Our guests: Andrea Sutton, VP Design Technology, AT&T and Timothy Morey, Global Managing Director, frog

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Design Mind frogcast Ep. 25 – DesignOps at Scale

On this episode, we talk about the role of design in bringing large, complex organizations into the future. To do this, we feature a conversation between Andrea Sutton, VP Design Technology at American telco giant <a href="https://www.att.com/" target="_blank" rel="noopener">AT&amp;T</a> and Tim Morey, Global Managing Director at frog. Andrea and Tim are two leaders merging creative instinct and business strategy to deliver the next generation of products, services and experiences. Hear their candid discussion on scaling <a href="https://www.frog.co/designmind/designops-its-in-our-dna" target="_blank" rel="noopener">DesignOps</a> in a massive organization, leading creative teams and insights from their careers in design, business and consulting.
Listen to the podcast episode and find transcripts below. You can also find us on <a href="https://podcasts.apple.com/us/podcast/design-mind-frogcast/id1541644073" target="_blank" rel="noopener">Apple Podcasts</a>, <a href="https://open.spotify.com/show/5mxbuRY6KtBwIrNhWhu0sx" target="_blank" rel="noopener">Spotify</a> and anywhere you listen to podcasts.

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Timothy Morey

Elizabeth Wood

Audio Production by

Authors

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Rebuilding Retail in a Post-COVID World 

Global lockdowns and restrictions due to COVID-19 have certainly affected every corner of our lives—from the way we work and live to how we access our basic necessities. While online retail was already on the rise before the pandemic, restrictions on in-person activities have only forced the needle on customer expectations when it comes to digital experiences. Still, the question for many companies remains: What does retail look like in a post-COVID world?
In a new report based on original research gathered through interviews with experts across the US, Japan and China, we uncover why online-merged-with-offline (OMO) strategies will be crucial to rebuilding retail in the coming months and years, and what brands can do to build and maintain trust with their customers.
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<h2 style="padding-left: 40px;">&#8220;In order for OMO experiences to be successful, they require a critical ingredient that is often in short supply among today’s consumers: trust.”</h2>
Only the most innovative companies will manage to fully realize compelling and seamlessly integrated physical and digital experiences throughout the customer journey. Dive in with our team of strategists and designers to explore the four key ingredients to successful OMO strategies, and discover three concepts that employ frog&#8217;s unique approach to <a href="https://www.frog.co/designmind/real-transformation-and-disruption-takes-convergent-design" target="_blank" rel="noopener">convergent design</a>.
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Authors
Timothy Morey, Global VP of Strategy 
Belén García, Associate Strategy Director 
Raquel Kalil, Visual Designer 
Shining Li, Senior Strategist 
Ion Nedelcu, General Manager

"Rebuilding Retail in a Post-COVID World"

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What CXOs in industrial and manufacturing companies need to know about investing in design as a way to increase productivity, safety and better overall employee engagement 


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The Changing Face of Design for B2B Companies

When asked to think of design-forward companies, people typically think of consumer-facing businesses in the tech, retail, financial services and perhaps automotive sectors. The design industry perpetuates this image by celebrating consumer gadgets and digital products from well-known consumer brands. But in reality, much of the action has moved into the B2B sector, with some of the most interesting design challenges of the last decade being tackled by and for industrial, manufacturing and technology companies.  
As a global strategy and design firm, frog has been part of this revolution in B2B design. Today, B2B projects make up around half of frog’s work. Our designers, technologists and strategists have worked on everything from mining safety products to global logistics systems to IT security equipment, and we want to share some patterns we see across these initiatives. 
Dealing with omniscience 
While consumer IoT has basically <a href="https://www.frog.co/designmind/dumb-things-smart-homes-do" target="_blank" rel="noopener">been a bust</a>, connected environments have transformed the ability of manufacturing firms to understand both their factory production processes and how their products are used “in the wild.” By installing sensors on factory floors, oil wells, power plants, airplane engines, ships, trucks, or any other machine, firms can generate rich data that they can use to monitor, manage, maintain and control equipment.  The challenge, however, is making sense of it all. 
Following the design practices established by the IT world, many people’s first instinct when dealing with mountains of data is to surface it all in dashboards. But in our experience, this approach tends to overwhelm operators and produce a lot of interesting-but-not-useful data snapshots. A better approach is to build data visualizations that reduce the cognitive load of the operator while enhancing their ability to rapidly make decisions.  In several frog programs, “speed to decision making” has been the metric we optimize for when designing sophisticated B2B management tools.  
Safety and productivity, not aesthetics 
Digital tools built by designers look great, but industrial and manufacturing firms don’t invest in design for aesthetics—they invest in design to increase employee productivity while keeping everyone safe. We’ve learned that the same design-thinking methodologies we use on consumer products can be leveraged to develop insights that lead to safer, more productive physical/digital processes and workflows in industrial settings. For example, one project required us to design safety equipment and a control system for a manufacturing environment in which the consequences would be dire if things went wrong. That meant the tools and software needed to be designed in such a way that the next step is always clear, even in stressful emergency situations. The erroneous Hawaii ballistic missile attack warning of 2018 and the Three Mile Island accident of 1979 have both been blamed, at least partially, on bad software design.  
A factor that compounds this design challenge is that employee roles can be rather fluid in many industrial environments. For example, a team of frogs conducting ethnographic research in a power station found that when the system “trips,” roles and titles become moot as everyone works together to solve the issue. This stands in contrast to consumer or office environments, in which there are defined user roles (e.g., administrator and user) and we create software to meet the needs of each role. Industrial software design requires the design team to gain a much deeper understanding of the relevant workflows and then design for scenarios rather than designing for user roles.     
Pleasing boomers and millennials 
Many companies in the industrial and manufacturing sectors have an aging workforce. Older workers have a lot of knowledge about specific tools, plants and systems, so companies want to hold on to them for as long as possible. At the same time, those companies are hiring digital natives who expect industrial and enterprise software to look, feel and act like top-of-the-line consumer apps. This can create a challenging conflict of design interests.
frog’s work with one technology equipment provider exemplifies this challenge. While their technology was very profitable, it was also very old. By today’s standards, its console-and-command-line user interface was far from optimal. New users were put off by the tool’s old school look and feel, and wanted a visual management console as well as mobile app. Power users who had spent years with the system, however, were familiar with the interface, effective at managing it and—like most people—reluctant to change. Our design challenge was to create a system that felt familiar to the power users, but also accessible and appealing to new users. This is a common challenge in operational technology systems, which tend to have 15-20 year product lifecycles, compared to the typical 3-5 years we see in IT.   
Design systems 
A common entry point for industrial and manufacturing companies looking to compete on design is to establish a design language. A design language distills design principles, aesthetics, interaction patterns and design assets into a system that helps ensure consistency across diverse and complex product ecosystems. The design language is normally supported by a UI toolkit that embodies those principles and patterns for engineering teams responsible for the development and release of products. 
While these tools give product teams a tremendous head start in the product realization process, they often fall short of delivering long-term value. Platforms and languages fall out of fashion, and vendor lock-in can make a company captive to a roadmap they have little control over. Having designed and implemented many design language systems, we realized that what they often lack is resiliency and a deeper connection to the rest of the product development lifecycle. As we considered the long-term needs of industrial and manufacturing companies, we looked for ways in which design can be truly embedded into a business.
For firms seeking a more resilient and long-term investment in design, a design system rather than a design language is the solution. A design system is a more comprehensive array of tools, components and workflows that actively unifies business concerns with design processes. The design system acts as the single source of truth for product design and provides a workflow backed by modular tooling that integrates design directly into the product development lifecycle. Design systems are often comprised of design tooling, a design language, UX technology architecture and systems, a UI toolkit, a governance model that allows the business to scale in a controlled way, and task management tools that make it real from day to day. The human element is critical here—finding ways to encourage, motivate and cajole various product teams to use the design system. Carrots are more effective than sticks, and in some industrial companies we have seen communities of design-minded engineers and product managers coalesce around a design system.  The modular nature of the system and its continual measurement and improvement allow the business to make changes as required instead of locking themselves into a specific platform vendor.
Once adopted, a design system provides a suite of products that feels consistent, unifies common patterns in order to lower user training costs, and delivers a user experience that is branded and unique to the company. 
Design can play a critical role in making industrial, manufacturing and technology firms more competitive. As machines and systems become more sophisticated and IoT connectivity produces dataflows that are hard for operators to digest, thoughtfully designed software will not only increase operator safety and productivity, but become a competitive differentiator. All companies are becoming software makers, which means they need to adopt current software design and development methodologies to remain competitive.  At frog, we find some of our most interesting data visualization and software design challenges with our B2B clients, and we welcome the opportunity to push the boundaries of our craft in meaningful ways with industrial and manufacturing clients.

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Sonny King

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Digital Transformation in Professional Services Firms


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Designing for Professional Services

Why Aren’t Knowledge Workers More Productive?  

Knowledge-intensive sectors such as <a href="https://go.frog.co/en/digital-transformation-needs-design" target="_blank" rel="noopener">finance</a>, insurance, and professional services are some of the most digitized, yet their real productivity growth has been anemic or even negative over the past two decades. Why?
One reason is that they are going about digital transformation in the wrong way. Many digital transformation initiatives over-index on “digital” and forget the “transformation.” For example, a frog client and financial services executive described one of their firm’s paper-driven processes that was undergoing digitalization. The discussion quickly moved to which cloud-based system would make the best host for various data capture forms, and how it should be linked to their existing systems. But more fundamental questions were overlooked: What is the purpose of the process and of the data being captured? How does it meet the needs of the bank’s customers? Could those needs be met in better ways? This type of strategic thinking and questioning is the essence of real digital transformation.
At frog, a strategy and design consultancy, we have worked with leading management consulting firms, systems integrators, advertising agencies, recruiting/talent management firms and global audit/tax services firms to craft more strategic digital transformations. Our work has focused on three broad areas: internal tools, knowledge management design, and employee experience design. Below are some general patterns and lessons that we’ve drawn from our work with these clients.
Internal Tools 
Until 2010, it was rare for companies to invest in designing good internal tools. The general attitude of business leaders was that their employees are getting paid to work, so they should put up with whatever tools the company provided to them. When funding was provided for high-quality design talent, it was typically reserved for public facing software (think SAP, Microsoft, etc.) rather than internal tools. This is, of course, short-sighted. Well-designed software makes knowledge workers more productive, increases the accuracy of their work, and increases employee satisfaction and fulfillment, which is critical to employee retention. These factors impact the profitability of professional services firms, where people are their main cost and only asset.
In the past decade, we have seen a dramatic change in this thinking. As part of digital transformation initiatives, the larger professional services firms are investing in thoughtfully designed internal tools. Back when we started designing internal tools, user expectations were low. We made recruiters at a talent management firm more consistent in their evaluations and faster at candidate placement by developing highly visual tools that were rolled out globally. We even received love notes from accountants at a major accounting firm after overhauling their audit tool suite!
Today, employee expectations at professional services firms are rightly higher, but the business case for investing in good tools remains the same. It’s all about productivity and profit, with the added bonus of greater employee satisfaction.
Knowledge Management Design 
Professional services firms have a linear scaling problem: If you win more accounting, advertising, recruiting or consulting work, you need to add more employees. Almost all professional services firms are looking for “non-linear” revenue opportunities to get out of this rut. But failing that elusive quest, the next best approach is to make your most valuable asset–your people– more productive. Enter knowledge management.
One way to make employees more efficient is enabling them to find information, methodologies and case studies from other projects more quickly. Process-oriented firms (“hire us because we have done this dozens of times before”) are most able to codify their employees’ project work into replicable best practices, while brains-oriented firms (“hire us because we are clever and will work this out”) are the least capable of repeatable processes. But even here there are opportunities to share research findings to help engagement teams find short-cuts. We find two common challenges in knowledge management design: tools and process.
The first challenge is that knowledge management tools lack adequate search tools and capabilities. This is significant because the precise framework, factoid or piece of analysis that might help a team is usually locked inside presentations and spreadsheets. To work well, search needs to be technically sophisticated enough to search within documents, but user-friendly enough that the results can be filtered and easily digested.
Even greater challenges arise when poor knowledge management processes are embedded in a firm’s culture. In some firms, knowledge workers hoard knowledge rather than submit it to the system, or they sanitize content (with the good intention of protecting client confidentiality) to such an extent that the assets they submit are vague to the point of being useless. It is often unclear whose responsibility it is to collect, curate and contribute to a knowledge platform, and employees rarely have an incentive to do so. Even in very large firms, the true knowledge management system is a network of people (“go ask Lisa, she knows about that client”) rather than a tool.
We have learned that successful knowledge management requires tools tailored to the company culture, coupled with an investment in organization and process design. The rollout needs to be thoughtfully curated, and it should over-index on training and cultural change, rather than simply training employees on the tool itself. Carrots work better than sticks, and technology tools alone won’t cut it.
Designing a Great Employee Experience 
Almost all organizations talk about the importance of their employees. In competitive talent markets, employee satisfaction is critical to recruiting and employee retention. But in professional services firms, people are truly the only asset they have. In the short run, a professional services firm can rely on its brand reputation and history to win new work, but once a project starts, the firm is only as good as its most recent result. That’s why talent management and design thinking for employee satisfaction is critical to professional services firms.
At frog, we have seen an uptick in what we’re calling employee experience design. We think of this work alongside customer experience design, but for employees. For example, one major auditing firm hired frog to design an employee experience that helped them to recruit and retain employees who value culture and personal growth over a paycheck. Using organizational and employee research, we defined key moments in the “employee journey” and designed new tools and experiences to double down on the moments that matter.
In large companies it can be hard to find the right people with the right knowledge for a project or task, or to find a project that leverages the talents of employees with special skills. Well designed Talent management systems can address these challenges. A global advertising agency hired frog to design an intuitive people directory and intranet that allows employees to find case studies and best practices, connect with peers globally and take action by launching new programs and initiatives. The resulting “centers of passion” brought together employees across disparate geographies and functions in a grassroots and organic way. Similarly, a global systems integrator hired frog to design a talent exchange, an internal marketplace for the firm to source independent experts for its projects. It simplified the legal and contracting process while lowering talent search costs. The systems integrator opened this platform to its clients, turning an internal tool into a revenue generating service.
The final aspect of employee experience is career management. Many professional services firms find it hard to evaluate their employees fairly and provide performance feedback because employees work on a series of different projects with different engagement leaders over the course of a year. This makes performance management burdensome for managers and frustrating for employees. One management consulting firm hired frog to concept, create, test and launch a feedback application for smartphones, paired with a browser-based talent hub to consolidate that feedback. The new system gave employees timely and project-specific feedback for personal growth, while reducing the time spent by managers on performance evaluations by 60 percent in its first year of operation.
Upshot 
People hate change. Even good change. We all pay lip service to the wonders of innovation, but we like what we know, and we aren’t keen to learn new tricks. Knowledge workers in professional services firms are no exception to this general human characteristic. Indeed, knowledge workers tend to be clever and loosely managed, making it hard to force them to do anything.
This is why the tools of design are helpful in successful digital transformation of professional services firms. Only by focusing on the employee experience, researching the real job to be done, and questioning why a process exists in the first place can we truly transform a professional services business. In contrast, technology-first approaches tend to succeed in mere digitalization but fail to achieve transformation, often needing to be papered over with wide-scale change management initiatives, adding time and cost. That’s why many leading consulting and auditing firms have invested in design thinking for productivity and employee satisfaction, a more strategic and successful approach to digital transformation.

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Considering Henry Ford’s 'Faster Horse' quote in the age of human-centered product delivery 

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When to Listen to Your Customers

I was recently presenting to a senior executive at an enterprise software company on research we had conducted with potential buyers of his product, when he brought up the well-worn (<a href="https://hbr.org/2011/08/henry-ford-never-said-the-fast" target="_blank" rel="noopener">but likely untrue</a>) quote from Henry Ford: “If I had asked my customers what they wanted, they would have said a faster horse.” Whether innovation is best when tech-driven, customer-insight-driven or genius-driven is a perennial debate, in which I conclude the right answer is all of the above. But I do want to address the “faster horse” comment because it is based on a logical fallacy.
The first mistake is to assume that consumer research is asking customers what they want. It’s not.  In my two decades as a product strategist and product manager, I have definitively proved that you can’t ask customers what they want and hope to get breakthrough product ideas. If you ask customers about existing categories of products and services, they will typically give you the specs of the industry&#8217;s &#8220;best-in-class&#8221; product at that moment, which you likely already know through competitive analysis and product teardowns. And if you ask people about new product categories that they haven’t yet experienced (think home robots or space travel), they tend to revert to metaphors from science fiction. What customers can explain is how they do things today, or what problems they solve with which tools, and where they struggle. With observational design research you can spot things that customers themselves are unaware of.  So while you can’t outsource the hard work of dreaming up new products and services to your customers—that’s your job—you can use what they tell you as meaningful input to create that ground-breaking new product or service.
Which brings me back to that “faster horse.” If the Ford team had asked and received this feedback, any good product manager trained in human-centered design would find quite a bit to work with. The customer didn’t say they wanted a more comfortable horse, or a larger horse to carry the whole family, or a more intelligent horse that could get to its destination without a rider. No, they wanted a faster horse. A good follow-on question would be whether it’s really a faster horse they want, or a horse with greater endurance that can go farther without resting, getting to the final destination sooner. Raw speed or range at speed? And so on. Ford and his car making team would have been able to prioritize their feature development based on that feedback, which could have led to even more dynamic outcomes around fuel efficiency, speed and overall design.
The fact of the matter is that by circumventing customer feedback, many companies are really just sprinting toward what ends up being a <a href="https://go.frog.co/en-us/product-delivery-versus-product-discovery-0" target="_blank" rel="noopener">failed product</a>. Consider <a href="https://www.fastcompany.com/90517971/exclusive-segway-the-most-hyped-invention-since-the-macintosh-to-end-production" target="_blank" rel="noopener">Segway</a>, which recently stopped production having sold just 140,000 units over its entire 20 year life. Its failure shows that a market-changing product only takes off if it actually solves some unmet need for the people who are going to use it, ideally at a price point that matches the problem, with a learning curve that the customer finds worthwhile.
So, the next time you’re evaluating an innovative new technology, novel design or elegant strategy, take the time to understand your customers and how it might fit into their lives. Human-centered design doesn’t mean asking your customers what they want, it means ensuring that what you make fits into their lives. Taking the time to conduct customer research might just increase your chances of success.

Sprinting Toward a Failed Product: How to avoid the pitfalls of product delivery through product discovery

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To survive in today’s competitive retail environment, companies must focus on one aspect of the customer journey to differentiate with unique new experiences. It’s all about finding that magic moment—not attempting to own the entire journey.

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Retail’s Magic Moment

But the advent of online and mobile shopping, coupled with social media has changed the traditional shopping journey so that it is no longer linear. We can jump around the journey, join and leave at mid points, or bypass entire steps.  For instance, while shopping on Amazon, we can be inspired at the checkout (in the moment of purchase) by recommendations for complementary products to go with the items in our baskets, sending us back to the start of a new purchase journey.  Or while checking into a flight on the United Airlines, we might circumvent considering options for getting to the airport, such as using a taxi, ridesharing, or driving ourselves by using the embedded “Order Uber” button in their check-in app. Indeed, a complete stranger’s negative review on TripAdvisor may change our planning process or derail a hotel booking entirely.

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<h2>Moving Beyond A Linear Journey</h2>
The traditional customer journey for retail has been a predominantly linear one, starting with the inspiration or desire to buy, and concluding with a consumer living with the purchased product.
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In light of the changing landscape and evolving customer needs and expectations, companies are now doubling down on specific moments of the shopping journey, choosing to differentiate themselves on that step. For example, Amazon was early to optimize and ultimately own the “Buy” moment of the customer journey by famously patenting its one-click ordering system allowing consumers to buy without going through a digital shopping cart. It was all about convenience, speed and efficiency, optimizing the experience for shoppers who want to get in and out as quickly as they can. 

This was a major game-changer as early as 1999, but in the decades since, we’ve seen shopper archetypes expand beyond the buyer who simply knows what they want and wants to get it as quickly as possible. We have seen retailers and CPG companies succeeding in a world of Amazon by focusing a different moment in the retail journey in order to offer a memorable, differentiated, competitive customer experience. Let’s break down the customer journey and look at how retailers can optimize each stage.

Perhaps one of the most saturated points on the journey, many companies are working to capitalize on social media and influencer culture by owning the moment of inspiration.  <a href="https://www.houzz.com/">Houzz</a> does this well, crowdsourcing inspiring photos of interior designs and monetizing that inspiration by linking to third party firms that sell furnishings, fittings and services. Retailers who curate towards specific lifestyles, from <a href="https://uncrate.com/">Uncrate</a> to Bonobos are also striving to optimize on the inspire portion of the journey, selling products and services within the context of their customer’s lifestyle or through social media platforms like Instagram.

Inspire

Marketers have historically focused on getting their brands into the consideration sets of consumers with a need or desire. Creativity and money is poured into advertising to make a product or brand top of mind. The trouble is that most consumers have very little time to think about the many brands vying for their attention. In many so called “low involvement” categories, consumers really don’t care which product or brand they use and are happy to switch. Tools like <a href="https://www.amazon.com/b?node=17729534011&amp;ie=UTF8&amp;ref_=snk_ddb_ftue_lm">Amazon Dash</a> buttons or <a href="https://www.amazon.com/Subscribe-Save/b?ie=UTF8&amp;node=5856181011">Amazon subscribe &amp; save</a> attempt to cash in on this lack of interest by taking the thinking out of re-ordering, thereby preventing other brands from being considered. Companies like Progressive are competing on the same insight in a very different way, by trying to push out competitors in the consideration moment with their <a href="https://www.progressive.com/auto/discounts/compare-car-insurance-rates/">price comparison tool</a>. The proliferation of options to meet a need, coupled with the accessibility of information through search engines such as Google and Baidu is eroding loyalty, opening doors to compete in the moment that consumers consider their options.

Consider

This stage was another fairly early entrant in online and mobile retail. Travel sites such as Expedia and <a href="https://www.hipmunk.com/">Hipmunk</a>, as well as more recent entrants such as <a href="https://www.google.com/flights">Google Travel</a> have found ways to monetize the research phase of the purchasing journey. Other comparison shopping sites have since surfaced in retails areas from clothing to cars. These sites are optimized for the plan moment of the journey, positioning themselves as the helpful guide in what can often seem like the endless options now available in the world of online retail—so much so that many would not even think of buying something without consulting one of these sites.

Plan & Research

This stage is one that has up until recently been rather neglected in the transition from in-store to online retail. What has emerged is a new class of white-label brands that offer non-sexy items like mattresses, toothbrushes or razors, in well-packaged and branded experiences. Mattress seller <a href="https://casper.com/">Casper</a> competes for this moment, delighting shoppers with the unboxing experience to such an extent that there are thousands of YouTube videos of people opening the unfeasibly small Casper mattress box and watching the mattress take shape. Premium and luxury product makers have struggled with the receive moment of ecommerce because it removes the in-store experience or the fancy 5th Avenue address. Net-a-Porter has capitalized on this hole in the luxury ecommerce market by creating a same-day delivery service that arrives right to your door in an oversized luxe shopping bag, rather than a brown cardboard box. And in China, JD.com has taken this idea one step further with their <a href="https://www.newyorker.com/magazine/2018/07/23/how-e-commerce-is-transforming-rural-china">premium delivery service</a> for luxury goods, where even the drivers are part of the experience, outfitted in tailor made business suits.

Receive

Product makers have always thought about how their customers will live with their product, and have optimized for it. After all, a company’s reputation will live or die by how their products perform. But some firms are doubling down on maintaining a relationship with customers beyond the transaction. Patagonia offers <a href="https://www.patagonia.com/returns.html">repair services</a> for its clothing as an effort to minimize their environmental footprint while maintaining relationships with customers.  Connected products offer opportunities to enhance the ownership experience.  For example, phones, computers and cars receive “over the air” upgrades to their software, often enhancing the product long after it was purchases. Another example of a firm doing this well is smart speaker maker <a href="https://www.sonos.com/en-us/home">Sonos</a>, who historically ensured that all of its speakers were “backwards compatible” with new software tools they brought out, ensuring that their customer’s investments in speakers are protected.
Companies looking to differentiate themselves in retail should start by selecting one or two steps in the customer journey to focus on, and ideate around ways to offer unique experiences in those moments.  Figuring out where to compete, and how this fits with your brand, is fundamentally a creative question, and one that the tools of design are well suited to address. At frog, we often address this as part of <a href="https://www.frog.co/services/customer-experience-design/">customer experience design</a> projects, not only thinking through new products and services but also how those fit into a wider system of customer engagement.

Live

Finding Your Magic Moment

Tim Morey leads a global team of business and product strategists who work alongside frog designers and technologists to bring game changing innovations to market. He has worked in Silicon Valley for 15 years in a variety of product, strategy and marketing roles. <a href="http://twitter.com/timothymorey" target="_blank" rel="noopener">@timothymorey</a>

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Consumer adoption of AVs is the next big hurdle for those in the Automotive industry. What lessons can we learn from other emerging catagories?

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The Road to Autonomous Vehicle Adoption

As autonomous vehicles (AVs) become increasingly more viable, product and service designers, marketers and entrepreneurs need to find new ways of lowering the barriers to mass adoption in order to reach commercial success. While the products are vastly different, there are lessons to be learned from the emerging cannabis market in how the autonomous mobility industry can reach new audiences and bring commercial concepts to market.

<h2>Operating Within Highly Regulated Markets</h2>
When safety is genuinely at stake, regulation is appropriate and necessary. But it’s important to understand that regulation exists on a continuum: on one end you have more solid, fact based regulations, and on the other you have more changeable, societal opinion-based rules. Both AVs and cannabis are highly regulated industries with a wide range of variation across states. This span of regulation is largely affected by public opinion, as regulators and politicians tend to codify the widely held beliefs of their constituents into laws and regulations for their states. For instance, in 1990 during widespread anti-drug campaigns by the Reagan administration, the number of Americans who thought cannabis should be illegal reached <a href="http://www.pewresearch.org/fact-tank/2018/01/05/americans-support-marijuana-legalization/" target="_blank" rel="noopener">81 percent. </a>Today, as perspectives are shifting towards the medical and wellness benefits of cannabis, that number has dropped to 37 percent. As a result, we’ve seen prohibition rapidly lifting state by state.
The span of AV regulation also varies widely from state to state. As AV makers, startups and OEMs look to enter the competitive autonomous mobility market, they may be able to learn from the expansion of the cannabis industry and actively work to shift public perception in favor of AVs, which will ultimately foster a positive regulatory environment.
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<h2>The Psychology Of Acceptance</h2>
Acceptance is hard work. In general, people are resistant to new ideas and innovations. It takes effort to learn a new product and we all worry about looking silly if we can’t figure out how to use it. So, if something’s intimidating, it seems safer to stick to what you know.
One way to get consumers to try new things is to anchor that experience in something they are familiar with today. Companies can achieve this with the right brand messaging. When digital video recorders (DVRs) were first launched by TIVO in the late 1990s, the use case they promoted was “pause live TV.” In today’s world of on-demand content, pausing live TV is an utterly trivial use case, but at the time, it was not only a novel idea, but one that people could relate to enough to give DVRs a try.
At this moment of vast innovation occurring in the autonomous mobility market, it’s up to industry players to shape new value propositions in ways that will boost acceptance. It’s not enough to introduce a driverless car, consumers need compelling reasons to try driverless cars.
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<h2>Granting Permission For New Use Cases</h2>
Aside from educating the public on new use cases, many people feel the need for permission to try new products or technology, especially ones that are seen as a bit naughty, indulgent–or in the case of AVs–a bit dangerous. People need to feel that this new product or service is safe and acceptable for people like them. In a recent <a href="https://www.frog.co/designmind/crossing-the-cannabis-chasm" target="_blank" rel="noopener">study on Americans’ attitudes to cannabis</a> conducted at frog, we found that the strongest indicator of approval for cannabis consumption was whether the respondent knew someone who consumed cannabis. Likewise with AVs, consumers need to feel that the technology is safe and acceptable to buy, own and use. Already, public opinion is warming to the idea of riding in driverless cars, but the overall perception is still being formulated, as the majority of the public has not had much first-hand exposure to such vehicles.
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<h2>Defining The “New Normal”</h2>
Another challenge for AVs, like cannabis, is that we don’t yet have established social norms around the product. In our study on attitudes towards cannabis we found that while 67 percent of people find it very acceptable to consume cannabis to treat a medical condition, just 21 percent find it acceptable to consume cannabis to relax with co-workers. In the case of AVs, it may see like riding in a driverless car is no different than the current state of driving yourself of or being picked up by a Lyft or Uber. But there will be some new boundaries we need to address with social norms. For example, is it acceptable to send an fully autonomous vehicle to drop kindergarteners off at school by themselves? What about middle school students? Is it rude to send an AV to pick up a loved one from the airport? Consumers need cues and guidance on all of these new conditions, which means AV makers and sellers have an opportunity to create new rituals for customers to adopt. Just as the diamond industry convinced us to spend 15 percent of our income on engagement rings, the auto industry will be able to guide the market on new rituals for adopting AVs.
By being deliberate about the new customer experiences and rituals they want to create, the automotive industry can accelerate adoption and reduce the fear that many people have around new technology. Much of it will come down to designing experiences around the target consumer–experiences that may even be outside the realm of what’s now considered the norm.
By challenging our perceived assumptions around mobility, we may be able to open up new areas of value and opportunity for AVs. Just as many cannabis startups have found ways to rebrand the product for wider audiences, AV makers may begin to move away from traditional OEM models. Perhaps through concepts such as <a href="https://go.frog.co/en/the_unexpected_future_of_autonomous_mobility" target="_blank" rel="noopener">Mobility as an Amenity</a>, which utilizes AVs for branded shuttle services for hotels or restaurants, or as perks in office or apartment complexes.
With barriers to adoption lowered, the industry has a chance to reach its maximum potential.

Tim leads a global team of business and product strategists who work alongside frog designers and technologists to bring game changing innovations to market. He has worked in Silicon Valley for 15 years in a variety of product, strategy and marketing roles.

Why management consulting firms are getting into design.

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Strategy as a Creative Act II: The Limits to Management Consulting

Management consulting firms have been adopting the mantle of design in recent years. Even venerable strategy firms like McKinsey are talking about customer journey mapping and customer experience design. And some design consultancies have been applying their design toolkits to strategic business questions for many years.
When I first joined frog in 2009 as a strategist, I recall being rather surprised that Fortune 500 firms would take fundamental strategy questions such as “Where should we play?” or “How should we compete?” to a design firm. This has now become the norm, and the boundary between management consulting and design consulting seems increasingly fuzzy because both types of firms are tackling the same questions for the same clients, and appear to be adopting each other’s techniques. However, beneath the surface, there is a profound difference in how the two types of firm tackle these questions, and that difference matters because it changes the outcome.
The traditional toolkit of strategy is analytical; business schools teach strategists to ground their thinking on data. Management consultants educated in this way begin strategy projects with an “as-is” analysis, digging deep into the world to better understand it. This might consist of an industry analysis to understand market dynamics, a value chain and profit pool analysis to see where value is being created and captured, and competitive analysis to better understand the direct and indirect competition in a given market. Management consultants review customer data, seeking to understand spending patterns, needs, wants and behaviors, and use those insights to segment the market into more attractive and less attractive customer groups.
Having done this analysis, and gained an understanding of the world as it is today, management consultants then look for opportunities for their clients to compete. Red oceans or blue, the idea is to analyze your way from the “as-is” state to a “to-be” state. It is a rigorous, deductive, analytical process where every recommendation strives to be defensible with data uncovered during the initial investigations. It also betrays an underlying mental model that sees the world largely as a fixed canvas or map within which territory to compete exists and must be found.
Designers do not see the world as a fixed canvas. They are an optimistic bunch, who see the world as a range of possibilities that can be crafted and bent to our will. Design consultants begin a project by looking for inspiration that will drive their thinking and ideation about the world as it should be. Inspiration can come from within an industry or outside of it. Sometimes a societal trend will trigger an idea. Or it could be driven by ethnographic research observing potential customers. At this stage in the process, design consultants gleefully dance over the “as-is” state, as they generate lots of ideas of the “should-be” state. Only when this creative, generative phase is completed do we bring out the analytical tools to evaluate the ideas. Is there a market and business model that will support this idea? Does the client have the right assets and capabilities to deliver this value proposition? Is the technology required to implement this idea mature enough? How will this idea change an industry dynamics or competitive set? Traditional strategy tools are used to evaluate the ideas to get a sense of what we need to do in order to make them real.

As a strategist in a design consultancy, I am clearly a convert to strategy as a creative act. As I outlined in an <a href="https://www.frog.co/designmind/strategy-creative-act-making-space-radical-ideas/">earlier post</a>, it is easy for analytical approaches to kill ideas too soon, but worse than that, analytical approaches are usually too constraining to generate truly radical ideas. If you start by seeing the world as a given, you inevitably end up simply tweaking it a bit. This is the mindset that benchmarks its way to mediocrity.
For some strategy challenges, being “best of breed” is good enough, and it is true that analytical approaches work extremely well for cost optimization problems. But to enhance revenue and to grow—either through new offerings or new forms of customer experience—creative approaches work better. If you want to do something that is truly new, to create value in a way that has never been done before, to lead rather than follow, and to reframe customer expectations, you need the tools of design. Some management consultants understand this, and are experimenting with design. But it is not enough to add journey maps and post it notes to an analytical process; you need to embrace a designer’s mindset. With this mindset frog is tackling critical business challenges for our clients, helping them with <a href="https://www.frog.co/services/venture-design">new venture creation</a>, <a href="https://www.frog.co/services/growth-strategy">growth strategy</a>, and <a href="https://www.frog.co/services/customer-experience-design">customer experience design</a>.

For many years now, brand practitioners, academics and consultants have shared a rallying cry: brand must be expressed through the experience of a product or service, rather than simply through creative communications.

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Personalization, Data and Trust: The Role of Brand in a Data-Driven, Personalized, Experience Economy

People experience the world differently. Authentic and differentiated experiences must be rooted in an understanding of this uniqueness, and should respond to an individual’s behaviors and the variability of life. Smartphones and smart connected products are making it easier for companies to offer tailored, personalized experiences that still embody the company’s brand values. The wide availability of many different types of personal data, coupled with the ability to store and analyze that data, allows firms to personalize consumer experience. With technologies such as smartphones, sensor networks and smart connected products, large global firms can interact with their consumers in personal ways not seen since we left behind the village store to enter the industrial age.
The shift to personalized experiences changes the relationship a brand has with its consumers. A consumer buying a smart connected product is no longer taking the last step in the journey that begins with awareness to consideration and ends with preference and selection, but is instead taking the first step in a relationship with a firm. Take something as simple as a thermostat; 10 years ago, a buyer would have done some research — perhaps by reading product reviews or talking to a sales associate at a hardware store — and then bought the product. Today, if you buy a smart connected thermostat, such as Google’s Nest or Honeywell’s Lyric, buying and installing the product is just the start of the relationship with the brand. The thermostat learns the preferences of a household, and the comings and goings of those in the house. Nest sends a monthly email, detailing the household energy consumption compared to others in the neighborhood. In this way, personalized experiences evolve the relationship between the brand and buyer from consumption to participation.

<h2>The Role of Personal Data in Brand Perception</h2>
Brands need to gather various types of personal data, from self-reported information to digital exhaust (the information that users generate as they go about their daily digital lives), to power these experiences.
Beyond the legal requirements to meet privacy regulations, how can firms gather these data streams in a way that builds consumer trust while meeting the business needs of the organization? What are the implications for brands?

<h2>Four important implications</h2>
In our work, helping brands large and small define experience strategies in a world of smart connected products; and in our research on people’s attitudes towards personal data, we find four important challenges for chief marketing officers (CMOs).
<ol>
<li>The value exchange — Are you giving consumers a compelling reason to share their data with you?</li>
<li>Designing a brand trust framework — Have you designed important trust-building moments — moments of trust — within the customer  journey?</li>
<li>Aligning privacy behavior with brand values — Do your brand actions around privacy align with the brand values?</li>
<li>Building trusted ecosystems — Are you thinking about ways to maintain consumer trust while increasingly sharing consumer data and digital exhaust with other firms?</li>
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<h2>The value exchange</h2>
Are you giving consumers a compelling reason to share their data with you?
<a href="http://www.pewresearch.org/dailynumber/internet-users-dont-like-targeted-ads/">Targeted advertising</a> is not seen as a value exchange by most consumers. Witness the success of <a href="http://venturebeat.com/2016/05/09/adblock-plus-passes-500-million-downloads/" target="_blank" rel="noopener">ad-blocking software</a> on web browsers and smartphones; most consumers would rather avoid advertising messages if they can, even if the message is tailored to their interests. Moreover, targeted advertising is simply an expression of a brand through creative communications, rather than a move towards expressing a brand through experience. Which is not to say that cross-selling and up-selling services based on personal data are inherently a non-starter for a successful value exchange with consumers. Rather, firms need to ensure that they are giving consumers enough value for the exchange to be worthwhile.
There are many examples of firms successfully using consumer data to deliver on-brand experiences in the digital world, which result in greater consumer spending with a brand. Amazon tailors recommendations based on your search and purchase history, and has become so good at predicting what we might want that they <a href="http://www.google.com/patents/US8615473" target="_blank" rel="noopener">patented ‘anticipatory’ shipping</a> in 2014. Amazon’s promise is the wide selection and availability of goods, coupled with convenient and rapid shipping. Making use of consumers’ data and analytics to better deliver on that promise encapsulates their brand promise in the experience of the service.
Moving from pure digital to blended physical and digital experiences, the Vail Resorts Management Company has launched the EpicMix app for smartphones, linked to skiers’ season pass or ticket. Skiers have their pass scanned each time they ride a chair-lift, leaving a trail of digital exhaust as they make their way through a ski resort. The app makes this information interesting and useful to skiers by calculating vertical feet descended each day, the number of ski days for the season, and so on. EpicMix adds some interest and fun to the skiing experience with challenges, contests and awards. The resorts employ professional photographers who take pictures of skiers and snowboarders, and these images are linked to a skier’s profile and app. The Vail Resorts Company’s stated mission is to provide ‘the experience of a lifetime’. More practically, their value to skiers is to enhance the enjoyment of the great outdoors and skiing, something the EpicMix app does well.
Using consumer data to power tailored experiences is not simply restricted to the consumer realm. GE Energy provides software tools to its power generation customers to manage power plants. Power plants are very complex systems, with many thousands of parts that need to be maintained and must be replaced on different time scales. In some ways, power stations behave more like living organisms than machines, in that the state of the power station is not simply ‘on’ or ‘off’ but rather it exists in various degrees of health. It takes power to make power, so unplanned downtime caused by some component failing is very costly. GE’s MyFleet product offers a way to oversee and manage the health of a power station by tracking and monitoring many elements of the system, and using that data to minimize downtime and optimize the health of the power station. The experience of the MyFleet software system is a living instantiation of GE’s brand promise that the industrial Internet will bring together brilliant machines, advanced analytics and people at work to deliver ‘never-seen-before performance levels’. The experience is tailored to meet the specific needs of a customer’s power station and to various operator roles in maintaining that power station.
These examples seem to suggest that the only way to offer a brand experience is through product or service design. Is there any role for marketing to play? We firmly believe there is. For example, frog recently worked with a chain of fitness clubs that offer a wide variety of services, including personal training, fitness classes, spa sessions and expert content. Looking to create a deeper connection with current and prospective members, we created a recommendation algorithm that matches members with relevant services and content, strategically tailored to fit their fitness personality type. The tool generates a ‘type’ that members reference in conversation, similar to a Myers-Briggs personality type. From onboarding to post-workout meals, the algorithm cross-cuts all of the brand’s touch points, helping to shape hyper-relevant, memorable experiences.

<h2>Designing a brand trust framework</h2>
Have you designed important trust-building moments within the customer journey?
To deliver value in exchange for personal data, brand managers need to consider the entirety of a customer journey and design the touch points across that journey to reinforce trust for a brand. It is not sufficient to optimize the mobile experience, or physical experience, or customer service center experience in isolation; they all need to reinforce each other for the experience to be successful. CMOs need to build a framework that enhances overall trust for a brand and optimize experiences to build that trust.
We recommend augmenting moments of truth with moments of trust. Google introduced the notion of the <a href="https://www.thinkwithgoogle.com/collections/zero-moment-truth.html" target="_blank" rel="noopener">Zero Moment of Truth</a> (ZMOT), the moment where shoppers conduct research, look for coupons or comparison shop. The ZMOT can be designed to add trust — creating the Zero Moment of Truth and Trust (ZMOTT) — with confidence-building measures, such as offering online reviews from other customers popularized by services such as Amazon.com. A more dramatic example is Progressive Insurance, a firm that offers comparison shopping quotes from competitor insurers through their <a href="https://www.progressive.com/auto/" target="_blank" rel="noopener">Progressive Direct web quoting system</a>.
The First Moment of Truth (FMOT), the moment when consumers are confronted with a product or service, is also an opportunity for trust building to become the First Moment of Truth and Trust (FMOTT). U.S. telecom carriers AT&amp;T, Sprint and Verizon have all recently redesigned their FMOT to add trust. Physical stores play an important role in the overall telecom customer journey, acting as the decision point to buy a new device or service plan. All three carriers designed their store experience to reinforce trust during this critical journey moment by creating face-to-face, semi-private conversation nooks or tables. When signing up for a new service plan, consumers share a great deal of personal information, including drivers’ license, credit score and payment terms. Moving away from over-the-counter transactions to a seated, semi-private conversation with visual access to all the information the carrier is collecting reinforces perceptions of brand trust.
Uber is an example of a firm that has successfully turned their Second Moment of Truth — the moment when a customer has bought a product and is using it — into a Second Moment of Truth and Trust (SMOTT). They do this in a number of ways. First, drivers and passengers know exactly who is on either side of the ride experience, building trust in a very human way. Second, Uber maintains GPS data tracking for every trip, so they always know where the car is at all times. More recently, Uber added a family tracking feature that allows account holders to track a family member’s trip in real time. Let us say you wanted to send an elderly parent to a medical center for a check-up. You can order an Uber for your parent and watch the trip unfold to ensure that the person got to the medical center as planned. Although significant incidents have occurred with Uber riders that raise questions around how fool-proof their system is, the company has structured a clear trust framework, reinforcing Uber’s brand promise of being ‘everyone’s private driver’.
The Walt Disney Company, which scored 12th on the Forbes 2015 most trusted brands rankings, is a good example of a firm that carefully calibrates each step on its customer journey to build and reinforce trust, making guests happy to share their personal data with the firm. Guests to Disney World are issued MagicBands, a passive radio frequency identification (RFID) wrist band that arrives at your home several weeks before your visit. This wrist band becomes your ticket into the park, your fast pass to rides that you can pre-book through the Disney website or mobile app, your hotel key for properties in the resort, your wallet for payments at kiosks throughout the parks and resort hotels, and your identity bracelet by which you can <a href="http://www.fastcompany.com/3044283/the-messy-business-of-reinventing-happiness" target="_blank" rel="noopener">tag the professional photographs taken of you</a> and your party by the park photographers. The current MagicBands have elements that make the experience of being in the park more magical than before. For example, while waiting in line for the Test Track ride in Epcot, guests can design their own car. During the ride, the guest’s design is scored on various car performance metrics, and after the ride is over, the guest can create a commercial for their car. In this way, the firm is using consumer data to enhance the user experience, reinforcing trust throughout the customer journey, and encapsulating the brand principles by making the guest experience magical.
It is this higher trust that allows firms to offer services and products that leverage personal data. In 2014, <a href="https://hbr.org/2015/05/customer-data-designing-for-transparency-and-trust" target="_blank" rel="noopener">frog conducted a study</a> in five countries to understand consumer attitudes towards sharing personal data with multiple brands. We found that consumers are most willing to share their self-reported data with companies, even if they only get small value in return. Demographic information, as well as taste and preferences, are readily shared by most consumers, especially if a company uses that information to enhance the experience of a service or product. For example, users of streaming music service Pandora readily share their favorite artists with the firm when they create playlists and stations. Consumers are slightly more sensitive about digital exhaust — the personal data we create through using smart connected products and digital services. Staying with the Pandora example, this is the personal data we create when we play some stations more than others, or skip specific songs. The company gets to know us better with each interaction and piece of personal data, but, again, if the information is used to enhance a service experience, most consumers consider it to be a fair exchange. What is more sensitive is if a firm uses personal data to market to consumers, or if they sell the data to third parties.
Aside from the data type and use is the question of whether consumers trust a brand with their personal data. frog’s 2014 study and subsequent studies from other organizations show that consumers have some understanding of whether they can trust a brand with their personal data. Social networks such as LinkedIn or Facebook in the United States, and Chinese equivalents such as Renren and Weibo, consistently garner lower trust from their users than mobile carriers and banks. Payments and credit card firms, as well as e-commerce firms, tend to score the highest on trust with personal data. Even if they cannot fully articulate data privacy policies and protections, consumers have internalized the fact that some brands and business models rely on sharing and selling personal data, whereas other firms only use personal data to enhance the experience of a service of the product. As we point out in a paper summarizing frog’s 2014 personal data study, Customer Data, Designing for Transparency and Trust, companies that are trusted have an advantage because they can design and launch personal data-intensive services with more speculative value and still expect consumers to adopt them, compared to less trustworthy brands.

<h2>Aligning privacy behavior with brand values</h2>
Do your brand actions around privacy align with the brand values?
Although direct marketers may have been working with consumer data for many decades, what is new is the availability and depth of data offered by smart connected products, and the powerful use cases for that data. As the field evolves, a line of business executives, IT teams, marketers, product and service designers, and corporate lawyers continue to grapple with new questions.
Lorrie Faith Cranor <a href="http://lorrie.cranor.org/pubs/readingPolicyCost-authorDraft.pdf" target="_blank" rel="noopener">famously estimated</a> in 2012 that it would take 244 hours to read the privacy policies of the websites and apps people typically visit in a year. Add in the end user licensing agreements (EULAs) and terms of service, and it is clear that very few people have the time to understand the implications of the digital exhaust they are creating, let alone manage it. Consumers cannot make an assessment of a firm’s data policies and its trustworthiness with personal data on a case-by-case basis, given the effort involved. In the absence of a rational assessment of a firm’s data policies, we need a short-cut — an emotional decision-making mechanism that stands for a firm’s data privacy policies.
Privacy policies need to become part of an organization’s brand image. Brand curators, marketers and experienced designers need to wrest control of data and privacy policies from the lawyers. This is already happening. In 2014, Apple started to make strong declarations about consumer data and privacy. It launched ever more sophisticated encryption on iPhones and iPads. In early 2016, it resisted efforts by the U.S. Department of Justice to force the company to build a backdoor into the iPhone, which would allow police and security services access to phones of criminals and terrorists. Whatever you think of the politics of the stance, Apple is sending a clear message that it stands for privacy and protection of its customers’ data.
On the flip side, if a firm loses control of consumer data, it has a direct impact on the brand’s image. Although several major retailers have suffered data breaches, Target’s fall 2013 breach was one of the most public, impacting 70 mn individuals. According to their <a href="https://www.sec.gov/Archives/edgar/data/27419/000002741915000012/tgt-20150131x10k.htm" target="_blank" rel="noopener">U.S. Securities and Exchange Commission (SEC) filings</a>, as of January 2015 they had incurred US$252 million in data-breach-related expenses. Beyond the direct cost, however, is the reputational harm and brand damage caused by the loss of trust. Something as arcane as consumer data threatened to undo years of brand building. Given the data breaches at several other competitors, consumers may forgive Target, but it will take them longer to forget. With brand managers at the table, or better yet at the helm, firms are better able to align privacy policies with brand values.

<h2>Building trusted ecosystems</h2>
Are you thinking about ways to maintain consumer trust while increasingly sharing consumer data and digital exhaust across organization boundaries?
The earlier examples of successful brand experiences that are mediated by consumer data and digital exhaust predominate in controlled environments such as resorts, parks and campuses, where a single organization owns all of the touch points. The EpicMix app, for example, only works within a ski resort owned and operated by the Vail Resorts Company. As our cities, cars and homes become smarter and increasingly connected, however, we will see more tailored, designed experiences. We will see these experiences cross multiple brands, firms and organizations, arranged around specific customer journeys. This raises new challenges: How does a brand express itself within a wider customer journey when there are multiple brands involved? How can brands maintain consumer trust while increasingly sharing consumer data and digital exhaust across organizational boundaries?
Again, we see Uber as an example of this strategy in action. The service began as a way to call a car within a proprietary mobile application. Uber, however, evolved to offer its service as a capability within other companies’ applications. For example, within the United Airlines mobile app, after checking in for a flight there is a button to order an Uber to take you to the airport. As an experience, this flows nicely along a customer’s typical journey map. Similarly, it is possible to order an Uber from within Facebook Messenger without ever leaving Messenger. Consumers may be comfortable with information flowing between the two firms, given the convenience of ordering a car without opening a new app.
Car makers designing in-car experiences for connected cars or self-driving cars are in a similar situation. Most carmakers offer third-party experiences today, such as SiriusXM or Android Auto. Others are building their own proprietary experiences. We believe that blended experiences are more likely to succeed in the market, but CMOs need to thoughtfully curate a trusted ecosystem and partner with brands that enhance their trust. Low-trust brands become the weakest link in an ecosystem, dragging down the higher trust brands to the lowest common denominator.
The rise of smart connected products and services, powered by consumer data, is not something that can be left to engineering, IT and legal teams to figure out alone. CMOs and brand marketers need to be front and center in defining on-brand experiences for consumers. Marketing teams need to make sure that the firm is giving consumers a compelling value proposition in exchange for personal data.
As consumers are more willing to share personal data with firms they trust, CMOs need to push their organizations to add trust-building moments into customer journeys. And while legal teams have legitimate reasons to push privacy policies and licensing agreements that defend the firm, CMOs need to ensure that the policies and actions the firm takes with regard to consumer data reinforce the brand promise. Data breaches, and the resulting loss of trust, may begin as an IT operational failure but have dramatic consequences for brand perception and value. Personal data and consumer trust are the building blocks of the personalized experience economy. They must be earned by firms, and willingly given by consumers. It is the new face of brand building, and very much the domain of marketers.
Originally published in the <a href="https://www.henrystewartpublications.com/jbs" target="_blank" rel="noopener">Journal of Brand Strategy</a>, Summer 2016

Kristin Krajecki

frog is a global design and innovation firm. We transform businesses at scale by creating systems of brand, product and service that deliver a distinctly better experience. We strive to touch hearts and move markets. Our passion is to transform ideas into realities. We partner with clients to anticipate the future, evolve organizations and advance the human experience.

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In a frog study on personal data, Chinese consumers stood out by placing low value on their own personal data, especially when compared to consumers in Germany and other countries where personal data is more highly valued.

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Designing with Data in China – Opportunity and Risk

<h2 style="text-align: center;">Chinese Consumers Don’t Value Personal Data</h2>
Many firms in China and around the world offer products and services that leverage personal data from their users, either to enhance the product experience for users, or to monetize that data in order to cover the cost of products offered free to users. For example, Sesame Credit is an offering from Alipay that provides credit to people who have not had credit before. It assesses risk by looking at a person’s internet shopping history, online bill payment records, phone usage history, and online behavior and compares this with the 300 million registered users and 37 million businesses who transact on Alibaba, China’s leading e-commerce company. Sesame Credit and products like it are made possible by the trails of digital exhaust we leave behind us as we lead our modern lives – a data stream generated primarily by our smartphones, but also from our cars, connected products in our homes, health and wellness devices, social media, communication tools and so on. These tools make our lives better in many ways, in this instance by offering financial services to people who have not had them before. But the data we generate and share is also more personal than ever before, giving firms and organizations that have access to this data a comprehensive picture of our lives. In order to understand how consumers feel about their personal data, and to construct a model for a fair exchange of this data, frog conducted a <a href="https://hbr.org/2015/05/customer-data-designing-for-transparency-and-trust" target="_blank" rel="noopener">five-country study</a> of attitudes to personal data in 2014. In the study, China stood out by being at the low end of the value that consumers place on their own personal data, especially when compared to Germany and other countries that place a higher value on personal data. Just three types of personal data were considered sensitive by the majority of Chinese consumers: their digital communications history, their government ID information, and their credit card/financial information. All of the other digital exhaust that Chinese consumers create each day through their use of mobile phones and computers—from their physical location to health history to web surfing history—were not highly valued. This is in stark contrast to counties such as Germany, where people placed almost 20x more value on their digital communication history, and also placed higher value on data types such as health history and medical information, which Chinese consumers do not value at all. It’s not that Chinese users are less aware of the personal data trails and digital exhaust they leave behind them than their global counterparts. Globally, 21% of survey respondents had a detailed understanding of how data is collected when they use online services and smart connected products. Interestingly, awareness has barely changed since 2011, even as the scale and sophistication of tracking has vastly increased. Awareness by Chinese users was slightly below the global average, at 17%, but comparable to German users at 16%. Moreover, Chinese respondents are worried about the same potential harm from the abuse of their personal data as the rest of the world – they worry that that someone might steal their identity (74%); that someone might steal money from them (62%), and they want to maintain their privacy (62%). So while Chinese participants showed a comparable level of awareness and similar concerns about the potential abuse of their personal data, they differ from their global peers in the value that they place on certain types of personal data.
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<h2 style="text-align: center;">China Can Lead the Market</h2>
Whatever the cultural reasons for this difference in how Chinese consumers value their personal data, the implication is very positive for Chinese organizations and businesses that are designing products and services using personal data. In <a href="https://hbr.org/2015/05/customer-data-designing-for-transparency-and-trust" target="_blank" rel="noopener">our original analysis</a> published in May 2015 we provided a framework for firms to use when evaluating the value they need to provide users, compared to the data type they are collecting and how they are making use of that data. Product makers and service designers can build their China market offerings with confidence that consumers are willing to share information with them. And the amount of value that product and service designers have to offer in return for that personal data can be lower, compared to markets such as Germany. It allows firms to launch “minimum viable products” that are more minimal. Put another way, product and service designers can take more risks with new and unproven value propositions when designing with data for the China market, and expect to gain some market acceptance. We see this playing out with frog’s work in Shanghai. We recently worked with a global household white goods maker to design a smart refrigerator that makes health recommendations to its users. Smart connected refrigerators are something of an industry insider joke in the design consulting world, as an example of a technology capability in search of a use case – we have been hearing about “the fridge that self-orders milk” since the first days of the internet. But this project was different. The concept is that the refrigerator gathers and records vital signs of the fridge users, including heart rate and blood oxygenation, and makes a general health evaluation of the user. Over time, it learns about the different individuals who use it, and provides health recommendations including possible changes in diet and recommendations about hydration and so on.
<blockquote>Product makers and service designers can build their China market offerings with confidence that consumers are willing to share information with them.</blockquote>
In countries where health data is highly valued, such as Germany and Britain, we would expect initial interest in a “health coach refrigerator” to be lower, unless the value provided in exchange is exceptionally high. But in China, where there is less sensitivity to sharing health and medical data, firms can launch products like the health coach refrigerator and learn and iterate based on customer reaction. Even if the first value proposition brought to market turns out to be suboptimal, Chinese makers are ahead of the global competition by learning and course-correcting sooner.

<h2 style="text-align: center;">Altruism</h2>
When compared with the rest of the world, Chinese consumers were particularly open-minded when it comes to sharing health data for the greater good. In our study, we asked participants if they would be willing to share their medical history with doctors and researchers if they would directly benefit from sharing by receiving medical tips, information, and new discoveries that might help them. (See chart below) 76% of Chinese respondents were willing to do this, and a surprising 63% were willing to share even if they did not benefit directly, simply to drive medical advances. This compares to a global average of 56% who are willing to share their medical records for direct personal benefit, and 46% who will share for the greater good, even if they derive no personal benefit. This data ties in with our learnings on local healthcare projects. We observe that the Chinese are very open about personal health issues. This may stem from the fact that Traditional Chinese Medicine was and is more embedded in day-to-day routines and people’s diets than healthcare trends tend to be in other markets. But whatever the cause, we are not surprised to see businesses such as genomic data and analytics pioneer BGI thrive in China. Likewise, fields of research and development that require population level studies are likely to have greater success in China.
Screen Shot 2016-01-20 at 2.35.28 PM

<h2 style="text-align: center;">The Role of Trust</h2>
Our research showed that, aside from the sensitivity towards certain types of data, another important dimension is the extent to which consumers trust a firm with their personal data. As <a href="https://hbr.org/2015/05/customer-data-designing-for-transparency-and-trust" target="_blank" rel="noopener">reported in our original article</a>, credit card and new finance companies enjoy the highest level of consumer trust, while banks, technology companies, retailers and phone companies fall in the middle, and social networks have the lowest level of trust. China is no different to this pattern. New finance firm Alipay tops the list of consumer trust, followed by banking and finance giants China Union Pay, China Merchant Bank, and Visa. The internet giants are in the middle, together with carriers and consumer electronics firms, and entertainment and social media fall to the bottom. What is different about China, however, is that firms at the higher end of the trust spectrum are more widely trusted. More than 90% of the consumers we interviewed trusted financial services firms to use their data in appropriate ways. This is 10-15 percentage points higher than the trust American and British consumers have for comparable financial services firms in their countries.
Screen Shot 2016-01-20 at 2.35.37 PM
This is important, because companies with a high degree of trust will be better able to compete in the market with products and services that use personal data. New products and services in areas such as connected healthcare, home security, personal safety, and smart home all have a potential to be very profitable businesses. But even in China, where consumers place a relatively low value on their personal data, companies that can earn and maintain the trust of their customers will be better able to succeed in these markets, because customers will more willingly share their information with companies they trust. Conversely, those who abuse their customer data—or who lose data in security breaches—are likely to be punished by consumers. Chinese customers are fickle and, on average, technologically savvy. This means they are difficult to win and easy to loose. And while trust in a company’s ability to handle personal data is rather specific and hard to measure, we believe that over time it will become a big part of how a brand is perceived and trusted.
<blockquote>This is important, because companies with a high degree of trust will be better able to compete in the market with products and services that use personal data.</blockquote>

<h2 style="text-align: center;">Going Global</h2>
Many Chinese product and service firms designing products with data aspire to build on their success in domestic markets to enter global markets. It is a natural move to make, particularly if a firm has honed products and moved ahead of the global competition. However, moving from China, with its customer base that places a relatively low value on personal data, into markets where consumers are more sensitive may be challenging. Firms building products and services that leverage data types that European and American consumers find more sensitive—such as location data, health history, and digital communication—history will have to offer more value in exchange for their personal data than they do for the China market. This may involve re-thinking how the data in the product is used. For example, it is more acceptable to consumers to use their personal data to enhance the product experience than it is to use that data for marketing purposes. Firms that offer services that are monetized using targeted advertising may have to re-think their monetization model. For example, in 2012, a team in frog Shanghai created a smart connected mask, the <a href="https://www.cnet.com/pictures/frog-designs-vision-of-wearable-tech-pictures/" target="_blank" rel="noopener">Airwaves concept</a>, in response to China’s air pollution problem. It uses a PM 2.5 sensor built into a face mask to make location specific assessments of air quality and to recommend replacing the filter medium in time to remain effective. While the concept emerged in China as a response to the severe air quality issues the country is facing, the idea continues to resonate with companies, media and people worldwide, as air quality is becoming a bigger problem in many cities outside China. Our findings imply that in order to make the concept work in countries like Germany we will have to re-evaluate our use of location specific data and how it is shared, and we would have to make an extra effort to reassure customers that their health specific data (e.g., whether they replace their filter regularly enough) is safe with us and will only be used in their favor.

<h2 style="text-align: center;">Competing on Trust</h2>
Product makers in China face the same fundamentals as the rest of the world when it comes to designing with data. They need to offer relevant value to their customers in the form of enhanced product and service experiences. But they have an advantage compared to their peers in Europe and North America because they enjoy a higher degree or trust with their consumers’ data, and those consumers place value on fewer types of personal data. This combination allows firms servicing the China market to experiment more freely with products and services that leverage personal data. It may give them an additional advantage as they tackle markets outside of China, because they will be further along the learning path compared to their global competitors. This article was also published in the January 2016 issue of Harvard Business Review China.

Rainer Wessler

As Vice President, Creative, Rainer leads a multi-disciplinary team of creatives in the Asia Pacific region from frog&#8217;s studio in Shanghai, where he has been based since 2009. He partners with frog’s local and global clients to help them embrace change and transform their businesses to drive growth.

Timothy Morey

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