Digital Product Design
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The document discusses how companies like Kodak and Fujifilm responded to disruptions in their industries from digital technologies. Kodak failed to capitalize on digital photography and filed for bankruptcy, while Fujifilm successfully pivoted to new markets like skincare products. The publishing industry is facing similar disruptions from the Internet. To avoid decline, publishers must retool their capabilities for digital content creation and distribution, view digital as an investment rather than a cost, and recognize that their true competition comes from all internet businesses seeking people's attention.
Digital Product Design
- 1. Designing Digital Products 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 My name is Andy and I’m the founder of Clearleft. We’re a design agency that helps companies like yours conceive, plan and design digital products. So I’m fascinated by looking at how other industries plan their product strategy. And more importantly, react to the kind of market changes that major disruptions bring.
- 2. Kodak In 1900 Kodak disrupted the photography industry with their $1 Box brownie camera. Prior to this, photography was a complicated process requiring specialist knowledge. Cameras were highly technical and film was difficult to develop. Kodak saw an opportunity in the market by removing the complexity from the user and putting it into their “back-end systems”. So they created a one click camera and a film you sent away to be automatically processed. Their slogan became “You press the button, we do the rest” and they touted the box brownie as a camera that event a woman or small child could use!! Box brownies flew off the shelves and changed the way the world regarded photography for ever. So it really was the iPod of it’s day. However this is a very well known story and one that’s been talked about a hundred times by my friends at Adaptive Path. That’s not the one I’m here to tell. I want to talk about what came afterwards.
- 3. Kodak Despite being one of the most iconic brands of last century, Kodak sadly went into administration earlier this year. Kodak pretty much invented the digital camera, but were unwilling or unable to capitalise on their invention and became squeezed by the effect digital photography was having on it's core business. Even though the business could see that their sales were dropping year on year, they’d invested too much into print infrastructure to change. Their internal processes and competencies were all aligned around film. They’d invested in huge factories to produce film and huge labs to develop it. As business started to fall they continued to cut back, shutting down factories and making people redundant in order to stem the flow and keep the shareholders happy. However in the end it wasn’t enough and Kodak closed down. Kodak had a great brand but a “worthless product” It seemed as though digital photography and the internet had made it impossible to make money from photography.
- 4. Instagram 6 months later Facebook bought a small photography start-up with 13 employees for $1b
- 5. FujiFilm With only a fraction of their former business, you’d imagine other film companies suffered a similar fate. Companies like Fujifilm for instance? Unlike Kodak, which focused primarily on film, Fujifilm managed to make a bigger dent in the digital camera market. 10 years ago it held around 30% of the digital camera market. However they made the mistake on targeting the low end of the market. This was crippled by the raise of camera phones and now they have just 6% market share. However what Fujifilm did next was something rather unexpected.
- 6. Astalift They launched a range of skincare products. This may seem a really weird think to do, but I think it was an act of genius. You see, the scientists at Fujifilm have been working for years to understand the effects light has on sensitive surfaces like film. Now that the film market is no longer existed they applied their skills to an even more important surface, your skin! Whether this is true or not, it gave them a compelling story and a great link into a new market.
- 7. The Pivot In the world of the Lean Internet Start-up Fujifilm undertook a pivot. A change in market conditions forced them to assess their strengths and weaknesses and undertake a radical course correction.
- 8. The Print World The print world has historically done three things very well. Writing content, packaging content in the form of newspapers and magazines, and then distributing the content.
- 9. The Print World io n Pr od ut r ib uc tio st Di n Content The print world has historically done three things very well. Writing content, packaging content in the form of newspapers and magazines, and then distributing the content.
- 10. Desktop Publishing The print world undertook a massive pivot back in the 80s when you shut down the old “hot metal” plants and moved to desktop publishing. You realised there was no longer much value in the mechanical production process and that new technologies were readying themselves to disrupt the industry. I’m sure it was an incredibly painful thing to do and many good people lost their livelihoods. But in retrospect this move probably helped save the publishing industry.
- 11. Desktop Publishing io n ut Pr o d tr ib is uctio D n Content The print world undertook a massive pivot back in the 80s when you shut down the old “hot metal” plants and moved to desktop publishing. You realised there was no longer much value in the mechanical production process and that new technologies were readying themselves to disrupt the industry. I’m sure it was an incredibly painful thing to do and many good people lost their livelihoods. But in retrospect this move probably helped save the publishing industry.
- 12. The Internet Pr ti on od bu uc st ri tio Di n Content Jump forward 30 years and the internet has now demolished the value of your traditional distribution network and is chipping away at your dominance over content.
- 13. Downsize Some publishers have reacted by downsizing. By reducing productions costs, laying off staff and optimising their systems. In fact I’m constantly amazed by how few people it actually takes to produce a magazine these days. This process works well for some titles. For instance I was amazed how lean “The Week”magazine was when we designed their iPad application last year. They felt much more like a start-up than a traditional publishing company to me. I suspect you guys also have pockets that work like this. However cutting investment in a shrinking market is very dangerous as you lose the ability to develop into new and more profitable markets. Instead you get the the situation that Kodak found themselves in. They no-longer had the ability to innovate themselves out of their own demise.
- 14. 3 THINGS The Publishing World Needs To Do So I think there are three things publishers need to do in order to avoid the fate of Kodak.
- 15. Retool io n Pr od ut r ib uc tio st Di Content n First off I think the publishing world needs to retool. You’re still fairly strong on content, at least in the traditional written sense. So you need to use this to your advantage. It’s also great to see folks like Haymarket diversifying their abilities into audio and video content as well. Although I think it would be worthwhile exploring as many different forms of content creation as possible. However apart from a few forward thinking companies like the Guardian and the New York Times, the digital capabilities of some publishers are still pretty poor. So you need to become experts at digital content creation and distribution.
- 16. Financial Times This is why we’re seeing companies like the Financial Times take much bigger chances with technology and invest in their digital infrastructure. I’m not sure if HTML5 will be the future of mobile, although I suspect it will be. However even if it’s not, they’ve been building up their digital capabilities over the years and this will put them in good stead for the future. So I think their acquisition of Assanka was probably a canny move.
- 17. Digital is an Investment not a cost This brings me on to my second point. Currently I believe some publishers see digital as a cost centre to be minimised rather than an opportunity for investment. As an agency, this is a battle I find myself constantly facing. The lack of enough time and resources to do a good job. This is probably why we’ve found ourselves doing less and less work with traditional publishers and more work with the TV industry. For a publisher, the amount you need to invest to get a successful digital product seems high in proportion to a physical print publication. For a TV company, it’s still less than the average TV show. Sadly this means that TV companies are investing heavily in digital while smaller publishers are missing out on the good talent.
- 18. Your Competition I think one of the reasons is that you still think that you’re competing against one-another.
- 19. Your Competition is Here When in fact you’re competing for attention against every internet business out there. So while you’re investing tens of thousands in incremental improvements to existing services, start-ups are getting anything between $500-$2million, assembling a team of a dozen experts and focussing on a single project for 18 months+ So if you really plan to compete on a level playing field, you need to be investing equivalently
- 20. Content Matters Which is why projects like Matter are very interesting. (for disclosure we’re working with these guys at the moment) Run by journalists and focussing on long form, highly researched articles, this lean start- up earned over $140k on kickstarter to help flesh out their concept. Once that’s done they will be looking to raise additional funding to put their plans into place. I suspect this will be in the millions. When was the last time you spent $140k coming up with a new digital concept, let alone millions for the final creation? It’s ironic that a small team of just two journalists can out invest some of the biggest publishing companies in the country.
- 21. Build better products h"p://www.flickr.com/photos/jurvetson/3275235423/sizes/l/ Famed business author Set Godin recommends that companies spend a large portion of the money they would have normally spent on marketing the product on the product themselves. How much are you guys spending on Marketing each year as opposed to product development? Is that a fair balance? I bet companies like Spotify are spending a small proportion of their budget on marketting and the bulk of it on product.
- 22. Digital Landfill Sadly I don’t think many companies are taking this approach. Instead we’re keeping product costs low, and marketing costs high. The result is often the digital equivalent of landfill. Products that will be thrown away almost immediately after purchase. And when these projects fail to get the returns you’re looking for, it’s easy to blame the digital landscape rather than the lack of investment.
- 23. Publishing needs to Pivot Lastly, I think publishers need to start pivoting more. Looking at the core of what they’re good at and using these skills in different areas. Start-ups are great at coming up with new ideas but are terrible at capitalising on them. At least in the short term. The publishing world are great at creating brands and driving traffic to them. You also have the commercial relationships in place and are good at making money off content. So why not move away from the safe world of written content and take some of the internet start-ups on at their own game?
- 24. Toca Boca One of my favourite new start-ups is a company called Toca Boca. They saw the rise of mobile devices and realised that while everybody was making games, nobody was making children's toys. So they set about creating some of the most delightful applications I’ve seen in a while. What’s interesting about Toca Boca? They spun out of a R&D department of Bonnier, a highly regarded scandinavian publishing company. They were able to do this because they had built up a team of web natives. They were willing to take risks and pivot into new fields. And they were willing to invest the same amount that a start-up would. This is why they create some of the highest rated toys on the app store.
- 25. Toca Boca One of my favourite new start-ups is a company called Toca Boca. They saw the rise of mobile devices and realised that while everybody was making games, nobody was making children's toys. So they set about creating some of the most delightful applications I’ve seen in a while. What’s interesting about Toca Boca? They spun out of a R&D department of Bonnier, a highly regarded scandinavian publishing company. They were able to do this because they had built up a team of web natives. They were willing to take risks and pivot into new fields. And they were willing to invest the same amount that a start-up would. This is why they create some of the highest rated toys on the app store.
- 26. Building your Team So in summary for publishers not only to survive but prosper you need to build up your teams.
- 27. Don’t Overlook Design Invest in a culture of product design
- 28. Lean Startup And be willing to explore new areas and business practices in order to take on the star-ups at their own game.
- 29. @andybudd www.clearleft.com andy@clearleft.com It’s our job to make great products. It’s your job to help ensure that happens. Please help.