Welcome to the summer newsletter of 2020. Here in San Francisco we’re still firmly in the grip of COVID-19, and it’s good to see how disciplined the locals are. As a result, COVID hasn’t made as many sick here as elsewhere. Please continue to be safe, everyone! Wear masks outside, avoid crowds, and wash your hands.
The first part of this edition continues the topic from the last newsletter, and identifies two additional marks of disruption:
#3: Innovator’s dilemma – if you’re not paying attention, you may not see disruption until it’s too late. TikTok fans recently proved this.
#4: Don’t automate, obliterate! Disruptive technologies open new opportunities by solving previously unsolvable problems. A recent retweet by a friend reminded me of this oldie-but-goldie statement by Michael Hammer (in HBR 07.1990)
In the second part of the newsletter, l talk about something completely different:
Amazon gave a reason for their purchase of self-driving car maker Zoox — and I don’t buy it! Read my opinion, and let me know yours.
Happy reading, and I truly hope that the next DIGIGRAM will catch you at better times (the exact same sentence that I wrote in the last newsletter, a sad fact)!
Till soon, Gert
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Marks of Disruption #3: You may not see disruptors until it is too late.
You simply cannot look away from potential competitors or disruptors.
This New York Times article made me listen up: A TikTok user uploaded a video asking others to order tickets for a Trump rally — but not to go. A few days later, the Trump campaign proudly boasted that over 1 million people had requested tickets. However, only 6,200 people actually ended up attending the rally.
The article reveals how TikTok users used this new medium to spread the word and motivate their friends to join the prank. The result was impressive – and the rally organizers never knew what was happening until it was too late. I foretold in the December 2019 Digigram that Tiktok is “… THE highly addictive platform for the quick mobile video candy that one of the most attractive consumer groups wants.”
The Tulsa incident shows that the masses of TikTok users have woken up — and mobilized (the potential: 1.5 billion downloads of the app globally). They’re using the technology and their power of the masses to take stances. As a result, they can disrupt causes or businesses that they don’t like.
As I said in December, TikTok is way more than just a selfie app for kids. Anyone managing a communications product, campaign, or brand today must consider TikTok, or else risk the kind of disruption that occurred in Tulsa. The same of course applies to other disruptive technologies, mediums, and trends, too.
Marks of Disruption #4: Don’t automate, obliterate!
Embrace disruptive technologies as opportunities, don’t consider them threats.
Salesforce’s Chief Digital Evangelist names three factors for a successful digital transformation:
- Create new processes (don’t just move the old ones to online/ mobile/ ERP/ cloud, etc.)
- Create new experiences (don’t just port the old flows to new web tools)
- Create new business models (don’t just outsource the invoicing to a payment portal).
And I’d add: Think beyond SaaS – because everyone is doing that one already.
What he’s saying is: Use new technologies to your advantage — or risk disruption from someone else who will.
Disruptive technologies are an opportunity to “reengineer” (as Michael Hammer said) your business to cater to newly emerging customer tastes and preferences. And be sure to make full use of the capabilities of new technologies: Don’t just improve what you already have – instead, obliterate the legacies and reinvent your business anew! With extreme customer centricity, focus on solving problems for your customers that nobody else has been able to, and, of course, with greater efficiency.
Many are skeptical of new technologies, such as AI, robotics, and Blockchain. Some fight them. Others think they can wait and see. But either way, you won’t win. Trust me – I was at Nokia when fun was made of Apple as “that fruit company from Cupertino,” and an executive commented on making foldable phones “over my dead body.” Who’s dead now?
Emotions and controversies aside, AI has incredible potential to automate routine tasks, such as analyzing MRIs, X-rays, quality control, and camera feeds. Humans should not have to spend their valuable time looking at 90% good pictures anymore, when AI can do this 24/7. Expensive, trained humans should spend their time making critical decisions on the dubious last 10% of the pictures. The same pattern, of course, applies to many other applications of AI, too.
Blockchain is an unfalsifiable database of both assets and transactions, and it can solve many unsolved problems. I find the built-in smart contract feature to have incredible potential. How does it work? Describe all the conditions of a contract, including the sequence of events that will lead to the fulfillment of the contract. As soon as the requirements are met, voilà, the payment is automatically released to the seller. No paper, no auditing, no invoicing, no waiting, no financing, no bank fees, no nada. Everything falls directly into place with full transparency. The same pattern can, of course, be applied to many transactions outside of contracts, too.
All of these examples are entirely non-controversial! No cryptocurrencies or black markets are involved; just tremendous and attractive business opportunities with global potential. Get on it. Or someone else might. The above three are only examples: Voice and AR/VR, for instance, are disruptive new user interfaces, and they’re ready for primetime, too.
I don’t buy it! The rationale Amazon gave for buying Zoox.
Amazon bought a self-driving car company. Zoox, the company that gave me my first-ever autonomous car ride (unforgettably impressive, though it wasn’t the wild ride shown here). Congratulations to the Zoox team — I’m very, very happy for you!
So why did Amazon buy Zoox? Amazon gave this rationale: “We’re acquiring Zoox to help bring their vision of ride-hailing to reality.” And further down in the press release: “Zoox is pioneering the future of ride-hailing by designing autonomous technology from the ground up with passengers front-of-mind.”
I don’t buy that Amazon would “help” to pioneer the future of ride-hailing by passengers. Amazon simply doesn’t strike me as a company that altruistically helps others achieve their visions. Furthermore, Amazon isn’t in the people-moving business, a space with already fierce competition, and lots of controversies. I don’t think they’d touch that business with a 10-foot pole.
However, Amazon’s own business is plagued by problems that could be solved by self-driving cars:
- Cost of last-mile deliveries: Amazon has traditionally used the U.S. Postal Service for many of their shipments. And President Trump has regularly attacked Amazon for paying what he perceives as too little for this service. Amazon could stop using the postal services altogether by creating its own fleet of autonomous, last-mile delivery vehicles.
- Labor disputes: Are Amazon drivers self-employed entrepreneurs or employees disguised as gig workers? Self-driving delivery vehicles need fewer drivers and don’t incur social costs and are never employees. Amazon could save money and avoid an Uber-like labor dispute.
- Round-the-clock deliveries: Self-driving vehicles never tire and happily work 24 hours. Amazon could deploy the technology in trucks for the long-distance shuttles between logistics centers, plus small and low-speed vehicles for door-to-door deliveries in neighborhoods, and more.
With self-driving delivery vehicles, Amazon could increase their service level while saving money on employee-related costs. Both benefits are very near and dear to the Amazon DNA.
But creating a robot taxi fleet that ferries people around? Nah, I don’t think so.
If Amazon didn’t buy Zoox to create taxis, why then?
My prediction is that Amazon will create autonomous, round-the-clock deliveries; initially, only for Amazon customers, then, for other delivery businesses, too. Amazon will apply the same playbook that has worked so well for them in the past:
- First, employ new technology for your own business to increase service levels and lower cost
- Next, use the Amazon volumes to perfect the technology
- Create an unfair advantage in the process
- Finally, productize it and offer it to everybody else
I predict that over time other companies will create autonomous ride hailing or package delivery services with self-driving vehicles based on Zoox’s technology. But not Amazon.
So watch out logistics businesses:
And self-driving car makers:
And taxi and delivery companies:
Amazon is coming for all of you, and they have lots of time. And lots of money. Watch out!
Top of the Month
The recent startup course “Deplastifying the Planet,” that I taught at UC Berkeley. Super-motivated students motivated me. And the results were impressive — our best team won 3rd place overall at the university’s startup competition, out of over 100 projects. Congratulations to “Upcycle” for beating out so many other teams with an environmental project. You can read about their journey here. I’d like to thank the project sponsors Method and Whole Foods, and my endlessly resourceful co-lecturer Mathieu Aguesse. Schoolab San Francisco is running the course for the third time this fall semester – let me know if you’re interested, and I’ll be happy to connect you.
Flop of the month
COVID. NO. NEED. TO. SAY. MORE. NO. CHANGE.