On this episode of the Design Mind frogcast, we’re exploring the potential for connected products, services and ecosystems that positively impact people and planet. With a focus on feasibility, desirability, viability and sustainability, our guests from across frog and Capgemini Invent share what it takes to innovate in this space, gain competitive advantage and sidestep the pitfalls of connecting for connectivity’s sake.
Today’s episode features the authors of a new frog report: Chief Challenges 06: Making Connectivity Matter.
Design Mind frogcast
Episode 40: Making Connectivity Matter
[00:09] Elizabeth Wood: Today on our show, we’re talking about what we here at frog call the ‘Connected World.’ Connecting hardware to the internet is not exactly new at this point. But what is new is the reach our connected devices can have, the services and applications they enable, the technology behind them and the positive outcomes they can have on people and planet. To tackle this heavy topic, we’re joined by five experts in the space. That’s Jeff Hebert, Global Head of Intelligent Products and Services in Intelligent Industry at Capgemini Invent; Richard Traherne, Global Head of Next Frontiers at Capgemini Invent; Chiara Diana, Vice President and Chief Design Officer of frog & Head of the frog Innovation Team; Heather Brundage, Senior Director, Strategy & Innovation at Synapse Product Development; and Phil Vann, Vice President, Intelligent Products and Services, Capgemini Invent.
[01:15] Elizabeth Wood: Today’s guests are also the authors of the newest frog report in our Chief Challenges series, titled ‘Making Connectivity Matter.’ Check today’s show notes for a link to download the full report.
[01:25] Elizabeth Wood: But first, what do we mean when we talk about connected products and services and the intelligent ecosystems that underpin them? What real impact can they have on our lives? To set the scene, we asked our guests to share some of their favorite examples.
[01:40] Phil Vann: My first examples of connected products were very different to today’s. I think my first was a radio alarm clock with an innovative snooze button that I spent hours, if not days, trying to figure out exactly how it worked.
[01:55] Jeff Hebert: The connected product that I use the most is my relatively simple optical heart rate watch. Collecting GPS, heart rate information, looking at my recovery and understanding things like my performance over time, I think is an interesting example of relatively seamless data collection. And then, the services that can be provided around that are valuable and, you know, valuable enough that I’ll pay for Strava and, you know, systems like that to use that data and provide some insight to me.
[02:29] Heather Brundage: I’m excited that connected products and services are more accessible. More companies are becoming more comfortable with it and understand the need to go there. There’s more understanding by consumers and by customers. It’s not as scary. It’s not as far-fetched. It’s becoming more woven into our lives. And we can get more holistic pictures of whether that’s a person’s health, whether that’s the health of a power plant, whether that’s the health of your pet.
[02:55] Richard Traherne: At a much more trivial level, I see convenience and excitement around what you can do at a very basic level. I enjoy barbecuing. And I was delighted last year to find that I was able to buy a connected thermometer, a connected ecosystem. I could set my barbecue off, go to the pub and watch the cook from 10 miles away.
[03:25] Phil Vann: Adaptive cruise control. You know, we’re not talking about Level Five autonomous vehicles here. We’re talking about a car that takes away some of the pains of lane control and slowing down when there’s a queue in front.
[03:36] Chiara Diana: When I was a young mom, I would have loved to have a connected thermometer. The idea that you can add such a simple feature, which is the tracking and the reporting of the data, and then the creation of some trends or visual representation around that, it would have made my life so much easier from a functional perspective, but also giving me as a mother the serenity and peace of mind.
[04:05] Elizabeth Wood: Bridging the divide between behavior, understanding and action is often a matter of connectivity. Our first guest, Jeff Hebert, Global Head of Intelligent Products and Services in Intelligent Industry at Capgemini Invent has spent his career making new connections between people, planet and purpose. Here’s Jeff now.
[04:24] Jeff Hebert: A connected product really specifically means something that lives in the physical world. We, as people, are analog creatures, and so we need an interface into the digital world. And when I think about this space, I break it into products that are either sensing something, they’re providing utility by digitizing and being able to understand things that couldn’t have been sensed or understood before. As well as actuators, things that change the physical world in some way. So whether that’s robotics automation, deciding to take action based off of that data, something that sits in the middle between those two is human digital interfaces.
[05:08] Jeff Hebert: So, for me, a connected service means a service that’s enabled by a connected product. We’re either using that data that we’ve sensed from the environment or from people to provide something new, or we’re actually driving and changing the world in some way through that robotic or automation interface by using information and data. And then I think there’s this interesting abstraction that goes next, which is a connected ecosystem. And this is where, in my mind, what that means is we’re going beyond just the services tied to connected products, we’re also tying into other kinds of data, other kinds of information, and maybe other services entirely.
[05:53] Jeff Hebert: You know, a simple example here could be a connected refrigerator. That’s the connected product. And that connected product could have a connected service, which maybe alerts you when you’re running low on milk. And a connected ecosystem could be that that fridge is now connecting to your grocery retailer, and automatically ordering you that milk before you run out. And that ecosystem means that now we’re synthesizing data across different platforms, and we’re providing services that have even more utility. And that could be with partners, or that could be across a business’s existing services and data.
[06:34] Elizabeth Wood: Products and services have had an intelligent aspect for some time—with evolutions building on web 1.0 ideas around connectivity, on to the more recent Internet of Things phenomena and now to artificial intelligence, and increasingly, generative AI behind the scenes. For the next evolution, Jeff sees a real shift toward making meaning with connectivity for humans and beyond.
[06:57] Jeff Hebert: I’ve been working in this connected product space for well over a decade. And it’s an interesting time right now for this market. We have one really big thing happening, which is climate concerns moving into the mainstream, where consumers, governments, businesses are all seeing an imperative to change and that resulting in a sea change within the market. So we’re seeing consumers being willing to spend more for more sustainable products, we’re seeing governments take action with regulations as well as incentives to be more sustainable. And then we’re seeing companies respond with net zero targets and real plans to make changes and improve. And we believe what that means is that if we close our eyes and imagine products coming into the world in the next few years, they will need to be more sustainable by design, we will need to see a difference in the way that we bring new products into the world.
[07:57] Jeff Hebert: Another big thing that’s happening is the pace of technology change is continuing to progress really significantly. So we’re seeing that products are much more capable. And that requires an even more intricate set of processing, software, AI, as well as robotics and advances in the physical world. So products are becoming more complex. And that means that they’re more challenging to create, more multidisciplinary to create.
[08:27] Jeff Hebert: At the same time we have the climate concerns and technology progressing, we also see consumer expectations increasing. You know, as consumers, we have all seen these products and used products of various levels of sophistication in this space. Some bring incredible utility to us, you know, we all have a phone in our pocket that’s incredibly powerful and seamless and easy to use. And we also have products that have not met that standard. And as the technology progresses, and as we experience more of these products that are seamless and are personalized, our expectations are going up for what those types of products should be able to deliver. So consumers are requiring more and expecting more.
[09:13] Jeff Hebert: And finally, at this current juncture, and I think this is temporal, we’re seeing a big shift, especially in the tech space that’s been leaders in creating these types of products, where the financial pressures are different than they have been in the past decade. And so that pressure is changing the nature of how people look at product development right now, moving a little bit away from longer term, more amorphous moonshot type products, and thinking more about what types of products are actually going to have a return more quickly, and how can they see a more viable business model more quickly out of these products.
[09:54] Jeff Hebert: So all of those things together, are resulting in the bar rising for what it takes to bring a new connected product into the world. And we actually have a lot of opportunity there as well. So the potential payoff for a company pursuing a connected product is also going up, because what they can get from it is becoming more valuable. They can create new services, they can bring new and personalized experiences to their customers, they can drive up loyalty in ways that they might not have been able to do before. I think that that’s the interesting landscape in which we find ourselves at the moment where it’s becoming more challenging, and the bar to entry is raising, and yet, the payback and what we can achieve, and what companies can look for, from these types of products is getting even more powerful and more beneficial.
[10:47] Elizabeth Wood: Now that we’re up to speed on the what and why of connected products, let’s move on to how to harness connectivity to make a business impact. Our next guest is Richard Traherne, Global Head of Next Frontiers at Capgemini Invent. Richard is passionate about leveraging emerging tech to take on new possibilities. But amidst a whole host of opportunities with connectivity, Richard shares why it all starts with finding the right path forward.
[11:13] Richard Traherne: For some time, we’ve seen the trend for ever greater integration of our physical and our digital worlds, and the evolution of digital services and ecosystems. There are strong opportunities in every sector, whether that’s your high- touch consumer all the way through to heavy industrial and everything in between. fundamentally connected ecosystems enable the power of physical and digital approaches to be blended together to provide a range of strong benefits. some of those benefits include things like more intimate customer relationships, new ways to connect to consumers, operators, and so on, with greater levels of insight to direct your future strategies of products and service offering.
[12:01] Richard Traherne: Another angle is greater efficiency and effectiveness and then going further towards predictive systems that allow us to have far more intelligence in the way that we live and operate. And then linking to efficiency, using connected ecosystems to find new and more sustainable ways to provide products and services.
[12:24] Richard Traherne: There’s also an opportunity to leverage the expertise and insight from your core business directly with consumers, so using the market insight, the scientific insight, maybe the technological insights to the traditionally used create your product to add value to the user. And we see that in companies with quite traditional legacy businesses in say, sport or clothing or pet food, where they can add services around their products, using those expertise to create things like performance or wellbeing services, for example.
[13:03] Richard Traherne: And one area that I feel passionately about, is in medical care. We all know the strains and constraints that our healthcare systems are under. And we know the difficulties of dealing with highly complex and highly confidential information and data. And so I think I would probably not be unusual to look to a future where you’re connected. But ultimately, connected ecosystems give companies the ability to be more competitive, to differentiate, to be more defensible, to put clearer water between themselves and their competitors, as well as potentially more stickiness, so a greater bond and a greater loyalty to their consumers, their users or indeed, patients. So the benefits are very much about going beyond the connected product and service itself and looking more towards a fully data enabled connected paradigm.
[14:09] Elizabeth Wood: During our conversation, Richard shared his insights into transformation, from identifying the triggers that signal it’s time to make a change to what to do if you get stuck along the way.
[14:20] Richard Traherne: In today’s fast moving world, any organization has to consider its evolution continuously. And so I think few question the benefits of a breakthrough transformation itself. But many do see challenges in achieving that transformation. It is valuable to look for the triggers and signs that it’s the right time for your organization to transform. Some examples that we see are companies that see disruptive new entrants.
[14:51] Richard Traherne: A second trigger would be seeing your business or product beginning to lose relevance, and generally seeing that reduction in purchasing volume in use, engagement and general life around the market that you’re operating in. Or you know, you might see reductions in customer intimacy.
[15:18] Richard Traherne: And then, one interesting trigger is the realization that the importance of third-party partnership or third-party data is going to have a huge effect on your business and your future, but that you lack that in your portfolio. And this is particularly important in a disrupted environment where that third party may be a partner that you traditionally would not engage with or not have familiarity with.
[15:50] Richard Traherne: And finally, I’d probably cite the realization of a lack of a credible, effective sustainability strategy. Sustainability as a core practice is easy to talk about, difficult to do. And so realizing that you don’t have concrete steps to enable that means that it could be a great trigger for a connected ecosystem type approach.
[16:17] Richard Traherne: The development of effective breakthroughs in the connected ecosystem space is really tough. There are a variety of stages that an organization can get stuck. Initially, we see many companies struggling to identify or to articulate the business case or user experience that’s going to underpin their success. Even if that first step is done well, and organizations have a strong business case and concept to work with, they may struggle with the confluence of new disciplines that have to be brought to bear to implement successfully, which might range across user experience, deep technologies, and maybe a broad set of technologies, data analytics, sustainability, together with all of the strategic and advisory expertise that’s required to guide the development. And many of those disciplines can be new to organizations that are stepping into a new transformative world.
[17:24] Richard Traherne: And then even if the technological challenges are overcome, companies may be left with organizational and people challenges, So fundamentally moving a legacy organization and the mindsets within that to a new place. And that extends throughout the whole organization from the R&D side through the operational side through the financial side. Breaking down those challenges is a really important step because it’s very common within organizations for there to be strong boardroom discussions about an interest in pursuing a particular path or exploring a new type of technology. But at the same time a stasis caused by ultimately a lack of confidence in how to make progress and how to obtain that result.
[18:16] Richard Traherne: One of our greatest strengths is helping clients to demystify that stage, to take systematic and deterministic steps, using the methodologies that we employ, to gain confidence to take big bold steps. And that confidence is born out of bringing together key expertise that explore some key areas like viability, desirability, feasibility and sustainability concurrently. And so pushing the art of the possible in each of those areas and iterating, once success is found in each, towards evermore performance and impact in the market across that range of disciplines. So having those disciplines together, in our view, is absolutely crucial to breaking the deadlock and moving past that point of stasis and building confidence.
[19:19] Elizabeth Wood: To help ground these challenges in fundamental convergent design principles, as well as more sustainable, and often circular business models, we’re going to hear from Chiara Diana, Vice President, Chief Design Officer & Head of the Global Innovation Team at frog. She explains that it’s all about keeping a human-centered approach. Here’s Chiara now.
[19:39] Chiara Diana: We live in an incredible moment of transformation and acceleration. The way in which we can interface with the word surrounding us is supercharged by a completely new way of understanding humans and context that is enabled by new forms of sensing, new kinds of data that can be elicited, and new ways of interpreting those data from the world around us. The learnings coming from those new interpretations spanning across the physical and digital realities. So this journey that is fueled by data that is enabled by technologies, is actually what we define as the potential territory where Connected World could play. We see that there is a huge demand for organizations striving to capitalize on the power of data and the power of technology to create a long-term defensible competitive advantage.
[20:39] Chiara Diana: The promise of the Connected World has been out forever. But the realization of the value generating product and solution is honestly still very limited. There are lots of solutions that failed in the market, because they were creating unnecessary value propositions and unnecessary complexity for customers to enjoy the value that they’re getting in exchange.
[21:07] Chiara Diana: If you simply think about what has been happening in the connected lighting, probably 20 or 10 years ago, in order to get your smart home connected lighting system was costing thousands of euros for a performance that was now we will define average. Nowadays, you could have a plethora of different applications and bulbs, each one with their own connectivity systems and password that are requiring to be set in order, gosh just to get your light turned on and turned off. And then you start seeing those that can be integrated with your Alexa or google home so that you can start speaking in order to control them. And you have the IKEA applications that are just not requiring a password to be set. And so you see that the more those solutions are designed in a way that you don’t as a human feel the burden of the complexity of the ecosystem behind but truly just enjoy the pleasure of that interaction.
[22:14] Chiara Diana: The entire spectrum of design capabilities and design disciplines are mobilized in order to deliver on the full potential of the Connected World. And this is not about only discrete components that are combining and defining this ecosystem. But it’s really about the interplay of all of those, one supporting and complementing the other. And we call it convergent design.
[22:45] Chiara Diana: If we think about the role of design into these journey, we really think about different components of design the ability to understand how we can form the new sensing through physical products that are able to interpret the human behaviors, as well as the layer of services that could be enabled with digital experiences or service design around the data that is captured.
[23:12] Elizabeth Wood: Chiara shares how attention to human needs can help bring a newly connected world into focus.
[23:20] Chiara Diana: From private, to professional, from customers, to clients, to consumers, to employees, we have an opportunity through design in the context of Connected World to really augment and supercharge humans across all those aspects of their life. When we think about how we can set ourselves apart, how we can really become invaluable for the customer, it’s deeply rooted in understanding the customers in a very holistic way.
[23:53] Chiara Diana: It’s really about deeply, thoroughly understanding the users’ needs, behaviors, motivation, or barriers to do something and their aspirations, What sometimes we say are “the non Google-able insights.” And push it through these understanding the provocations that are enabling us to go beyond what exists today to ensure that we are anticipating what could be a wish by interpreting the seeds of a possible future. Then there is an aspect about cross disciplinary collaboration and experimentation that is enabling us to bring this understanding to complement drivers of change that comes from other spaces of potential, the transformation of technology, the transformation of software, the new potential in mechatronic and hardware engineering, and rapidly iterate in order to understand what is possible or what could be possible against the learnings that we got from the users.
[25:04] Chiara Diana: Delivering innovation into this space is complex as there are so many factors and capabilities that need to come together. And the journey to make them come together is still uncertain, because there’s not been walked by many before. So there is a necessity to embrace this dimension of uncertainty, as well as de-risking the journey to the potential impact of those solutions.
[25:34] Chiara Diana: Even in the design space, the ability to concurrently think about the ecosystem interplay, the various channels, the various touch points, the digital interfaces, and put them in service of the broader conversation with the value creation that we are enabling, or the novel engineering that can inspire new solutions to come to life, and how we can make all of those be designed and define in a way that is sustainable for the people for the business and for the planet in the long term.
[26:10] Chiara Diana: When we think about the impact that we aim to achieve, I think it is always multidimensional. How this is changing my life, how this is changing my society, for that to be executable, we need to ensure that there is an impact on the business—sometimes it could be revenue generation, elevation of operations to drive more efficiency or value to the business in terms of innovation capital.
[26:40] Chiara Diana: But I think that there is an additional dimension of impact, that more and more we can not, not consider from the start and have it embodied into our entire journey of innovation, which is the impact to the planet, this is reflected into the way in which we think about sustainability by design, in each one of the steps of our innovation journey, both as the products that we design ensuring that we pick the right material that we consider these assembling and all those kind of choices on the broader lifecycle of the product. And on the other side is really thinking about the definition of the product and the ecosystem to project, by default, more circular approaches to the way in which we think about the entire interaction with the product and service ecosystem.
[27:34] Elizabeth Wood: We’re going to take a short break. When we return, you’ll hear more from our experts on the evolving world of products and services.
[27:45] Elizabeth Wood: Hi, Elizabeth here again. Just interjecting to say if you’re interested in going deeper into the Connected World, be sure to download frog’s latest Chief Challenges report, ‘Making Connectivity Matter.’ Featuring insights from the experts featured in today’s show, this report outlines the rise of intelligence embedded into every facet of life. In it, you’ll find three key takeaways: how to find opportunity in our sustainable future, why it’s time to fuel insights with access to new data and what it takes to push boundaries with convergent collaboration. Check this episode’s show notes for a link to download ‘Making Connectivity Matter.’
[29:19] Elizabeth Wood: Now back to our show. Our next guest Heather Brundage is Senior Director, Strategy & Innovation of Synapse Product Development, part of Capgemini Invent. She’ll go deeper into examining that all-important connective tissue: data. Here’s Heather now to talk about going after the big goals might mean first understanding how to measure returns.
[28:40] Heather Brundage: One challenge that I see with innovative connected products and services is that there is a huge pot of gold at the end of the rainbow. Everybody, I think, can agree to the potential value of connected products and services. So when I see companies going for the big prize, the big pot of gold from the beginning, unfortunately, we’re all constrained by cashflow, by markets, by stresses of stakeholders wanting to see quick returns. When I’ve seen companies be successful is when they set up interim milestones and smaller steps along the way, where that the ROI is positive most steps of the journey and that those steps of the journey are smaller, bite-sized chunks.
[29:21] Heather Brundage: I’m loving the trends that I’m seeing and connected products and services have a renewed focus on what value am I delivering to my customers? More companies are now realizing that, hey, the data I collect, I also need to show to my customer, why it is valuable for them to collect that data. And when this is done, right, I call it this virtuous value cycle that can come out of that in that a company can have an agreement with their customer to say I’m customer, I’m going to collect this information. And let me be transparent about why I’m collecting it and what value is being delivered to you. So that customer says okay, sure, you can take my data. And the company then uses that data to create actionable insights and value that they deliver back to their customer.
[30:00] Heather Brundage: And over time, you can spiral up to an incredible amount of data exchange and incredible amount of value delivered both to your customer. And of course, realize then by you as a company. That value virtuous value cycle breaks, when that transparency breaks with the customer. It of course breaks if you have security breaches, and you expose their data in places that they did not agree to. And it can be so incredibly powerful to build you up from a one on one service to an entire ecosystem of value delivered. But it also takes time. It doesn’t just take time because the technology takes time to develop. It also takes time because that trust takes time to develop with your customers. And it takes time for you as a business to evolve in order to have the expertise of those data insight value delivery generation and be able to continue to operate sustainably to deliver that value.
[30:53] Heather Brundage: And so where that big ROI on connected products and services is jumping from the very bottom of that virtuous value cycle up to that top. You need to take it in each step of the way in order to kind of climb up that rung and build up that trust and with your customer, build up that experience within your company and build up those changes that will be necessary to deliver that new value. Because oftentimes the new value can unlock is in a drastically different place from maybe your core business. But if you have privileged access to information from your customers, to give you insights about things that they need in a different space, you’re uniquely situated to then deliver those needs.
[31:36] Heather Brundage: Data itself is not valuable. It’s what you do with that data. So the data can then be used and transformed to create insights that can then create value. There needs to be a skill around data, not only collection and storage and processing, but then we’re also talking about AI, we’re talking about how you’re then extracting value from that data. The entire connected product and service needs to really be architected at that ecosystem level, you need to think about that solution holistically before you get too down into the weeds of which processor are we going to use? Because which processor are we going to use on the device depends on, well, what compute is happening at the edge versus in the cloud or even connecting to the cloud? Is this going to be on premise? Or is this going to be connected to the internet? What’s the security need? How much data needs to be stored where? and what’s the cost of transmitting that data and storing that data? It’s a lot and thinking about it holistically, and then working down into the details leads to a lot more success.
[32:37] Elizabeth Wood: Innovation engineering is at the heart of connected products and services. Heather explains how innovation must always be deployed strategically and with a broad definition of value in mind.
[32:49] Heather Brundage: I would define innovation engineering as building something that’s never been done before. And oftentimes, we’re not even sure if it can be done. That’s what makes it innovative. Of course, anytime you build anything, it probably hasn’t been built before exactly the way that you’re about to make it. But in innovation engineering, we’re really pushing the boundaries of what’s possible. And when we’re pushing the boundaries of what’s possible, that means there’s a lot of risk involved. So innovation engineering is much more risky than sort of, “Hey, let’s build more of the same engineering,” which means that the process that as we approach it is different, fundamentally different. And that process includes having to focus on what are those biggest risks, and aggressively reducing those risks early and iterating.
[33:37] Heather Brundage: I think another area of innovation engineering that is overlooked some time or less exciting is I would say, innovating within a box. And I know a lot of folks they go out of the box thinking is super creative. Yes, and I find that when putting constraints on a problem, those constraints including Hey, does the customer want it? Hey, is it gonna make our company business? Hey, can we reduce that carbon impact? leads to incredibly creative solutions. When the box is open, if you’re not thinking about the box, you can come up with a solution. But it may not be a successful product or service at the end. And so by actually putting those constraints in place, and forcing your teams to innovate within those constraints, you can come up with incredibly valuable, incredibly creative solutions to really, really hard problems.
[34:39] Heather Brundage: If you’re building something that’s never been done before, it can be really tempting at times to try to make every single component of it also novel, whether that’s an amazing new user interface, or a really cool piece of technology.
I have seen clients fall into the trap of innovating for innovation’s sake, IP is exciting. And doing what’s hot and new can be exciting. But when you’re building an entire complex system, which any connected product and service is, it’s really critical to identify: where does innovation matter within this system? Where is there a novel problem to solve and focus that innovation energy in those key places?
[35:13] Heather Brundage: Taking that strategic lens, sometimes companies go to the other extreme. They want an innovative new product, and they want to buy it off the shelf. And that’s tricky, because if you can buy it off the shelf, and clearly it’s not innovative, it means that your competitors can also buy it off the shelf and offer it to their clients. And so innovation engineering is also that balance of identifying what parts are commodity, are not innovative, what components of the system can we reuse from what exists out there? And where is the standout?
[35:45] Heather Brundage: We’re not going to invent a new type of resistor if we can use a resistor off the shelf. We’re also not going to create new types of silicon if we don’t need to. And so it’s really about strategically deciding: What is the differentiator? And how do we enable that differentiation? And where can we get away with using things that are already available? And I would say, as a company thinking about, where are you trying to differentiate from your competitors? And what is going to be valuable for you to own moving forward? And so you need to find the just right—not too hot, not too cold—just right, for your company. And each company is going to be different based on the goals and the capabilities that you already have.
[36:25] Heather Brundage: When thinking about how to strategically apply emerging technology to your new products, whether that’s, “Hey, I’ve heard there’s a lot of hype around AI. How might I use that? Or should I be thinking about that?” Your focus should be more on: How can this technology unlock new user value? Or how can this technology unlock new value for your company? And not just oh, I want to throw it in. If you go back a few decades, and everyone people were kind of just slapping connectivity onto their product, and became jokes, because why would you need a connected blah, insert, toaster, hairbrush. Other silly thing here. And we’ve since seen some incredibly successful connected toasters are connected hairbrushes that found the right combination of value to their user value to their company. And we’ve also seen others fall very flat, whether that’s a juice maker that didn’t add extra value to their customer, or whether that was a smart mattress that wet the bed. You really need to focus not just technology for technology’s sake. But how can that technology enable you as a company to deliver value to your customers, to your own business in a way that is sustainable for the planet and also sustainable for you as a business to operate and continue to deliver value?
[37:51] Elizabeth Wood: Next up, we’re joined by Phil Vann, Vice President of Intelligent Products and Services at Capgemini Invent. With three decades of experience in this space, Phil has seen the transition from physical to connected products. And yet he shares that when it comes to creating true value with connectivity, the real work has just begun.
[38:10] Phil Vann: Connected products and services: firstly, the product part of it. We’re talking about physical products that you can touch and feel that contain at least the following prerequisites. It requires compute. It requires connectivity. And it requires software. That’s the core common denominator of what a connected product is.
[38:31] Phil Vann: I’ve lived through the mobile phone to smartphone era. I’ve lived through the Walkman to iPod era. I’m not saying I’ve seen it all. But I’ve certainly experienced as products have gone from physical and mechanical to smart and connected. Over the last sort of 20 years, we’ve been through a bit of an evolutionary cycle where there was a time when products needed to be functionally complete, they needed to be defect free, and those products once they reach that state, but then find their way into the market. That’s how things were done to 15, 20 years ago, very much a waterfall approach and defer defect free approach prior to launch. And then of course, we realized the limitations of that. And the opportunity that is present in being able to have what we’ve referred to as living products. And those products would be updated over their lifetime. You’d push out new software, at the very least, but ideally new new features, new services and those new features and services could present both beautiful experiences for the end users but also new additional monetizable solutions for the company pushing those out. If you get the balance right between rock solid software, and the ability to update over the air and push out new services, that I think is where the sweet spot exists.
[39:51] Phil Vann: You don’t want to over engineer a physical product because that adds cost that is maybe not utilized. Now, this changes that approach somewhat, because what we’re saying here is that if you can build in capability within your product that has a ten-year lifetime, assuming that there are going to be software and functional updates over that time, you need to prematurely build in material beyond what you need today. That’s a difficult thing to justify if you don’t have that long term vision. If your product is in the field for longer, and it’s still used, and you can push out new functionality, your install base grows, And a larger install base allows you to push out new products, but more importantly, new services. So you build up your incremental, unconventional revenue streams. It needs that to be designed in, engineered in, from the outset. And that’s in advance of committed revenue streams. So it needs a bold vision to realize that.
[40:49] Phil Vann: To create value from connected products, I like to think of it as an above the line and below the line value. And what I mean by that is below the line is products that are smart, intelligent, connected with a data exhaust allow companies to get insight about the usage of their product, or imminent failures of their products. And so there’s a lot of benefit internally within an organization that can be realized. That’s the below the line benefit, which is although there is incremental cost in bringing those products to market, there is internal operational efficiencies that can be achieved if you use the insight of use the data correctly.
[41:28] Phil Vann: Two is the opportunity that presents itself for new incremental services, or new ways of monetizing the existing products in the existing services. And I tend to categorize that into two buckets. One is new conventional revenues, so allowing them to address new sectors, new markets, for example. But it’s the unconventional revenues that are truly interesting here. So offering your product as a service. Opening up ecosystems that allow innovation to be created on top of those existing products. There’s a lot of value to multiple stakeholders around the data that is created from, from such devices. All the way through to potentially operating as a platform. So Platform-as-a-Service, think of Uber as a platformed Taxi provider. That’s where the value lies: above the line in terms of new incremental revenue that wasn’t achievable as a result of their legacy physical products, but significant below the line value in terms of operational improvements from the data exhaust.
[42:31] Elizabeth Wood: During our conversation, Phil shared why platforms and partnerships have become such important buzzwords.
[42:38] Phil Vann: That ecosystem of data, that ecosystem of insights, what is interesting in that whole topic is about who owns the ecosystem. And so a few examples, right, that we’re used to that we’re aware of, you’ve got Apple HomeKit, or Apple Health kit, you have Amazon Alexa. And as a result, manufacturers have the opportunity to connect their product into other ecosystems, third-party ecosystems. And of course, there’s a lot of value in doing so because we, as consumers, at least want to have that type of integrated system where you don’t have an app for each device that you’ve got within a home, that you can provide some sort of rule-based autonomy around what they do within your home. And that’s really only possible if you’ve got some sort of aggregation function around that. The risk I suppose to that for the device manufacturers that they lose access to, or they lose a control point to that ecosystem. And so there is this battle ground over who owns it, and who owns it also has the potential to monetize it. And therefore, you’ve got this battle between the aggregators and the ecosystems that exist there already. And those that innovative, forward thinking device manufacturers themselves want to achieve.
[43:56] Phil Vann: Platforms is probably one of the most overused, overloaded terms within our industry, it can mean everything. And it can be nothing. But it is important, whatever it is, it’s important in the delivery of connected products. And what I mean by being overloaded is that if you just think about our context here and connected products, platform can be used to describe a cloud platform provided by the hyperscalers, an IoT cloud platform, which provides services around a sort of traditional Cloud Platform. You’ve got embedded operating system platforms, think of Android as one example there. You’ve got hardware platforms from a lot of the semiconductor manufacturers that provide most of the building blocks of compute functionality that these devices need and more and therefore when when people talk about platforms, it’s important A to be specific about what it is we actually mean.
[44:53] Phil Vann: And then also, we use it in a commercial context as well to talk about platform business models as well, just to confuse the audience even further. What we’re seeing is the importance of each of these platforms, the component parts within that capability stack because they provide a lot of the non differentiating functionality. And that’s important here because there are a lot of competitors within industries looking to differentiate themselves, and often that differentiation isn’t achieved through recreating these platform components.
[45:28] Phil Vann: There’s an important consideration within the OEM community on what they choose to build and what they choose to partner or license from somebody else. And getting that decision right is…is not easy. Because if you just take the cloud platforms, there are multiple competing providers of cloud platform solutions with different pros and cons, different commercial models, different risks, different presence in different parts of the world. And therefore there is absolutely a component to evaluate what the right platform and ecosystem community should be that you need to realize your product portfolio. Once you’ve made that decision, then you can work out well what is the capability I truly need within my organization to be differentiating? How can I be differentiating with my product? With my service? As opposed to how do I replicate capability that might already exist?
[46:23] Phil Vann: And then lastly, probably not the last problem, but the last one I can think of is around the organizational transformation. And I’m not just talking about adding new capabilities here. It goes back to transforming the whole organization to react to what is needed. And so yes, your R&D organization needs to change. That’s a given. It needs to grow. It needs to evolve that’s built by decisions that take place there. You have changes to your HR organization in response to that, because they’re now looking for a whole different talent pool. They’re looking to attract a different type of candidate. They need to react. But more importantly, I think when you get into, you know, sales and marketing as an example, there’s a different value proposition. You’re selling a different way. It is often people that are incentivized a certain way going back to sell more of a certain device. And that is how you increase revenue and profitability. And now this is a different sales proposition.
[47:20] Elizabeth Wood: To round out our tour of the Connected World, here’s Jeff Hebert again—sharing insights into trends and what’s next in this space.
[47:29] Jeff Hebert: AI, and what we can achieve in terms of insight from data is getting more and more sophisticated and easier and easier to approach. That trend is exciting and interesting. But it also then leads to the trend in this connected product space, which is if you can create insight from data, then the real questions I think become, what question do you want to ask? And what data do you need to enable that insight? And so I think that what question to ask becomes this very important business and experience focused question and what data you need, becomes not only driven from that question, but also what’s possible? Can we digitize the information? Can we get access to the information that you need to create that insight? I think that that whole space is seeing a really significant trend and quite interesting.
[48:25] Jeff Hebert: Another big trend we’ve talked about is the focus on sustainability. And the fact that it’s moving from being perceived as a cost. And as an issue or a concern for companies to something that may actually be a way for them to differentiate, or wait for them to charge perhaps even more for a service that consumers are happy to respond to. So I think that there’s some exciting opportunity in that sustainability space as well.
[48:52] Jeff Hebert: So in terms of bringing connected products into the world, we have those upfront phases where we’re defining a vision of where the product should be focused. Well, how does it benefit the business? We’re coming up with a definition of the product and the ecosystem and in the services. What do they need to achieve? What are the specifications? What are the requirements? And then we’re coming up with how are we going to make that possible? What does the product need to do and what features need to be included? And what architecture is needed to enable them? Those phases require concurrent collaboration across those different areas.
[49:28] Jeff Hebert: And as we get into the later stages of development, there’s also a whole new area of focus that we need to be considering, which is, how do we actually achieve this at scale? When it comes to the physical product, we need to establish things like the supply chain. How do we assemble the product, test the product and ensure that what’s going into a consumer’s hands is reliable and safe? And then outside of the physical product space, we need to design the digital ecosystem for scale as well, and all of the work that needs to go with that. So it’s both from the physical and the digital perspective.
[50:07] Jeff Hebert: And then that includes the evolution going forward. Once we’ve launched this product, these smart connected products don’t end. We’re collecting information constantly. And if we’ve designed them right, we’ve enabled them to be upgraded with new firmware, with new software, with new applications and new services. And so we need to be listening to our customers and using the data we’re collecting to evolve those products as we go forward.
[50:36] Elizabeth Wood: That’s our show. The Design Mind frogcast was brought to you by frog, a leading global creative consultancy that is part of Capgemini Invent. Check today’s show notes for transcripts and more from our conversation. You’ll also find a link to download the full frog report ‘Making Connectivity Matter,’ featuring more from our experts. We really want to thank our guests from across frog and Capgemini Invent. That’s Jeff Hebert, Richard Traherne, Chiara Diana, Heather Brundage and Phil Vann, for sharing their insights on the future of connected product and service ecosystems.
[51:09] Elizabeth Wood: We also want to thank you, dear listener. If you like what you heard, tell your friends. Rate and review to help others find us on Apple Podcasts and Spotify . And be sure to follow us wherever you listen to podcasts. Find lots more to think about from our global frog team at frog.co/designmind. That’s frog.co. Follow frog on Twitter at @frogdesign and @frog_design on Instagram. And if you have any thoughts about the show, we’d love to hear from you. Reach out at frog.co/contact. Thanks for listening. Now go make your mark.