PALO ALTO, CA - APRIL 28: The Apple Inc., logo (Image credit: Getty Images via @daylife)
Apple continues to ride high as a product company. Great design, especially around the UI, and marketing have allowed the iPhone and iPad to soar even as iTunes has lost its competitive edge. Herein lie the secrets of what Apple and other trusted brands should do next. Reinvent the service mix.
Before going into that, here's a little background.
A couple of years ago the Harvard Business Review asked me to analyze their archives. In doing that I found a marked transition point in and around 1990 - 1992 - suddenly, in an economy of goods, business writers were fixated on "services". Companies were failing to develop services around product.
We came to think of the service economy as burger flipping. But at the time we meant, product has to be supplemented with a service layer.
The reason was straightforward. All product could be commoditized. But a service layer helped to build stronger customer relationships. And created new opportunities for differentiation.
Against that background, Apple is a classic exponent of the product + service company.
However, iTunes and the Apps Store, which drew people to Apple's designs, now have worthy competitors in Amazon, Google and Android. Increasingly people will also draw content from Facebook just like they do now from YouTube. Differentiation at the service layer is becoming more difficult.
But there is a component of service that Apple and its competitors overlook. In the long term Apple's profitability from product will decline but even as it declines, one asset will remain strong, if Apple protects it. That is trust.
In a world where trust is on the brink of collapse, companies like Apple have a ton of it, even as they extract an excessive level of cash - excessive in the sense they have been unable to use it - from the economy they serve. Trust will be the new product and service.
Andre Durand, CEO of Ping believes trusted identity is the next frontier on the web. And I'm inclined to agree with him. Andre's company manages identity for enterprises, among other services. And it has taken me three long conversations now to begin to understand identity's implications.
If I "get it", then what I get is that the Internet is full of friction because our identities are scattered around different sites. Partial data about us is continuously sold to companies that want to sell or advertise to us products that often have no real value to us.
That loose form of marketing that we used to call "targeted" will soon be joined by a much-transformed labor market, where we will be recruited for shorter periods, far more often, as enterprises move to an on-demand labor model.
What we know, what we can do, and what we have achieved, will have to be verified parts of our online identity. Our income will depend on it. And will need to be absorbed into on-boarding and payroll automatically.
As an example of the disadvantages of incomplete information, I jut waited 10 days for a payment from a client that left out a crucial number on a wire transfer. It will now take 10 days to track that money. And then it all starts over. That is friction, and it causes more friction. Eliminating this friction, or more generally barriers to opportunity, is the next phase of economic acceleration.
That has already begun, in the sense that apps developer communities are very low friction forms of commerce, a topic Nick Vitalari and I addressed in The Elastic Enterprise.
In the long run I don't care which products I carry in my pockets. Samsung's are as good as Apple's. And no doubt Blackberry will produce a decent smartphone in the new year.
I'm not too fussed about the app or content as a service layer. In fact as a service layer they are quite weak. What I care about is simplicity in my life, giving more recognition and time to the people in my close networks, and being able to draw more value from my wider networks. The latter is increasingly important and under-served.
I don't see any smartphone maker helping with it. I see my economy changing but I see them serving my needs in the 2007-2010 time frame.
What I really care about now is how I am presented to the complex world and networks around me. And for that I need my service providers to get closer and help me build a trusted identity online, with information that belongs to me not to LinkedIn or Facebook.
In fact I want one or two service providers that will step to my side of the business model.
Instead of seeing me as an entity they can extract data from, in order to upsell and cross sell, or indeed on order to merchant my data on to other retailers, I want a service provider that I can genuinely trust my data to and who can broker relationships with me across the virtual world.
Facebook could never be that partner because its whole business model is predicated on me being an acquisition for its purposes.
But could an Apple or a similar trusted brand become a real friend and co-manage information about me? And you, of course?
If there was a highly validated version of my identity in a highly trusted databank I suspect that getting new assignments in a fast changing economy would become easier. Finding out about economic benefits -precisely defined needs from my side, reasonable offers from merchants - would become easier. Perhaps PR agencies would be less inclined to spam me but people with a unique perspective, say on the Spanish experience, would know that's what interests me.
My economy is full of frictions that I as a member of the free agent nation struggle to deal with in the time I can allocate to work and leisure. The service provider that addresses this without compromising my data will be the next Apple.
Follow me on Twitter @haydn1701
