Brands are Built in the Next Release
Marc Andreessen wrote an amazing article in 2011 that shocked the business world where he said:
“In short. Software is eating the world.”
On one hand not much has changed since Marc penned these words a short 6 years ago; software still is eating the world. But on the other hand, EVERYTHING has changed. The development and proliferation of connected “hardware” has allowed the software that Marc wrote about more power in our daily lives. No longer are we constrained to connectivity through computers or the mobile devices in our pockets. Now we live in an IoT connected world where we’re faced with connected appliances, thermostats, watches, toilets, vehicles, just to name a few, giving software the power to make our lives more unified, measured, connected, and seamless. And with the massive developments in conversational tech, screens are becoming less important in our transactions. In today’s world, the hardware is becoming just as important as the software with one key distinction. The hardware is the point of transaction fulfillment.
This new world has created moments of disruption in many different industries where software empowered physical experiences are the new interaction model. Examples include Nest, Uber, Airbnb, Tesla and Sonos; all of which are changing the way that consumers interact with a particular service or vertical causing “disruption” in boardrooms around the world. This new reality in these everyday interaction moments with the new smart “hardware” grows with each software release, making the brand’s success determined on the software updates not so much the product or hardware updates. And the crazy thing about the brands that are doing it well, is they keep getting stronger release after release because of the product feedback loop built into these business models.
“This new reality in these everyday interaction moments with the new smart “hardware” grows with each software release, making the brand’s success determined on the software updates not so much the hardware form.”
Another amazing benefit of this hardware-meets-software world is slowly closing the feedback loop from product, service, experience, and communications giving the companies the power to craft and form a holistic experience with their consumers. As hardware comes “online,” companies can get real time information on product usage, consumer pain points, or defection, giving them massive power and insight into how to craft services or communicate to their consumers. It’s a world that we, as business leaders, aren’t used to.
Let’s look at Tesla. Technology in auto industry has long been a factor of the manufacturing process with technology decisions made 5-7 years in advance of a product launch. This means that once the vehicle finally hits the market the technology is already antiquated in the marketplace. Tesla saw that as a huge opportunity and turned their vehicles into mere hardware. The actual vehicle performance and promise is built off the software that powers it. For example, all the recent news surrounding Tesla’s autonomous driving isn’t dependent on launching a new “hardware” product, but it’s being implemented from software release to software release, where the software for autonomous driving is powering a current state hardware product. A dynamic shift in the way we look at cars.
Nest is another amazing example of a company embracing the hardware-meets-software economy. They took a traditional business model and shifted it where software subscription becomes the brand and service. The hardware simply being a delivery mechanism that powers their subscriptions, but without the hardware there would be not opportunity for their subscription models.
HARDWARE AT THE SPEED OF SOFTWARE
Not every industry is experiencing a digital transformation like this, but most are and at some level all will. The first step to understanding that this is happening and that there are some great examples to learn from. The next step is defining how your company and brand will react. Here are some lessons to learn from these case studies that could help direct you in your company’s transformation.
The consumer experience is the number one thing: The reason for the success of the case companies was they found a way to leverage the physical and the digital to create a compelling consumer experience. They have a deliberate and intentional strategy. They didn’t do it just because they could. Each business model was crafted with precision and care.
Take away, don’t add: Another consistent theme across these companies is they used technology and software to eliminate issues, barriers, decisions, and pain points of their consumers. They never added to the process, product, or service with technology, they only removed.
Break down silos: The hardest part for most established companies is the legacy systems, processes, and organizational structures that were built at a different time in digital evolution. To be successful in the hardware-meets-software world, there needs to be organizational reform to capitalize on software release timelines and what they mean to product, service, and communications.
Data / Unifying the Experience: I’ve always told my clients that in today’s world, each action that happens in the physical world, has a bit behind it that can be unified. Whether you should, that’s another question. But a key driver to the success of all case companies is the understanding and use of data.
“Brands are now built in the next release”
All in all, brands are now built in the next release. All products or services are now digital, regardless of whether or not the physical nature of them is digital in nature. No longer are we able to make a product and think that it will sell itself because that’s the way it’s always worked. We need to evolve and grow.
How is your brand approaching this new hardware-meets-software economy? What are your challenges?