Week 172

Igor is kicking off the Week Note season with a deep dive into a mobile payment lab that we helped start last year.

Some time in early September, we began a conversation about establishing a Mobile Payment Lab of some sort for a client with whom we had an ongoing relationship for roundabout three years now. In fact, we collaborated on the project with our friends from Edenspiekermann, who have been working for the same client since 2009. Our roles on this project have always been complimentary and I can’t imagine a smoother collaboration process with anybody out there.

Scope of the project

The task was both clear and complex: the goal was to provide an external setup for a strategic approach to finding and prototyping ideas for future features and products. The client is a technology company with a banking license and an established contender in the payment-processing field. They have also invested heavily into the field of mobile payment and been enjoying a good run in the market building mostly white-label solutions for various corporations around the globe with a focus on Europe and Asia.

Product development so far has been approached via market demand (i.e. clients asking for specific features) and a management team that has deep understanding of the field. What had been lacking was a comprehensive roadmap for how to explore future developments without waiting to react to an immediate client request. Basically, the goal was to be able to shape the market instead of only being shaped by it.

Labs are rarely successful and can’t operate as startups

People who know me well also know that I’m not necessarily a believer in the Lab idea. Both internal as well as external Labs usually have one major setup problem and that is lacking the ability to appropriately transform their work back into the larger organization. That doesn’t mean that the work in those labs can not be interesting or innovative. They often are. Even if corporations staff labs with internal people. Given the opportunity to break certain habits and working under different (not necessary more relaxed) conditions, people tend to produce very different results and that’s great. But if those results aren’t in any way usable to their colleagues who are busy churning away at the “normal stuff” which is also known as the thing that currently pays the bills, than all of the work that is being produced in a lab is usually fairly pointless.

Another down side of labs is the fact that they are usually handled as some sort of pet project by well funded members of the management board. That is to say that they are not necessarily strategic and often fairly political. By being used politically – labs require people, people equal money, money equals power – they become even less able to transfer their work into the rest of the company, because the kind of rivalry tends to make people less open about adopting the work of “the other guy”.

At the end of the day, the goal for whatever is created inside of those labs is to become a source of revenue for the whole organization. This is crucial. Otherwise the life expectancy of the new structure is minimal.

  • Generating creative ideas and building presentable and maybe even sharable prototypes can be fun. But more often than not it results in services and products that do not resemble in any way something that can be build and maintained by the company itself. The idea and the prototype are about 10, maybe 20 precent of the work.
  • In most corporations, the approach can rarely resemble the one of startups. I know, this is largely different from the advice that most people in my field will give. The real-politics of a modern day corporation will never allow for the kind of flexibility that the VC funded startup ecosystem can provide. I consider advice that ignores that fact as harmful, because it ignores one core principle of how the funding of startups works. While there are certainly exceptional funds that have a better success rate, usually 8 out of 10 startups fail. Meaning that only 20% of extremely well funded and nurtured ideas generate enough return on invest for the investors. It also helps that VCs don’t actually use their own money for taking larger bets. The same is just not possible for a corporation that attempts to find new sources of revenue. To allow 8 out of 10 ideas to fail, they would have to allocate too many resources and thus potentially harming the overall organization. The only way for corporations to part-take in this process is by creating their own fund and hire good talent that will manage the cash allocated to that fund wisely. This is being done by most blue-chip companies, but differs significantly from the lab structure.

The most important piece of the puzzle for setting up a lab is not how many or what resources will be allocated to it, but how the work will be transferred back into the organization. We have spent a significant amount of time on deliberating how to do this right. While I’d like to share more useful advice, this is as far as non-contextual insight will get you, unfortunately. Those kind of projects seem only on paper or in TED-like talks as something that can be adoptable by reading an article or applying one rigid framework. While learning as much as you can helps, this is all about the individuals involved, with whom they talk, who they go to lunch with, who there allies are and who their opponents. It probably helps more to play chess from time to time too.

Our role

Our role was both a strategic one – in which our knowledge of the client and the market came into play – as well as a product-oriented one. Together with the Edenspiekermann Service Design team, we found a way to work that was both feasible for us as well as the client.

We chose a short iteration cycle. We aimed for 4 weeks between new iterations and ended up on a 5 week cycle. One cycle consist of establishing the scope of inquiry aka defining the work. We should have started with a maximum of two different tasks. Instead we had four. Which was definitely a strain for the whole team, because it put us under more pressure than is good for morale and quality of the output. Mostly, it worked out fine, but we definitely are planing to change that piece of the process in the next round. That being said, pulling some longer evenings in which everyone churns away also brought the team closer together. Which is immensely valuable for Labs in general. While those are, as described, not startups, they do work similarly on an interpersonal relationship level.

While having a mainly strategic position, I oscillated between different roles heavily. At certain points, I felt a bit like a Creative Director, other times I was happy about deep dives into research, connecting the dots between previously read articles, designing print prototypes and having the excuse to buy a Little Printer in the process.

It is important to have clear roles in Labs, but it’s equally important for everybody to be part of everything. Small teams and narrowly defined exploratory missions do have the luxury of actually getting everybody’s input. That’s what they can excel at. We, thankfully, managed quite alright from the start.

At some point, I will have to share a few insights about payment and especially mobile payment. After being involved in this topic for almost three years continually, we accumulated a fair share of experience and good judgement about the industry and opportunities in the field. Both locally – Germany is always a special case for that –, but also internationally. As part of the ongoing project, I have been learning everything there is to learn about iBeacon as well as payment solutions in Africa.

Week 162 + 163

Igor reports back from two packed weeks, building labs, starting new projects with a focus on Brazil and buying a Little Printer.

Look, it’s a double feature again. Last week flew by without me realizing that I missed out on writing a week note.

Here we are, second half of November. Before soon, it will be Christmas and 2013 will feel like ancient history. I blame my early end-years attitude on our friends from MoreSleep / Freunde von Freunden who’s Christmas dinner we attended last Friday. It was fun. Great to see some familiar faces and a surprisingly large amount of new ones as well. Things are good.

Things are good at Third Wave as well. In fact, they are more than just good.

A project that we collaborated on with Edenspiekermann got green-lighted. We have been commissioned by a shared client to be their mobile payment laboratory. Based closely on the OODA loop, we developed a process that helps us tackle two major obstacles:

  1. Validity of the setup – Each cycle is only 4 to a maximum of 6 weeks long. After that the client gets to see our work which can formalize itself in form of a concept, a storyboard, prototypes or something entirely different. With every concluded cycle there is the option to adjust the process and change the team structure.
  2. One of my biggest issues with Labs in general, but especially ones that aren’t part of the corporate structure is that they by and large do not contribute to the company itself. That doesn’t mean that they do not create value. Often this value can not be utilized by the company who was paying the bills. To make sure that this is not the case here, we installed a solid protocol for measuring success.

As always, I regret not to be able to share more details on this project. It has been a great experience so far.

That being said, this lab reminded about work that BERG London has been doing all the way back in 2010. Which, unsurprisingly, triggered my urge to buy a Little Printer. So now we have lots of fun exploring what we can do with our new gadgets beside using it for the project itself. If you have a BERG Cloud account, have been developing things for it or just bought a Little Printer yourself, let us know.

Little Printer

That’s not the only new collaboration that we started. A new client – who, surprisingly, found us through googling – wants us to do some work on the topic of Concentrated solar power – Wikipedia, the free encyclopedia in Brazil. Since both our local knowledge as well as our Portuguese are limited, we found ourselves some help and are happy about having more people at the office.

On that note, have a coffee and enjoy a great week.

P.S.: There is a new coffee service on the block. Check out Kaffee bitte!.

Week 127

Igor joined a lunch with the top management of a German bank recently to provide some insights about mobile payment and customer-centric products.

When it comes to money – or more precisely – to spending money, we want to think about it as little as possible. Making a decision about what we want to buy is hard enough, we do not want to make decisions about how we want pay for it on top of it all.

This, somehow, seems to elude most banks, payment providers and basically everybody who is seeing a chance on earning a dime with all those transactions and credit card fees.

We have been involved in many different projects about mobile payment, loyalty programs and even couponing. It’s the wild west out there. Everybody wants to be in the money business all of a sudden. And for a reason. Technology, that’s the assumption by many, allows not-money-business actors to take a stab at that extremely lucrative, well guarded market.

And yet, the problems that many experience while attempting to enter the market are all the same: the insight is a wrong one. Last week, I attended a lunch with the top management of a big German bank. Or at least, it was a lunch for them. Them, being a very homogenous group of 10 men, had the chance to eat and ask me questions while I was busy trying to give them access to my thinking about finance with a focus on mobile. There was no time for eating, but I felt as if I made my vision of what I would be doing if I where them understood. Of course, the one question about the one thing that they should be doing emerged as well. The one answer that I could say without doubt was – and this brings us back to what I was said in the beginning of the post – is this: make the life of your customers easier.

The implications of this are big of course and apply not only to the finance sector. They are tide in closely with our general understanding of what we can help our clients with: offer products and services that people actually want to pay for.

Yet, especially the finance and payment sector has a lot of learning to do here. Money is part of our worlds infrastructure. At least in this particular version of our reality. Complacency, conservatism and the attempt to preserve what one has are incremental trade marks of any infrastructure operator. Sometimes with reason, most of the time without.

At this point, we feel as if we can create a significant contribution to this vital conversation and market. If you want us to elaborate on some of the ideas mentioned, please let us know.

What we read this week (25 Nov)

Payment isn’t the future of NFC, Facebook is ruining sharing, privacy online is hard (so here are a few pointers), the US are building a firewall and Amber Case shares her mind-blowing tech setup. Enjoy!

  • Why payment isn’t the future of NFC
    Janne Jalkanen knows a things or two about NFC. Before becoming the CTO of the up and coming Finnish startup Thinglink, he worked for Nokia and was there known as ‘The Godfather of NFC’. Here he muses about why mobile payment is by far not the most interesting way to use NFC and what he hopes for that will come out of this technology. (➟ Instapaper)
  • CNET: How Facebook is ruining sharing
    Molly Wood share a very good analysis of the new “frictionless” sharing mechanisms in Facebook. They might not be such a good idea after all, and it’s obvious already that they make us more hesitant to click on links inside the social network. (➟ Instapaper)
  • Facebook is Gaslighting the Web. We Can Fix It
    Anil Dash with a scathing analysis of Facebook’s content sharing policies: Facebook has moved from merely being a walled garden into openly attacking its users’ ability and willingness to navigate the rest of the web. The evidence that this is true even for sites which embrace Facebook technologies is overwhelming, and the net result is that Facebook is gaslighting users into believing that visiting the web is dangerous or threatening. (➟ Instapaper)
  • Debating Privacy in a Networked World for the WSJ
    Researcher Danah Boyd shares indepth insights into the way privacy works online, and gives pointers for companies to get it right. (➟ Instapaper)
  • NYTimes: Firewall Law Could Infringe on Free Speech
    Rebecca MacKinnon, founder of Global Voices, summarizes the damage the so-called Stop Online Piracy Act would have – a bill discussed in the US House of Representatives that would emulate China’s system of corporate “self-discipline,” making companies liable for users’ actions. The burden would be on the Web site operator to prove that the site was not being used for copyright infringement. The effect on user-generated sites like YouTube would be chilling. (➟ Instapaper)
  • The Setup of Amber Case
    True geeks that we are, we love to learn how our peers set up their technology infrastructure. UseThis asked UX Designer and Cyborg Anthropologist Amber Case about her tech setup, and it’s absolutely fascinating. Mind=blown. (➟ Instapaper)
  • HBR: The Question That Will Change Your Organization
    Polly Labarre with a great reminder why questions rule. (➟ Instapaper)
  • Everything is a service
    Service is kinda big these days, nothing new here. But Dave Gray of Dachis Group has written a big article, connecting a lot of dots and giving a great overview about the change in our economy. (➟ Instapaper)
  • HBR: What I Learned Building the Apple Store
    Ron Johnson, CEO of J.C. Penney and former senior VP for retail at Apple, about how you don’t need Apple products to be successful in retail. (➟ Instapaper)
  • On Systems and Strategy
    Clay Parker Jones, another brilliant mind at Undercurrent, “explores the features of adaptable systems and puts forward four key things that will help you design strategies that don’t suck.” He looks at a lot of real world systems and how their creators try to fail proof them (sometimes without success). (➟ Instapaper)
  • Luddite legacy
    Technology is now killing jobs faster than it’s creating new ones. And more and more, the machines don’t even need workers to operate them. The only way to create new jobs today is to go for the things that “make people human”. (➟ Instapaper)

Btw. we really like what Evernote has done with Clearly, a Chrome extension that, similar to Readability, allows you to read content on the web in a much more comfortable fashion. If you read the articles above in Chrome, we highly recommend using Clearly.