Friction

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A spartan deck which accompanied my speech at Thinking Digital conference in New Castle.

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  • Photo © Stavros Markopoulos http://www.flickr.com/photos/markop/1998212134/
  • Definition of Friction, paraphrased from Wikipedia:Friction is the force resisting the relative lateral (tangential) motion of solid surfaces, fluid layers, or material elements in contact. Friction is not a fundamental force, as it is derived from electromagnetic force between charged particles, including electrons, protons, atoms, and molecules, and so cannot be calculated from first principles, but instead must be found empirically.
  • Better quote illustrating the colloquial view of Friction as exceedingly negative - http://www.fearofphysics.com/Friction/frintro.htmlFriction is the "evil" of all motion. No matter which direction something moves in, friction pulls it the other way. Move something left, friction pulls right. Move something up, friction pulls down. It appears as if nature has given us friction to stop us from moving anything.
  • Should outline his concept that friction is unworkable in digital, that supply always outstrips demand and that scarcity no longer exists. Also nice to introduce Trust concepts…Summary of Gerd Leonhard’s friction is fiction in the digital age:In the unconnected, pre-internet world we (EMI, Universal, Warner Music, Sony, DMGT etc) made lots of money using friction, domination & controlScarcity created friction which enforced attention and ensured paymentConnectivity & mobile & social kills the idea of using friction to ensure or enforce payment (though not the idea of paying itself per se as iTunes has demonstrated)Forcing to buy is like forcing to loveAs a business principle, friction is dead – too expensive to dominate, too many moving parts, too much transparency, too many people talking, too much disruption by new players (see United Breaks Guitars for consumers being able to get their own back if you fail them - http://www.youtube.com/watch?v=5YGc4zOqozo)Now its all about liquidity, lubrication – twitterm, skype, youtube, faceboook – empowered and engaged users lubricating the ecosystemAttention is the new currencyCase in point, the newspaper paywall; a complete and utter failure to understand what and why consumers pay for; online implementations focused on “catching” the consumers who didn’t want to pay, rather than creating as frictionless an environment as possible to collect money for the convenience of consumption (which was their old model).Implications include need to with-vertise – not advertise and unlock value to receive value (as per MIT’s Open CourseWare)We need to give up control to gain trust and to possibly be in commandWe must think engagement – not enforcement and think cars, not faster horsesDiscuss friction is fiction in the digital age:Scarcity doesn’t exist any more? Or has it moved?Trust/Data new assetsGrowing businesses I was shocked and disappointed at the continuing failure to put customers in the middle of a business. Too often businesses focused on what they could provide, an inventory or capabilities led business strategy, rather than a customer needs led one.“Broadcast mentality”Capabilities not needs lediTunes has demonstrated that by making the consumer experience frictionless it is still possible to generate revenue from consumers
  • The new key’s to value creation in the digital economy and the only ones that can’t be commoditized are: Trust, Referrals, Personalization and Data.© Olobez - http://www.flickr.com/photos/olopez/2550984437/
  • The genesis for my initial specialization in UX & Design was a realization that in early technology and websites, the technology was all to often present, forcing users to conform to its expectations, rather than it to theirs. Technology as a means rather than and ends, there is a dramatic need for businesses to examine the friction in their customer relationships & the interfaces between them.
  • In our business we have several customer groups, we have the Audience – the one everyone thinks of; we have our advertisers – or as I refer to them our sugar daddies… and lastly in ever increasing cases we have the creators of content; journalist, artists, musicians & writers. Each group has different needs, requirements and desires – we as a business need to learn how to satisfy and even delight these various groups.
  • In our business we have several customer groups, we have the Audience – the one everyone thinks of; we have our advertisers – or as I refer to them our sugar daddies… and lastly in ever increasing cases we have the creators of content; journalist, artists, musicians & writers. Each group has different needs, requirements and desires – we as a business need to learn how to satisfy and even delight these various groups.
  • In our business we have several customer groups, we have the Audience – the one everyone thinks of; we have our advertisers – or as I refer to them our sugar daddies… and lastly in ever increasing cases we have the creators of content; journalist, artists, musicians & writers. Each group has different needs, requirements and desires – we as a business need to learn how to satisfy and even delight these various groups.
  • IN HBR this year a new thesis was put forward; pitting Shareholder capitalism up against customer capitalism. HARVARD BUSINESS REVIEW ARTICLEThe Age of Customer Capitalism by Roger Martin Modern capitalism can be broken down into two major eras. The first, managerial capitalism, began in 1932 and was defined by the then radical notion that firms ought to have professional management. The second, shareholder value capitalism, began in 1976. Its governing premise is that the purpose of every corporation should be to maximize shareholders' wealth. If firms pursue this goal, the thinking goes, both shareholders and society will benefit. Though that is the theory, in reality shareholders have not been better off since they became the center of the business universe. From 1933 to the end of 1976, when they were allegedly playing second fiddle to professional managers, shareholders of the S&P 500 earned compound annual real returns of 7.6%.From 1977 to the end of 2008, S&P 500 shareholders did considerably worse - earning real returns of 5.9% a year. Putting shareholders first forces managers into playing a game in which they focus on managing shareholder expectations rather than on managing the business. The main principle behind shareholder value capitalism is inherently flawed, and it's time we abandoned it and made a shift to a new era: customer-driven capitalism. Companies that make customers their top priority, as P&G and J&J do, generate returns that are just as high as, if not higher than, those of shareholder-focused companies, and can sustain them for longer. If companies put the customer first, they will make better decisions, because they can focus on improving operations and products and services, rather than on spinning lines to shareholders
  • Actually scarcity still exists, it is simply migrating to new areas based on competition, its moving up the value chain, out to customer interfaces and into more complicated algorithms and into the area of recommendations (Social Media).
  • There are three new key’s to value creation in the digital economy and the only ones that currently can’t be commoditized: Trust, Referrals, Personalization and Data. 1st talk about Trust – how do you build it, what if you lose it? In the end, the only true way to build trust is Time; Old established brands have the advantage.
  • The 2nd of these key’s is referrals – Social media The new key’s to value creation in the digital economy and the only ones that can’t be commoditized are: Trust, Referrals, Personalization and Data.
  • The last key’s to value creation in the digital economy is personalization. This is about friction of change – the cost of promiscuity. The more personalized a business or service gives you, the more loathe you are to leave – this doesn’t even require “locked in settings” or “transfer charges” it is also the simple fact that if you LOVE your existing service, you will NEVER leave.
  • Data about behavior (commerce, comments, community, consumption)The ability to connect, mash up and mix-up this data to create new, rich, bespoke and highly relevant experiencesAcross different platforms, networks and services.Knowledge about and for the benefit of ALL of our customers
  • DataData is where the action is, it is hard to duplicate, hard to aggregate and given it’s relation to time provides a key competitive differentiator to a business. DATA Crisis: We, for the past 3 years have been creating more data than we can store, forcing erasure, this will increase 10x + every 5 years.DataKeys to value in Data & Trust are the same = TIMEFrom Gerd Leonhard on his $trillion estimate“it's roughly $450-500 Billion in value for global advertising, alone (see attached - numbers vary a bit here, some would argue it's around $420-450 Billion but I think the $500 B is more like it) add to that all marketing budgets that are not direct advertising, PR, Marcom etc, plus Data Mining etc which I am estimating to be another $500 Billion (incl all b2b marketing activities such as apps ertc)© http://www.flickr.com/photos/marvinok/457123897/ 
  • Where else is Scarcity or Friction still key to power?PrivacyData Discovery- New Forces of Friction
  • FACEBOOK IS the ONLY social platform which matters today. It is evolving into the web OS. 20% of time online in the UK is spent on Facebook; yet few businesses are there, and even fewerhttp://www.flickr.com/photos/balakov/4300931777/
  • Where else is Scarcity or Friction still key to power?PrivacyData Discovery- New Forces of Friction
  • PrivacyCloud computing - leads to perceived loss of privacyPrivacy is different from secrecySecrecy is VERY difficult today given the number of methods of monitoring and examining our behavior.Trust/identity/privacy are currencies
  • PrivacyCloud computing - leads to perceived loss of privacyPrivacy is different from secrecySecrecy is VERY difficult today given the number of methods of monitoring and examining our behavior.Trust/identity/privacy are currencies
  • PrivacyCloud computing - leads to perceived loss of privacyPrivacy is different from secrecySecrecy is VERY difficult today given the number of methods of monitoring and examining our behavior.Trust/identity/privacy are currencies
  • The old scarcity in media was around distribution, now it’s around discovery, next is recommendation. Businesses need to be agile in their focus in finding the next point of scarcity, friction or direction of change.
  • Discussion about regenerative braking in Electric Vehicles
  • Friction as the single key for creativity and innovation.
  • Discussion about organizational design – putting friction into the middle of product discussions, moving it out of the consumer interface Organizations require friction to survive. I am constantly surprised by the lack of friction; or efforts by businesses to stamp out friction, when in fact it is the key to unlocking innovation, creativity and competitive spirit. The Key to harnessing friction is in plugging it in in the correct place in the organizaxtion. It should exist to drive quality, and delivery to customers, not in the interface with these customers.
  • LESSONSFriction, not a fiction, it is a necessity.Friction points move consistently making it difficult to capture and hold advantage.Friction is a force for good, when focussed towards a constructive objective
  • Lastly, know who ALL of your customers are, learn their wants, needs and desires, and build your company around them, not around your capabilities. ->
  • Friction

    1. 1. Friction<br />Good, evil, necessity or fuel?<br />Photo © Stavros Markopoulos http://www.flickr.com/photos/markop/1998212134/ <br />
    2. 2. Friction – Definition (i)<br />Definition of Friction, paraphrased from Wikipedia:<br />Friction is the force resisting the relative lateral (tangential) motion of solid surfaces, fluid layers, or material elements in contact. Friction is not a fundamental force, as it is derived from electromagnetic force between charged particles, including electrons, protons, atoms, and molecules, and so cannot be calculated from first principles, but instead must be found empirically. <br />http://www.flickr.com/photos/lookingsmug/3696754470/<br />
    3. 3. Friction – Definition (ii) Colloquial<br />Better quote from Fear of Physics:<br />Friction is the "evil" of all motion. No matter which direction something moves in, friction pulls it the other way. Move something left, friction pulls right. Move something up, friction pulls down. It appears as if nature has given us friction to stop us from moving anything.<br />http://www.flickr.com/photos/oilinki/4284012565/<br />
    4. 4. In Media friction has consistently been about enforcing payment<br />
    5. 5. “Friction is fiction” - discussion<br />http://www.flickr.com/photos/miss_gruviera/2246764067/<br />
    6. 6. The Ultimate point of Friction – the PAYWALL<br />© Olobez - http://www.flickr.com/photos/olopez/2550984437/<br />
    7. 7. A simple, intuitive interface, which disguises its technological underpinnings, giving the user what they want. This frictionless experience fills the user with pleasure and delight.<br />
    8. 8. Great User Experience = Avoid Friction<br />
    9. 9. Who is your customer? - Advertisers<br />http://www.flickr.com/photos/gr8fl89/2349119146/<br />
    10. 10. Who is your customer? - Creators<br />http://www.flickr.com/photos/theramblingrountrees/2109005226/<br />
    11. 11. Who is your customer? - Audience <br />http://www.flickr.com/photos/isayx3/3748835100/<br />
    12. 12. HBR Article: The Age of Customer Capitalism by Roger Martin <br />7.6% compound annual real returns<br />5.9% compound annual real returns<br />Photo © ichazhttp://www.flickr.com/photos/chazoid/2630539049/<br />
    13. 13. Key Values in Digital Economy - Scarcity<br />We’ve had do identify, discover and or create new forms of scarcity<br />
    14. 14. Key values in digital economy – Trust<br />New Values – Trust, references, personalization, data.<br />DESIGN TO ADVISE<br />Only Time builds Trust<br />http://www.flickr.com/photos/marksetchell/27964330/<br />
    15. 15. Key values in digital economy – Referrals<br />Google created 8 billion links last year<br /> - social media created 6 billion<br /> Which has more authority?<br />http://www.12manage.com/images/picture_word_of_mouth_marketing.jpg<br />
    16. 16. Key values in digital economy – Personalization<br />http://www.flickr.com/photos/laihiu/42983096/<br />http://www.flickr.com/photos/marksetchell/27964330/<br />
    17. 17. Key values in digital economy – Data<br />Key values in digital economy – Data<br />The information about an asset, call it metadata, user data, or just DATA is more valuable that the digital copy of the relevant asset (the “CONTENT”.)<br />http://www.flickr.com/photos/marksetchell/27964330/<br />
    18. 18. Data is the new Oil<br />Currently abundant, under-measured, un-regulated, and largely un-monetized<br />Long term systemic friction from privacy <br />Estimated value of new Data markets is $ 1 Trillion<br />© marvin908 on flickr<br />
    19. 19. Where else is scarcity or friction still key to power? - Discovery <br />Today Google is the GATEKEEPER of Discovery <br />
    20. 20. Facebook = Internet + 20 years ?<br />© balakov - http://www.flickr.com/photos/balakov/4300931777/<br />
    21. 21. Where else is scarcity or friction still key to power? - Privacy<br />
    22. 22. Privacy is NOT secrecy<br />
    23. 23. New forces of friction? - Identity<br />
    24. 24. New forces of friction? - Connections<br />http://www.flickr.com/photos/dcdead/2860127362/<br />
    25. 25. “Friction in economies simply moves from place to place based on competition”- Rich Skrenta <br />
    26. 26. Friction is a good thing?<br />
    27. 27. ‘The whole business starts with ideas, and we’re convinced that ideas come out of an environment of supportive conflict, which is synonymous with appropriate friction.’<br />—Michael Eisner <br />Photo © andythesquirrelhttp://www.flickr.com/photos/andythesquirrel/3979749578/<br />
    28. 28. Putting friction into the middle of product discussions<br />
    29. 29. Lessons<br /> <br /> <br />Friction, not a fiction, it is a necessity.<br />Friction points move consistently making it difficult to capture and hold advantage.<br />Friction is a force for good, when focussed towards a constructive objective<br />FRICTION IS A FORCE FOR GOOD<br />
    30. 30. Success Strategies<br />Know who ALL of your customers are…<br />Build a business around their needs wants & desires<br />Value comes from long-term quality relationships<br />
    31. 31. & Delight <br />
    32. 32. Thank you<br />Richard D. Titus<br />CEO, &<br />richard.titus@and.co.uk<br />@richardtitus<br />

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