Blurring boundaries is one of the emerging patterns of fast changing markets: in a nutshell the borders that, for many years, have characterized product categories, consumption occasions, and consumer adoption patterns, are now disappearing, ultimately changing the world as we know it.
The role of TV and the Living Room
One of the most compelling examples of blurring boundaries is the role of the TV in the living room. Once the most important device, a family aggregation moment, the ultimate resource of news and entertainment at home, it now just one of the available screens to chew and digest content. And of all possible screens, it is the one still missing the sharing functionality.
While innovation was producing more and more boxes, e.g., VHS player, Set-up Boxes, DVD players,…, the TV retained unchallenged its central role, until a combination of hi-speed internet penetration and the emerging offer of LCD and plasma screens of all sizes, allowed even for PCs to challenge TV’s dominance. The tipping point of this process was the emergence of smart devices and eco-systems of production and fruition of content, in which the TV set is one of the many devices, not the core of the offering. Large subscription-based broadcasting giants already offer a complementary ‘on-the-go’ version of their content, while Netflix, once a DVD rental service, produces its own award winning exclusive content, for its own subscribers. Apple and Google already compete in the space, by offering distribution services for movies and TV series, which can be purchased/rented and streamed on-line to any device.
Interestingly enough traditional Consumer Electronic players like Philips, Panasonic and Sony – all of which were contenders to the crown of the living room – did not see the boundaries blurring, nor new entrants coming their way, focusing their attention in non-experience centric devices (e.g. DVD-R, Blue Ray, 3D TV) rather than putting their own customers at the center of the equation. In this new ecosystem, the content producers challenge their own windowing distribution systems by making content available on-the go; Apple and Google, who have no roots in traditional consumer electronics, are fearlessly fighting for dominance in content distribution and fruition, and Netflix, previously only a DVD rental service, is producing content and offering it in streaming for its own subscribers. Hence our definition of blurring boundaries, depicting previously clearly identifiable borders, transforming now in fuzzy – almost meaningless – borderlines.
Blurring Boundaries: drivers
While the TV example is full of technological advances, the ‘blurring boundaries’ phenomenon is not exclusively a hi-tech one. In wines and spirits boundaries are changing in an intriguing way, because of brands, not technologies: product categories do not limit consumption occasions as they did 20 years ago (e.g., suffice to think that certain categories included aperitifs and digestives, placing the products exclusively around meals, and nowadays wine consumption grows faster outside meals); traditionally male categories are embracing women (e.g. whisky) and many spirits brands are betting on female consumers to recruit male counterparts for their brands.
But what is the source of the phenomenon? There are four main interconnected drivers behind it: the first one is the emergence of ambient intelligence, which often refers to (eco-)systems with a “smart” prefix: smart-cities, smart-cars, smart-TVs and indeed smart-phones. Ambient Intelligence is about device-less and intuitive control, in which technological advances are introduced only to respond to a clear user-centric design challenge. Ambient Living is also about new consumption attributes, focused on the multi-sensorial experiences. Probably the easiest way to understand the technological implications of Ambient Intelligence is referring to the introduction of the 2003’s book “The New Everyday”, by former Philips Design CEO and former Electrolux Chief Design Officer, Stefano Marzano:
Much of today’s material technology is still obtrusive in our homes and offices, in the shape of grey and black boxes – televisions, computers, appliances… These are set to disappear, as the technology becomes incorporated in our material environment.
The second macro-driver behind the blurring boundaries phenomenon is the Internet of Things, a world of interconnected devices and appliances, which communicate among themselves seamlessly. While the concept is not new, because already in the late 90s consumer goods and appliance manufactures were envisioning more connectivity at home, it is now a reality.
“We expect more than 50 billion devices to be connected in the next 10 years” explains Luca Barone, CISCO’s Sr. Director for Marketing and Strategy, “but IOT is a reality already now: in the US you can purchase already Nest – recently acquired by Google – or wireless enabled scales, connected garage doors, smart-phone enabled locks and Internet of Cars.Like cloud computing, IOT is a uber-trend, which takes long time to develop: nevertheless the learning curve is very steep, which means that if your company is not a leading player in the space, it might be cut-off forever”.
This is having repercussions also in other sectors: in the automotive we are seeing a shift from “connected cars” to IOT, which underlines the transition from “getting content and data into the car” (e.g. navigation, entertainment, internet) to “getting data out of the car” to develop new services, new apps as well as increasing security, safety and improving the driving experience.
The third macro-driver of our phenomenon finds its root in the changing global resources landscape. In his 2011 scholar paper, Reinventing Marketing to Manage the Environmental Imperative, Professor Kotler urges marketers to start managing the sustainability question, because we all need to stop assuming that and acting like we were living in an infinite resources world, as well as, because consumers are more and more interested in how companies meet their societal obligations.
This sustainability imperative is the third macro-driver behind the blurring boundaries phenomenon.In a nutshell, most consumers will hardly pay a premium for greener and more sustainable products, but they expect their brands –specially the premium ones- to be sustainable, by ultimately removing from their repertoire brands, which do not meet certain sustainability criteria. This has a far-reaching impact on businesses, both in consumer marketplaces and in more traditional B2B environments, because what consumers demand of their brands, their brands will demand of their suppliers. “Apple is a major customer of ours and they challenged us into using more sustainable materials” describesRob Kirschbaum, VP of Open Innovation at DSM, a global Dutch health nutrition and materials producer, “but we were ready for it. In 2010 we already set an objective for ourselves to deliver 20% of our 2015 turnover from products that have less than 5 years in the market. As a matter of facts, sustainability at DSM goes hand in hand with innovation, and of course long term development happens in an Open Innovation eco-system together with customers and suppliers.”
The final macro-trend at the root of the blurring boundaries is the emergence of the collaborative economy. Co-creation, Crowd-sourcing, open-source are all aspects of this new economical model, where an idea builds on top of another idea in a seamless and instant way, by providing new products, concepts, services, designs through agile, scalable and expert based, international collaborative organizations. To better understand the impact of the collaborative technology, we go back to out TV example, by looking at Netflix, at the time not yet in content, which in 2009 crowd-sourced the solution to a key problem they could not solve internally: an algorithm to better predict movies suggestions to their own customers, based on what they had rented and they rating of the movie. By doing so, Netflix elevated the consumer experience to the highest, while acknowledging that innovative solutions could not only be created through an inside-out approach.
Blurring boundaries are a very real phenomenon, with four macro drivers:
- ambient living
- Internet of Things
- emergence of collaborative economies
The event might manifest in products, distribution systems, technology, brands and adoption models, and like disruptive innovation might completely challenge the status quo, by creating very different operating conditions. The impact is often extreme: Philips, a long standing commercial and innovation leader of TV sets and boxes, following their audio, video, DVD players business, sold also their TV business in 2011, because they could not respond strategically to the blurring boundaries.
This article was originally posted on the Esadecreapolis Blog in Oct-Nov 2014