How Going Digital Is Changing Everything

Sweden’s Electrolux is no stranger to reinvention. The company, which was incorporated as Lux in 1901, specialized in selling kerosene lamps and other forms of lighting until soon after the first World War when a former employee named Axel Wenner-Gren came up with an idea for transforming industrial vacuums into domestic devices and convinced the company to buy a patent and pay him for sales in company stock. Before long the company switched its focus from lighting to vacuums cleaners, refrigeration technologies and other household appliances.

Wenner-Gren became one of the richest men in the world in the 1930s and decades later played a small role in pioneering the computer industry. Electrolux merged with another company in 1919, taking on its current name and eventually growing into the number two maker of household appliances worldwide in terms of revenue, just behind Whirlpool. To remain cutting edge, the company, which is headquartered in Stockholm, is using digital technology to crowdsource ideas for future products from design students all over the world.

This year’s people’s choice award went to Mab, a futuristic automated cleaning system consisting of hundreds of flying mini-robots; it was conceived by Adrian Perez Zapata, a designer in Colombia. A drawing of the Mab prototype resembles a crystal ball covered by tiny beads that take their inspiration from bees. (See the front page illustration of the Mab sitting on the rug in the middle of the living room.) The beads are actually mini robots that scan the house and then divide up and fly around to provide custom cleaning. The mini-robots clean surfaces with a drop that touches and traps dirt particles.

“This year’s winning concept renews the idea of looking at the robot, seeing it not as one unit that mimics a person, but instead as something inspired by the magical logic of nature’s collaborative efforts and group intelligence,” Stefano Marzano, chief design office at Electrolux and head of the jury, said when announcing the winner in October.

Electrolux’s contest — and its reliance on social media for feedback — is just one of the many ways that digital is changing the future of business. Social, local, mobile technologies are helping soccer teams morph into entertainment companies. Digital is forever changing the publishing business. It is transforming the way television and other programming is consumed (see the story on how ex-Googlers with Internet-first points of view are shaping the future of TV on pages 8 and 9). It is radically changing the car industry (think not only about electric vehicles and autos connected to Internet services but Google’s driverless cars).

Technology is allowing both healthcare and education to become more personalized and ubiquitous. It is radically changing the way people and companies communicate. It is defining the future of money. (See the story about angel investor and Bitcoin believer Shakil Khan on pages 12 and 13.) It is even shaping the way people consume chocolate.

When Norwegian media group Schibsted launched FINN.no, an online classified site, in 2000 the company’s executives knew it would cannibalize a vital revenue stream for its newspapers. But the publishing company, which was first launched in 1839, had to look to the future, says Raoul Grünthal, CEO of Schibsted Sweden. “You must accept that if you have disruption in an industry, that’s a fact,” says Grünthal. “If you don’t disrupt yourself, somebody else will. And at the end of the day, it’s better that we do it than somebody else does it.” (For the full story on Schibsted’s digital reboot see pages 2 and 3.)

Electrolux has a similar philosophy. It doesn’t promise to manufacture products dreamed up for its Design Labs’ contest: it uses the competition as a way to tap into — and sometimes later recruit — the best and brightest young designers who may end up disrupting the household appliance sector. It operates on the assumption that change is necessary and uses social media to test the public reaction to radical new concepts.

“We try to look for the future talent we want to have in the company,” says Yasushi Kusume, vice-president of Electrolux Group Design. “It is all about people, finding the new potential talent. It is very crucial for our company to do that.” The idea of the design competition is to motivate students on a global level by inviting them to present breakthrough ideas for future household environments. First prize is €5,000 and a six-month paid internship at an Electrolux global design center. Some of the budding designers end up with full-time jobs.

Beyond talent, Electrolux uses the contest to “try to get inspiration and insights” says Kusume. Then, it uses social media to get public feedback. For example, says Kusume, “if you ask people ‘would you like automatic cleaning of the house?’ I don’t think anyone would say no to the idea of an effortless way of cleaning.” But then it is necessary to use social media to drill down, he says. “We need to ask ‘how would you like it to be cleaned? By a robot vacuum cleaner that is human shaped? One way to do it is with beads (that transform into flying mini-robots). Some of it may not be socially acceptable and it is important for us to understand this. We went into this thinking ‘who wants beads flying around?’ but we were positively surprised,” he says. Members of the public who responded via social media seemed nonplussed by the concept, so who knows? A Mab-like product may someday show up in your living room.

“We are living in extremely exciting times,” says Erik Kruse, whose job title at Swedish telecom equipment manufacturer Ericsson is “Networked Society Evangelist.” Ericsson invented Kruse’s job title because “we live in a networked society and we need to be prepared,” he says.

And how. Social media is transforming every big business, including the way football clubs are in touch with their fan bases. Didac Lee, a scheduled speaker at SIME 2013, an annual conference in Stockholm that brings together over 1,600 top executives and marketing professionals from the media, Internet, advertising and IT industry to discuss how digital impacts business, was brought onto FC Barcelona’s board three years ago to help the club better adapt to the digital age. “The traditional model is changing, soccer teams are changing from sport clubs into entertainment companies and digital is the only way to reach a global audience,” says Lee, a serial Internet entrepreneur who is responsible for new technologies for FC Barcelona.

Since Lee came on board FC Barcelona has developed local-language web sites with localized content in many countries around the world, including China. “China is a fast-growing market for us,” says Lee, a native of Spain whose parents emigrated from China. “Traditionally there was no soccer in China. It is a new sport there and Chinese fans are just starting to engage with European clubs.”

Under Lee’s leadership FC Barcelona has become number one globally in terms of number of followers on social networks among football clubs and it has launched eleven different mobile apps.

Social media is “transforming the way foot ball clubs are in touch with their fan base, how they interact, how they engage, how they communicate,” says Lee. FC Barcelona is using social media to sell tickets and merchandise and to create value for sponsors. Whereas in the past sponsors would pay big money to have logos plastered in the stadium “that is no longer enough,” says Lee. “Sponsors want access and to get in touch with the fan base.”

Social media helps them do just that. FC Barcelona recently collaborated with Qatar Airways on a video. Posting it on YouTube garnered a million views in one week. When it was pushed out on the club’s social network the video got 5.4 million additional views. (For more on social media’s impact on brands see the story on pages 6 and 7.)

It is no accident that FC Barcelona brought in an outsider to help it transform for the digital age. An outsider point of view is crucial for companies and organizations in all sectors to remain on the cutting edge in the digital age. “Just look at [popular music streaming service] Spotify,” says Ericsson’s Kruse. “No one on the inside would have ever come up with this concept. You need an outside point of view to disrupt different industries.” (For more on Spotify and other disruptive young Swedish Internet companies see the story on pages 4 and 5.)

A fresh perspective is key, agrees Nava Aviv, an Israeli tech entrepreneur with degrees in clinical psychology and computer science.

The ability for companies to outsource specific R & D problems to teams from different disciplines that self assemble in the cloud will play a big role in keeping companies innovative, she says. But unless management remains open and is ready to listen to outsiders, all is for naught.

Aviv, who is now working on a stealth mode financial services start-up, has at various points in her career been hired to help transform industries she knew nothing about — everything from water infrastructure to the diamond industry. She likes to tell the story of how she traveled to Switzerland to a global conference of diamond dealers. The boss kept telling her what to say and think so, feeling frustrated, she wondered off on her own, to another part of the conference where stone polishers from around the world were gathered.

Aviv spent four hours observing the polishers and which booths got the most traffic. Her take away? That small, colored diamonds would be in big demand. When she recounted this to an industry executive on the train ride back to the hotel he looked at her with astonishment. He had just paid a consultant $100,000 to do a study that took months and reached the same conclusion.

The moral of the story is that people on the outside can give companies a fresh perspective; they notice things that people within a sector don’t.

Those that fail to grasp the importance of being open to outside views will keep on making kerosene lamps.

Diamonds are forever. But unless they embrace innovation and continuously reinvent themselves vacuum cleaner makers, football clubs, and even chocolate makers will never be able to make the same claim.

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