The Next Generation

Posted by Mike Walsh

Jun 6, 2011 10:18:00 AM

the marker

How can you tell what the future withholds? Don't bother with Market Research – they're useless. Don't settle for a new Facebook page – Pour contents into it. Don't ask your customers what they want - Step inside their lives. The trend specialist, Mike Walsh, who's arriving in Israel as Partner's guest , reveals the secrets of digital marketing. "The conversation with the web rend specialist Mike Walsh started off with a technical malfunction.

Walsh, staying in Istanbul at the time, wasn't able to maintain telephone contact with Israel. After almost an hour of failed attempts, we finally succeeded in communicating. The man whose work is to predict the upcoming trends on the Internet and in mobile, found it to be hilarious. "What you don't know is that I had to ask the hotel for a different phone, because the one in my room was not working ", He laughs. "There was this train of technicians, trying to help me have this call". 

After the train left the station, the Australian Walsh was free to share some of his insights into the Internet and its future. As an adviser for CEOs and companies such as Philips, BBC, HSBC and Procter & Gamble, he's considered an expert in emerging markets. There, he argues, is the future of the web.

"Many innovations origin in Asia and that is what my new book "The Divergence" is about. If you want to understand innovation you have to approach places and markets which have the largest consumer disturbance (to business models, to veteran industries, to profits – god forbid) and examine the consumers instead of the businesses".

The consumers, according to Walsh, are the most important thing for whoever wants to understand where the market is headed. Not just any consumes, but specifically those who are far away from American mainstream. Walsh defines "disturbance" innovation that improves a product or a service in a way the market did not expect. This is usually done at a lower price or for a different market of consumers.

"The companies do not form the disturbance, they only make it their asset and profit from it. And what we see in the West, the US is perhaps a nurturing environment for fund raising, but has a quiet market. There are not too many disturbances. There are not many new ideas are born there."

The proof is there to see. "The social network was originally from Korea in the 90's from a website named Fireworld; Group Purchase sites, like Groupon, followed the collective shopping in China five or six years ago; the social games like Farmville and Domio started in Japan and became commercial in China many years before they became popular in the US.

1. How to communicate with the consumers of tomorrow Five tips by Mike Walsh for creating innovative contact with your clients

2. Look at your business from the disrupting client's perspective. Ask yourself if anyone born after 1994 can use your product or service all the time, from anywhere and using any device. Is the interface suitable for the next generation?

3. How good are you at telling a story about your product? Do you have a content strategy? Do you think like a media company? This is the future of consumerism.

4. How much time you put into examining the innovative disruptions in the industry, in your country and beyond? Do you have radar pointed not only to your competition, but to your consumer as well, what are they doing in aspects concerning your future?

5. Ask yourself how easy it is to be conducted in front of you. Do you maintain a fixed business model or do you make changes to make it's easier for consumers to communicate with you, even if it means you might earn less money in the short term?

6. Check how much time you spend thinking about disruption. Do you actively encourage the staff and management to find methods to 'destroy your business'? And thereby stay ahead of competitors and creating the next wave of innovation in your field.   

Three Waves of Innovation

Walsh is CEO of the innovation research lab Tomorrow and deals with the Internet since the mid-90s. Mike previously ran research company in the Asia Pacific called Jupiter Research. He says it was one of the first research companies to examine what consumers are doing on line. Afterward he held senior strategy roles at News Corporation, founded by Rupert Murdoch, in both the Australian and Asian markets. “This is how I was exposed to the disturbance the Internet was creating on the consumer’s level and on media companies level – what the Web did to TV and newspapers.”

Three years ago he moved to Hong Kong, started off with his company and wrote his book “Futertainment”, which focuses on erupting markets and refers to the fact that most of the Internet disturbances are consumer disturbances from countries like China, Japan and Korea.

Walsh came to Israel as a keynote speaker at Partner's Orange Mobile Cloud Conference, for the company’s largest business clients. The conference which will take place next week, is trying to map the future with regard to the Internet and to smart devices. Walsh will discuss the need to keep track of changes in consumer behavior and less of technological changes. “I will talk about the cloud technology and how it changes our lives. Not technologically, but the way we do business and more importantly – the way we live. I will also talk about the effect of the younger generation and which innovation models should companies adopt in times of struggle and uncertainty.”

If the future is not about technological development, how can you predict it?

“I believe there are three waves of innovation. The first wave is technology. A bunch of nerds sit at some garage and invent crazy technologies that no one really understands how to use, like Steve Jobs and Steve Wozniac the hippies who set back in ’75 in some garage trying to build the first personal computer out of wood.

The second wave is behavior. This is the stage when consumers use the technology in a way that even the inventors didn’t think about. This is the stage Facebook and Twitter are at. Tens of millions users and it is still not clear what is their business or how to make money out of it. The people in these companies are in an experiment, when they don’t really know what the right business model for them.

The third wave is business. Only when someone understands how to assign a business model to behavior and technology, it all comes together. And this is usually the worst time to buy those companies, because then it is too late”. A good Example, according to Walsh, would be the cellular industry. “There's a new Chinese word – Shenzhenien –that refers to the copies of smart-phones made in the city of Shenzhen. They don’t make iPhone, they make HiPhone. It costs 100 dollars and has enough room for 2 SIM cards. Those imitation manufactures followed with such attention for the innovations, that they started releasing new versions of their own every week. To some extent they were even more innovative than the original phones they were copying and some even became a massive manufacture like HTC. In my opinion, five years from now the biggest cellular manufacture could be a brand that doesn’t exist yet and could turn up from those erupting markets”.

Two Web types

Born to a Chinese mother in Australia and grew up in a mixed impact of East and West, Walsh involved in what is happening in these markets, especially in the far east. In his opinion, the best way to know what will be the next trend is to “look away to markets and other geographic areas that develop a different type of behavior and technologies. See how they operate in their market conditions and then decide if it could fit your market as well”. This is how he recommends his clients to act in everything related to internet trends. He claims that today there are two coexistent types of internet. "I'm talking about the West's Web as opposed to the rest of the world's Web. All eyes are always looking towards Silicon Valley, despite the fact that the U.S. contributes only 14% of the global Internet. CEO of Google, Eric Schmidt said that the internet is a game of four companies: Google, Facebook, Amazon and Apple. According to him, they are the only four you should pay attention to. This point of view is a very limited with preference to the West. The world's largest social network is not Facebook but the Chinese social network, established in 2005 - has 70 million registered users. Many places in world have not only new emerging technologies but also different consumer behaviors, and they will not remain there.  It's like a virus. If a certain consumer group somewhere decides to do something new, it has a tendency to spread out globally. Bit like Tamagotchi coming from Japan, but much faster."

So companies must listen to their clients to know what's going to happen next.

"Depends on the definition of listen. Some companies today conduct market researches. They take a group of clients and ask them what they want. The results are useless because clients don't know what they want. You don't have to ask people what they want, you have to observe the way they live. Companies need to have anthropologists rather than market researchers, and some companies do.

"Intel, for instance, has one hundred employs whose job is to live and spend time with customer. To go through their garbage, see how their rooms look like, trying to figure out not what their saying but how they're living.

"Another issue companies should check is the people that cause them most trouble. Today, companies are more exposed to this through the legal department. Who we want to prosecute and which companies or users violate the rules. This is a good spot to see the future from. If a company's lawyer wants to sue someone, that person is probably the man the company should hire."

Online All the Time

No one really knows what the future holds, including Walsh himself. But he does know that in order for something to happen it must be a disturbance to something else that already exists. Walsh gives an international problem as an example - Facebook surfing in the workplace. "A client called me and said, Mike, I've been listening to what you said and we are planning to have free Facebook access on lunch time. I asked him what he's planning to do with the rest of the day. Is he going to place a metal detector at the entrance and take all their laptops? Facebook is not something you can block. Everybody is logged in all the time via smartphone."

And this is only one of the challenges facing companies today. But the problem is most of the people who are currently in power do not understand intuitively the changing consumer behavior. "A biggest opportunity should be taken right now is to try to look at the companies through the younger generation's prospective. Generation that grew up without thinking about these technologies, which are considered normal for him."

Walsh recommends looking at the people born in 94 and later, which he calls "The Naturalists". "When you ask them how they get movies, how brands affect them or how they communicate with friends, they are not really able to explain because they don't think of it in our terms. They are not familiar with a world where you can't get the movie you wanted. They are not going to learn our consumer behavior, we have to learn theirs."

For his misfortune, most of the companies don't apply this due to the difficulty of it. "Not only they're trying to maintain their current business model, but they are not built to think about the consumer. Look at how many problems TV channels and film production studious have. They're making profit in a very clear, distinctive path and they're having trouble to respond to changes in consumer behavior. The music industry, for example, was the first to get hurt from the behavioral change. And is not the last. It happens in almost every aspect of business. The Internet is not a channel or a technology, it is a change in our way of life. In the way we work and communicate. That's why you can't "have Internet" as a business strategy."

He recommends businesses to rethink and reconsider their model of engagement with customers and learn the biggest trend – cloud consumerism such as Facebook and other social networks. "Those websites have successfully managed to develop a model for interaction and user based business model. If your business is not able to allow consumers to communicate whenever they want and provide them with information that will serve them, then you lose a great opportunity."

Success, in Walsh's eyes, can only come with the understanding the consumer change. And no, 5 million likes or friends on the company's Facebook page do not empress him. "A like is not a client, it is a beginning of a relationship. There is a danger today, as we're just getting started, people do not emphasizing the most important ingredient – content. To make a connection with consumers it's not enough to open a Facebook page, you must create relevant content. It's less important what the consumers have to say to you, what's more important is what they're saying to each other. That's the reason why 5 million people liking you on Facebook are less important than 5 million people talking about you among themselves. And to do so you must have content strategy."

By Roni Levin

This article appeared in the Israeli newspaper, 'The Marker'.

The Marker





Topics: Israel