Design Mind frogcast Ep.42 - Shifting from Performance to Outcomes

On this episode of the Design Mind frogcast, we’re talking about future-proofing products and services to connect the dots between creating experiences people love and contributing toward a more regenerative future for people and planet.

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Episode Transcript:

Design Mind frogcast
Episode 42: Shifting from Performance to Outcomes
Guests:  Chiara Diana, Chief Design Officer, frog & Ruth Thomson, SVP, Global Consumer Business, Cambridge Consultants

[00:09] Elizabeth Wood: Welcome to the Design Mind frogcast. Each episode, we go behind the scenes to meet the people designing what’s next in the world of products, services and experiences, both here at frog and far, far outside the pond. I’m Elizabeth Wood.

[00:25] Elizabeth Wood: Today on our show, we’re talking about future-proofing products and services to connect the dots between creating experiences people love and contributing toward a more regenerative future for people and planet. Today’s guests, Chiara Diana, Chief Design Officer at frog and Ruth Thomson, Senior Vice President at Cambridge Consultants, will be taking us through five key challenges they’ve identified businesses face when creating transformation in a more Connected World. They first explored these challenges over the summer as part of the Cannes Lions festival with guests from Nestlé, L’Oréal and Mercedes-Benz among others. You can hear some of those discussions in our Cannes Lions bonus series from over the summer (Day 1, Day 2, Day 3, Day 4), available in the Design Mind frogcast feed anywhere you listen. But first, I’ll let our guests introduce themselves.

[01:15] Chiara Diana: I’m Chiara Diana, Chief Design Officer at frog. frog is the creative consultancy firm that is part of Capgemini Invent. And through frog, we help our clients to bring to market innovative solutions that are tailored around the needs of the customer in order to drive new value for the business, for the humans and for the planet.

[01:37] Ruth Thomson: Hi, I’m Ruth Thomson. I’m a commercial SVP leading Cambridge Consultant’s business globally across consumer industrial and energy markets. Cambridge Consultants is part of the family of companies within Capgemini Invent alongside frog. Particularly, at Cambridge Consultants, we focus on disruptive innovation enabled by deep technology, so where you can bring truly disruptive change with innovative technology and science.

[02:04] Elizabeth Wood: To set the scene, let’s first address what we’re talking about when we talk about the Connected World.

[02:10] Chiara Diana: Connected World for us is really a reality in which the humans, the human-built assets and the environment are connected one to another. And this is creating a platform for more informed, more efficient and more valuable interactions across all those parts for a broader collective benefit. This you might say is not new. Fifteen years ago, more or less, I would say, the concept of Internet of Things was born in a moment in which we started adding a lot of machines connected one to another. So the concept of a connected reality is not new at all, but it’s quite pervasive.

[02:46] Chiara Diana: We have a number of connected devices today, which is about double of the world’s population, and keeps increasing. Nevertheless, we have not been yet able to extract the value that is promised. The data that are generated from those connected artifacts remains for most of the cases untapped.

[03:07] Ruth Thomson: As Chiara says, I mean, this has been happening for a while. But you know, it’s becoming more and more pervasive, but why? You know, why now? I’d say there’s kind of three main reasons that are helping unlock this. Firstly, you know, the technology building blocks are available and extremely prevalent at very low cost now. If you think of things like kind of MEMS sensors, and the enablers for connectivity, these are now, you know, completely ubiquitous and available at very low cost.

[03:31] Ruth Thomson: A second point would be if you think about a connected ecosystem, you know, particularly for the consumer area, your phone is part of that system. And to most people that is effectively already there as part of the system. So you’ve got part of the system kind of for free in people’s pockets. So if you think about an enabler there and think about the additional cost, you’ve got part of the system there.

[03:51] Ruth Thomson: I think a third reason of why now is a consumer expectation. Connectivity is all around us, you know. Different sectors have adopted this at different stages. So for example, you know, sports and fitness has been doing this for really quite a long time. You know, the kind of whole movement of the quantitative self has been a pretty pervasive, so people are expecting to be able to track, monitor, understand. Even if you’re not in a B2C market, then your users are bringing expectations from their personal lives. And we’re seeing lots of different sectors adopting this over time. I’d say, you know, CPG sector is probably 10 years behind where sports and fitness are, but we’re seeing kind of them adopted, as well as into the healthcare and agricultural spaces.

[04:28] Chiara Diana: Yeah, and Ruth if I may add, I think that there is an additional factor, which is kind of changing the rules of the game into the space, which is a very different, a new consciousness on the scarcity of our resources—resources as humanity, resources as a planet. And this is both on the side of the environment, as well as on the side of the human resources. We hear all about SDG, Agenda 2023. Those are becoming guidelines for the governments and also for the organization to change the way in which they operate. So I truly believe that we are in a moment in which through more intelligent sensors, for example, you refer to agriculture, monitoring the soil, the plants, the weather, we can really build solutions that are optimizing the way in which we consume land, water or use pesticides.

[05:22] Chiara Diana: On the other side, if you think about remote patient monitoring, or digital augmented treatments, we’re really cutting the operational costs from the hospitals while providing more convenient care to the patients and better outcomes. Again, with less resources. So those are just two examples of how we can capitalize on the potential Connected World as a way to really design a more sustainable society for all of us.

[05:50] Elizabeth Wood: So if there’s such promise in using data and technology to contribute to more regenerative futures, what’s holding people back?

[05:57] Chiara Diana: Probably if we would have the answer, we would all be very rich. I would say that we know that this is an urgency because of the factors that we just mentioned. Almost 90% of the organization that we had the opportunity to speak with through the Capgemini Research Institute, they say that they plan to offer intelligent services in the next five years. And they expect this to be so massive that in many cases, more than half of the revenues are expected to come from this part of the portfolio. So this is a massive industry shift that is planned for the next five years really now.

[06:34] Chiara Diana: Nevertheless, despite this imperative, only few of those organizations have scaled those use cases, the majority of them are stuck at proof of concept. So this means that it is an easy concept, but it’s really difficult to realize those intelligence solutions on top of this Connected World that we say is a platform for making them real.

[06:55] Chiara Diana: So what we did in the last years as we brought our capabilities together, has been really to investigate. What are the struggles that our client face? And kept discussing those iteratively, more recently, during our frog week at the Cannes Lions, where we have some of the front runners such as Mercedes, Nestlé or L’Oreal, discussing with us: Where are their main struggles? Where do they face blockers in realizing the true value of this potential? So we identified kind of five, that we call them challenges. Those are representing what is preventing those organizations to realize value from those convergent portfolio. Sometimes those are very technical, sometimes are organizational, and sometimes even more cultural ones. So having those in clear sight, even just understanding that those challenges could emerge, is enabling us to put in place the right strategies to really unlock sustainable success.

[07:57] Elizabeth Wood: During our conversation, Chiara and Ruth identified five key challenges that are holding organizations back from realizing the Connected World. The first has to deal with a disconnect between what technology can do and what customers actually want technology to do.

[08:13] Chiara Diana: The first challenge is that tech excitement outpaces customer benefit. I would say it’s really easy to fall in love, us as individuals and us as an organization, with the latest technologies. But if you think of a technology or technology and a product are two very different things. So we have seen, we have seen in history, I was doing some research or preparing for this panel, looking back at 2015, we saw several companies heavily investing to incorporate those latest technologies into their business and facing big failure in the marke due to the lack of traction. I was scanning the 3D TVs. You might all remember them and actually no one ever bought them. or the Google Glasses, which probably were a little bit too early to be adopted. Or the case for QR codes that only really got traction when the context of the COVID pandemic really made the case for alternatives ways of interacting with product.

[09:12] Chiara Diana: So linking what is possible to what is valuable is one of the really core challenges of innovation if we sum it up. And this is even harder in the moment in which we want to play in territories that are new—when what you’re proposing is not something that you have a benchmark to measure against. So in those cases, it’s really hard to anticipate what success could be.

[09:37] Chiara Diana: And so we really need to take an opportunity to be rigorous in the way in which we think about our business case—really transparent on the assumptions that we’re using to feed the business case and really honest on the areas where we lack information. Because then we can be really obsessed and going deeper with our customers to fill the gap. Understanding behaviors, understanding needs, understanding drivers and barriers to change to adopt something that is new, are really important steps and that we need to put in this kind of due diligence at the beginning of an innovation process.

[10:15] Chiara Diana: Don’t fall in love with the idea at the beginning, iterate the product after you define an MVP and even validate alternative go-to-market options, alternative business model for a same solution. We really need to embrace all those openness and uncertainties and put them into the innovation process.

[10:35] Ruth Thomson: As Chiara says it’s very easy for people to get carried away with the technology. You know, there’s some exciting stuff out there. And there’s a lot of companies being pushed to, you know, embrace digital and connectivity. So we get clients coming to us saying you know, kind of help them create this digitally enabled product service. And my first question is always why? Why do you want to do this? Let’s first understand that value that you’re trying to deliver for yourselves as a business and kind of for the end users, the consumers or other stakeholders. And then let’s structure the value proposition and kind of the solution that we’re trying to build around that that underpinned by that why? The answer to the why is going to be different for the different categories for different brands, and for different types of products. So it’s really about understanding that pain point and opportunity area and keeping that understanding at the heart of the development.

[11:25] Elizabeth Wood: The next challenge addresses the new costs that come with innovation. Here’s Ruth to explain.

[11:31] Ruth Thomson: The second challenge is about how unexpected costs are going to erode your return on investment. I think as companies get into doing digital and connected products, I think it’s really important to acknowledge that this is gonna be different to maybe what you’ve done before. You know, particularly if we focus on a physical product company, you know, now embracing kind of digital and connectivity, this is going to be different, both in terms of technology and the development, you know, the supply chain, how you go to market. You’re going to need to have different metrics and different ways of acknowledging the ROI compared to some of your more traditional physical products–and you need to set expectations accordingly. This is going to be a big shift.

[12:10] Ruth Thomson: So let’s maybe think about some of the types of metrics you might use. So for example, at the start of the development, you know, CPGs, are used to launching a new SKU multiple times a year. There’s a very fast pace to innovation. And this can be still fast, but not as fast, particularly not at the beginning. So kind of managing expectations and setting KPIs for kind of understanding that this might be going to take longer.

[12:32] Ruth Thomson: Similarly, if you think maybe further along at the end of the development, thinking about maybe some of the costs that might be coming along, and some of the systems you need to set up in place to make sure that this launch is going to be successful in the market. For example, you know, maybe you’ve got a physical product as part of the connected ecosystem. So you’re going to obviously need to set up the physical supply chain to do this, but it’s going to be very different to your traditional products. You’re now dealing kind of with electronics and different forms of manufacturing. You’re also going to think about how to maintain that digital service ongoing. You’re going to need to have to think about customer support. You know, that’s going to be quite different for a connected product where someone’s calling up saying, “Oh, I can’t connect to my device” versus maybe asking for a return product of a physical device.

[13:14] Chiara Diana: Yeah, maybe as you’re teasing that, Ruth, I think it’s worth to put in clear sight that there is a cost associated to the organizational change, and bringing the organization to be something that is very different from the current today in order to deliver this radically new propositions within their portfolio.

[13:35] Chiara Diana: I think that there is an element when we think about return on investment, which is important to consider as we approach these individual innovations. There is the potential to scale connected solution across a broad portfolio instead of considering those as atomized and independent innovations. And this is enabling to, let’s say, distribute the cost of innovation across multiple assets, if we are able to plan in a kind of coordinated way. So remaining open to scale, remaining open to platform, to a new platform that could morph and become more flexible or remain more flexible, I think is an interesting element to consider in the moment in which decisions to invest are made. Now it’s not fully formed as a thinking. But I think that there is an element of interest in the idea of platform-zing those connected investments beyond the one single item in the portfolio.

[14:32] Ruth Thomson: Yep, you’d need to balance that with sorting out a full platform across a multinational company versus the ability to be able to experiment and kind of test isn’t it? So it’s how on earth do you get that balance? Right?

[14:44] Chiara Diana: Yeah, I think it’s an interesting tension together with the you know, experiment, go to market fast, learn and adjust to the definition of the full platform. What’s the balance that you need to find? That also depends probably from who you are as an organization and what your ambitions are in terms of the portfolio that you’re aiming to build.

[15:05] Ruth Thomson: Cause the initial cost is going to be higher the first time you do it, but you can think about care. So you can amortize that cost across the platform, if you could set that up effectively.

[15:16] Elizabeth Wood: We’re going to take a short break. When we return, Chiara and Ruth will share three more pitfalls that organizations can fall into when future-proofing their product and service strategies.

BREAK: 

[15:30] Jeff Hebert: Hi I’m Jeff Hebert, Global Head of Intelligent Products and Services, Intelligent Industry at Capgemini Invent, as well as president of Synapse Product Development and the lead author of frog’s latest Chief Challenges report ‘Making Connectivity Matter.’ Featuring insights by industry experts from across the Capgemini Invent family, including frog and Synapse, and with real world case studies, including Nestlé Purina and Volvo, this report breaks down the changing landscape of challenges and opportunities associated with creating connected products and services. Together, we explore the significant value that connectivity can bring and share perspectives on the ways businesses can successfully journey into increasingly intelligent offerings. Read the report to learn about building the connected products and services and ecosystems of tomorrow. Check this episode’s show notes for a link to download ‘Making Connectivity Matter.’

[16:27] Elizabeth Wood: Now back to Ruth Thomson, Senior Vice President at Cambridge Consultants and Chiara Diana, Chief Design Officer at frog. Next up, Chiara explains the third challenge of realizing connected transformation.

[16:41] Chiara Diana: The third challenge is that new business models are bringing way new complexities. I think that, in essence, making it very simple, selling products and operating services are two completely different businesses. Companies that are embracing data to evolve the portfolio that they currently have are making a big stretch, to what are their kind of conventions of operating and running as an organization, thinking as an organization. I think that at the core of this stretch, maybe I would list kind of three factors. But there are for sure, many more.

[17:17] Chiara Diana: So first, product and services have two very different cost structures and operational profiles. So traditional products, or maybe the main costs are in R&D, the production of the assets and then in the distribution. Services maybe require faster cycles of updates, especially when they are operated through digital, significant costs and the phase of operations—maybe a little bit less in this stage of R&D. On top of production, usually you have very different go-to-market challenges that have different logic. And so to match these which have costs, we have seen already a new wave of transition from, you know, traditional purchase to subscription models, that this is emerging as a best practice in order to compensate some of these recurring costs.

[18:05] Chiara Diana: The second factor is that we need a completely different set of competencies, and even a new workforce to deliver on the surface. Think about, I don’t know, you might have your truck that is connected in a fleet and you have advisory services on top of the data that are collected. So you need to have competencies in order to deliver this advice—partially it can be automated, partially it will need human support. So those competencies might be already core to the organization, maybe they are within R&D, and you need to move them to a client or customer-facing part of the organization, or you don’t have those capabilities. And this means that you could decide to grow them from inside, you could acquire them from the market, or you could even partner in a broader ecosystem, that though to create a win-win-win scenario, definitely that will have impact on the business case and the modeling of the cost.

[18:57] Chiara Diana: The third one, though, and I think that this is the more fascinating and probably more disruptive if we think about new business models is really the ability to create new models building on the data that are tracked and are interpreted. So really transforming the way in which we think of pricing solutions. Think of the shift from performance to outcomes. When we speak about features on demand, or product as a service, it’s a radical transformation of the way in which we think about selling. We are unlocking completely different relationships that a brand or organization will have with the customers and the users. These new business models that are so radically different, I think are challenging so much the traditional concept of product as a whole, that we probably don’t know exactly what are the best practices to execute on those. We are in a territory where maybe if you benchmark automotive has been testing features on demand, but it’s not fully scripted yet.

[20:01] Ruth Thomson: I think this overlaps with what we talked about earlier with the ROI. Because you need to think about the different way in which you’re making money, the different way in which you’re exploring this—maybe not thinking about it as a single product, maybe thinking as a platform. I think something you’ve touched on there, Chiara, is about kind of looking at the value of the data and kind of the insights that could be brought there. Because maybe that’s not just about kind of the value just to the consumer, but maybe, you know, you’re helping the brand, understand more about that consumers individual and as a population. How can you use that not only for that product, but for future products as you learn and develop and to be able to offer things?

[20:34] Ruth Thomson: I think we’re just at the beginning of exploring the value of data, that we do need to look at how that overlaps with different things within the ecosystem? What is this going to mean to work with ownership of data with the rise of Web 3.0? And what’s that going to mean? And think about, you know, how can brands maybe work together where they’ve previously been competitive? If you think of the future of a smart kitchen, I think it’s very unlikely that consumers are going to want to buy all of their kitchen appliances from the same brand, and how are these going to all interact together to be able to deliver a future connected kitchen experience? If Web 3.0 happens, the consumer is going to own the data.

[21:11] Chiara Diana: I think that what’s next is really the connected ecosystems. And the challenge is that in connected ecosystems, you are assuming that the consumers or users could flow across assets that are belonging to different brands and different organization in a position of ownership. But then what is the value exchange with the organization that are still trying to own and control the customer journey to make it an opportunity for locking them into their own assets, into their own ecosystem? Think of the strategy of Apple. Think of what Samsung is trying to do with their connected home. All of them today are playing on value-added services in order to drive and increase the attractiveness of their own ecosystem.

[21:56] Chiara Diana: But us as poor users, you have many different passwords. When you want to just watch the TV, you need to ensure that’s connected with your phone, and maybe you lost the remote control. So from a user perspective, that’s really unsustainable. And even from the value that we can generate from the data that will be much more massive in the moment in which those will cut across the privately owned different ecosystems. I think I was sharing with Ruth the other day, will we connect to our digital and augmented ecosystem with our government digital ID? I don’t know, maybe that’s going to be the future. Who knows?

[22:36] Elizabeth Wood: Challenge Four has to do with the operational and cultural impact of making change within an organization.

[22:44] Ruth Thomson: The fourth challenge is about how innovation clashes with organizational silos. I think this is a really important challenge. It’s extremely important to avoid silos. And the way in which traditional physical product companies have set themselves up for success are not necessarily the right way in which you need to go about doing some of these more connected experiences. So we’re talking about silos across the types of groups that need to bring a product to market. So across, you know, R&D, marketing, the brand people, IT, digital, the ongoing supply chain—so those organizational structures, but also even within R&D.

[23:18] Ruth Thomson: So let’s just think about the technology development for the moment and how that could be split up. I think a common mistake I’ve seen physical product companies make is when they’re thinking about a future physical digital ecosystem, they silo the physical hardware development separate to the digital development. I think this is a real recipe for disaster because you’re putting massively at risk creating a cohesive consumer experience by doing this.

[23:44] Ruth Thomson: You’re also risking that the system just isn’t going to work. For example, I saw a project where the Cloud team were building their system expecting that they were going to receive data from the physical device every few seconds. But separately, the hardware team were developing it thinking that it was going to be battery-powered and would be asleep most of the time and only sync every few hours. So the thing isn’t going to work, let alone think about the disaster that would be for the consumer experience. So you need to think about the whole development as an ecosystem.

[24:10] Ruth Thomson: I think lots of companies, particularly software-based companies, have had the role of a product manager, and that is increasingly being used in lots and lots of other industries. I think that’s a really good idea. There’s that single person who’s got the job to ensure that the vision and the essence of the product concept is delivered. They need to be working closely with a technical system architect. I’ve also seen a mistake that people think a project manager can pull together these different streams. And that’s a different skill set. you need a technical system architect to be able to pull this together.

[24:40] Ruth Thomson: I think another thing is, as companies start doing this, we often see maybe like an incubator, or like an X team is kind of created to be able to run some of these. This can help overcome some of these early hurdles of silos, because maybe you’re putting together people to be able to experiment and differentiate. It can help address some of the ROI issues we talked about earlier. That’s not a long-term solution. This will need to be integrated truly in the company. But I think it’s good for the short and medium term.

[25:08] Chiara Diana: We have been seeing that being refused by the organization when those spin offs tend to get back and be incorporated into the core business. So incubators could represent as you’re saying, a temporary accelerator for those new solutions to come. But if those are not coming together with the broader organization transformation, then the moment of going back will be clashing against the usual challenges. In fact, sometimes I would say, Ruth, I don’t know if you agree, that some of those very novel products that are quite on the side of the core portfolio have been spin off as new organizations to allow them to grow the capabilities around the shape of this incubator, and then run with some shared assets with another company but with the autonomy to be really set from scratch in the right shape for operating connected solutions.

[26:06] Chiara Diana: Maybe if I can add one point or complement, Ruth, what you are alighting, there are so many dependencies across digital and tech that can business model business model and, you know, go to market and even the design of the solution itself, that we need to work in quick iteration cycles. So to ensure that the changing assumptions are reflected across all the elements that are part of this interconnected ecosystem.

[26:31] Chiara Diana: Now, it’s a balance. Because on one side, we need to have all those people collaborating together. On the other side, each one of those streams have their own speed. Speed of developing a digital solution might be very different from the speed of developing new sensors. So we need to be, at the same time, embracing an iterative approach, while respecting that each one of the team needs to have their own autonomy to preserve the value that they can bring to the ultimate solution.

[26:59] Ruth Thomson: I recognize what you’re saying about the iterative approach. I think it’s important you’ve got those streams running. You know, it’s not just the consumer value and the design, is it? It’s not just the technology. It’s not just the business model and the business viability. They need to truly interact together. I think companies can make a mistake by running those three streams in parallel or people run them in sequence, which leads to lost money in time. Whereas if you can have them truly integrated and iterative together, that gets you the best result faster.

[27:29] Ruth Thomson: I think having everyone on the team, understanding the overall value that you’re trying to create, is really important. Because you could have, you know, for example, the technology kind of hardware team, you know, they’re focused on getting this PCB board working, and you know, these sensors lined up, whereas they’re going to do a far better job, if they can understand that overall value, and figure out how is that working across some of the other parts. I think it will help the people within their sections do their jobs better, and keep it focused. And then it’s that job with that overall person to kind of sew it all together, and keep that focus on the value at the heart of the development.

[28:08] Chiara Diana: I would agree. And I would add on top that having an understanding of the ultimate ambition is going to help people to stay motivated and actually overcome challenges that could be identified along the way because they look at the broader outcome and not just the best outcome for my specific stream.

[28:28] Chiara Diana: At the same time, I think it’s also important to have a preliminary understanding of the challenges that the other tracks will be facing to be respectful of the push backs. Iterations has a lot of push backs. And I think that you succeed in innovation if you’re able to navigate the compromises in the best way. And navigating compromises comes with a lot of humbleness for understanding or respecting the perspectives of others.

[28:59] Chiara Diana: If you think about what happened in the moment in which organizations embraced agile for digital development. So the first point was, okay, we need to make the tech team aware of what’s happening in the moment in which we define the product. And likewise, the business team and the experience team, they need to be aware of what are the implications in terms of tech architecture that are lying behind that will create constraints to what they need to design or realize in the future. So I think that first understanding that you need to have mutual exposure, even in the very early stages to who are the different teams and then the perspective that they bring to innovation has been a big learning there. And I think that now it’s about expanding that to a lot more different capabilities—though, again, with very different mechanics, timings, roles and expertise.

[29:52] Elizabeth Wood: The last challenge has to do with the human aspect of consumer behavior. frog founder Hartmut Esslinger once said that “form follows emotion.” Decades later, this remains true when designing connected products and services.

[30:06] Chiara Diana: The fifth challenge is that design lacks emotional value. Well, I will take it from maybe just a step back. So we mentioned several challenges. We spoke about aligning the organization, we spoke about identifying the right business model, making sure that there is a demand for where we want to play. But even if we get all of those correct, it’s not a given that value is cracked.

[30:31] Chiara Diana: There is an underlying complexity that we have been discussing in this conversation that could become overwhelming from a user perspective that is going to become too much of a barrier towards the adoption—even if, in theory, the value would be there.

[30:47] Chiara Diana: And this I think that we can feel it on our skins in our daily interaction. The reality of this kind of smart and connected solutions is that they are not smart at all for the users at the end. We are lost in passwords that we need to remember, we have the SIM cards to recharge, or even all the different subscriptions that you have to the various services that are making this system work. So the reality is that for turning on and off the lights, if you have a complex ecosystem around it, that you would go back to the traditional bulbs. We need to ensure the way in which we deliver those complex solutions always ensures that we keep the execution in first sight. We need to execute with elegance, we need to minimize the barriers for adoption. And this is about fulfilling the basic convenience needs, but also to engage more deeply with the emotional needs of the individuals that is enabling them to create these kinds of repetitive, deep and lasting engagements.

[31:52] Ruth Thomson: It’s that ongoing what are they trying to achieve, isn’t it? I think whether, you know, like you said about turning on the lights, people want to see, don’t they? If you could not have the light switch you would. You know, often hardware is a necessary evil. It is part of a physical ecosystem. How are you getting it to help that consumer achieve what it is they’re trying to achieve? If I think back to the early days of sports and fitness devices, if you think of the number of kind of failed companies across that time, think about the number of different wearable devices that ended up at the back of the drawer or going dusty. You know, what did they do wrong? I think with hindsight, we can look at it and go, you know, they were focused on selling the thing. Whereas actually, what the people wanted to achieve was that overall fitness goal. Some of the ones that were really great were where you could buy into this goal. There’s an emotional destination. So for example, “I’m going to train and get ready for this marathon. I’m gonna get ready to look good on the beach this summer.” You know, that is that overall kind of goal and emotional thing. It’s not about buying a thing.

[32:53] Chiara Diana: And I think, Ruth, this is super interesting, because it gets back to what we were saying, I think at the beginning of this conversation, which is a transition from selling for a specific performance of the product, or a feature of a product, to selling the outcome. But in the moment in which you make the shift from the feature to the outcome, the outcome, you realize is influenced by so many additional factors that are outside of the job to be done of this specific product. So this is requesting, and I think it’s a nice bridge to the where we see the evolution of this whole Connected World thing going, is an evolution from thinking of your own specific product performance, to how those products are part of interconnected ecosystems of physical, digital behavioral interventions that are actually helping humans to achieve this ultimate goal—to be the better self, to match with their own aspirations in life.

[33:52] Elizabeth Wood: During our conversation, Ruth and Chiara shared which challenges they think ultimately pose the biggest barriers.

[34:00] Ruth Thomson: I’d definitely say the danger of the silos. I think particularly because we’re seeing a lot of multinational companies, you know, some of them over 100 years old, they’ve got a lot of established ways of doing things. These physical product companies have optimized themselves to be able to, you know, pack, ship, deliver huge number of SKUs. And they have a lot of silos within it. They have a lot of traditional ways about doing physical product development. Now, they need to do it quite different. So I think from my experience, that has definitely been the biggest hurdle. I think, interestingly, when me and Chiara did the panel at Cannes along with Nestle and L’Oreal, they were also agreeing that that was the biggest hurdle within their organizations.

[34:35] Chiara Diana: I would echo that, I think, even reinforced by the voice of our interviewees in Cannes. Nevertheless, maybe, as we think about a few years ahead, in a scenario in which these intelligence solutions are commonplace and will become the norm, I think we need to keep in sight how we are going to differentiate. So the elements of sharp value propositions and how those are translating to the execution of the solution, I think will be a key factor to stand out.

[35:09] Elizabeth Wood: So, elements of this transformation have been in motion for some time. Then what’s next for the evolution of the Connected World?

[35:18] Chiara Diana: If we observe this transformation from product to intelligent product, intelligence services, the reality is that we’re switching the focus from just what one of these elements within an ecosystem is able to produce or deliver to what is the ultimate outcome that supported by data and guided by intelligence that you are as a user, as a customer, as an individual, as an organization able to achieve. There is a shift from looking at individual components within this ecosystem to being part of a larger one. I think that this is the shift that is still a struggle. This is the shift that we have to create the path for the future ahead.

[35:59] Chiara Diana: Today, we see that we are locked into very isolated, connected and intelligent ecosystems in which data are owned, interpreted and valued within very specific islands. But then the interconnection from one island to the other island is made by humans. It’s you re-logging into another system and re-copying the data that you have from the other ecosystem, just to share with your doctors what you collected on your Apple Watch. And this is just a very, very basic, basic example. Think when you’re starting to scale that at the level of large organization and even industry 4.0. So I think that this transformation towards connected ecosystems that nowadays come with huge challenges on ownership of the data, value within the business case. So it’s really massively unplotted, I think, is actually the future and where the future value lies.

[36:53] Ruth Thomson: I agree with what Chiara said. As we said at the beginning, you know, IoT has been around for a while. But there is still so much more that can be done. There’s still so many things that could just get stuck at proof of concept stage because of all the challenges we’ve talked about. And there’s so much more in how those individual products and services can be tied together in ecosystems like Chiara is talking about.

[37:14] Ruth Thomson: I’ve used the example of the smart kitchen. I think that’s quite a good one because with all the appliances that you have in your home, you don’t want to replace those that often. You’re very unlikely to buy those from a single brand. So how could you get those all working together?

[37:30] Ruth Thomson: I think traditional physical product companies as well are trying to kind of sell the whole thing. Whereas how do they work within, you know, an ecosystem? I think there’s an interesting example of where Henkel and Bosch have collaborated together. So Henkel really understands cleaning, you know, from their laundry business. They didn’t try and do a smart cleaning device. Instead, some of their algorithms for understanding how do you remove stains are present within some of the Bosch devices. I think that’s a really interesting way in which those companies have worked together. And maybe that will happen more in these future connected ecosystems.

[38:02] Chiara Diana: Maybe one point that I think is also fascinating to think of, as we, for example, reflect on the connected kitchen example, is that in the moment in which we start thinking about connected physical products, physical products, especially as you kind of move to larger scale, you have to accept the fact that they have longer life with consumers than the traditional digital products have. And so you cannot expect that you’re changing your refrigerator every two years as you might do with your Apple Watch, even if that’s already a little bit upsetting. So how do you plan for a connected ecosystem in the moment in which you have within those ecosystems, products that have belonged to very different innovation cycles or innovation ages?

[38:53] Chiara Diana: Think of our smart connected TV that we have in our apartments. Mine is probably old, 12 years. Still I can plug in a ps4 to see and watch Netflix, but it will not be as smart integrated to the rest of my connected home. So this idea of products that have different levels of intelligence according to the moment in which they were born, but are in reality part of ecosystems around the users. I think it’s a very fascinating one to address.

[39:22] Ruth Thomson: So Chiara has talked about the connected ecosystem, something that’s really important of how we think about kind of how do we tie different connected products and services together? I think even within how do we develop, you know, a single kind of connected product and service, we’ve talked about the challenges of silos and the importance of having the different groups linked together. I think we’ve touched on how it’s important that you have the desirability, the feasibility and the viability all running together. This can’t be a tech push. It also can’t just be, you know, a consumer vision without any enabling technology behind it. And neither of those are going to happen if someone’s not going to make any money. So these things need to all come together to be able to work.

[40:03] Ruth Thomson: We always say that you can’t run these things in parallel because they need to be truly integrated. We also say you can’t run them in series, because you’ll lose a load of time and money. So I think the best way of running connected product development and actually any product development, I think the best thing to do is to run desirability, feasibility, viability truly integrated together to get the best results for your business.

[40:28] Elizabeth Wood: Of course, in the face of an ongoing climate crisis, underpinning all of this innovation, there needs to be a deep focus on sustainability.

[40:37] Ruth Thomson: I think Connected World and connectivity, I see it as one of the potential tools in the toolbox for how do you address this. So it’s something you can use as we think about how do we address sustainability issues. You know, it could be part of how you think about how you design the whole system to helping drive circularity—to help people know how to do the right thing, to be able to help prompt and nudge people to be able to achieve that sustainability goal. I think that’s an important point.

[41:02] Ruth Thomson: Also, obviously, we’re talking here about creating new different products and services. So how do we develop those themselves in a sustainable way? So not just using the connected devices and products to help sustainability, but actually embedding sustainability principles in how we develop these new products and services. I think what Chiara was saying earlier about the modularity, you know, kind of some of these ecosystems, could also help. Because, how do we maybe upgrade things without having to replace and throw out everything could also be a third point.

[41:32] Chiara Diana: I think these upgradability, right, to repair, are all things that are core in the way in which we design, develop, implement, and go to market with connected products. But I think that we can expand that from looking at the one individual piece to look at portfolios. And so identify when you have the opportunity to convert features from different artifacts into one artifact in order to deliver more functionalities with less consumptions of energy and resources. So it’s scaling the concept of sustainable development and lifecycle assessment not just to the one individual connected something, but to the entire product set or portfolio that an organization might have. And this, I think, is probably less relevant to the consumer space, but I think that as you move on the industrial side, definitely there is a big consideration that could be made.

[42:35] Elizabeth Wood: Across all innovation, Chiara and Ruth share why it’s mission-critical to stay laser-focused on the human element of creating change.

[42:44] Chiara Diana: For me, I just want to emphasize what we said at the beginning about the role that connected products could play in our reality of a planet where resources are becoming more scarce and there is more awareness and desire to act on protecting those resources. I think that there is an aspect related to the environmental side. But we often undervalue the aspect about the scarcity of human resources: doctors, teachers. Think of all of them and how connected solutions could actually empower them to achieve better or with a better breadth their scope or their ambitions. I think that that’s massive, and it’s a very, very interesting angle.

[43:30] Ruth Thomson: Which I think helps highlight how much more there is that could be done. Different industries are adopting it at different rates. There’s more and more use cases emerging all the time. There’s the global challenges to address like Chiara’s mentioned. So I do think we’re just at the beginning. And there’s a lot more we can do.

[43:47] 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.

[43:59] Elizabeth Wood: We really want to thank our guests, Chiara Diana, Chief Design Officer at frog and Ruth Thomson, Senior Vice President at Cambridge Consultants. Check our show notes for a link to learn more about the Connected World at frog, plus a link to download our new Chief Challenges report ‘Making Connectivity Matter.’ You’ll also find a link to a summary of these challenges written by Chiara for Business Leader.

[44:23] 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.