes the capacity of highways could increase three-fold.

http://www.ted.com/talks/sebastian_thrun_google_s_driverless_car.html

7. Lisa Gansky: The future of business is the “mesh”

Lisa Gansky believes that sharing is the future of business. A so-called “mesh company” combines three ingredients: social (our ability to connect with each other), mobile (devices that enable us to find each other) and physical goods (knowing where things are). Gansky says that a service like Zipcar, which didn’t invent car sharing, made it sexy by choosing the right kinds of cars (not boxy cop cars) and targeting universities. The company realized all along that, according to Gansky, “a brand is a voice and a product is a souvenir.” A key distinction for Zipcar is its recognition that it is not a car company—it’s an information company. The information it has about its customers puts it in a great position to anticipate what those customers want next.

http://www.ted.com/talks/lisa_gansky_the_future_of_business_is_the_mesh.html

8. Josh Silver demos adjustable liquid-filled eyeglasses

How can we ensure that people who need glasses but can’t afford them can get access to them? Why not fill glasses with liquid so they can be easily adjusted without the need for an eye doctor? That’s what Josh Silver suggests, and demonstrates. Silver wants his affordable eyeglasses (at about $19 a pair, he thinks they’re still too expensive) to reach a billion people in need by 2020. The answer to all of the questions surrounding such a grand undertaking is research, according to Silver.

http://www.ted.com/talks/josh_silver_demos_adjustable_liquid_filled_eyeglasses.html

9. Mike Matas: A next-generation digital book

We’ve all seen or used the iPad and Kindle. But have you read a book on either device that takes full advantage of the technology. Certainly the Kindle is purpose-built for just reading. But the iPad has vast capabilities. Now Mike Matas of Push Pop Press demonstrates what he calls the first feature-length interactive book. The book takes full advantage of the iPad. You can swipe from chapter to chapter, scroll through the pages, zoom in, pinch pictures to open them and listen to narrations, then fold them back up onto the page. The infographics are interactive, enabling the reader to dig deep into data without leaving the book.

http://www.ted.com/talks/mike_matas.html

10. Rachel Armstrong: Architecture that repairs itself?

Rachel Armstrong says that buildings today use old technologies: blueprints, industrial manufacturing, and construction using teams of workers—all of which results in an inert object. This one-way transfer of energy from our environment into our homes and cities is something Armstrong believes is unsustainable. Sustainable homes and cities, Armstrong thinks, will come only when these buildings and cities are connected to nature. To save a city like Venice will take more than inert materials. Armstrong proposes “metabolic materials”—materials that can grow, adapt and repair themselves. For example, the sinking city of Venice, built on wooden piles, could be saved by a limestone reef that would grow underneath the ancient city.

http://www.ted.com/talks/rachel_armstrong_architecture_that_repairs_itself.html

If there are other videos on innovation you found to be inspiring, please share. In the words of Ray Kurzweil, we are just at the 1% moment in technological growth, with the Singularity still years away.

– Nitzan

@nitzans

@highstartgroup