How to fail less by Steve Blank

Learning that a start-up is actually the search for a business model rather than the perfect product or service is probably the most important lesson for any entrepreneur.

And here is a wonderful visual summary of Steve Blank’s  customer development methodology or the art of ‘how to fail… less’ in start-ups.

Posted in Innovation, start-up | Tagged , , | Leave a comment

Can the future of banking be found in the 1970s?

There were a lot of great things in the 70s, flares, discos, the Ford Capri, but the most interesting may be the humble leather wallet stuffed with cash. Now, obviously anything stuffed with cash is pretty good, but what’s really interesting is that an old wallet could show us the future of banking and payments.

Today less than a third of our spending is cash and over 89% of us are paid direct to bank accounts. Money for the majority is digital, we get paid and we make most of our payments electronically. We never see or touch most of our hard earned cash and the key feature of a modern wallet is how many plastic cards it can hold, with a few notes reserved for incidentals. We’ve become distanced and disconnected from our money but back in the 70s cash was king and the wallet was a surprisingly sophisticated money management tool.

In the 70s many would start the week with a fixed amount of cash in their wallet. Most payments came out of that single wallet and every payment provided instant, simple and intuitive feedback on the cash remaining, based on a quick glance at the thickness of remaining notes. So, when someone asked if you wanted to go to the disco, this was the 70s remember, you already had a pretty good idea if you could afford it or not. If it was a close run thing, you simply checked your wallet to get an accurate view. The beauty of a cash wallet is that every payment provides a subtle but constant reminder of how much money you have left.  When you’re connected to your money in this way then you always have the knowledge to make day to day spending decisions, which means that you’re truly in control.

Since the fab 70s the gradual move towards electronic payments has distanced us from our money. Today many day to day spending decisions are based on how much money we think we have and we all know the unpleasant experience of checking our balance to discover the gap between perception and reality.

Traditional electronic payments don’t provide instant feedback on the impacts of our spending, but as we move towards mobile money there is a fantastic opportunity to recreate the power of a cash wallet and much more besides. Today’s mobile banking has brought convenient account management to some but a digital smart wallet has the potential to transform the customers banking experience. Mobile banking is about payments, current and savings accounts, debit and credit card statements, etc. The smart wallet is about intuitive money management, providing control and transparency in the short and long term.

Imagine that every time you make a payment you get instant feedback on what you’ve just spent, how this compares to last week, and how this may impact future spending. When you pay for lunch you get a little reminder that, this week, you’ve spent more than expected and that may leave you short before pay day or impact your holiday plans. I now have the knowledge, and maybe tomorrow I’ll economise a little, or when someone asks do I want to go for a drink then I’ll decide to be good or I’ll go for it anyway but at least I won’t be so surprised at the end of the month. Maybe making a large purchase, like a new TV, might result in an offer to spread the payments over 6 months because next month the car insurance is due. Just like a cash wallet every payment is an opportunity to actively engage with your money, but with a much wider horizon and much deeper understanding of your needs and desires.

The smart wallet is a combination of spending history, mobile payments, scheduled payments, forecast spend, etc wrapped up in an intuitive service that is accessed from my mobile phone, tablet or internet depending on what I’m doing and where I am. The foundation is the move from cards to mobile payments – creating the channel for feedback and making every payment a real opportunity to engage and manage our money as we want.

This is more than exposing current banking services in mobile and adding a sprinkling of mobile payments. Digital money and electronic payments need to have the same level of visibility as cash in a wallet. The banks have an incredible resource in the spending history they already hold for all of us and this could be used to help each of us build an informed, dynamic view of our digital money. Analysing previous years would allow the bank to predict regular but occasional events, such as annual insurance premiums. Combined with scheduled payments and other regular spending the bank could offer a forecast of future spending which the customer could then tailor to their exact needs.  This forecast of planned and unplanned future spending would give the customer a view on their money not looking backwards but forwards, providing the knowledge to make day to day spending decisions. Building this kind of knowledge and feedback into everyday payments recreates the value and simplicity of a cash wallet, but rather than being limited to a week at a time I am now connected to my money today, tomorrow and into the future.

The smart wallet is about my bank helping me, rather than them, to manage my money by bringing digital money into the everyday real world, just like cash stuffed into a leather wallet in the 1970s.

movenbank's spending insight

movenbank’s spending insight

The good news is that although the 70s classic “2001: A space odyssey” may have been a little optimistic in its vision of the future the signs are looking good for the smart wallet. The first balance forecast services are starting to appear, with Simple banks ‘safe-to-spend’ monthly view and KeyBank’s recent launch of ‘mycontrol banking’ centred around the ‘mymoney forecast’ service. Movenbank may prove to be the first of the next generation. Their ‘Spend, Save, and Live’ service combines multiple accounts and credit cards to provide ‘the most complete insight into your spending’ with the aim of ‘helping you to learn more about your money and know how much you really spend so you can spend smarter and save more’. Exciting times, if these types of rich personal financial management services can be brought into the real world by making that intuitive link via the act of paying then we will be on the road to a truly smart wallet.

Posted in Innovation, mobile banking, mobile money, mobile payments | Tagged , , , | 2 Comments

DeltaWing – a lesson in innovation

Unless you’re a fan of the 24hr DeltaWingLe Mans motor race then you’ve probably never heard of the DeltaWing. That’s a great shame because it’s the most radical innovation in racing car design since, well, since motor racing began. More importantly the DeltaWing is a great lesson in innovation for us all.

By starting with the problem rather than the solution Ben Bowlby came up with a concept which completely rewrites the rule book for race car design. The DeltaWing is innovative from nose to tail, but as an example take a close look at the improbably narrow nose. It still has 2 front wheels, but they’re close together and each tyre is only 10cm wide. To put that in context, that’s roughly the same width as those on a venerable Citroën 2CV, or about half of your average road car. It looks like it shouldn’t work. Current wisdom says you need a wide track and wide tyres to corner quickly, but the DeltaWing does work and it can generate cornering forces about 8 times that of a typical road car. So, it must have big wings like an F1 car then, but the DeltaWing doesn’t, or as its name suggests it does but not in any way that you’ve seen before. It’s all about achieving the perfect balance of weight, grip, and aerodynamics with the result that you have a beautifully efficient and devastatingly quick race car. It’s one of the best examples of true innovation any where today. I could go on, but this video of Chris Harris driving the DeltaWing and Ben Bowlby explaining some of its magic does a much better job.

The DeltaWing shows us what can be achieved when we throw away the rule book and all preconceptions of what the solutions could be, and get down to understanding the real problem we’re trying to solve. This is the key to innovation, being able to let go of the solution long enough to make sure that you’re answering the right question. Most people approach a problem with an answer in mind, and then work hard to deliver the best possible version of that answer. But if we want to be truly innovative and ensure that we have the right solution then we need to follow a different approach – quite simply we need to stop problem solving and make sure we truly understand the problem and its context, so that we can ensure we are asking the right question. Tom Kelley in ‘The Art of Innovation’ defined the simple methodology used by IDEO, the world’s most successful product design company, in creating innovative products:

Understand the market, the client, the technology and the constraints

Observe real people in real-life situations

Visualise potential solutions and how people will use them

Evaluate and refine concepts using prototyping to find the optimum concept

Implement the concept by developing into a desirable, feasible, and commercial solution

Or as I like to think of it, Stop and make sure you know what the real question is, Think as a team to create innovative solutions to the problem, Design the solution and prove it on real people, Deliver by ensuring that the core principles and rational of the solution are understood by all.

Posted in Innovation | Tagged , , , , , | 1 Comment

What’s the point of the Apple iPad mini?

Apple makes beautiful things but while beauty can be only skin deep, you may need to dig a little deeper to understand the iPad mini. At first glance it’s easy to dismiss the mini based on specification and pricing as some kind of booboo by Apple. The small tablet space has become very competitive with consumers expecting a lot in a pocketable package for a low price. In this market the iPad mini is simply too big, too expensive and too slow for most people. Great design and the Apple brand will be enough to justify premium pricing for a few but dig a little deeper – the reasons expectations are so high from a small tablet is that most are being sold to underpin wider ecosystems, so margins are slim while specifications remain high. That means we now have some very good 7inch tablets at around £200, and lots more to come.  You might not have access to 400,000 apps but these tablets do everything that most people need, at a price were their willing to take a risk, and because of that they are flying off the shelves.

Apple on the other hand has built its success on making money on every element of the ecosystem, hardware, software, services, etc. The iPad mini demonstrates that Apple don’t see a need to change this anytime soon but they do need to protect their customers from the Amazon and Google invasion. One of Apples great strengths is selling more Apple to their existing customers, constantly building engagement and loyalty. Possibly the greatest risk to Apples’ success is when an existing customer steps out and tastes the forbidden fruit of another ecosystem, because at that moment the premium for being an Apple customer can seem a little too rich.

So, what is the point of the iPad mini if it is not designed to compete with Kindle HD or Nexus for the masses? It is for all those existing Apple iPhone customers who would like an iPad but cannot come to terms with £399 and just may consider being naughty with a Kindle HD or a Nexus at £200. Apple could have reduced the price of iPad2, but then the iPad4 would look too expensive. By introducing iPad mini, Apple is attempting to lower the entry point just enough to keep existing Apple customers from drifting into new ecosystems while not sacrificing their premium pricing.  With the iPad mini Apple is acknowledging how good the competition has become, but is continuing to fight on its own terms.

Posted in tablet | Leave a comment