“You‘ve got to start with the customer experience and work backwards to the technology.” Steve Jobs
This is an article that I have wanted to write some time now, so I’m pumped to finally share it.
Before I start off let me briefly introduce myself, my name is Frederik, I’m a Copenhagen-based innovation gig working at KRING INNOVATION. At KRING we build corporate startups and help businesses explore and execute innovation initiatives.
What is the Smart Home? 🏠
The term Smart Home varies in definition but generally refers to products and services that are enabled by networked devices in the private household.
While still immature the market is expected to experience an enormous boom globally over the next five years (growing with more than 30% a year according to Statista, 2o17).
There are many reasons for this massive development. Many of them I believe boil down to the ability to design experiences that is more tailored to the individual user than exisiting outdated products and services.
From Cable to Netflix 📺
A familiar example can be found in the current trend away from cable TV & packages towards connected products and services.
Traditional TV packages have notoriously been known for offering standard packages to its customers, well-knowing that the customer normally only uses 20% of the channels while paying for the additional 80%. A perfect example of the old “One-size fits all approach” in which the market dictates the push of products and services.
Connected devices (Apple TV and Google Chrome) and streaming services (Netflix, HBO) have been able to successfully identify the painful user experience and successfully innovate. Among the key drivers behind the success of these new streaming services have been the ability to offer much lower prices than the TV-package providers, create tailored experiences and create comfort & convenience by ingraining services on connected devices.
The Smart Home Experience 👪
The ability to offer new and better user experiences through connected products and services have started a massive development within the Smart Home Domain, going far beyond the streaming of movies. Today Smart Home products/services cover everything from Smart Lights, Irrigation systems to Baby Monitors.
The market is still maturing and there are still important lessons to be learned, but so far, the landscape consists of three important blocks: Products, Platforms, and Services. Together they make up a Smart Home eco-system that each provides a unique customer experience.
Each of the blocks is explained below by description, example and impact.
Connected Products 📱
Connected products, as the name suggests, connects to the internet and by doing so opens up for brand new offerings. Connected products can be accessed anywhere through a smart device (phone/tablet etc.) creating comfort and convenience for the users (e.g. if you are worried that the oven might not be turned off you can conveniently turn the oven off from your phone). Connected products also have the ability to perform automatic software updates, this enhances the lifetime of the product and ensures that the product is in sync with other connected devices (e.g. your speaker can connect to your smartphone and vice versa). Finally, connected products stores data in the cloud. The storing of data enables users to customize their product and tailor it after their demand (e.g. location settings to explain what the weather will be like where you live).
Example 🔎 An example of a connected product is an Apple TV. The Apple TV updates to keep in sync and stores data so that photos, music and personalized apps always can be accessed. Another example is the Sonos Speaker that records data in the user’s room to provide a better music experience that is tailor specifically to the user’s situation.
Impact 👊 Connected devices allow businesses to get closer to the customer, collecting valuable data that is then used to create a better and more customized user experience. In that way connected devices allow businesses to come much closer to the customer than the analog products can ever be.
Platforms connect the different smart devices, so they become interoperable and easy to use. Platforms are essential for the Smart Home as they allow connected products to work together in a simple user-friendly manner (e.g if you lock your smart lock then your smart lights will turn off).
Example 🔎 Apple HomeKit is an example of such a platform connecting different smart home products under one simple user face.
Apple HomeKit allows the user to setup different If-this-then-that scenarios up for the home. A simple scenario similar to the example previously describes could be “if” the door locks, “then” turn off all lights in the house. Apple calls these scenarios “Scenes” and are the backbone of the Apple HomeKit platform.
Impact 👊 Similar to the App Store on the iPhone owning the go-to-platform, allows the platform-provider to control the ecosystem creating competition and forcing third party smart home solutions to build on top. Several businesses incl. Google, Amazon are now fighting to become the go-to Smart Home platform.
Smart Home services make it easier for customers to get things done. As connected products store customer’s information, services become more customized as data is shared with service providers. E.g. ordering your favorite pizza with a push of a button without having to explain what you want, where you live and how you want to pay.
Example 🔎 A pioneer in this field is Amazon. With the launch of Amazon Echo, a virtual assistant, Amazon offers its customers to buy products directly from Amazon’s website simply by talking to the speaker. Amazon has taken this a step further with its replenishment services. With one click from an Amazon Dash bottom, the user can reorder essential household products like detergent, beverages, food etc.
The newest service launched by Amazon is the so-called Amazon Key which allows couriers to unlock users front door, drop off a package and then relock (the service requires a smart camera and a smart door lock sold by Amazon of course).
Impact 👊 Smart Home services has a massive impact on the way services are ordered and received. Companies are currently fighting for the customer data so they can build relevant services for the customers which currently include predictive maintenance, e-commerce, shopping, bookings of travels etc. We are still just seeing the tip-of-the-iceberg. Earlier this year Amazon acquired the doorbell-camera, Ring, for $1 billion dollars, Google & Apple are expected to follow suit with similar future Smart Home investments.
The big question going forward will be – how much data users are prepared to share in order to receive more customized solutions?
Moving Forward ⏩
While the above examples might seem very technical and complicated for many of the current readers they are all bound by one common mission — creating a better customer experience. The novelty of the current smart home products and services doesn’t come from the technology alone but from trying to create more tailored and relevant customer experiences.
For many incumbents, this is a crucial lesson. One has to look at the technology in the right way. It is not enough of a differentiation to make a new app or a new piece of technology. Incumbents need to think about if they are creating a better experience than the previous experience, and then do it well in their part of the ecosystem. The first step is acknowledging that customer demands are changing. Incumbents most move therefor move away from the one-size fits all towards the one-size-fits one.
Innovation is not always about implementing fancy new technologies – it’s about how it makes users feel.