Consumer adoption of Bitcoin | A jobs-to-be-done analysis

Venture capitalist Marc Andreessen recently did one of his tweetstorms on the topic of Bitcoin, a technology he avidly supports. In 25 tweets, he talked about criticisms people have of Bitcoin. Including this one (#18) about “use cases”:

Let’s acknowledge this: When you’re talking currency and payment systems, the use cases and relevant users are enormous. The
whole planet, really, and all manner of transactions. Lots of places where Bitcoin could theoretically make an impact. In this post, I wanted to think through the consumer payment market, one of the bigger targets there is. According to the Federal Reserve, a U.S. consumer makes around 69 payments per month (pdf). Fertile ground for exploiting underserved jobs-to-be-done.

A powerful way to analyze any idea is to apply jobs-to-be-done analysis. Specifically, apply three jobs-to-be-done tests:

  1. Does the idea target an actual job-to-be-done that enough people have?
  2. Is the idea a meaningful improvement over the current way people fulfill their job-to-be-done?
  3. Does the value of the idea to customers exceed the cost of the idea to them?

In the above linked post about the three tests, I note that the output of the tests are really degrees of certainty about an idea. You can think of it as meters:

JTBD degrees of certainty

The more uncertain you are, the higher the adoption risk of the idea by your intended beneficiaries.

For this analysis, we’ll target a specific set of possible beneficiaries:

Bitcoin will become a frequently used currency for U.S. and European consumers, displacing dollars, euros and pounds.

Ok, on to the adoption analysis. Each test includes an assessment of its certainty.

#1: Targets and actual job-to-be-done of enough people

We long ago left barter behind as a primary basis for goods and services exchange. Currency offered many advantages: a way to exchange with you now, even if I don’t have a good you want; store of value of that outlasts many goods; ability to build up a supply of currency for larger purchases; immediate trust because the currency is known, as opposed to the risk of a receiving a deficient product in trade.

Currency won out over barter for many reasons. And to that end, Bitcoin addresses an actual job-to-be-done: a measure of value that can be exchanged for goods and services.

The level of certainty for this test:

Targets actual job-to-be-done
of enough people
Certainty meter- targets real JTBD enough people

 #2: Better than current solution

Any new thing has to provide better outcomes than the incumbent solution. And not just a little better. Studies show people will undervalue the benefits of a new offering, and overvalue the benefits of an existing solution. This reflects the varying degrees of the Possibility Effect and the Uncertainty Effect people have. Providing a strong improvement in outcomes is needed to overcome the inertia of the Early and Late Majorities.

Put yourself into the shoes of a typical consumer:

  • I need to pay for groceries
  • I need to pay for my Amazon purchases
  • I need to pay for school tuition
  • I need to pay for gas
  • I need to pay for rent

All these activities happen today with dollars, euros, pounds and so on. In what way does paying by Bitcoin provide better outcomes for my payment needs than the currency I use today? Among the Bitcoin improvements I’ve seen described:

Payment cannot be repudiated: The blockchain technology locks in the transmittal of the payment. There’s a full record of payment offered, payment accepted. Which is great as a record for the transaction. Except repudiation isn’t a material issue for consumers for today. They by and large don’t feel pain from it.

No centralized government control over the currency: Bitcoin is a distributed currency, with no central authority overseeing and manipulating it. The implied value is that issues like devaluation, inflation and governments tracking your spending are finally put to rest.

But stop and think about that. Who cares about these issues? Go find 10 neighbors. Ask them their level of concern that the money in their wallet is managed by a central authority. Find out what they think about the traceability of their spending. Many payment services companies actually offer traceability as a feature, not a bug (e.g. Mint, Yodlee, American Express, etc.). I haven’t heard much outcry about payment traceability among the general public.

Reduced identity theft fraud: Credit card numbers can be stolen and used by thieves. Marc Andreessen asserts that Bitcoin greatly reduces this risk. And I suspect he’s right, as far as we understand the risks today. But already, creative thieves are figuring out ways to steal Bitcoins. Innovation at its finest.

But getting better about reducing identity theft is a clear opportunity for better outcomes. Credit card companies have become quite advanced with this via big data algorithms, which spot out-of-norm transactions and flag them. Companies are also good at covering the losses resulting from payment identity theft.

Because Bitcoin is still experiencing losses due to fraud, it’s not clear in consumers’ minds that it’s less risky than current currency and payment methods.

The level of certainty for this test:

Meaningful improvement over
the current way people fulfill
the job-to-be-done
Certainty meter- meaningful improvement over current

#3: Value to consumers exceeds costs of new idea

In this test, you’re asked to look holistically at the costs of a new idea. Monetary costs, yes. But also other costs, such as:

  • Connecting the new solution to existing infrastructure
  • Loss of features you enjoy in current solution
  • Giving up the uncertainty of the current solution
  • New unwanted behaviors

Given the low (non-existent?) value of Bitcoin over current currencies, pretty much any cost will cause a high level of uncertainty for this test.

And Bitcoin has costs. Its current volatility makes it tough to rely on a consistent store of value. You receive $10,000 worth of Bitcoin today, what will that be worth in a month? There’s a learning curve for usage. You need to know how to operate a Bitcoin account, and retrain yourself to think in terms of Bitcoin values (like when you travel abroad and have to mentally calculate the local currency price into your home currency to understand what something really costs).

To the extent that economic cycles will inevitably continue, you need to get used to no central authority intervening to help stabilize things. It’s not clear what a Bitcoin-dominated world would look like in terms of economic stability. Likely, though, this uncertainty doesn’t weigh into consumers’ calculus of costs.

The level of certainty for this test:

Value to consumers exceeds
the cost of the new solution
Certainty meter- value exceeds costs

Wrapping up

It’s hard to see how Bitcoin becomes a regular currency used by consumers. It doesn’t offer sufficient improvement over incumbent currencies and the cost is hard to overcome with any potential value. One possibility: if the lower fraud rates associated with Bitcoin are reliable, perhaps merchants will offer discounts for use of them. That could spur some people to switch to Bitcoins.

The bigger story of Bitcoin is actually the blockchain technology. The ability to ascertain easily, without an intermediary, that a transaction (e.g. document signing, receipt of something, etc.) has occurred seems to offer tangible value over current solutions. That may be Bitcoin’s true legacy.

I’m @bhc3 on Twitter, and I’m a Senior Consultant with HYPE Innovation.

Radio Show Interview: Collaborative Innovation at Scale

The area of collaborative innovation is a natural extension of the social business movement. It’s the extension of social into purposeful collaboration, a term Alan Lepofsky uses to describe the evolution of the social business market.

In the innovation-focused radio show, Women Who Innovate, host LeAnna Carey, innovation expert John Lewis and I talk about collaborative innovation at scale. In other words, what are the benefits of, issues with, and techniques for getting hundreds and thousands of people to share ideas and insights, toward a common goal. It’s a different task than getting small teams to collaborate. The recording of the show is below:

This event had a unique twist. It was run in conjunction with the weekly innovation conversation on Twitter, Innochat. In both the radio show on on Twitter, the following topics were covered:

  1. How important is it to get diverse people to contribute to innovation, vs. singular creatives to generate innovations?
    • Doesn’t Steve Jobs point to the primacy of singular genius?
    • What is the model for cognitive diversity to generate innovation outcomes?
  2. What differentiates sharing in large groups vs. small teams?
    • How much does familiarity mean trust?
    • How to handle different personalities that will intersect?
  3. In environments where employee skepticism reigns, how do you change attitudes to open up sharing?
    • What are the ways in which skepticism can creep in?
    • What is the #1 issue that must be addressed?
  4. What are motivations for employees to contribute to an innovation program?
    • How much does “what’s in it for me?” come into play?
    • What are the intrinsic and extrinsic motivations?
  5. What techniques help drive participation in crowdsourced innovation programs?
    • What influence do senior executives have?
    • What influence does peer participation have?
    • How can gamification drive greater participation?

It was a thorough, fast-paced discussion. If you’re considering crowdsourced innovation programs, it’s worth a listen.

I’m @bhc3 on Twitter and I’m a Senior Consultant with HYPE Innovation.

Talk-n-Tweet | Collaborative Innovation at Scale

Previously, I’ve described Why Crowdsourcing Works. Crowdsourcing is a case where you get many people who don’t one another collaborating toward a defined outcome.Talk-n-Tweet Collaborative Innovation at ScaleTo reiterate the principle points about the value of crowdsourcing:

  • Diverse inputs drive superior solutions
  • Cognitive diversity requires spanning gaps in social networks

Simple enough, yet actually a rich field for work and analysis. To that end, I invite to two events happening simultaneously on Thursday 25 September 2014 (12 noon Eastern):

  • LeAnna Carey’s radio show (link)
  • Twitter Innochat (link)

I’ll be on the radio show talking with Lea Carey, Renee Hopkins and John Lewis. At the same time, the weekly #innochat will follow along with the radio program. It’s a unique chance to blend live conversation with online discussion. The main questions to be tackled will be:

  1. How important is it to get diverse people to contribute to innovation, vs. singular creatives to generate innovations?
    • Doesn’t Steve Jobs point to the primacy of singular genius?
    • What is the model for cognitive diversity to generate innovation outcomes?
  2. What differentiates sharing in large groups vs. small teams?
    • How much does familiarity mean trust?
    • How to handle different personalities that will intersect?
  3. In environments where employee skepticism reigns, how do you change attitudes to open up sharing?
    • What are the ways in which skepticism can creep in?
    • What is the #1 issue that must be addressed?
  4. What are motivations for employees to contribute to an innovation program?
    • How much does “what’s in it for me?” come into play?
    • What are the intrinsic and extrinsic motivations?
  5. What techniques help drive participation in crowdsourced innovation programs?
    • What influence do senior executives have?
    • What influence does peer participation have?
    • How can gamification drive greater participation?

As a reminder, the event time across time zones:

Thursday 25 September 2014
9 am Pacific
12 noon Eastern
6 pm Central European Time

I look forward to hearing your take on this issue.

Sharing economy is still in early adopter phase

Airbnb. Lyft. Kickstarter. Quirky. Kiva. TaskRabbit.

The sharing economy is increasingly in the news. Those six companies are receiving a lot of chatter, as shown by Google News results for September 12, 2014:

Google news results for sharing economy firms 091214

Certainly, the sharing economy is a “thing”. But it’s not yet as mainstream as may come across in the media. For most of us, it’s still sort of a “toy” if you will. Cute that people would offer up their home for a weekend or give someone a ride in that empty passenger seat. But as YCombinator’s Paul Graham says:

Don’t be discouraged if what you produce initially is something other people dismiss as a toy. In fact, that’s a good sign.

The sharing economy is in the early adopter phase. Which means it’s going to need some attributes to make the jump to mainstream adoption:

  • Offering a “whole product” experience, not just satisfying a narrow slide of all needs
  • A feature-quality-price blend that better satisfies existing jobs-to-be-done than do incumbents
  • Evidence of value and satisfaction from others they trust (friends, media)

But the upside is terrific when the sharing economy is adopted. That topic is explored more fully in my new post: Harvesting Abundance in the Sharing Economy. It starts with the premise visualized below, and builds on that:

Changing how we buy goods and services

Interested in how we can dramatically increase supply and long tail options? Check out the sharing economy post.

I’m @bhc3 on Twitter, and I’m a Senior Consultant with HYPE Innovation.

 

Bring customers into the idea review process

Say you’ve got some internal ideas at your company. Who takes a look at them? Assesses them to determine next steps for each idea? Figures out the value and difference the ideas can make?

How about your own customers?

I talk a lot about jobs-to-be-done here, and getting a firm grip on those to understand where innovation and product enhancement opportunities lie. But sometimes that’s not realistic. Ideas come from many sources, and more likely than not, fail to reflect hard analysis of jobs-to-be-done. But customer feedback is valuable. Any idea which can touch on customers’ experience – products, services, support, pricing, deliver, knowledge – can benefit from their perspectives.

The concept sounds right, yes? But it’s also something that’s somewhat scary. I know this because I asked innovation executives for a number of large companies what they thought of it. There was hesitancy to the concept of bringing customers into what is generally an internal – and often murky at best – process of evaluating ideas.

In my post, What if customers evaluated your company’s ideas?, five areas are examined to de-scarify this idea:

  • Differentiating from focus groups
  • Profile of right customers to involve
  • Type of ideas
  • Ways to engage customers in the evaluation process
  • What criteria make sense?

Give it a read, and see if this is something you’d consider.

I’m @bhc3 on Twitter, and I’m a Senior Consultant with HYPE Innovation.

Enterprise gamification…yes or no? Twitter #innochat Thursday May 22

What do you think about gamification for the enterprise? Smart innovation that helps deliver results? Or horrible idea that treats people as Pavlovian animals? Well, this week’s #innochat will examine that question.

#innochat? What’s that, you ask?

#innochat is a weekly conversation that takes place on Twitter, covering topics related to innovation. It’s open to anyone and is a great chance to add your perspective, learn how others view the topic, engage in a debate, and make connections. The general format:

  • Use the #innochat hashtag in your tweets
  • Follow the moderator, usually Drew Marshall or John Lewis, who will post the questions for the discussion
  • 4 or 5 questions are used to structure the conversation

#innochat runs for one hour every Thursday at the same time:

Innochat clocks

It’s my pleasure to be the guest for this week’s #innochat. For our topic, I’ve chosen: Applying gamification to enhance innovation outcomes. Click that link to read the framing post, and here are the four questions that will structure the discussion.

  1. What is your definition of gamification?
  2. True or false: Gamification is fundamentally about points, badges and leaderboards. Why?
  3. Given a magic wand, how would you use gamification to enhance innovation outcomes?
  4. What are the potential negative outcomes from gamification?

Share what you think about gamification. See you Thursday May 22, 2014.

I’m @bhc3 on Twitter, and I’m a Senior Consultant with HYPE Innovation.

 

Positive Deviance vs. Best Practices

Over time, I’ve seen people write disparagingly about the use of best practices in innovation. A recent example of this comes from Paul Martin in Say ‘Best Practice’ again, I dare you. As Paul notes:

For me the term ‘Best Practice’ conjures up images of a race toward uniform mediocrity, led by those who follow the crowd.

I understand his position. It’s a version of fast-following in a way, where people do not take a fresh look at an activity. They just follow what others are doing. You may share his passion for banishing ‘best practices’. Although be careful there. Some things really don’t need innovation if they’re not critical to a company’s differentiation and growth. For instance, if there are best practices for closing the accounting books on a quarterly basis, what issue of mediocrity is there?

The issue with best practices appears to be:

  • It’s done by an organization with which you compete
  • It propagates the status quo rather than break new ground
  • It doesn’t differentiate you, so why would you do just do what everyone else does?

There is a form of “best practices” that doesn’t violate the above. It’s called positive deviance.  Positive deviants are people who deviate from the norm and achieve superior results for an activity. They don’t have access to different resources than others. They just do things differently. A great example comes from Vietnam. The Save the Children organization wanted to address the pervasive malnourishment of children. In conducting field research, they came across families that had very healthy children. What were they doing differently? They fed their children the crabs and shrimp that were around their village. These protein-rich animals were available everywhere, but were disdained as trash, not worthy of consumption. Yet, these same disdainers had children who were malnourished.

Best practices indeed!

The point here is that positive deviance is a form of best practice that is:

  • Emergent
  • Based on experimentation
  • Consistent with internal community norms and context

While best practices may come from consultants and media coverage, positive deviance is more localized. And it’s often hidden. People aren’t openly talking about what they’re doing different. I liken this to William Gibson’s famous observation:

The future is already here. It’s just not evenly distributed.

Why not change that? In my post, Beyond Ideation: Four Fresh Ways to Generate Innovation, I talk about running campaigns for four different types of insight:

  1. Challenge orthodoxy
  2. What’s working (i.e. positive deviance)
  3. Problem-sourcing
  4. Trendscouting

These are different ways to use crowdsourcing beyond the normal ideation use case. Including finding your positive deviants.

I’m @bhc3 on Twitter, and I’m a Senior Consultant with HYPE Innovation.

 

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