Let Us Now Praise Jeff Bezos

Jeff Bezos is the Abraham Lincoln of the business world: he doesn’t let critics stop him from making history.

The success of the Amazon Echo encapsulates his resiliency perfectly. eMarketer recently reported that Echo owns more than 70 percent of the market for voice-assisted devices, whose usage grew nearly 130 percent in 2016. During 2017, 35.6 million Americans will use voice-activated assistants at least once a month, which means 25 million of them will use Echo. And during the 2016 holiday season, Amazon sold nine times as many Echo devices as it did the year before. But the ascendance of Echo was hardly assured when Amazon launched the product in November 2014.

In fact, Amazon’s Echo caused a good deal of criticism, ranging from concerns about violations of personal privacy to skepticism over its value to do anything useful for its owners.

Echo Faces a Rocky Start

The Echo surfaced at a time when Bezos was fielding taking heat for the failure of the Amazon Fire phone, which Amazon had released earlier in 2014. And although the Echo made some positive impressions coming out of the gate, the product didn’t exactly overwhelm the media influencers. The voice-activated speaker inspired bemused reactions from publications that were not quite sure what to make of it, including The Verge, which described Echo as “a crazy speaker that talks to you.” An analyst at Wedbush Securities told Bloomberg, “I think it’s just a two-way speaker, but why isn’t there an app that lets me do the same thing without having to spend $99 on hardware? I think this is a solution that is seeking a problem.” And Consumer Reports criticized the Echo for being too rudimentary.

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Fyre Festival Debacle Shows the Difference between Marketing and Branding

The Fyre Festival has become the train wreck you can’t ignore. The event organizers, rapper Ja Rule and entrepreneur Billy McFarland, promised attendees “two unforgettable weekends of mystery and music” with acts such as Blink-182 and Major Lazer appearing on a private island in the Exumas April 28-30 and then May 5-7. But by early morning April 28, the event was trending on Twitter as “the luxury party that turned into the Hunger Games,” with attendees reporting massive disorganization, inadequate housing, food shortages, and unbelievable chaos. The Fyre Festival is now scrambling to evacuate stranded attendees after canceling the event.

Here we have a painful reminder of the difference between marketing and branding. When synchronized well, marketing creates a promise, and the brand delivers on that promise through an experience. The Fyre Festival certainly created quite a promise. The festival marketed itself as an exclusive event “for those with uncompromising taste and a burning desire for adventure” with tickets reportedly costing as much as $12,000 and some VIP packages costing as much as $250,000. Attendees were promised luxury cabanas, sumptuous meals, private island parties, cool music, and generally the most decadent experience money could buy. “Set against the surreal island backdrop of the Exumas where ordinary rules don’t apply, Fyre ignites the best in music, cuisine, innovation and hospitality,” according to the event’s Facebook page. To build awareness, the festival relied on high-profile influencers, including Victoria’s Secret models, to post teaser content on their Instagram accounts. And teaser videos such as this one certainly looked appealing enough to those with enough cash:

But it quickly became apparent that the experience was not living up to the advertising, as the first attendees to arrive complained of spartan living conditions in disaster relief tents. Many took to social media to report what was going on:

As reported in Variety, “According to reports from would-be concertgoers, the site is more like a hurricane disaster staging area, with incomplete tents and boxed lunches instead of luxury accommodations and celebrity chef-prepared meals.” Meanwhile, Blink-182 canceled its appearance. Within hours, the organizers abandoned any hope of putting on the event and turned their focus to evacuating stranded travelers.

Now, if you’ve been to enough music festivals, you expect to pay for a bit of discomfort. Enduring crowds and inclement weather is just part of the deal when a festival promises you access to cool music. In fact, enduring some discomfort is sort of a badge of honor — the price you pay to say you were there when Kendrick Lamar tore up the stage. But the Fyre Festival promised an elite experience. And as Brian Solis has argued passionately, your brand is all about the experience.

Your brand is also all about delivering the experience you promise. A promise creates an expectation. You can proclaim your marketing a massive success when your promise of private cabanas on a luxury retreat results in concert goers willing to fork over thousands of dollars to spend their weekends with you. But when the experience fails to deliver on a promise, you fail to meet expectations, and your brand dies a quick death.

The rapidly unfolding disaster is also an embarrassment for Ja Rule. How much damage to his personal brand results remains to be seen, but his Fyre Media company, founded in 2015, now faces a crisis of epic proportions. United Airlines may have dragged a passenger kicking and screaming off an airplane. But when you create huge buzz by relying on supermodels and influencers to hype an event and then anger an island crawling with affluent millennials with access to social media, you’ve created a whole new level of pain.

Will Fyre Media now show us how to recover from a brand disaster? Stay tuned.

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Why Uber Remains Disruptive and Dangerous

Uber is the Kanye West of Silicon Valley: bold and brilliant. Toxic and troubled. Disruptive and dangerous.

Uber’s willingness to play dirty and its dysfunctional culture are well documented, most recently in a New York Times piece, “Uber’s CEO Plays with Fire” that laid bare the controversial management style of CEO Travis Kalanick, including his “pattern of risk-taking that has at times put his ride-hailing company on the brink of implosion.” The company’s many scandals have given rise to the #DeleteUber movement, which has been an economic boon to rival Lyft.

And yet Uber remains as bold and disruptive as ever, as two recent news developments show.

On April 25, Uber announced that it will launch a network of flying taxis in Dallas and Dubai by 2020. The news places Uber front and center among the companies trying to define a market for electric vertical takeoff and landing aircraft (VTOLs), also known as flying cars (to the chagrin of purists). So-called flying cars could change the way people travel and the way transportation companies, delivery services, and even urgent care/on-demand health services operate, especially in urban markets hampered by congestion. Other prominent players trying to launch VTOLs include Airbus and  Kitty Hawk, a company backed by Google cofounder Larry Page, which released a demonstration video of a prototype on April 24.

The development and rollout of VTOLs faces some major hurdles ranging from regulatory barriers to constraints in battery life for the craft themselves. But if Uber has taught us anything, its the company’s ability to disrupt. This is the company that ushered in the era of the on-demand economy and disrupted the transportation and delivery industries. It’s also a business that knows how to scale an idea. As Alex Davies of WIRED reported, the company has formed partnerships with companies that are developing VTOLs as well as relationships with the businesses necessary to build out a flying car infrastructure. As he wrote:

And here’s the crazy part: Uber could make it happen. “I think 2020 is realistic for a vehicle that is not replacing an airplane but replacing a car,” says Richard Pat Anderson, director of the Flight Research Center at Embry-Riddle Aeronautical University. A purely electric aircraft might remain elusive, but a serial hybrid setup—where the aircraft carries a fuel-burning turbine to keep the juice flowing, much like the Chevrolet Volt—could work.

Meanwhile, as flying driving cars and Uber’s scandals were making headlines, McDonald’s announced that the fast-food giant has teamed with Uber to deliver McDonald’s to your door. As McDonald’s pointed out, nearly 75 percent of the population in its five largest markets live within three miles of a McDonald’s, and McDonald’s has been testing the Uber delivery service since December (through UberEATS, Uber’s food delivery unit).

As Peter Frost of Crain’s Chicago Business reported, “Delivery is a natural sales channel for McDonald’s to pursue since much of its food already is consumed outside its restaurants. Some 70 percent of McDonald’s U.S. business goes through the drive-thru, and in urban areas, far more consumers take its food to-go versus eating inside.”

The McDonald’s relationship is an example of how Uber can partner with brands that have the muscle and reach to help Uber deliver on its vision, in this case, services that cater to the on-demand consumer. Uber does the same with hospitals to deliver on-demand healthcare as well.

Uber doesn’t need to play nice to be disruptive and dangerous. Uber does not even have to be a long-term success. Ideas are the fuel of disruption, and Uber knows how to scale an idea even as the company’s brand implodes.

Note: check out Uber’s 2016 white paper on VTOLs here.

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Why AI Is the Future of Music

The music industry finally has some reason to celebrate, thanks to artificial intelligence.

The Recording Industry Association of America (RIAA) recently announced that music revenues in 2016 grew 11.4 percent to $7.7 billion — the highest year-over-year growth rate since 1998. Although the industry is only half the size it was in 1999, double-digit growth is encouraging after years of either declines or flat results. Why the growth? According to the RIAA, the answer is simple: streaming is taking hold. And streaming services — especially Spotify — are lapping the field with AI.

As the RIAA noted, the biggest contributor to growth was a doubling of revenues from paid streaming services such as Apple Music, Spotify, and Pandora. In fact, for the first time ever, streaming music platforms generated the majority of the U.S. music industry’s revenues.

Younger streaming platforms such as Tidal are still too new to contribute significantly to the $3.9 billion that streaming services generated in 2016. Rather, the established streaming leaders, especially Spotify, are hitting their strides by offering better products fueled by AI.

Pandora and the Power of Personalization

Streaming services such as Pandora and Spotify have always created customers by personalizing their vast inventories of music. If you stream music, you already know how well Pandora and Spotify create engagement by offering you customized listening choices based on your personal tastes. I still remember how exciting it was when I first started using Pandora years ago and created my own Pandora radio stations based on names of artists or songs that appealed to me. If I wanted to create a station based on my love of Massive Attack, I could do so. If I wanted to create a station of music inspired by the Cure song “All Cats Are Grey,” I could do so. And Pandora refined my stations even further when I gave a thumbs up or thumbs down to songs that Pandora suggested to me based on my listening tastes.

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Amazon and Walmart Fight for the On-Demand Grocery Shopper

On March 28, Amazon fired a shot in its war with Walmart to define the future of the $600 billion grocery industry. The world’s biggest online retailer announced the beta launch of AmazonFresh Pickup, an on-demand grocery service. With AmazonFresh Pickup, customers can order groceries online and have their orders ready for pick-up at designated AmazonFresh Pickup physical locations — in as little as 15 minutes.

The service is a clear response to Walmart’s limited rollout of Pickup and Fuel concept stores, where customers order online and then drive to Walmart to have their groceries loaded into their cars by employees.

Both businesses are racing to win loyalty from the on-demand consumer.

The rise of the on-demand consumer is one of the compelling trends defining the 21st Century economy. As Google has reported, we’re living in the era of the micro-moment, when consumers, armed with mobile devices and apps, can research and purchase goods and services on their own time and terms. On-demand businesses such as Uber have acted as important catalysts. Uber, for all its flaws, demonstrated the power of responding to mobile consumers with an easy-to-use app that provides a service on demand, and the company has had a profound impact across many industries. Businesses ranging from Panera Bread to 7-Eleven have responded to the on-demand consumer with services such as online ordering and drone delivery.

The grocery industry is well suited to an on-demand model. People need to restock groceries often, and obviously perishable goods have a limited shelf life. But as writer Mark Rogowksy notes in Forbes, the on-demand grocery model has been fraught with its share of failure, one of the reasons being that grocery delivery is not as “on-demand” as it sounds. In fact, it’s a lot easier for mobile consumers to order and pick up groceries on the go rather than wait around in their homes for delivery. Hence, Walmart has been experimenting with the Pickup and Fuel stores. Walmart launched the stores in late 2016 amid speculation that the giant retailer had found a way to battle the ongoing Amazon threat.

At about the same time Walmart began experimenting with Pickup and Fuel, Amazon made headlines with the beta launch of Amazon Go, which consists of physical self-service grocery stores where anyone with an Amazon account, a supported smartphone, and the Amazon Go app can simply take what they want from the store and leave with no check-out required. The flagship Amazon Go store is open exclusively to Amazon employees, and so far the frictionless shopping model has encountered glitches as the in-store technology struggles to keep pace with consumer foot traffic when the Amazon Go store gets busy. Amazon has delayed the launch of a public-ready Amazon Go. But as Amazon has demonstrated with its latest announcement, Amazon has many more cards to play.

Both Amazon and Walmart are in a strong position to lead the on-demand grocery business. They both have brand muscle and deep pockets. Amazon is crushing Walmart (and everyone else) in online retailing, and Amazon is successfully moving into our homes and cars with on-demand devices and technologies such as the Dash button and Alexa voice assistant, which make Amazon a more ubiquitous and convenient presence in our lives, as Google strives to be. Walmart, though, possesses many advantages, including scale and a powerful physical ecosystem that includes not only its stores but network of partners, over whom Walmart wields considerable power.

Walmart also has an uncanny knack to experiment and learn. For example, in 2015 the company launched Walmart Pay to make it possible for shoppers to use their mobile devices to check out and purchase goods, and in 2016, Walmart expanded Walmart Pay across 4,600 stores. Walmart has quickly added services to Walmart Pay that cater to the needs of on-demand consumers, such as the ability for shoppers to refill prescriptions and skip pharmacy lines. Here is a company that understands the intersection of the mobile and physical worlds.

In coming months, Amazon and Walmart will continue to claw their way for leadership. And who will win? The on-demand consumer. With each innovation, Amazon and Walmart are reshaping the grocery industry around the needs of mobile consumers — which is good news for shoppers and the businesses that possess the means to service them on shoppers’ own terms.

Image source: Matthew Kane (https://unsplash.com/@matthewkane)

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Amazon Wants to Be Your Personal Stylist

Amazon sure knows how to keep everyone off balance. While retailers are figuring out how to use automated chatbots to service customers, Amazon is pushing a new personal styling feature that relies on the human touch.

The Launch of Outfit Compare

Days ago, Amazon began to make available to Prime members a service called Outfit Compare. With Outfit Compare, Amazon Prime members receive advice from Amazon on their style choices. The service works like this:

  • Amazon Prime customers may post two photos of themselves wearing different outfits of interest to them.
  • An Amazon stylist then gives feedback on which outfit looks better on the customer. The stylist provides feedback based on factors ranging from what’s trending to what looks best on you. The stylist uses a style scale in voting for the preferred option, ranging from “Definitely Pick This One!” to “It was a close call.”

And according to Amazon, your stylist is a real person, not a bot. Amazon says that Outfit Compare “is powered by a team of fashion specialists” whose backgrounds include retail, editorial, and styling.

Throughout the past week, a number of journalists have reported on the launch and have tested it. So far the coverage of Outfit Compare includes a fair bit of incredulous head scratching, such as:

  • How Amazon corralled a team of fashionistas to help people in a stylistic funk is a weird question. It’s unclear whether there’s any sort of automation at play — because it’s hard to imagine a team of stylists eagerly waiting just to dress you. — Sam Blum, Thrillist.
  • It’s not immediately clear how this feature will boost Amazon’s bottom line in the near-term. — Sarah Perez, TechCrunch.
  • Amazon has added what might be the strangest feature for Prime members yet . . . Outfit Compare is a fun tool to mess around with, but it’s unclear what exactly Amazon gets out of it. — Chaim Gartenberg, The Verge.

Those comments remind me of the bemused reactions when Amazon rolled out the Dash button in 2015. The Dash button seemed so out of the blue that many thought its launch was an April Fool’s joke. But two years later, Amazon says the list of brands signing up for the Dash program include Campbell’s Soup, Cascade, Clif Bar, Mentos, and Quilted Northern, to name but a few. All told, more than 200 Dash buttons exist.

In other words, Amazon is not just messing around.

Amazon’s Fashion Aspirations

So then what does Amazon get out of rating customers’ style habits? I think Amazon is using Outfit Compare to figure out how to create a more effective balance between human judgment and personalization through technology. Why? To become a true fashion brand.

Amazon clearly wants to become a fashion brand. The company operates Amazon Fashion, which bills itself as “a one-stop destination for head-to-toe style.” Its moves to build up its fashion business also include, among other things, consulting with fashionistas such as Julie Gilhart (formerly the fashion director for Barneys New York) and hiring Caroline Palmer, formerly Vogue.com editor, as director of Editorial, Video, and Social Media for Amazon Fashion.

Amazon has already launched seven private-label clothing brands, and Amazon is poised to become the largest clothing retailer in the United States. But selling a lot of clothing and being a fashion brand are two different things. Successful fashion brands build trust by possessing a sense of style and curating style appropriately. And as reported by Business Insider, Amazon gets lukewarm customer reviews for style curation.

Stitch Fix Shows the Way

I suspect Amazon is watching Stitch Fix to learn about style curation. Stitch Fix is an online style recommendation service. The site uses artificial intelligence to analyze and recommend personal style options to its customers based on a variety of data, including information reported by customers. Personal stylists analyze the AI-based recommendations and then assemble a customized package of clothing, which is delivered to the customer. Customers can always return what they don’t want — in fact, returns help Stitch Fix’s AI engine get smarter.

One Stitch Fix stylist explained to Computerworld the human/AI dynamic this way:

When a client fills out a profile and is ready to be styled, we are able to see what the algorithm is suggesting based on the data collected from her profile — everything from sizing to location, geography, body type, fabric preferences, colors and pattern preferences. It helps to not have to worry about the broad strokes of what a client does not want. Then we can make creative decisions about what will fit her body and her lifestyle.

By contrast, without AI, a stylist might need weeks of working with a client to come up with the best recommendations.

So far, the combination of AI and human judgment has made Stitch Fix so successful that more than 80 percent of its clients come back for a another delivery within 90 days, and one third spend more than half their clothing wallet share on Stitch Fix. Stitch Fix has achieved a valuation of $300 million since its founding in 2011 and is reportedly considering an IPO.

Amazon is already known for using AI to power its product recommendations. But the launch of Outfit Compare suggests that to become a fashion brand, Amazon realizes it needs to apply more than algorithms. It looks to me that Amazon is learning from Stitch Fix to apply the human touch. Amazon is a fast learner. And what Amazon wants, Amazon usually gets.

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Drake and Jay Z Write Rules for Music Moguls

Drake and Jay Z are among the most successful musicians year after year. Between them, they earned $92 million in 2016 while making the list of Forbes highest-paid musicians, adding to the nearly $97 million they pulled down in 2015, and $93 million in 2014. Drake’s 2016 album Views was a gigantic commercial success (which is saying something in the era of the single), and he gets the most streams of any artist on Spotify. Recently both made the news for two different reasons: on March 6, Jay Z launched a venture capital firm, Arrive, to invest in startups. On March 18, Drake released a 22-song playlist, More Life, that promptly broke two Spotify streaming records and one Apple Music streaming record. Drake and Jay Z demonstrate how the new music moguls are defining success for the recording industry. On the one hand, Drake illustrates why artists need to hustle their songs constantly in an on-demand economy. And Jay Z understands why musicians — even the elite — need to build personal brands that transcend music.

Drake: Hustle Your Music

Drake knows that making music inaccessible doesn’t work in the on-demand economy. You can’t expect fans to buy your albums to find hidden gems of songs that reward patient listening the way Led Zeppelin used to do in the glory years of album oriented rock. As Brian Solis once noted, attention is a currency to earn and spend. And attention, while difficult to earn, is easily spent. Keeping anyone’s attention is increasingly difficult at a time when Americans own four devices on average and toggle their way through a sea of websites, apps, games, and other distractions that compete for our time. So Drake distributes music liberally, dropping multiple songs like attention bombs as he did with More Life, Views in 2016, and If You’re Reading This It’s Too Late in 2015 (along with a short film for good measure). He doesn’t expect his fans to wait for a new album to hear his new songs — he maintains a constant hum of activity through his music, supported by a strong social media presence.

As Dan Rys of Billboard noted, “Unlike superstars for whom every move is an event, Drake keeps his activity at a constant simmer, peaking at ­strategic moments.” As a result, he is one of the few artists in the Forbes list who made the bulk of his money in 2016 from music sales.

Even Beyoncé, whose every album is an event, keeps our attention by releasing a barrage of videos to support her albums. Artists need to feed a content stream to keep their names visible. As music pundit and consultant Cortney Harding once told me, “Albums take a very long time to make, and artists can’t remain silent in between album releases, especially when everyone else is releasing a steady stream of content on YouTube. If you want to release an album a year from now, you need to release a song a month and content between songs rather than remain quiet and expect fans to wait for the big release day.”

For Drake, every day is release day.

Jay Z: All Business, Man

Jay Z has always known his brand is bigger than music. Even as his star was ascending as a rapper in the 1990s, he was creating business ventures. In 1996, Jay Z cofounded of Roc-A-Fella Records, and then a few years later cofounded Rocawear clothing line. He Jay Z operates businesses such as his entertainment company Roc Nation and Armand de Brignac champagne (which he acquired in 2014). As he put it, “I’m not a business man, I’m a business, man.” (Ironically the one venture that he’s apparently not mastered is streaming. His Tidal streaming service has famously struggled.)

In 2016, he released no new music, and he didn’t tour. And yet he earned $53.5 million as he cashed in on his many business ventures. His latest, Arrive, will invest in early-stage startups and provide support ranging from marketing to business development. Part of Roc Nation, Arrive will apply Roc Nation’s entertainment management experience to support entrepreneurs (and that experience is considerable, as Roc Nation works with the likes of J. Cole and Rihanna.) Arrive will apparently not restrict itself to entertainment startups.

Jay Z has also proven to be an innovative business operator with his music. For instance, in 2013, he signed an intriguing deal with Samsung to distribute one million copies of his Jay Z’s Magna Carta Holy Grail album through a special app exclusively on Samsung phones before the album went on sale publicly. Samsung reportedly paid $5 for every album, meaning Magna Carta Holy Grail sold $5 million before a consumer purchased a single copy.

As I noted in my ebook The New Music Moguls, the successful moguls who regularly make the Forbes list of highest-paid musicians build their audience through recorded music, but make their real money elsewhere, whether from touring, endorsing products, or investing in businesses. Dr. Dre may have earned his reputation as a rapper, but he earned his biggest payday, $620 million, through his stake in Beats Electronics. Diddy is worth hundreds of millions of dollars because of his branding deals with Cirac vodka and Aquahydrate. The list of celebrities as business brands goes on and on: Katy Perry (who has cobranded music with H&M), Luke Bryan (who endorses Miller Lite), Rihanna (who has her own footwear line with Puma), and Taylor Swift (who earned $170 million in 2016 through touring and via deals with Keds, Diet Coke, and Apple). Oh, and Drake hedged his bets through branding relationships with Apple, Nike, and Sprint. They all realize that recorded music is a launching pad, not an end unto itself.

The days of consumers rushing out to buy recorded music are over. We’re streaming songs, discovering music through ads, apps like Snapchat, and many other platforms that didn’t exist before digital. But music no longer engages our hearts. Music captures a fraction of our attention at best. The new music moguls grab our attention through their music and turn attention into money through their personal brands.

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How the Apple Watch May Simplify Your Next Doctor’s Visit

Doctors and dentists are not exactly renowned for managing the flow of information in their offices effectively. How many times have you been to a doctor’s or dentist’s office and gotten the sense that providers spend an inordinate amount of time checking in with administrative staff for patient records? A software provider named Simplifeye aims to make work flow in the medical office more efficient by storing information on wearables such as the Apple Watch.

By having patient information stored on the Apple Watch, providers always have instant access to patient records and thus an make themselves more efficient and cut out the downtime associated with waiting for administrative staff to deliver records.

As reported in TechCrunch, Simplifeye has obtained $3 million in funding. In addition, the good news for Simplifeye is good news for Apple. As I reported recently, Apple seeks to be the data backbone for patient care. Having its hardware and software integrated into companies such as Simplifeye helps Apple deliver on its strategy by strengthening the Apple data infrastructure in healthcare.

Simplifeye is set up to be an Apple shop, so to speak (one of its founders worked at Apple) although Simplifeye also offers a mobile app for providers who don’t want to use wearables.

Whether the Apple Watch has penetrated the consumer sector adequately is an open question. Apple officially does not report Apple Watch sales. But the signs are that the Apple Watch is making inroads in both the health provider and payer side (as witnessed by mass purchases of the Apple Watch by Aetna). And Simplifeye applies to dental care, too. As reported in Dentistry Today, “The Simplifeye app works in conjuction with the Apple Watch and allows dentists and staff to view the day’s schedule, know who’s in the waiting room, which operatories are ready for patients, and more. This system will allow you to flow patients through your office more quickly and efficiently, and your patients will be thrilled with the quick turnaround time.”

My recently published ebook, Dr. Apple Will See You Now, offers more insight into Apple’s direction in healthcare. Meanwhile, up-and-comers such as Simplifeye are helping Apple influence the future of healthcare.

Image source: dentistrytoday.com

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The Four Elements of the On-Demand Economy

Big brands continue to transition to the $57.6 billion on-demand economy, which is characterized by the complete removal of friction from consumer purchases:

  • Jaguar and Shell recently rolled out a partnership to make it possible for people to prepay for gas from their in-car infotainment touchscreens. By using Apple Pay or Paypal configured in a Shell app, Jaguar drivers in the United Kingdom can select how much gas they want and prepay without needing to take out their wallets. The service will expand globally.
  • Walmart now allows customers to bypass lines at its in-store pharmacies. Pharmacy customers use their Walmart app on their mobile devices to order prescription refills and then use an express lane to move ahead of the customer service line and retrieve their orders. Customers can also track order status and view pricing details.

Product preordering is hardly new. As I have discussed on my blog, brands such as Starbucks and Panera Bread have been offering preorder services for a few years. But businesses such as Jaguar and Walmart help legitimize preordering, which is one of the elements of the on-demand economy. Meanwhile, many brands continue to develop services that deliver products to consumers on demand. Amazon removes friction from online (and offline) buying with Dash buttons and Amazon Go stores. Retailers such as (Walmart among them) have launched services that make it easier to either pick up products or have them delivered to your home. Uber deserves credit for being the on-demand catalyst. Now the legacy brands are learning and adapting.

The Four Elements of the On-Demand Economy

The “on-demand brands” typically adopt one or more of the following four elements of the on-demand economy:

  • Making it possible for consumers to prepay and avoid needing to reach for their debit cards or for cash, a model that fueled Uber’s rise. Prepay works especially well with high-volume products that rely on repeat purchases and low consideration, as is the case with Panera, Starbucks, and Walmart’s pharmacy. Typically customers know what they want before arriving at the store and don’t want to spend a lot of time choosing among products.
  • Delivering products to consumers on their own terms, often at their own homes, faster than ever before. For instance, Amazon has launched drone delivery in the United Kingdom to speed up product delivery and is preparing to do the same in the United States. UberRUSH partners with brands such as Nordstrom to offer product delivery, and business such as Heal in Los Angeles bring doctors to your doorstep. These types of services appeal to a variety of demographic segments, ranging from busy parents to urbanites who don’t own cars and lack time to pick up their products. But fulfilling product orders in an on-demand fashion does not need to require the brand to deliver products to the home. Walmart is experimenting with Pickup and Fuel concept stores, where customers order online and then drive to Walmart to have their groceries loaded into their cars by employees.
  • Relying on mobile devices such as phones and wearables. One cannot overstate why mobile has been integral to the rise of the on-demand economy. Mobile searches overtook desktop searches two years ago. There are almost as many mobile phone subscriptions as there are people on earth (which took only 20 years to happen). As Google noted, mobile phone users typically want things done in the moment — what Google calls micro-moments of demand. During micro-moments, people make instant decisions about where to go, what to do, and what to buy: about 76 percent of people who search on their smartphones for something nearby visit a business within a day, and there was a 2.1x increase in mobile searches for stores open now and food open now from 2015 to 2016. Those findings make intuitive sense: when you’re on the go, you don’t have a lot of time to do complex research for things to buy.
  • Using on-demand marketplaces in which people tap into a pool of available inventory to get what they want. Examples of on-demand marketplaces include Uber, Lyft, and Zipcar for either getting a ride (Uber and Lyft) or renting a car quickly. A number of on-demand marketplaces have popped up in local markets to service different industries. For instance, in Chicago, ParqEx connects people who want to rent their parking spaces with people looking for parking in the moment. Many pundits associate Airbnb with the on-demand economy. But I think Airbnb’s success has more to do with opening up a broader inventory of lodging options as opposed to making them available on-demand. Browsing Airbnb is more of an “I am traveling and want an interesting alternative to a hotel” than “I need a place to stay now.”

Voice and Self-Service

The on-demand economy is evolving rapidly in a number of ways, mostly notably through the rise of voice search. Voice search ads a layer of complexity to on-demand transactions: with our voices, we can request more complex services and products. We can ask Alexa, “Tell me where I can watch the movie Get Out this afternoon and use my Stubs discount card” or “Where can I get barbeque ribs in the west Chicago suburbs?” Businesses that want to be found during those open-ended searches need to optimize their online content and data so that they are visible for voice search. Businesses that understand how to make themselves visible for voice will capture more on-demand queries, thus being part of the on-demand journey, from awareness to consideration to purchase and service.

Another major development is the use of buy buttons such as Amazon Dash to enable self-service on-demand. The Amazon Dash button turns any object into a smart device for replenishing items such as laundry detergent. Amazon reports that the Dash buttons, available to Amazon Prime members, have taken off. According to Amazon, Dash button orders occur over twice a minute, and for many popular items, more than half of orders are done via Dash buttons. The list of brands signing up for the program include Campbell’s Soup, Cascade, Clif Bar, Mentos, and Quilted Northern, to name but a few. All told, more than 200 Dash buttons exist.

It’s easy to foresee a time when Amazon will turn the Dash button into an auto-order device that uses sensors to replenish certain products without the consumer even needing to click a button. Auto on-demand may take hold in other industries and forms for products that are ordered often. For now, brands are responding when consumers call — and faster than ever.

Image source: nextjuggernaut.com

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Dr. Apple Will See You Now

Apple has been defined by consumer product innovations such as transforming mobile phones from calling devices into data centers. But you won’t find Apple’s future in an Apple store. You’ll need to visit a hospital like Johns Hopkins Medicine.

At Johns Hopkins, physicians provide epilepsy patients with Apple Watches to track their seizures, possible triggers, medications, and side effects. Thanks to a special app developed by Johns Hopkins, the EpiWatch, patients have access to their personal information through a dashboard that also shares data with providers if the patient wants to do so. Patients can also send a message to family members and providers to let them know when the patient is tracking a seizure. Johns Hopkins is collecting this data to eventually understand how to predict seizures before they happen.

Johns Hopkins is one of many healthcare providers working with Apple to help patients manage their wellness and clinical care. Apple is not abandoning its role as creator of consumer devices and software — in fact, Apple is doubling down on devices by carving out a bigger role in healthcare. For the past few years, one of the world’s most valuable brands has acting as the data backbone for patient care, one built on Apple hardware and software. Having changed industries ranging from music to telecommunications, Apple is helping to the healthcare industry make an important and necessary shift toward wellness and clinical treatment.

Apple’s Strategy

Over the past few years, Apple has made some significant product developments, personnel hirings, and corporate acquisitions to make Apple a brand for wellness and clinical care. For example, in 2014 Apple launched HealthKit to give Apple users a central repository to track health and fitness data on their Apple devices. The launch of the Apple Watch positioned Apple more firmly as provider of a consumer health-management wearable. The 2016 acquisition of Gliimpse, a medical data storage and sharing start-up, bolstered Apple’s entry into supporting clinical care with smarter electronic health records. So what, exactly, is Apple’s game plan for healthcare? To sum it up:

Apple’s strategy is to be the data backbone for patient care.

And that patient care strategy — for now — focuses on wellness care (providing services such as fitness and nutrition management designed to keep patients healthy) and clinical care (using data more effectively to help patients manage conditions such as diabetes).

The two key elements of that strategy are:

1). Software for patients and providers to monitor and share data

Through its Apple Health app and the ResearchKit and CareKit application development software frameworks, Apple has been creating a software infrastructure for wellness care, diagnostic care, and medical research on Apple devices such as iPhones, iPads, and Apple Watches.

So far the real action for Apple is occurring on the provider side for clinical care. For instance, as reported in Forbes, in February 2015, Ochsner Health System in New Orleans launched its “Hypertension Digital Medicine Program,” which relies on HealthKit to empower patients to measure and share with the provider their own blood pressure and heart rates. Oschner adjusts (in real-time, if needed) patients’ medications and lifestyle counseling based on the findings.

The Apple website also contains many examples of health providers applying ResearchKit and CareKit. For instance, Duke University has developed a ResearchKit app that allows physicians to screen and diagnose autism by using their iPhone cameras to do facial recognition checks. The University of Rochester used ResearchKit to build an app for the largest Parkinson’s study in history. According to Apple, “the app helps researchers better understand Parkinson’s disease by using the gyroscope and other iPhone features to measure dexterity, balance, gait, and memory.”

ResearchKit and CareKit have built off HealthKit’s core functionality to give Apple an entree into clinical care. As reported by Alex Webb of Bloomberg, “The ultimate goal of Apple’s medical technology team is to turn HealthKit into a tool that improves diagnoses . . . The system could chip away at two problems that plague the industry and have stumped other specialist firms in the field: interoperability — allowing data to be transferred from hospital to hospital across different databases; and analysis — making it quick and easy for physicians to extrapolate salient information from mountains of data.”

2). Hardware: the Apple Watch and iPhone to create an ever-present device platform

Apple Watch and iPhone are the delivery devices for Apple’s health management software. The iPhone gives Apple an installed user base of 101 million users in the United States, and the Apple Watch a wearable, which is key for managing everyday fitness goals such as nutrition and exercise (because of the convenience of wearables).

The iPhone accounts for 70 percent of Apple’s revenue. For Apple, penetrating healthcare is important to maintain sales growth. After experiencing three straight quarters of slumping sales, Apple recently reported that iPhone demand came roaring back in the first quarter of 2017. Finding new markets such as healthcare should help Apple maintain its leadership

On the other hand, the Apple Watch is still a small enough part of Apple’s ecosystem that its sales are rolled up into Apple’s “other products” category. But Apple Watch is essential to Apple cracking the fitness market. And at Startup Fest Europe in Amsterdam, Apple CEO Tim Cook brashly predicted an era in which everyday people will wonder how they ever got by without their Apple Watches “[b]ecause the holy grail of the watch is being able to monitor more and more of what’s going on in the body. It’s not technologically possible to do it today to the extent that we can imagine, but it will be.”

But consumer usage is only part of the story for Apple Watch — the other is institutional uptake. Hospitals such as Johns Hopkins University and King’s College Hospital in London are using the Apple Watch to do everything from giving patients reminders to take their medicine to collect information about patients’ epileptic seizures in order to better understand epilepsy.

And Apple is collaborating with the health payer side, too. Recently, Aetna announced that the insurer is providing the Apple Watch at no cost to its 50,000 employees “who will participate in the company’s wellness reimbursement program, to encourage them to live more productive, healthy lives.” Aetna is also developing health apps integrated across multiple Apple devices ranging from the iPhone to Apple Watch to handle a host of health management functions ranging from refilling prescription orders to paying for health treatment.

Look for Apple to continue to develop the Apple Watch as a fitness and telemonitoring device. Last year, Apple filed a patent to make the Apple Watch capable of monitoring your heart beat and warning you of an impending heart attack. And recently Apple filed a patent to embed into smart sensors into Apple Watch wrist links. In doing so Apple identified fitness-monitoring capabilities as a potential application of the functional band links.

Will Apple’s Strategy Succeed?

These applications of Apple technology are taking hold for some overlapping reasons, including the advent of pay-for-performance models (in which physicians are rewarded for achieving successful patient outcomes as opposed to volume of patients treated) and the rise of wellness care.

The adoption of pay-for-performance models and an increase in high-deductible insurance plans are contributing to a bigger focus on wellness care — in other words, investing in programs intended to keep patients healthy. The PwC’s Health Research Institute (HRI) cites wellness care as one of the top five forces shaping the future of healthcare industry over the next decade, with wellness accounting for $276 billion of the $5 trillion U.S. healthcare ecosystem. The Apple Watch and Apple Health position Apple well here.

Moreover, the uptake of pay-for-performance or (outcomes-based compensation models) — in which payers reward healthcare providers for achieving quality-related goals instead of volume of care — plays into Apple’s favor. Here’s why: As noted by Reenita Das of Frost & Sullivan, “To date, the majority outcome-based compensation models are, in reality, performance modifiers built on top of legacy fee-for-service reimbursement schemes. In 2017, we will begin to see more fully formed schemes that focus on patient support across the care continuum. As such, healthcare providers are in dire need of the right technologies and tools to help them effectively deploy and coordinate patients, personnel and infrastructure [emphasis mine].”

In other words, healthcare providers need access to better data to help patients achieve better outcomes, which is exactly why Ochsner Health System in New Orleans jumped all over Apple’s HealthKit to start treating hypertension. A sustained effort to making clinical care more effective requires better management of electronic health records, which is what Apple is aiming to provide, as seen with its acquisition of Gliimpse.

Tim Cook’s Vision

Apple’s actions follow through on Apple CEO Tim Cook’s vision for Apple as a healthcare player. As he told Fast Company’s Rick Tetzeli in 2016,

We’ve gotten into the health arena and we started looking at wellness, that took us to pulling a string to thinking about research, pulling that string a little further took us to some patient-care stuff, and that pulled a string that’s taking us into some other stuff,” he says. “When you look at most of the solutions, whether it’s devices, or things coming up out of Big Pharma, first and foremost, they are done to get the reimbursement [from an insurance provider]. Not thinking about what helps the patient. So if you don’t care about reimbursement, which we have the privilege of doing, that may even make the smartphone market look small.

And Cook has good reason to be optimistic. Apple’s ace in the hole consists of its toehold among the various players in the healthcare ecosystems, especially physicians, who prefer using Apple products. And the Cleveland Clinic recently rated the Apple Watch as having the most accurate heart-rate sensor. In 2017, I expect Apple to deepen those relationships through joint research and development (as it has done with Mayo Clinic).

And to paraphrase Steve Jobs, here’s one more thing: expect Apple to articulate a vision for integrating artificial intelligence and healthcare. The company recently joined the Partnership on Artificial Intelligence, a consortium dedicated to using AI for social good. AI, data, and healthcare are converging. I expect Apple to be at the center of that convergence.

This blog post is adapted from my ebook, Dr. Apple Will See You Now.

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