TechCrunch gets the interface

In a column, for TechCrunch, Tom Goodwin claims “The battle is for the customer interface“. It’s always cool to see people agreeing with you – it’s been 18 months or so since I wrote “It’s all about controlling the interface“, and 3 years (has it been that long?) since I wrote “7 rules for interface control“.

It’s odd that Goodwin starts with Uber and doesn’t mention their most recent purchase (a mapping startup) – a classic interface play. Nor does he mentions this.

The battle rages on…

 


It’s all about controlling the Interface

It’s been 18 months since I wrote about interface control. And o, what 18 months those have been!

Facebook tried to become the primary mobile interface, but failed (so far). Apple tried to bump Google off its interface, but failed. Twitter tried to decimate its own ecosystem (but apparently failed), while fighting an interface battle with Facebook. And Instagram. And Tumblr. Facebook fought with Yandex. Microsoft, with its Windows dominance on the wane, decided to compete with the hardware manufacturers who market it. And Zynga realized the (inter)force was not with it. Live by the interface, die by the interface.

Here are 10 things we learned about the interface economy over that period.

It’s a battle of giants

The Digital 5 are battling it out: Google, Apple, Microsoft, Amazon, Facebook (perhaps we should call them the Phygital 5, since four of them now play in both the physical and digital realms, and the fifth – Facebook – is grappling to define its physical manifestation). Others will join the fray: Samsung? IBM? eBay? Walmart? Twitter? While others will be left behind (Sony, Yahoo, Nokia, Blackberry…). Only the giants are willing and able to pay considerable sums to build a moat around their interface, or to keep others from strengthening theirs (see FB/Instagram, Google/Waze)

Facebook isn’t always Home

I believe with Home Facebook struck not only too early, but also arrogantly. Sure, phones should be built around people rather than apps. But Facebook is not all there is to people. To see how a phone can be built around people, Facebook should look to platforms like this.

…nor should it be

Those who rely on Facebook as their home – i.e., give up their interface to Facebook – do so at their peril. That seemingly attractive trade-off between control and reach only works for a rare few; for all the others it is a risky trade indeed: they might get reach, but it will not guarantee access. Just ask Zynga, BranchOut, Viddy, and SocialCam.

…but it should not be underestimated

And that’s an understatement. Facebook is still a threat to Google in search (although Facebook search isn’t solved just yet). The App Center allows it to collect invaluable app data, compensating somewhat for its lack of OS. And Instagram has grown like bonkers since the acquisition.

Owning the OS is not enough

As does owning the screen. Why is it not enough? Because, for example, you need a good product.

Apple of all companies should know this, but it did not execute on it. The opposite is true: over time, it had neglected its default iOS apps. Google, on the other hand, invested in its own apps for Apple’s software. The result was nigh inevitable: Apple’s Maps were an embarrassment, while Google’s Maps app was an instant success. And, ironically, with the YouTube app Apple seems to have done Google a favour.

There are other ways to compensate if you don’t own the OS. One of them is to understand the ways users discover content (including apps), which is Facebook App Center‘s cornerstone; another is to understand their usage patterns and predict what content they would need (ergo, Google Now).

Developers are important. Until they aren’t

It really depends on where a burgeoning interface is in its life cycle. At the beginning developers are its lifeblood; they’re indispensable force multipliers. But slowly, as a platform gains strength, the developers are warned to stay away from duplicating “core functions” of the platform and are advised to find other ways of adding value to it. Twitter’s path is a classic example (see Twitter clients, photos, stocks etc.).

For physical brands, a software layer extends the interface

As consumers turn more and more into mobile mavens, physical brands are at risk of losing their formerly-safe interfaces. When consumers can showroom at will, a retailer’s interface with consumers – while physically tangible – becomes almost useless transaction-wise, and consumer goods become commoditized.

To preserve the interface, retailers and manufacturers need to transform its nature by developing a software layer on top of the physical one, wherein consumers can find the value they seek (be it product information, service, social value, price etc.). Retailers can also leverage the physical interface by focusing on the added value inherent in human interactions, but that’s a whole other matter…

…so they’re experimenting

With contests. And hackathons. And APIs (also this). And partnerships. And accelerators.

Most still don’t get it. But some might go the distance.

The shape of the generic Interface ecosystem is gradually forming

Interface ecosystems revolve around Interface platforms – e.g.,Facebook in social and Google in search. Many large ecosystems are being fought over.

Platforms have numerous piggy-backers: planets orbiting the platform-suns. They can circle their sun for a while, but as we’ve seen, they are sometimes consumed by it.

Any ecosystem will have also-rans: losers of the big battle, winners in specific geographic regions, nibbling challengers.

In some ecosystems you’ll have data players. Their proprietary data will be important even for the platform giants; sometimes they can even turn into satellite platforms. Echo Nest is a great example of this unique creature.

Then you have the API players. They are the “gauge bosons” of the ecosystem, the critical mediators between ecosystem members. Twillio and Aviary are brilliant examples. Here’s to Twillio!

Many verticals are still in land grab mode

Battle cries are still heard in many places, with players fighting over this- or that-graph. It’s about the data – who collects, who controls it. Viva la interface!

Here are examples of some of the most intriguing battles:

  • Who will dominate the music interface? Apple? Google? Spotify? Deezer?
  • Has Google won the location battle? Can Foursquare ever become a platform, or will it be a data player?
  • Will messaging stay a divided arena? What will become of WhatsApp? Will small upstarts learn not to mess with Facebook?
  • Can an ecosystem be more jumbled than payments? Apple, Google, Amazon, eBay/PayPal, credit card companies, mobile operators, Intuit, Square, other startups too numerous to mention… Who will come out the victor?
  • What can we learn about the education ecosystem? Will academic institutions gain the higher ground, or will MOOCs educate us all? Will LMS players become true platforms?
  • And how about health? What will healthcare giants do? Can Practice Fusion be part of the cure? Will RunKeeper be successful in building a health-graph? And what will become of data players like 23andMe?

Thinking Digitally

William Gibson was spot on: The future is already here – it’s just not evenly distributed. As technology develops exponentially, consumers’ behavior evolves arithmetically, and companies change linearly, the digital divide between corporations and their consumers widens. We live in a digital world; digital thinking is a key skill that any C-level executive should possess, and digital principles should permeate every facet of the business. Yet in many organizations we still find a mid-level marketing manager responsible for digital activities, sometimes developing “digital strategy” for various brands.

But it shouldn’t be about “digital strategy” for a brand – it should be about Strategy (with a capital S) for a company. It’s time we moved from digital (as a specialized discipline) to digital thinking.

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Several years ago, Design Thinking was all the rage. “At its simplest level,” IDEO President Tim Brown explained in an interview, Design Thinking is “about using the processes that designers have used for many years but applying them to a broader set of challenges both in business and society.” Although the logic was impeccable, Design Thinking was unsuccessful beyond the confines and minds of IDEO. But that logic is, in my eyes, a valid one; the same logic should be applied to Digital Thinking. Digital Thinking is about using digital principles and applying them to business in general.

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So what does it mean to think digitally? What are those principles that should serve as filters through which today’s managers view the world and approach their business? Here they are, somewhat logically ordered:

1/ Think network

A digital world is a connected world. Thus, at the core of a digital world is the network, and when building or transforming a business for a digital world one must follow the rules of the network (hey there, Metcalf), connecting both people and things. Successful digital-world-businesses control the access to key network interfaces.

The currency of the network, of course, is the link. In a networked world, I link therefore I am.

Questions to ask: How has the network changed your business – and how can your business leverage the network? Can you own a network interface?

Role model: IBM’s Smart Planet.

2/ Think collaboration

Dialogue, conversation, participation, collaboration, open innovation, co-creation, crowdsourcing, UGC, P2P – call it what you will. The network allows businesses and people to collaborate at scale like never before.

Questions to ask: What parts of your value chain can be transformed thanks to collaboration?

Role models: P&G’s Connect+Develop, Guardian’s Open Journalism, Kickstarter, Linux.

3/ Think sharing

Collaboration starts with sharing, and sharing seems to be growing exponentially in a digital world – see Zuckerberg’s Law. Social networks should really be called sharing networks – there is no social (or social graph for that matter) without sharing, and people’s willingness to share is a major driver behind Facebook’s ascendance. The sharing of individual and group actions, photos, interests, and physical goods and resources isn’t done just for sharing’s sake – it also serves the need for identity building and signaling [see principle #7].

Questions to ask: What shared content/actions/goods have the potential to affect your business?

Role models: Facebook, Pinterest, Airbnb, Zipcar.

4/ Think context

Meeting and engaging stakeholders at the right time and place – i.e., in the right context – is a key success factor for any business, even more so in a digital world. Location and mobile are the “where” and “how” of context, which explains their huge importance; together they serve commerce (recommendations, coupons, deals, mobile payments), content (mobile as a 1st and 2nd screen) and creativity (photo sharing). Add in “social” and you get a truly potent mix (hence SoLoMo, although I prefer ShLoMo – much more catchy, and follows the logic of the previous principle). The recent proliferation of proximity/serendipity-based social networking is a case in point.

Questions to ask: What are the key contextual markers (timing, location, motivations) the fulfillment of which will drive your business?

Role models: Instagram, Path, Foursquare.

5/Think now

If location and mobile are the where and the how of context, now is the when. A digital world is a word of live, real time, on-demand fulfillment. “Now” services are instant and seamless. Seamlessability (invented that one just now) is a key issue from the consumer’s point of view – think about areas like mobile payments and content delivery.

Questions to ask: How can you make your business/product/services more instant? How can you make it seamless?

Role models: Twitter, Tesco Homeplus subway virtual store, Amazon Web Services.

6/Think data

Predictive analytics. Machine-learning algorithms. Contextual businesses rely on data. BIG data. They analyze huge swaths of it, structured and unstructured, using massive cloud databases.

Data is today’s Intel inside. The war between Google and Facebook, Google and Apple – heck, Google and everybody else – is, to a large extent, war over data. Interface control relies on data

Consumers care about data, too. Data visualization is becoming more and more important. In the future we’ll talk about the data experience.

Questions to ask: What does your business do with all that data?

Role models: Google Translate, IBM Smart Planet, Visual.ly.

7/Think human

The more we become digital, the more we rely on data – the bigger the need to stay human. “Human” means personal/ized. It means authentic and transparent. It means interesting, and memorable (hence curation). It means private, yet social (fine line there, which Facebook keeps moving). It means playful (hence gamification). And it means physical.

Questions to ask: How can your business convey human-ness?

Role models: Pandora, Microsoft Kinect, Siri, Zynga.

8/Think simple

Keep it simple, stupid. Make stuff that “just works”. Seamlessly.

Questions to ask: How can you simplify your product/service?

Role models: Apple, Square , Dropbox

9/Think “free”

In a digital world, free can take many forms.

Free as in “free beer” (gratis).

Free as in “free-in-exchange-for-ads/your-privacy”.

Free as in freemium.

And even free as in freedom – to share/copy/incite a revolution (libre).

Information does not always want to be free. But it certainly helps.

Questions to ask: What type of free/dom does your business stand for?

Role models: Facebook, Dropbox, Evernote

10/Don’t think – DO

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You’ll notice the principles are not mutually exclusive – they overlap and interconnect in myriad ways. Industries that move along the digital/technological curve incorporate an increasing number of those principles – the car industry is an interesting example (networked, data intensive, mobile/location vehicles); whereas disrupted industries experience a “sudden principle onslaught” to which they are unable to adjust. Mind you, with technological tools and platforms changing constantly, the principles keep evolving as well; but one needs to differentiate between the principles on one hand – and the tech/tools that serve them, on the other (mobile and cloud computing, apps and APIs, 3D printing etc.).


7 rules for Interface control

One of the most critical elements of a successful strategy in the digital age is the Interface control.

By “Interface” I’m not referring to UI and the implied design elements; nor am I referring to APIs, although relevant to the discussion. By “Interface” I’m referring to a point – physical or digital – at which a business and a customer meet, and transact using data: the business receives valuable data from the customer (or money, which in the digital age IS data), and the consumer receives relevant data or data-like service. John Battelle called it “points of control“, and control is certainly the objective here; but I prefer using “Interface control” as it describes WHAT you’re striving to control, and brings to bear the fact that customers are part of the equation.

Under this definition, the importance of “Interface” cannot be overstated. Interface control can lead to the acquisition of competitive barriers such as high switching costs; it can provide the key for unlocking network effects; it can lead to the disruption of entire industries as a result of pseudo-disintermediation (i.e., instead of taking out the middle man, a new middle man is put in place). Those who acquire control of key Interfaces have a better chance of gaining surplus profits.

3o years ago, when IBM decided to outsource (so to speak) the development of a PC operating system, it forever gave away the most important Interface with consumers when it came to the PC; at the same time, Microsoft’s dominance was practically cemented (although it took a decade to come to fruition). Microsoft’s control of the PC interface was a major reason it so easily crushed Netscape in the browser wars. Even today, with the mobile Interface gradually overtaking the PC Interface in importance, Windows 7’s sales demonstrate how Interface control can turn into a license to print money.

Battles for Interface control are raging all around us. Take the battle for the social layer. This is more than a battle to control users’ social interactions; it is a battle to control ever-increasing portions of users’ data, within any site or application, inside or outside of social networks. Facebook is certainly the 800-pound/800-million-strong gorilla in this arena, with Google finally showing signs of success and MySpace a corpse. But when marketers and media properties blindly implement Facebook’s myriad buttons they are foregoing a critical Interface with their consumers – one at which consumers provide invaluable data on their habits and preferences. Sadly, the battle is conceded before it’s begun, without even trying to establish an Interface based on mutual value exchange.

The mobile phone, with its constant physical proximity and inherently personalized nature, is the ultimate Interface according to our definition (Adam Greenfield’s term is apt: interface object, as opposed to a communications device). No wonder, then, that several Interface-control struggles are taking place simultaneously throughout the mobile value chain. Mobile operators, handset manufacturers and OS makers are all vying for control over the Interface with the end consumer. The operators – historically, the dominant players in the chain – are fighting to escape the “dumb pipe” fate; handset manufacturers are trying to avoid commoditization. The OS makers (some of them doubling as handset makers) are striving to get onto as many handsets as possible – i.e., into the hands of as many consumers as possible.

The iPhone is by now a classic example of an OS/handset maker bypassing carriers to take an Interface-control position. For many mobile consumers, the iPhone touchscreen and App Store form the primary interface with the mobile universe. The contrast between Apple’s position and Nokia’s position is striking. Nokia’s move to hand over smartphone OS control to Microsoft might prove to be Nokia’s undoing; it certainly hasn’t learnt from IBM’s PC mistake. Nokia has simply given up on trying to control the Interface with consumers and is now relegated to the hardware battle, stuck in the middle between Apple and low cost manufacturers. The Android OS was supposed to perform an iPhone-like magic trick for Google; but its phenomenal growth notwithstanding, its fragmentation and “openness” allow operators to keep de-facto control of the Interface.

The apps, being a potential barrier to switch, are a key interface element, and so attracting developers is a critical driver in attaining (and maintaining) control. Apple is the one to beat here, with Google gaming steam. Operators want to play too (again, “dumb-pipe-ophobia”) – but they’re mostly playing Apple’s/Google’s game instead of their own. If they seek Interface control, they should leverage their assets to become indispensable for developers: unique APIs, proprietary segmentation data, marketing support, and carrier-based services.

Numerous other Interfaces are at play nowadays, some of them overlapping with mobile, social or both. A few examples:

  • Location – Google, Facebook and quite a few others (e.g., Foursquare) are vying for position, with no dominant player yet.
  • Photo sharing – Instagram is an amazing story. One of the giants will grab it.
  • Real time broadcasting – not sure that’s an Interface, really. If it is, then Twitter’s it. If it isn’t – well, that explains part of Twitter’s problem.
  • Music – Napster destroyed the traditional Interface. iTunes became a dominant alternative. Is Spotify about to change things?
  • Books – “Buy once, read everywhere” is Amazon’s way of planting Kindle as the Interface for books.
  • Living room entertainment – Google vs. Apple vs. Microsoft
  • Voice – Apple’s Siri is a breakthrough, but Nuance is the one with the keys to the castle.
  • Memory – yes, memory. Evernote can be the future Interface.
  • Health, travel, payments…

Interface control is important not just for technology companies, but for CPG companies, as well – after all, a fight to control an Interface is a fight to control access to customers. Ordinarily, CPG companies reach consumers indirectly, but as direct-to-consumer paths gain in importance it will become imperative for CPG companies to analyze whether they can achieve some level of Interface control. Here are some guidelines for any company to consider when performing such analysis:

1. Map your Interfaces.

Analyze all stages of the value chain, and identify existing or potential customer touch points that can be turned into strategic interfaces. Remember: a strategic Interface is not an API or a UI, but a critical point of interaction – online or offline. For example, customer service is a critically important but often neglected Interface, outsourced for the sake of cost cutting. Bad customer service is in fact an example of a failure to take advantage of an interface at which the business-customer value exchange can be dramatically important. Another example is the “P” in CPG – the Package: when every customer has a mobile handset with a built-in camera, the package holds unique potential as a retailer-circumventing interface (up until now I’ve discussed industry/category Interfaces; the examples above relate to intra-company Interfaces, which are no less important).

2. Vertical integration is not a panacea.

It does not ensure Interface control. Sony, for example, boasts vertical integration in the 3D space: from 3D cameras to 3D content to 3D TVs. The problem? Most of the interfaces in this “integration” offer no added value to consumers; few consumers will insist on purchasing a Sony 3D TV in order to watch a Sony-produced 3D movie. It’s therefore important to ask yourself the right interface-related questions: are the interfaces under my control really important to or relevant for consumers? Are these Interfaces at all? The Sony-Apple comparison is instructive here: in Apple’s case, the interfaces between the company and the developers, between the app store and consumers, and between consumer and handset are all relevant – i.e., mutual value exchange takes place in each and every one.

3. More information = more power.

The extent to which you control a certain Interface correlates directly with the quality of the information received or provided through it; the more comprehensive/exhaustive/relevant the information – the more power you can wield through the Interface. It is no coincidence that Google’s acquisition of ITA was challenged by other industry players: the quality of information in Google’s hands increased thanks to the acquisition – and hence, its power.

4. Proprietary information = more power

Strive to gain control by leveraging proprietary information; APIs can be useful here. Credit card companies, for example, possess extensive data on their customers’ and consumers’ financials and financial habits; by offering developers APIs that leverage that data, they can maintain their grip on a market threatened by digital disruption. In another example, leading food companies can leverage recipe data to provide value to consumers in relevant interfaces (e.g., mobile).

5. Controlling distribution is as important as controlling information.

That’s a rule both the music and newspaper industries have had a hard time to grasp. Both have suffered from the loss of control over previously-lucrative Interfaces. Take newspapers for example: first they lost sight of the Interfaces readers use to search for jobs, real estate, cars and other classifieds; then they lost the Interface through which readers consume news. Now they’re left with the “paper” in “newspaper” – an interface that’s no longer relevant for most. Yep, content is king. If you have distribution, that is.

6. If you can’t build a platform, become part of one

What if you’re a small company with seemingly no chance of controlling any Interface?  Try to identify the right ecosystem for you, and ride it to glory; who knows, you might discover your own Interface on the way (Zynga and Instragram are intriguing examples). But if the elephant you’re riding on becomes possessive, watch out.

7. The middleman is more important than ever.

The Internet did bring about disintermediation onto quite a few industries – but in many of them it simply put in place new middlemen: enter Craigslist, enter iTunes. Often, to control an Interface is to be a middleman, a broker; despite all the technological advances and digital innovations, some of the most ancient principles are still valid. Plus ça change, plus c’est la même chose.