Good morning, and thank you for joining us for our first Retail
Byte briefing of the year. For those of you that dont know who 383
are; were a digital experience studio. That essentially means that
we help big companies to act more like the startups that are
disrupting them. Helping them to deliver transformational new
digital products and services in a leaner, more agile way. Were
kind of the antithesis of a Deloitte or an Accenture. The
anti-consultancy, in that we actually design and make stuff too.As
for me, Im a Partner at 383 and employee number 2. Over the last 8
years Ive worked with a mixture of our traditional and start up
retail clients to help them imagine, validate, design and launch
new ways of doing business that improve customer experience and
unlock new income. What I want to do this morning is look at a few
ways that traditional retail models are being disrupted and also to
explore some practical ways that today's retailers can help to
future proof their revenue streams for tomorrow.
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Good morning, and thank you for joining us for our first Retail
Byte briefing of the year. For those of you that dont know who 383
are; were a digital experience studio. That essentially means that
we help big companies to act more like the startups that are
disrupting them. Helping them to deliver transformational new
digital products and services in a leaner, more agile way. Were
kind of the antithesis of a Deloitte or an Accenture. The
anti-consultancy, in that we actually design and make stuff too.As
for me, Im a Partner at 383 and employee number 2. Over the last 8
years Ive worked with a mixture of our traditional and start up
retail clients to help them imagine, validate, design and launch
new ways of doing business that improve customer experience and
unlock new income. What I want to do this morning is look at a few
ways that traditional retail models are being disrupted and also to
explore some practical ways that today's retailers can help to
future proof their revenue streams for tomorrow.
First of all, lets look at how many traditional retailers are
operating today. At its most basic level, they are set up to source
goods from suppliers using a buying department, this buying
department fills a store with sought-after goods and then the
retailer markets these goods to consumers and sells them at a
profit. But we know that aside from the foundations of a successful
retail business, its crucial to develop new customer propositions,
revenue streams and models. Let's look at a practical example of a
retailer who didnt understand this.Source - Wikipedia
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First of all, lets look at how many traditional retailers are
operating today. At its most basic level, they are set up to source
goods from suppliers using a buying department, this buying
department fills a store with sought-after goods and then the
retailer markets these goods to consumers and sells them at a
profit. But we know that aside from the foundations of a successful
retail business, its crucial to develop new customer propositions,
revenue streams and models. Let's look at a practical example of a
retailer who didnt understand this.
This is the original Borders store in Ann Arbor, Michigan. It
opened in 1971 and was founded by Tom and Louis Border, both smart
guys and University of Michigan graduates. They developed an
inventory system that tailored each stores products to its local
community. They even had the foresight to spin this inventory
system off into its own business that supplied other local
independent book stores. And whilst at its height it operated over
1,200 stores in the US and rest of the world, this is where the
innovation ended.
Source: Wikipedia
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This is the original Borders store in Ann Arbor, Michigan. It
opened in 1971 and was founded by Tom and Louis Border, both smart
guys and University of Michigan graduates. They developed an
inventory system that tailored each stores products to its local
community. They even had the foresight to spin this inventory
system off into its own business that supplied other local
independent book stores. And whilst at its height it operated over
1,200 stores in the US and rest of the world, this is where the
innovation ended.
2006 would be the last time it would turn a profit and over the
next 4 years its income dropped by $1bn. Why? Aside from spiralling
debt, operating too many stores and generally poor management, they
were too late in understanding the impact of the web on their core
business; from 2001-2008 they outsourced their online sales to
Amazon (worryingly something that M&S had been doing too until
very recently). They didnt foresee the looming decline in CD sales
and didnt understand the changes in how customers wanted to consume
books. They were focused on selling books, not helping people to
read books. No e-reader was ever developed; Amazon did this, so did
Barnes & Noble, even WHSmith.
Source: Wikipedia
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2006 would be the last time it would turn a profit and over the
next 4 years its income dropped by $1bn. Why? Aside from spiralling
debt, operating too many stores and generally poor management, they
were too late in understanding the impact of the web on their core
business; from 2001-2008 they outsourced their online sales to
Amazon (worryingly something that M&S had been doing too until
very recently). They didnt foresee the looming decline in CD sales
and didnt understand the changes in how customers wanted to consume
books. They were focused on selling books, not helping people to
read books. No e-reader was ever developed; Amazon did this, so did
Barnes & Noble, even WHSmith.
In much the same way as Borders didnt understand that its
purpose was to enable people to read (rather than sell books),
Blockbuster didnt understand that they werent renting DVDs, they
were enabling people to watch movies.
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In much the same way as Borders didnt understand that its
purpose was to enable people to read (rather than sell books),
Blockbuster didnt understand that they werent renting DVDs, they
were enabling people to watch movies.
Netflix did. In fact, when they tried to sell to Blockbuster in
the early 00s for $50m, they were laughed out of the boardroom.
They now have a market cap of $38bn.
The very nature of retail competition is changing again as
technology becomes more accessible. Since 2009, the top 25
retailers in the U.S. have lost 2 percent of market share, this
doesnt sound severe but thats in the region of nearly $70 billion
in salesthat have moved to smaller more nimble, savvy players.
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Netflix did. In fact, when they tried to sell to Blockbuster in
the early 00s for $50m, they were laughed out of the boardroom.
They now have a market cap of $38bn.
The very nature of retail competition is changing again as
technology becomes more accessible. Since 2009, the top 25
retailers in the U.S. have lost 2 percent of market share, this
doesnt sound severe but thats in the region of nearly $70 billion
in salesthat have moved to smaller more nimble, savvy players.
These newer retailers are competing in such ways that we may not
immediately even categorise them as retailers. Theyre slowly
nibbling away at market share and value chain.
And whilst were all comfortable with the work weve done on
So - Id imagine that most retailers in this room are able to
sell online, and have a solid e-commerce offer?
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So - Id imagine that most retailers in this room are able to
sell online, and have a solid e-commerce offer?
Id also imagine that you all have some sort of mobile offer,
even if thats just that theres an app where people can browse for
and buy products?
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Id also imagine that you all have some sort of mobile offer,
even if thats just that theres an app where people can browse for
and buy products?
And many of you may offer a kind of click and collect
experience. But great as all these things are, they are just
experiences on top of the same model, theyre not new models.
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And many of you may offer a kind of click and collect
experience. But great as all these things are, they are just
experiences on top of the same model, theyre not new models.
So, how do we avoid becoming another Borders, a Blockbuster or
Woolworths? Well, we believe there are 3 key models that will
disrupt the traditional retailer over the next 5 years and this
means finding new ways of doing business, not finding new ways to
sell the same things to customers. Thats not to say were advocating
you go away and overhaul your business tomorrow but we certainly
think that its time traditional retailers started exploring how to
take advantage of some of these.
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So, how do we avoid becoming another Borders, a Blockbuster or
Woolworths? Well, we believe there are 3 key models that will
disrupt the traditional retailer over the next 5 years and this
means finding new ways of doing business, not finding new way to
sell the same things to customers. Thats not to say were advocating
you go away and overhaul your business tomorrow but we certainly
think that its time traditional retailers started exploring how to
take advantage of some of these.
Subscription models are interesting. Theyve been employed by the
likes of Netflix, Graze and Cornerstone (who youll hear from
shortly). And theyre attractive because the constant revenue stream
from a subscribing customer reduces uncertainty in income. Theyre
often paid ahead of shipping the product, which from a cash flow
perspective is much healthier and the revenue overall is often
greater than that derived from one time purchases. Theyre
effectively (but ethically Im sure) locking consumers in. We worked
with Ollie at Cornerstone to build out their model, test the
proposition and launch the platform. One of the super interesting
things we found when talking to customers was that people were
subscribing not to the razors, but the convenience of not having to
go to a store to buy them anymore and I think you can apply that
convenience lens to other operators such as our friends from Graze
and Netflix.
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Subscription models are interesting. Theyve been employed by the
likes of Netflix, Graze and Cornerstone (who youll hear from
shortly). And theyre attractive because the constant revenue stream
from a subscribing customer reduces uncertainty in income. Theyre
often paid ahead of shipping the product, which from a cash flow
perspective is much healthier and the revenue overall is often
greater than that derived from one time purchases. Theyre
effectively (but ethically Im sure) locking consumers in. We worked
with Ollie at Cornerstone to build out their model, test the
proposition and launch the platform. One of the super interesting
things we found when talking to customers was that people were
subscribing not to the razors, but the convenience of not having to
go to a store to buy them anymore and I think you can apply that
convenience lens to other operators such as our friends from Graze
and Netflix.
In the fashion world, you only need to look at services like
Thread to understand how this model taps into a very real customer
behaviour (for men at least), which is that they want to look good
but they dont necessarily want to spend the time in stores or even
shopping online. Thread has a personal stylist curate a monthly box
of clothes that he or she thinks may suit you and that you may like
and ships them to you on a subscription basis. Interestingly, in
the early days this was just another way to buy ASOS clothes but
its morphed since then. You can look at other players in this space
such as Birchbox, who spoke at our Canvas Conference last year, or
Bloom, the flowers on subscription service. You may also have
noticed that Amazon will actually allow you to subscribe to pretty
much any of their products on the right-hand side of a product page
when you add to basket.
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In the fashion world, you only need to look at services like
Thread to understand how this model taps into a very real customer
behaviour (for men at least), which is that they want to look good
but they dont necessarily want to spend the time in stores or even
shopping online. Thread has a personal stylist curate a monthly box
of clothes that he or she thinks may suit you and that you may like
and ships them to you on a subscription basis. Interestingly, in
the early days this was just another way to buy ASOS clothes but
its morphed in that time. You can look at other players in this
space such as Birchbox, who spoke at our Canvas Conference last
year, or Bloom, the flowers on subscription service. You may also
have noticed that Amazon will actually allow you to subscribe to
pretty much any of their products on the right-hand side of a
product page when you add to basket.
Marketplaces are another clear disruptor because they dont
actually own the products theyre selling to customers. Theyre only
facilitating the purchase between users and taking a percentage.
Weve been advising a major camera manufacturer lately on building
out a model whereby users of their cameras can opt-in to upload
certain shots to a stock photography marketplace and share in a
return of those revenues. Were just designing the service at the
moment and doing some tech exploration on how we might engineer
this.
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Marketplaces are another clear disruptor because they dont
actually own the products theyre selling to customers. Its only
facilitating the purchase between users and taking a percentage.
Weve been advising a major camera manufacturer lately on building
out a model whereby users of their cameras can opt-in to upload
certain shots to a stock photography marketplace and share in a
return of those revenues. Were just designing the service at the
moment and doing some tech exploration on how we might engineer
this.
If you look at ASOS, theyre taking this into their offer at the
moment with ASOS Marketplace, where you can buy from independent
boutiques and there are a stack of other successful examples from
the likes of Not On The High Street and Etsy. Why arent companies
like HMV doing this? Why cant I buy from other gamers with an
approval from HMV?
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If you look at ASOS, theyre kind of taking this into their offer
at the moment with ASOS Marketplace, where you can buy from
independent boutiques and there are a stack of other successful
examples from the likes of Not On The High Street and Etsy. Why
arent companies like HMV doing this? Why cant I buy from other
gamers with an approval from HMV?
Finally, access over ownership of a product or service has been
pioneered by the likes of AirBNB, but it has some serious
implications on the retail world as well as hospitality. Its part
of the sharing economy and its likely one of the most disruptive
forces around. What if people dont need to buy whats in your store
or on your site, but they just need access to it? Were working with
a car manufacturer now to engineer a new service where people can
have access to a range of their vehicles dependent on need, such as
a sports car at the weekends and a SUV for Monday to Friday. Think
of it as AirBNB for cars, and there are other opportunities too.
What if I just need access to a laptop for the school term from PC
World (or similar), rather than permanent ownership?
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Finally, access over ownership of a product or service has been
pioneered by the likes of AirBNB, but it has some serious
implications on the retail world as well as hospitality. Its part
of the sharing economy and its likely one of the most disruptive
forces around. What if people dont need to buy whats in your store
or on your site, but they just need access to it? Were working with
a car manufacturer now to engineer a new service where people can
have access to a range of their vehicles dependent on need, such as
a sports car at the weekends and a SUV for Monday to Friday. Think
of it as AirBNB for cars, and there are other opportunities too.
What if I just need access to a laptop for the school term from PC
World (or similar), rather than permanent ownership?
Another example is from Audi in Germany, where theyre letting
groups of users share the same car and schedule when they need it
through an application.
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Another example is from Audi in Germany, where theyre letting
groups of users share the same car and schedule when they need it
through an application.
I wanted to give you some practical things you can do tomorrow
to start exploring alternative models within your own business. Its
not hard to develop propositions that tap into new customer
behaviour and for us to start doing business in different ways. In
fact, its super simple and a lot of the time this is where were
called in.
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I wanted to give you some practical things you can do tomorrow
to start exploring alternative models within your own business. Its
not hard to develop propositions that tap into new customer
behaviour and for us to start doing business in different ways. In
fact, its super simple and a lot of the time this is where were
called in.
Recommendation One is to talk to customers. Sounds straight
forward, but done in the right way it can help to unearth
surprising insight. We undertook some work recently with a major
travel business to help them better understand their users and
their behaviours and as a result we've now got around 5 actionable
pieces of insight for where we take the business next and what new
digital models we spin out.
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Recommendation One is to talk to customers. Sounds straight
forward, but done in the right way it can help to unearth
surprising insight. We undertook some work recently with a major
travel business to help them better understand their users and
their behaviours and as a result we've now got around 5 actionable
pieces of insight for where we take the business next and what new
digital models we spin out.
Specifically, get out to stores and talk to customers who are
and arent buying from you; how could you make the purchase but more
crucially the consumption of the products that you sell easier and
more convenient for them? Film the responses, build a picture of
what other services theyre using and where youre losing share of
wallet.
One of the things we like to do, and again its simple, is to
take clients out on safari to look at retailers who are doing
things in new and innovative ways. Its no more complex than taking
people into stores and meeting new and interesting startups who are
disrupting your model. And theyll want to meet, youre a potential
strategic investor.
Also just survey people - we all have a CRM, take some data from
there and ask customers what it is they need from their experience
with us. What is it that theyre hiring us to do? How can we make
that easier for them?
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Specifically, get out to stores and talk to customers who are
and arent buying from you; how could you make the purchase but more
crucially the consumption of the products that you sell easier and
more convenient for them? Film the responses, build a picture of
what other services theyre using and where youre losing share of
wallet.
One of the things we like to do, and again its simple, is to
take clients out on safari to look at retailers who are doing
things in new and innovative ways. Its no more complex than taking
people into stores and meeting new and interesting startups who are
disrupting your model. And theyll want to meet, youre a potential
strategic investor.
Also just survey people - we all have a CRM, take some data from
there and ask customers what it is they need from their experience
with us. What is it that theyre hiring us to do? How can we make
that easier for them?
There is absolutely no need to commission an Accenture or
Deloitte or McKinsey to go away for 12 months and research
appetite. Develop a prototype that you test with the customers you
spoke to, see if it solves their problems and understand the
nuances. We do this all the time, for every new product or service
we design and engineer there are more than likely about 9
prototypes we threw away or iterated on before we got to something
that solved a problem.
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There is absolutely no need to commission an Accenture or
Deloitte or McKinsey to go away for 12 months and research
appetite. Develop a prototype that you test with the customers you
spoke to, see if it solves their problems and understand the
nuances. We do this all the time, for every new product or service
we design and engineer there are more than likely about 9
prototypes we threw away or iterated on before we got to something
that solved a problem.
You don't even need engineering knowledge to do this - the first
place we start at is paper prototypes. Thats literally just
sketching a product or service interface onto bits of paper and
walking customers through what the proposition might be or how it
might work.
At boardroom level, sometimes there isnt the patience or time to
sit in on these sessions so were big advocates of using video to
tell the story of a product or service and to demonstrate the use
case for it. Weve done that with Hilton recently and its unlocked
major investment for how we reimagine the future of their guest
experience.
If you need something higher fidelity, again, please dont think
you need a team of developers to do this - just throw some JPGs
onto a mobile or desktop to communicate the proposition to users
and get their feedback.
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You don't even need engineering knowledge to do this - the first
place we start at is paper prototypes. Thats literally just
sketching a product or service interface onto bits of paper and
walking customers through what the proposition might be or how it
might work.
At boardroom level, sometimes there isnt the patience or time to
sit in on these sessions so were big advocates of using video to
tell the story of a product or service and to demonstrate the use
case for it. Weve done that with Hilton recently and its unlocked
major investment for how we reimagine the future of their guest
experience.
If you need something higher fidelity, again, please dont think
you need a team of developers to do this - just throw some JPGs
onto a mobile or desktop to communicate the proposition to users
and get their feedback.
Finally, build a business case for the model you want to test
inside your business. Were a cool studio, yes, but even we
understand that we have to have our initiatives sponsored by senior
executives and that inevitably at some point theyll want to see
numbers.
Again, please dont spend 12 months with a consulting firm
putting this together, you dont have 12 months and you really dont
need it.
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Finally, build a business case for the model you want to test
inside your business. Were a cool studio, yes, but even we
understand that we have to have our initiatives sponsored by senior
executives and that inevitably at some point theyll want to see
numbers.
Again, please dont spend 12 months with a consulting firm
putting this together, you dont have 12 months and you really dont
need it.
Businesses can develop a compelling proposition for the model,
product or service by boiling down the essence of their offer into
a sentence. What is the customer problem, how can we solve it and
what is the value that is generated for our customers?
Dont write a business plan, just throw some early assumptions
into Business Model Canvas. If youve never seen BMC, its a single
A1 piece of paper where we can show a visual representation of how
our idea will make money and what resources we need in order to do
that. Ill share with you where you can learn more about BMC
shortly.
We should be going through this loop constantly- customer
insight, prototype feedback, business case development. It shouldnt
take longer than 6 weeks to do this and its a habit we help all of
our clients to get into. Once its done put the videos, data,
prototypes, proposition and business model into a deck and share it
internally.
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Businesses can develop a compelling proposition for the model,
product or service by boiling down the essence of their offer into
a sentence. What is the customer problem, how can we solve it and
what is the value that is generated for our customers?
Dont write a business plan, just throw some early assumptions
into Business Model Canvas. If youve never seen BMC, its a single
A1 piece of paper where we can show a visual representation of how
our idea will make money and what resources we need in order to do
that. Ill share with you where you can learn more about BMC
shortly.
We should be going through this loop constantly- customer
insight, prototype feedback, business case development. It shouldnt
take longer than 6 weeks to do this and its a habit we help all of
our clients to get into. Once its done put the videos, data,
prototypes, proposition and business model into a deck and share it
internally.
Heres an example from our client Homeserve, who are not a
retailer in the traditional sense but they sell stuff and the
people they sell stuff to are changing.Their customers are
installing smart thermostats in their homes - whats our route into
them through this medium? What new model exists here?
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https://goo.gl/33bcIZType Styles - All type styles are saved as
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Heres an example from our client Homeserve, who are not a
retailer in the traditional sense but they sell stuff and the
people they sell stuff to are changing.Their customers are
installing smart thermostats in their homes - whats our route into
them through this medium? What new model exists here?
We went to customers homes who had installed smart technology
and wanted to understand how they were using it and at what point
it was appropriate for Homeserve to offer services. We paper
prototyped a tonne of examples and eventually built out an
subscription and one-time engineer booking API that can be consumed
into any third party smart home application like Tado, Hive or
Nest. And yes, we made a video of what that might look like.
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styles and easily accessible on the right.Colours - Open the
Colours popup. third icon along, select 383 from dropdown.
We went to customers homes who had installed smart technology
and wanted to understand how they were using it and at what point
it was appropriate for Homeserve to offer services. We paper
prototyped a tonne of examples and eventually built out an
subscription and one-time engineer booking API that can be consumed
into any third party smart home application like Tado, Hive or
Nest. And yes, we made a video of what that might look like (see
the next slides notes).
The Tado video demonstrator can be viewed here:
https://vimeo.com/111514284
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The Tado video demonstrator can be viewed here:
https://vimeo.com/111514284
The key takeouts here are that we can optimise the experience of
our existing model to a certain extent, but that these arent the
fundamental shifts required to guarantee a future for our
businesses.
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The key takeouts here are that we can optimise the experience of
our existing model to a certain extent, but that these arent the
fundamental shifts required to guarantee a future for our
businesses.
Get out and talk to customers; youd be amazed at the insight and
opportunity this throws up. I cant believe that in most companies
that this still isnt someones full time job. Ive been working at a
bank recently where the guy in charge of managing and developing
new products hadnt spoken to a customer for 6 years.
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Get out and talk to customers; youd be amazed at the insight and
opportunity this throws up. I cant believe that in most companies
still that this isnt someones full time job. Ive been working at a
bank recently where the guy in charge of managing and developing
new products hadnt spoken to a customer for 6 years.
Finally, learn from the people who are coming for your lunch and
do it in a way that is relatively quick and inexpensive. John Lewis
launched JLab a couple of years ago to incubate disruptive start
ups and give them a route to market - this is a great way to get
closer to new models.
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grid, use it - View > Guides > Show Master GuidesIcons can be
found here - https://goo.gl/ExMA3tImages can be found here -
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Colours popup. third icon along, select 383 from dropdown.
Finally, learn from the people who are coming for your lunch and
do it in a way that is relatively quick and inexpensive. John Lewis
launched JLab a couple of years ago to incubate disruptive start
ups and give them a route to market - this is a great way to get
closer to new models.
So, in 20 minutes, Ive demonstrated why retailers still need to
find new models, who is doing it well and how you can go about
creating your own.
The questions I think to ask yourself are
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So, in 20 minutes, Ive demonstrated why retailers still need to
find new models, who is doing it well and how you can go about
creating your own.
The questions I think to ask yourself are..(see next slide).
How can we better solve problems for customers? How will
customers want to access our products in the future?How can we test
this quickly and inexpensively?
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How can we better solve problems for customers? How will
customers want to access our products in the future?How can we test
this quickly and inexpensively?
Here are two great places to start if you are interested.
Digital Transformation by Jo Caudron & Dado Van Petegham - a
book that will help you to understand the underlying models that
power the world's most disruptive businesses.
Strategyzer.com is a great site to understand how to quickly
build out models to share internally.
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presented to a room.* DELETE THIS SLIDE BEFORE STARTING *There is a
grid, use it - View > Guides > Show Master GuidesIcons can be
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https://goo.gl/33bcIZType Styles - All type styles are saved as
styles and easily accessible on the right.Colours - Open the
Colours popup. third icon along, select 383 from dropdown.
Here are two great places to start if you are interested.
Digital Transformation by Jo Caudron & Dado Van Petegham - a
book that will help you to understand the underlying models that
power the world's most disruptive businesses.
Strategyzer.com is a great site to understand how to quickly
build out models to share internally. .
Id be really happy to have a coffee with anyone whos interested
in all of this - helping traditional companies to act more like
disruptors is what I'm passionate about and I usually get 3 or 4
requests for a chat after Byte and I'm more than happy to do that.
You can get in touch at [email protected].
Were always keen to make sure Byte is about you learning, and
not us pitching, but suffice to say we practice everything Ive
shown you here today in our work at 383.
So, go and get started.
This is a presentation keynote
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presented to a room.* DELETE THIS SLIDE BEFORE STARTING *There is a
grid, use it - View > Guides > Show Master GuidesIcons can be
found here - https://goo.gl/ExMA3tImages can be found here -
https://goo.gl/33bcIZType Styles - All type styles are saved as
styles and easily accessible on the right.Colours - Open the
Colours popup. third icon along, select 383 from dropdown.
Id be really happy to have a coffee with anyone whos interested
- helping traditional companies to act more like disruptors is what
I'm passionate about and I usually get 3 or 4 requests for a chat
after Byte and I'm more than happy to do that. You can get in touch
at [email protected]
Were always keen to make sure Byte is about you learning, and
not us pitching, but suffice to say we practice everything Ive
shown you here today in our work at 383.
So, go and get started.
This is a presentation keynote
The Presentation keynote is to be used when the keynote is being
presented to a room.* DELETE THIS SLIDE BEFORE STARTING *There is a
grid, use it - View > Guides > Show Master GuidesIcons can be
found here - https://goo.gl/ExMA3tImages can be found here -
https://goo.gl/33bcIZType Styles - All type styles are saved as
styles and easily accessible on the right.Colours - Open the
Colours popup. third icon along, select 383 from dropdown.