Last year’s Consumer Electronics Show in Las Vegas was the last big technology event to take place before Covid hit. The following month, the Mobile World Congress in Barcelona was cancelled, heralding in a year in which the traditional platforms for product announcements disappeared. That hasn’t stopped new products appearing, not will it; the design lead times for phones and TVs are at least two to three years, so even next Christmas’ products will have started off before Covid. The design departments for major high-tech companies are a bit like supertankers – they’re difficult to stop or change direction. Where the absence of exhibitions may be more keenly felt is within smaller companies and startups, who typically use these events to gauge interest in their products and visions.
The Consumer Technology Association, which runs CES has had a year to work out how to transform it into a virtual event. The virtual show has just finished and was strangely muted. Keynote speakers from large companies were beginning to talk more about their relationships with society than their product vision. Probably by coincidence, we’ve just had the tenth anniversary of the Arab Spring. Back in 2010, social media companies were congratulating themselves for bringing Western democracy to the Arab World. Over the following decade, the results of that revolution have displaced over 26 million people, helped the growth of ISIS and the week before CES 2021 opened, showed social media helping an uglier side of Western democracy with the storming of the United States Capitol in Washington.
It was perhaps unsurprising that few industry leaders were uttering the word “algorithm”, which is getting distinctly tarnished. “Smart” was still there, along with AI and many companies played to the Covid bandwagon. Automotive companies, who have increasingly become dominant voices at CES, were parading their green colours, promising an all-electric future. Their conversion, along with the US Department of Transport’s recommendation of a recall of 158,000 Model S and Xs should have worried Tesla investors, as it suggests the road may be pulled from under their tyres, but it didn’t seem to. It appears that unicorns remain unicorns, even when all of the available evidence suggests they are about to return to their mythical status.
But what of the unicorns yet to be? Over recent years, a large part of the fun of CES (assuming anything happening in Vegas can be described as fun), has been to roam around the start-up stands. It’s like Kickstarter on steroids. Anything you couldn’t imagine or possibly need is there. Hidden amongst them are a few things which seem like really good ideas. Many will never come to market, but it’s a great showcase of ideas. For those start-up companies, shows like CES offer two big benefits:
- A window to tell the world about your idea and hopefully interest some investors, and equally importantly
- An opportunity to get feedback about whether your idea makes sense.
The second benefit is often downplayed, but for many startup companies who are doing something really innovative, it’s the first opportunity to get some honest feedback outside the four walls of your hothouse. It is often the first time that anyone has questioned them or asked why they think anyone is interested. The scheduled meetings you have with investors and suppliers are important, and these big exhibitions are a great way to have dozens of them in one place, but walking around the halls and having the plethora of brief chats can really help you understand whether you have the right idea or not. Many companies, who have been sensible enough to listen, have come away from their first public exposure and made radical changes to their product vision or business model as a result.
As far as I can tell, that opportunity for feedback has been lost, and it’s a concern. For the last year, most product design has been conducted from home, with teams losing the ability to meet face-to-face. I’ve been working from home for many years, so my working day hasn’t changed that much, but it has become apparent to me how we lose from that isolation. However well you know your team members, the interaction becomes more structured. You realise that every so often you need a good argument to clear the air and I’ve yet to find a way to do that online. The same applies to white boards – the scrabble to seize the marker pens and add your idea doesn’t work online, but there are definitely times when that form of conflict is useful. We are missing them. The ability to go out for a coffee or a beer to sort things out, and to stimulate new flights of fancy are vitally important to the creative process. Without them, it’s too easy to avoid debate and slip into consensus design.
However much companies may hype them up, almost every tech product we buy conforms to the same design process, which is incremental development. One of the best summaries I’ve ever come across is from Jonathan Meades’ novel Pompey where he explains that through
“Incremental Product Mutation the customer is hooked: the extra feature is the lure. It is the model for the electric shaver which shaves, which is succeeded by the electric shaver which shaves and has sideburn trimming attachment, which is succeeded by one which possesses variable speeds, and that by the latest thing of the year before last with nostril hair clipper, clock, etc.”
He concludes with the rather neat observation that “the Swiss Army’s top brass are myopes with hair on their palms”.
That was in 1990, before we had 2G or the Internet. For Swiss Army, perm any of our current, major technology brands. The endless additional mutations that they have come up with have bound us ever more tightly into the incremental mutation philosophy, hastening it to an annual cycle of product releases.
Clayton Christensen was a bit less readable (but has probably made a lot more money out of it than Mr Meades) when he expanded on the process in his classic book “The Innovator’s Dilemma” seven years later.
The chart shows that manufacturers generally focus on adding enhancements for their most demanding customers (the blue line). That’s because they tend to generate more margin, and it helps stave off commoditisation. Eventually someone comes along with a cheaper way of doing it – the Disruptive Technical Innovation, which generates a cheaper product. In its first iterations it is likely to have fewer features (think PCs vs mainframes, Netflix vs video rentals, etc.). However, technical innovation generally happens faster than customer requirements, so in the course of time the new technology (the green line) offers even demanding consumers all they need, so they drop the more expensive brands they used to buy.
CES has always been a good touchstone for looking at what those disruptive technological innovations might be. 2014 was a good year for spotting them, bringing us Bragi’s Dash earbuds and Amazon’s Alexa virtual assistant.
Bragi struggled to be a major brand and morphed into an audio software platform. However, Apple took up the challenge and their Airpod has become the fastest selling consumer product ever. Alexa, which arrived later that year, changed the way millions of people interact with things around them, possibly doing more than anything else to rescue the concept of smart home. Ironically, what is possibly the most successful consumer product to come out of CES also debuted in 2014. It was the selfie stick, which became endemic until a pandemic stopped travel and the associated plague of pointless photos.
The point here is that the disruptive technological innovation is generally a step which changes the way a product works or can be manufactured. Although we can credit crowdfunding for many more products coming to market nowadays, very few are disruptive in this sense – they’re just adding techy geegaws (or should it be geekgaws?) for their most demanding customers, following Christenson’s red line.
CES, as we experienced it this year, felt like it has lost its purpose. It continued to give journalists and analysts the opportunity to listen to a lot of talks from industry leaders in one concentrated burst, but TED’s been doing that for years. It let startups have interview slots, but they felt like marketing pitches. What it missed was the chance to see the stuff that might not have made those interviews and the serendipitous looking around and questioning, which for me has always been such an important part of these events.
Without these, I’m seeing ever more polished crowdfunding videos which push startups into a battle to add yet more features; entering production before they’ve had a chance to perform a reality check. The danger is that this removes them from the disruptive jump, leaving it to the major brands who, like Jonathan Meades’ hairy-palmed myopes, have historically been poor at real disruption. Where major companies have disrupted, it has often been by performing a proper engineering job on other start-ups’ ideas, as Apple did with Airpods. This makes it more difficult for start-ups to succeed and more challenging for VCs to pick a winner, as their next unicorn is likely to be stillborn. That hasn’t stopped investment – CB Insight’s consumer report showed funding hit a new record in Q3 last year. The question is how much of that investment money will provide returns?
The other elephant in the room is the effect of what will be close to two years of lockdown for most consumers, along with a shift to working at home. People are still buying tech, but there is more of an emphasis on its capability, i.e. its applicability to working at home and home schooling, rather than the delight of the new which has characterised the last decade of product development. That may elongate the time between purchases, at least of major items. We’re already seeing a growing interest in accessories like wireless earbuds, as opposed to phones. If that is true it may hasten the eventual demise of the smartphone.
It is interesting to map that lowering of performance expectation onto the Christensen slide.
If the consumer demand for performance flattens out, the slope of the top dotted line comes down. Technology innovation is likely to remain unchanged, as it has a long-term roadmap driven by competition amongst suppliers. The combined effect is that when a disruptive technology appears, giving us the new products on the green line, the point at which they meet the lowered consumer expectation will occur much earlier and be far more brutal for the industry incumbents.
These multiple changes – loss of physical exhibitions, face-to-face design, absence of design feedback and new consumer priorities all reinforce the incremental, Swiss army knife approach which ignores disruption. When it finally comes, as it inevitably will, it is likely to be painful. The successful companies will be those that understand these changes and best prepare themselves to become the disruptors. It is no longer clear whether CES has a part to play in that process.