How future consumers will change the game

How Future Consumers will Change the Game ECR Europe Conference 27 May 2008, Berlin

How Future Consumers will Change the Game ‘A people led approach to innovation’ Gus Rodriguez Kees Jacobs ‘Organising people’s lives’ Alastair Bruce ‘User-driven Internet’ (by Kees Jacobs) ‘Community co-creation’ Mark Hansen Future Consumer 1

The main message… Just accept When will my that consumers start consumers listening to me are the boss again…? in the future Future Consumer 2

How is your dialogue with your consumers ? Future Consumer 3

The view of current consumers on their future behaviour Health and wellness will be the key personal drivers 85 % of consumers expect this to be (extremely) important Consumers will strongly consider sustainability aspects in their decisions But only 20 % are willing to pay a premium for this 4 Future Consumer

The view of current consumers on their future behaviour Consumers expect to become smarter in using all kinds of new technologies – at home, in stores and ‘on-the-go’ Consumers are increasingly expecting to enter a true dialogue, and are willing to provide relevant information Over 50 % are willing to provide personal information Expecting ‘personal promotions’ in return (80 %) 5 Future Consumer

The view of current consumers on their future behaviour Stores will remain important – but the online channel will grow considerably alongside For non-perishable food: 60 % will only buy in stores For Health & personal care: 40% will only buy in stores Consumers will increasingly demand new options for home delivery 20 % is interested in neighbourhood pick-up See GCI ‘Future Supply Chain’ session Tomorrow 11.30 – same location 6 Future Consumer

How Future Consumers will Change the Game ‘A people led approach to innovation’ Gus Rodriguez Kees Jacobs ‘Organising People’s lives’ Alastair Bruce Insert video clip 1 ‘User-driven Internet’ (by Kees Jacobs) ‘Community co-creation’ Mark Hansen Future Consumer 7

People Led Innovation Gus Rodriguez, Vice President Partnerships, Incubators and Consulting Philips Design May 27, 2008

“Every few hundred years in Western History there occurs a sharp transformation. Within a few short decades, society rearranges itself: its worldview (paradigm), its basic values, its social and political structures, its arts, its key institutions. Fifty years later there is a new world.” Peter Drucker “Post Capitalist Society” Story is more about the How of the Future than the What of the consumer. CONFIDENTIAL Partnerships, Incubators and Consulting, Philips Design, May 27, 2008 9

The distribution of wealth Purchasing Power Population > $10,000 advanced 500 Parity per year in millions markets $1,500 - emerging 1,500 $10,000 markets < $1,500 developing 4,000 markets Beyond materialism Source: adaptation of a model presented by S. Hart - Kenan-Flagler Business School, WSSD, 2002. CONFIDENTIAL Partnerships, Incubators and Consulting, Philips Design, May 27, 2008 10

Commoditization, Oversupply and Waste CONFIDENTIAL Partnerships, Incubators and Consulting, Philips Design, May 27, 2008 11

People: involved, connected, empowered CONFIDENTIAL Partnerships, Incubators and Consulting, Philips Design, May 27, 2008 12

The future of technology Ambient Intelligence The house of the future will look more like the house of the past than the house of today - Stefano Marzano CONFIDENTIAL Partnerships, Incubators and Consulting, Philips Design, May 27, 2008 13

CONFIDENTIAL Partnerships, Incubators and Consulting, Philips Design, May 27, 2008 14

The Future of Economics economic index Gross Domestic Product (GDP) Index of sustainable economic welfare (ISEW) time We cannot continue to “consume” the future in this way CONFIDENTIAL Partnerships, Incubators and Consulting, Philips Design, May 27, 2008 17

A new paradigm Industrial age People age CONFIDENTIAL Partnerships, Incubators and Consulting, Philips Design, May 27, 2008 18

A new paradigm •Top Down Authority •Open Ended, Organic •Masculine •Feminine and Masculine •Experts and professionals •Explore, create, experiment, refine •Work it all out a priori •Real life trial and error and experience •All planned and charted •Collaborative participation also based •People construct their own meaning •Life Future Predetermined •Own their own futures . CONFIDENTIAL Partnerships, Incubators and Consulting, Philips Design, May 27, 2008 19

The consumer of the future Beyond materialism … search for the Quality in Life • Self development and growth • Relationships-family, friends, community • Participation and control • Balance and well being • Diversity • Creativity • Empowerment CONFIDENTIAL Partnerships, Incubators and Consulting, Philips Design, May 27, 2008 20

People Led Innovation … Researching the Future Foresight,Trends &People Research: Socio-dynamics, CultureScan Foresight in Design Personas, Generations, Communities Engaging with the Future Cultural Innovators Creative Communities Social Entrepreneurs Co-Creating the Future open, collaborative inclusive research Envisaging the Future Probes-experience demos Application demos CONFIDENTIAL Partnerships, Incubators and Consulting, Philips Design, May 27, 2008 21

Understanding society & people… in the dynamic future context Short term insight forecast foresight Long term CONFIDENTIAL Partnerships, Incubators and Consulting, Philips Design, May 27, 2008 22

Cultural … Leaders, the future consumers Cultural Creative's: aprox 24% of the adult population (44 million in USA). Core CCs- 50% Green CCs - Global sustainability - Very green - Leading edge thinkers and creators - Strong interest in spirituality - Upper middle class - Middle class - 66% women, 33% men - 55% women, 45% men - Above average income - Above average income Key values Key values - More concerned with psychology - More environmentally focused - The meaning of life, new knowledge - Strong social and community concerns - Being socially concerned Cultural Innovators Personal growth, self actualization, self determination, Sustainability, diversity, social concern, altruism at the leading edge of change and are a powerful force for change in the coming years CONFIDENTIAL Partnerships, Incubators and Consulting, Philips Design, May 27, 2008 23

Open Innovation: Co-creating the Future Collaborative Innovation Networks drive new growth through radical innovation Companies see the need to collaborate with other companies and stakeholders for new business development beyond their business boundaries, to innovate and make a difference in society. CONFIDENTIAL Partnerships, Incubators and Consulting, Philips Design, May 27, 2008 24

New platforms for Co-creating the future The Philips Design Co-creation Experience Philips Design is exploring new ways to collaborate and engage with Second Life residents. Visitors to the Co-creation Experience home are invited to register to participate in collaborative activities aimed at further understanding people’s motivations and desired experiences. CONFIDENTIAL Partnerships, Incubators and Consulting, Philips Design, May 27, 2008 25

Design Innovation From Vision to Innovation and New Value Discover Inspire & Imagine VISIONARY PROJECTS Realize New Nomads 2001 10 CONFIDENTIAL Partnerships, Incubators and Consulting, Philips Design, May 27, 2008 26

Philips | Swarovski CONFIDENTIAL Partnerships, Incubators and Consulting, Philips Design, May 27, 2008 28

Integral communications solutions CONFIDENTIAL Partnerships, Incubators and Consulting, Philips Design, May 27, 2008 30

The Simplicity Event “Is Philips Design the Absolute Best Design Company in The World? I don't know the answer, of course, but I go to a lot of events and see a lot of fascinating things and on Monday night I went to The Simplicity Event put on by Philips Design on Pier 94 in Manhattan and it just blew me away. I saw technology in natural harmony, seamlessly integrated into the way we normally move through life.“ Bruce Nusbaum Business Week editor, New York, 2006 CONFIDENTIAL Partnerships, Incubators and Consulting, Philips Design, May 27, 2008 32

The Simplicity Event: Health & Wellbeing move your body share experiences care for your body relax your mind listen to your body Next Simplicity Events reinforce the notion that Philips is a reference point for Simplicity. The 2006 Simplicity Event focused on health and well being! CONFIDENTIAL Partnerships, Incubators and Consulting, Philips Design, May 27, 2008 33

Habitat: living Off the Grid light water air CONFIDENTIAL Partnerships, Incubators and Consulting, Philips Design, May 27, 2008 36

Skin: Electronic Tattoo CONFIDENTIAL Partnerships, Incubators and Consulting, Philips Design, May 27, 2008 37

People Led Innovation … Researching the Future Foresight,Trends &People Research: Socio-dynamics, CultureScan Foresight in Design Personas, Generations, Communities Engaging with the Future Cultural Innovators Creative Communities Social Entrepreneurs Co-Creating the Future open, collaborative inclusive research Envisaging the Future Probes-experience demos Application demos CONFIDENTIAL Partnerships, Incubators and Consulting, Philips Design, May 27, 2008 38

How Future Consumers will Change the Game ‘A people led approach to innovation’ Gus Rodriguez Kees Jacobs ‘Organising People’s lives’ Alastair Bruce ‘User-driven Internet’ (by Kees Jacobs) ‘Community co-creation’ Mark Hansen Future Consumer 40

Organising People’s Lives Alastair Bruce, Industry Leader Retail ECR Berlin, 27th May 2008 Google Confidential and Proprietary 41

Google ... Organising People‘s Lives „To organise the world‘s information and make it universally accessible and useful“ Google Confidential and Proprietary 42

Google ... Over 80 Products Google‘s Mission: „Organise the world's information and make it universally accessible and useful.“ Search YouTube Maps Mobile Desktop Sidebar Toolbar Earth Google Mail & Talk Calender Blogger Groups Picasa iGoogle Book Search Google Confidential and Proprietary 43

The Digital Divide Google Confidential and Proprietary 44

Information 1 Billion Google searches per day Google Confidential and Proprietary 45

Communication 118 Billion Emails & IMs sent per day > 250 M registered Skype users Sources: IDC: 'Worldwide Email Usage 2007-2011”; Radicati Group, 'Instant Messaging Market, 2007-2011' Aug 2007 Google Confidential and Proprietary 46

Community 250 Million Internet users on a social network Sources: http://www.lexisnexis.com/about/releases/1009.asp (Sept Google Confidential and Proprietary 47 2007); Forrester Europe eCommerce Forecast 2006

Entertainment 10 hours Video uploaded to YouTube per minute Source: Google Google Confidential and Proprietary 48

Commerce €130 Billion EU eCommerce market This figure has tripled in the last 3 years By 2011 the figure will increase to 20% of total European commerce Source: http://www.auctionbytes.com/cab/abn/y08/m02/i22/s02 (Feb 2008) Google Confidential and Proprietary 49

Technology Drives Change Broadband penetration Democratise Falling cost the tools of of digital production storage Google Confidential and Proprietary 50

Falling Cost of Digital Storage • Storage capacity doubles annually for any given fixed storage space • 1 GB storage today costs around € 0.30 • Average iPod stores upwards of 30 000 songs Google Confidential and Proprietary 51

Increasing Broadband Penetration • 400 million households with broadband access by 2010 • 50% broadband penetration in W. European markets • 60% of Europeans predicted to have 3G phones by 2010 Google Confidential and Proprietary 52

Democratising the Tools of Production • 100 million digital cameras sold annually worldwide • Everyone is a photographer, designer, blogger and journalist... • Multi-media 24/7 interation is becoming standard Google Confidential and Proprietary 53

Internet Evolution Information & Commerce Community, Communication Self-Expression & Entertainment 1.0 2.0 3.0 1994 1998 2000 2003 2006 2008 Users 77M 400M 500M 1000M 1400M Google Confidential and Proprietary

Search … Reducing Complexity Google Confidential and Proprietary 55

Future: Universal Search “In 10 years you can ask Google a question!“ Marissa Mayer VP, Search Products & User Experience Google Confidential and Proprietary 56

Organising People’s Lives: Messaging Communicate and Connect Google Confidential and Proprietary 57

Organising People’s Lives: Sharing Collaborate and Organise Google Confidential and Proprietary 58

Organising People’s Lives: Visual Messages 258 Mill. Unique User Quelle: ComScore Networks, Jan 2008 Google Confidential and Proprietary 59

Organising People’s Lives: Geographic Info TrackTrack ABX Air Southwest Airlines Find your closest flight 6359 from Boise 752 from Illinois restaurant in over to San Francisco to Los Angeles 65 countries Google Confidential and Proprietary 60

Organising People’s Lives: Getting to Work Google Confidential and Proprietary 61

Organising People’s Lives: Personalisation Source: Google Google Confidential and Proprietary 62 estimate

Self-Organisation: Wisdom of Crowds Nike Social Networking with Google Maps Oral History of Route 66 on My Maps Starbucks Google Maps layer Google Confidential and Proprietary 63

Tools for Organising People’s Lives Google Confidential and Proprietary 64

Digital Nomads: Shift Global to Local 1930s Local Individual Organising Mobile People‘s Lives Google Confidential and Proprietary 65

Thank you for your time! Alastair Bruce, Industry Leader Retail ECR Berlin, 27th May 2008 Google Confidential and Proprietary 66

The User-driven Internet - How it applies to businesses and retail

The User-driven Internet allows you to better engage with your customers Feedback Feedback Target on Facebook Target on Facebook (‘Back-to-school’) (‘Back-to-school’) •• Target made its first foray into social Target made its first foray into social networking by sponsoring a page on networking by sponsoring a page on Facebook, a site rich in college Facebook, a site rich in college students students •• Target's Facebook page was given the Target's Facebook page was given the theme of "Dorm Survival Guide – It theme of "Dorm Survival Guide – It was all about the box, referring to was all about the box, referring to small rooms small rooms •• Target also communicated in the Target also communicated in the students' vernacular, "not in Target students' vernacular, "not in Target speak,“ – student lingo was used to speak,“ – student lingo was used to increase dialogue increase dialogue 70 © 2008 Capgemini

The User-driven Internet allows you to better involve your customers Co-Design Co-Design Online Design Community Online Design Community •• Interactive design tool available on Interactive design tool available on website where users submit graphics website where users submit graphics •• Submitted graphics are displayed Submitted graphics are displayed and rated by other users and rated by other users •• The designers of highly rated The designers of highly rated graphics then specifiy the printing graphics then specifiy the printing method and material colour onto method and material colour onto which their design will be printed which their design will be printed •• These highly rated designs are then These highly rated designs are then produced as a limited batch produced as a limited batch production run by Threadless production run by Threadless 71 © 2008 Capgemini

The User-driven Internet allows you to better understand your customers Dell Gain Customer Insight Gain Customer Insight Hell Blogs for Customer Feedback Blogs for Customer Feedback and Idea Generation and Idea Generation •• Result of poor publicity from Result of poor publicity from Dellhell.com was, Dell’s shares and Dellhell.com was, Dell’s shares and sales fell sales fell •• A few months later, Dell released a A few months later, Dell released a press release saying “we have learnt press release saying “we have learnt a lesson and we listen to our a lesson and we listen to our customers” customers” •• As a result, Dell introduced a raft of As a result, Dell introduced a raft of initiatives to engage better with their initiatives to engage better with their customer to improve their service customer to improve their service •• The Dell Community website was The Dell Community website was created, which contains seven created, which contains seven dedicated forums covering their dedicated forums covering their different product types: different product types: -- Members can use the forums to Members can use the forums to openly flag problems and share openly flag problems and share any solutions they have found any solutions they have found -- Dell analyses problems that are Dell analyses problems that are flagged and responds to them in flagged and responds to them in the forum or in their production the forum or in their production process/technical support as process/technical support as necessary necessary •• Dell Idea Storm is another online Dell Idea Storm is another online community which was set up to community which was set up to encourage customers to post ideas encourage customers to post ideas for new products: for new products: -- Ideas are voted on by other users Ideas are voted on by other users and the best ideas are converted and the best ideas are converted into actual products and action into actual products and action and by Dell and by Dell 72 © 2008 Capgemini

The User-driven Internet allows you to improve your brand reach Viral Marketing Viral Marketing Viral Marketing using Social Viral Marketing using Social Network Network •• Topshop created a profile page on Topshop created a profile page on social networking website MySpace. social networking website MySpace. •• The profile page is open about the The profile page is open about the fact fact that it belongs to the fact fact that it belongs to the company company •• The pages invite the shoppers and The pages invite the shoppers and fashion enthusiasts to read the latest fashion enthusiasts to read the latest gossip and see new clothes ranges gossip and see new clothes ranges •• Topshop created over 3,000 friends Topshop created over 3,000 friends •• The visits from its MySpace profile The visits from its MySpace profile page made it the number two source page made it the number two source of traffic after Google of traffic after Google 73 © 2008 Capgemini

The User-driven Internet allows you to find new market opportunities New Customers & Markets New Customers & Markets Social Network and Online Video Social Network and Online Video Re-Opening Old Market Re-Opening Old Market •• A MySpace user who missed Wispa A MySpace user who missed Wispa bars initiated an online campaign via bars initiated an online campaign via his profile called “Bring Back Wispa!” his profile called “Bring Back Wispa!” •• 14,000 people joined this group 14,000 people joined this group •• Fans posted videos of old 1980s Fans posted videos of old 1980s adverts on You-Tube adverts on You-Tube •• Cadbury Schweppes noted this Cadbury Schweppes noted this phenomenon and demand so agreed phenomenon and demand so agreed to produce a trial batch of 23m bars to produce a trial batch of 23m bars in 2007 in 2007 74 © 2008 Capgemini

The User-driven Internet allows you to better service your customers Customer Services Customer Services Map Mashup Map Mashup •• In 1996 Yell.com was established as a In 1996 Yell.com was established as a simple text and graphics online simple text and graphics online version of the popular Yellow Pages version of the popular Yellow Pages •• More recently Yell.com introduced a More recently Yell.com introduced a mobile applet so that mobile phone mobile applet so that mobile phone users could access Yell.com on the users could access Yell.com on the move move •• Also introduced a maps mashup Also introduced a maps mashup •• The map mashup takes mapping data The map mashup takes mapping data and plots the businesses returned in and plots the businesses returned in a search relative to the users’ a search relative to the users’ location location 75 © 2008 Capgemini

‘because you can’t see it in your stores, don’t assume it isn’t happening’ 76

The LEGO Co-Creation & Innovation Mark W. Hansen, Director Business Development ECR – May 2008

Evolution of user involvement Passionate LEGO advocates who want to co-create and Lead Users have a two-way dialogue with us and among themselves ~ th. global LEGO Users with details registered in our 1:1 Community ~ millions global database so it's possible to have a dialogue LEGO Users who participate directly Connected Community with us, but are not registered in our ~ 10 million global database so it's not possible to contact them directly Have bought or received a Active Households Tens of millions LEGO set in the past 12 months LEGO Factory 2007-25-04 / Page 79

Tapping into co-creation LEGO Factory 2007-25-04 / Page 80

AFOLs create and share LEGO Factory 2007-25-04 / Page 81

There are multiple online networks... LEGO Factory 2007-25-04 / Page 82

Some users play full time… LEGO Factory 2007-25-04 / Page 83

Product Development: from RIS to NXT 1998 2006 LEGO Factory 2007-25-04 / Page 84

Lead users co-driving publicity 11 page cover story in Wired Magazine LEGO Factory 2007-25-04 / Page 85

TOOLBOX: Evolution of user involvement User enterprise – LEGO partner User-developed – User published User-developed – LEGO published Co-developed – LEGO published LEGO developed – LEGO published LEGO Factory 2007-25-04 / Page 86

LEGO Factory 2007-25-04 / Page 87

User Developed, User published products LEGO Factory 2007-25-04 / Page 88

What do we offer consumers today? LEGO Factory 2007-25-04 / Page 89

... BUT we continue to develop and learn to create new consumer PLAY EXPERIENCE LEGO Factory 2007-25-04 / Page 90

LEGO Universe Phase 1: Phase 2: LUP Phase 3: LUP III LUP II • October 2007 • September 2006 • May 2007 •XXXXX key users • 12 key users • 62 key users LEGO Factory 2007-25-04 / Page 91

Thanks for listening! mwh@lego.com This year, more than 400,000,000 children and adults will play with LEGO bricks. [ - virtual LEGO bricks not included] LEGO Factory 2007-25-04 / Page 92

"Companies don't fail because they do the wrong things; they fail because they continue to do what used to be the right things for too long” (How) will you let future consumers change your game ? Future Consumer 94

Thank You ! How Future Consumers will Change the Game ECR Europe Conference 27 May 2008, Berlin

How future consumers will change the game

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