Episode Sixty Three: Disbanded; The Responsive OS

by danhon

0.0 Station Ident

I’m writing this at the family farmhouse in Missouri, and the cows are asleep across the road in their field. Cancer hasn’t won yet. Our family is splitting in two: I’m heading back to Portland tomorrow, while my wife and son stay behind. This is not, by a long stretch, the best of any situation.

1.0 Disbanded

Last episode I wrote a little about wearables and the latest research from Endeavour Partners about how the market’s doing. A scant few hours after I’d posted that, the Secret thread I’d been following[1] broke, with news reported in CNet that Nike had laid off its hardware/product engineers to concentrate on a software-only play[2]. Shortly after, countless[3] opinions[4] were issued to the extent that Nike later issued a sort-of non-denial[5] saying that while the Nike+ FuelBand SE would be supported “for the foreseeable future”, they didn’t say anything about any further digital sport products.

Now, Nike’s a client of my employer – and I worked on the Nike account as interactive creative director when I arrived at Wieden+Kennedy Portland, and also was part of the (large, cross-agency) team responsible for the launch of the original FuelBand. And I’m obviously not going to betray any client confidence or speak to any juicy insider information.

What I will say, though, is this: Nike and Apple have always been close, from the very first Nike+/iPod collaboration to the announcement of the iPhone 5S’ M7 motion co-processor and demo of Nike+ Move, and yes, lots of people have pointed out that the two companies share Tim Cook on their boards. That’s not to say that the relationship is *super* tight – Nike obviously had the heads up that the M7 was coming out so they could have an app ready, but the app wasn’t *that* ready: it was a few weeks before Nike+ Moves was available for the iPhone 5S, and we didn’t instead see the 5S ship with Nike+ Move built-in.

I think Cook having a sly word in Nike’s board’s ear about an upcoming Apple product highly unlikely. Instead, I’d point to this para from the Recode story:

“Sources said that the decision over what to do has been debated for months within the company, due to high expenses, manufacturing challenges and the inability to make adequate margins on the business. In addition, sources note that Nike has been unable to attract as high a level of engineering talent as the business has grown.”

which, again, without any insider information, would seem about right. I think that these articles from Undercurrent[3] and Fast Company[6] give too much credence to the Apple/Nike connection and that there are more pressing internal reasons for the shuttering of the Fuelband project.

Apple, though, I presume has been thinking about whatever “activity sensing ecosystem” exists, however nascent, and what good product can be made out of it that would get people to buy iPhones. The M7 is an off-the-shelf processor, one that’s apparently so good at sipping power that it keeps running while everything else – the baseband and the CPU – is turned off, and we’re seeing the stereotypical Apple MO of introducing new functionality or manufacturing techniques in a low-volume product to see how they go before they trickle down into everything else. Ask yourself this: at what point does the M7 start to appear in the new 5C and the iPod Touch?

I’m also not entirely sure (ie I haven’t completely thought this through yet) as to what an Apple/Nike partnership would look like. While legacy Nike+ functionality is still built in to the iPhone 5, it relies upon sensors attached to Nike shoes. The Nike+ Running iOS running app, however, is on the same playing field as every other app-based running system, ie, at the whims of Apple’s iTunes Store fitness category manager. It’s for this reason that you can get relatively successful apps like Runkeeper and Strava, all the way down to my brother’s Zombies, Run!

Does Apple need Nike to sell iPhones? Not in the way that it helped having a partner to sell iPods in the early days. Does Apple need Nike to provide specific insight into activity measurement and monitoring, in the way that it was missing a critical part of the user experience stack like maps, that had to be provided by a third party? I don’t think so, either. It can get that experience in.

Nike, I have always maintained, had a pretty good product with the Fuelband, but one that was attached to an outstanding brand.

So, here’s my Unordered List of Reasons Why Nike Decided To Shutter The FuelBand And Digital Sport Projects:

– Nike is still an atoms company. If you take a look at their current executives[7], there’s no one who knows how to build, launch and sustain digital products, never mind good digital products. In fact, Nike doesn’t even appear to have a CTO. They have technology executives responsible for things like supply chain management and their store.com, and even a “consumer technology officer” but their feet are still firmly planted in the pre-internet, pre-digital era. And you have no idea how painful it is to keep using the word “digital”.

– The brand was stronger than the product. Or: Nike have built such a phenomenally successful brand over the past thirty-odd years that you could practically stick a swoosh on *anything* and have it sell well-enough. Credit to Nike for not doing that, and coming up with products that deserved to have a swoosh on them. But the promise of a Nike wearable wasn’t delivered upon by the current experience of the Fuelband.

– The physical product had been commoditised. In some ways, Nike’s attempt to deal with this – creating a proprietary activity measurement system in Nike Fuel – was smart: it had (still has?) the potential to create lock-in for an ecosystem. I disagree that “wearable sensors are making exponential leaps each month”[3] – it’s that kind of silly boosterism that is firmly within the domain of Gartner’s peak of inflated expectations – we’re certainly not seeing breakthrough sensing platforms that can be packaged up and made consumer-scale en-masse – and everyone and their dog is using the same rough three-axis accelerometer plus magnetometer style platform, with added flourishes here and there like an altimeter. And when the physical product’s commoditised, you either need to make sure you’ve got standout physical product (which is still a possibility when you have the *resources* of Nike) or make sure that you’ve got a great experience platform. Nike, having no history whatsoever of building great experience platforms (the original iteration of Nike+ Running being built by R/GA) and no executive-level experience of building out successful experiences, was always going to find that hard. In fact, while the physical product’s been commoditised, you could even make the argument that wearable sensors are not only not making exponential leaps each month, they’re in some ways *getting worse* thanks to attempts like Samsung’s Gear Fit [8,9] which are cramming more technology with a worse user experience into the same form factor.

– It was doing great for the stock price, but not so great for the bottom line. Unsurprisingly, Nike haven’t broken out sales numbers for the Fuelband in roughly the same way that Amazon haven’t broken out sales for the Kindle Fire.

– The Fuelband wasn’t necessarily the first “failure” from the Digital Sport team either – remember Nike+ Training[10] (“New-fangled, digital Nike+ Training shoe shuttled to discount stores”) and Nike+ Basketball[11]? It doesn’t look like either of those products are available anymore.

– Services are hard, whether you’re a software company or an atoms company. Either way, it’s not good when people can’t get their Christmas presents working[12]

– On the other hand, Nike got a great deal of press out of the Fuelband story two years ago and was able to tell a story about how the company was staying innovative. They have their Nike Fuel Lab[13] down in San Francisco, but again from an outsider’s perspective and from the perspective of a hungry startup like Runkeeper or Strava – what does Nike have to gain versus the startup? Is Nike bringing a whole bunch of ready to activate daily active users? And how does a Nike software ecosystem work in conjunction with other measurements? Does Fitbit have to pay a license fee to Nike if it wants to display NikeFuel?

– Ultimately, they don’t know what it’s for. I mean, in broad brush strokes it’s clear that they know what it’s for: but the world and the competitive market is a lot more complicated than it was two years ago, and it shows no sign of changing. It’s interesting to note that the Fuelband is part of its own category at Nike and isn’t part of something like Nike Sportswear, where it would have more of a fashion and activity story. It’s also not promoting a story of wellness, and is going for the younger crowd, something Nike traditionally does. But: where’s the long-term play? If Nike were taking a page from a startup playbook they would’ve gotten a tonne of product out there at a highly competitive price (while doing the tricky job of maintaining the prestige of the brand) in order to build an ecosystem. But the product and ecosystem kind of looks like a halfway house. It doesn’t feel like there’s a big enough audience for Nike to attract third party developers and for a long time, the only way to generate Fuel was via Nike’s integrated solutions. If you were going to develop something that *used* Fuel, though, that was fine for their API, but the problem there was that the install base was never going to be that big. And if the install base wasn’t that big and you had to work with a big corporate, why not start your own and grow from there?

So that’s a bit of an unordered list. But there are a bunch of questions raised, too.

R/GA made a big deal out of its collaboration with Nike and have remained suspiciously (and contractually, I suspect) silent on the issue. The Fuelband won a tonne of awards at Cannes and everywhere in 2012/2013 because it was the “new advertising” – a partnership with an agency that had created a physical product, a service and what felt like a new category for a brand. But then the rate of innovation slowed down and, well, it didn’t feel like Fuelband was iterating on its software platform as quickly as its competitors were. So what does this mean for an agency like R/GA when one of its biggest wins turns out to be shuttered by its client?

If Apple does indeed come out with an iWatch this year (unlikely, I think, and certainly not a product that’s going to satisfy the quite unreasonable analyst and rumour mill demands that Apple are now subject to), then it’ll be interesting to see how the rumoured Nike/Apple partnership pans out. Will Nike get pride of place as a pre-install and the iWatch automatically, without an app store download, calculate Nike Fuel for you? My bet is on no. Nike will have to play by the same rules as anyone else and rely on a user-installed app on either the watch or a tied smartphone to convert what the watch measures into Nike Fuel.

It’ll also be interesting to see what comes out of the new iteration of the Nike Fuel Lab – is Fuel, as some say, a viable Activity Graph that can support a vibrant third party ecosystem? Again, I doubt it, if only because that graph relies on two layers worth of conversion: once into the Nike Fuel ecosystem and then again into the third party developer’s apps and services. The way Nike’s behaving at the moment, I’m not entirely convinced that third party developers will see it in their best interests to help Nike grow an ecosystem when they’re doing quite well growing their own.

[1] https://www.secret.ly/p/uxaztevdcicghcabkkczuzkpkz
[2] http://www.cnet.com/news/nike-fires-fuelband-engineers-will-stop-making-wearable-hardware/
[3] http://responsive.org/2014/04/nike-and-the-future-of-the-fuelband/
[4] http://recode.net/2014/04/19/hardware-is-very-hard-why-wearables-arent-working-yet/
[5] http://recode.net/2014/04/18/nike-denies-fuelband-shutdown-but-layoffs-could-reveal-new-cracks-in-wearables-market/
[6] http://www.fastcodesign.com/3029400/why-nike-is-probably-killing-off-the-fuelband
[7] http://nikeinc.com/pages/executives
[8] http://www.dcrainmaker.com/2014/04/pinnacle-samsungs-activity.html
[9] http://www.theverge.com/2014/4/14/5612832/samsung-gear-fit-review

[8] http://www.oregonlive.com/playbooks-profits/index.ssf/2012/10/new-fangled_digital_nike_train.html
[9] http://www.wired.com/2012/08/nike-plus-basketball/
[10] http://www.oregonlive.com/playbooks-profits/index.ssf/2013/12/temporary_nike_fuelband_s.html
[11] http://www.nikefuellab.com

2.0 The Responsive OS

As part of my reading on the Nike Fuelband fallout, I happened upon this essay by the team at Undercurrent on their latest product, the Responsive OS[1]. There’s something about it that sits uneasily with me, and as I think about it a bit more, I think it’s because there’s a strong tie to that most wonderful of things, the Californian Ideology, and the Responsive OS seems like it’s a bit of a side-line cheerleader, breathlessly espousing the Valley Way Of Doing Things, or, at least, The Startup Way Of Doing Things. I’m mostly always suspicious about management and strategy consultancy, mainly because in my experience a lot of the organisations peddling it promise a lot and deliver a little, with it always being easy to blame on the client (whom, a lot of the time, rightly shares some of the responsibility for failure to deliver). So I thought it’d be interesting to go through Undercurrent’s Responsive OS manifesto.

Undercurrent counts as proponents of the Responsive OS (and how up-to-the-minute-but-not-quite to sell clients an “operating system” as a manner of running their companies: one would think that the dominant metaphor of the day would be more like a “platform”) companies like Tesla, Amazon and Instagram.

There’s a bit of cherry picking here, of course. For every example of a software company eating the world (and I should make clear that my flag is firmly planted in the software-eats-world camp), there’s a counter-example that doesn’t follow the same sort of “behave like a startup” rhetoric. And, of course, there’s the self-reinforcement: there are as many examples of software-eating-world companies that don’t follow the rhetoric or fit the same plans, either.

The implication – or threat – is that if you and your company don’t “behave like a tech startup” then you’re going to get disrupted. This is the same kind of Digital Ninja talk that we’ve seen for the past twenty years or so: a massive tidal wave of change is coming and if you don’t listen to us, you’re going to get subsumed. A lot of careers have been made, and less have been destroyed, peddling One True Way to survive the coming digitisation apocalypse.

I’m not going to disagree that “technology – software in particular – has had a destabilizing effect on traditional business models.” That’s what technology does, and it’s what technology has always done, so we can skip that particular content free sentence. What comes next is a little disingenuous, I feel: the proposition that “the proliferation of personal computing power has leveled the playing field in almost every industry.” Where we can agree is that Moore’s Law has resulted in both the proliferation of computing power *and* communications capability, and what that’s done is *changed* the playing field. But by no means has it leveled it: if it had done so, then everyone would have an equal chance, and it’s clear that all participants don’t. There are massive structural barriers to entry that aren’t solved merely by technology, and in that respect, the Valley’s boosters aren’t wrong. There’s certainly a lot of regulation out there: ask anyone in the medical devices space or Airbnb or Uber, and there will be regulation out there: as disruptive as a startup like Airbnb is (and I’m not arguing that Airbnb isn’t), it doesn’t mean that regulation isn’t or shouldn’t be forthcoming (nor does it mean that the current regulation in force is proportionate).

What seems like a weird non-sequitur to me though is when the manifesto states that “It used to be that the best day to start your business was yesterday. Now, due to the constant expansion of what you’re able to invent in your garage, tomorrow is almost always a more advantageous starting point.” – I don’t know what to do with advice like that. It’s certainly not actionable: so I should put everything off until tomorrow, because systems and processes will be more efficient then? The best business is one that’s started, period: and that *is* agreeing with the startup rhetoric, because shipping product always beats an unexecuted idea.

There’s no disagreement from me that there are a bunch of processes that are unfit for competing in today’s world. But that doesn’t mean that all processes are unfit. I can certainly broadly agree that “legacy processes that enforce bureaucracy, command-and-control structures, waterfall development, and risk management are still largely the standard among big corporations” but then management has always been an art and it’s always been difficult. And sometimes, enforcing risk management can actually be useful.

We learn that today’s “fastest growing, most profoundly impactful companies are using a completely different operating model” which again, in most circumstances, feels like the climbing the summit of the peak of inflated expectations. And as an aside, perhaps this is why I have that uneasy feeling about what Undercurrent are espousing: I intensely dislike those who engage in promoting that peak: because they’re the ones who feel like they’re ruining it for everyone else. If it weren’t for the peak, we wouldn’t have the trough of disillusionment.

To be sure, this *is* a manifesto, though: it’s a rallying call to “hack together products and services, test them, and improve them,” all while your competition edits PowerPoint (not even Keynote!). These excellence-driven companies are “obsessed with company culture and top tier talent” and emphatically pursue “employees that can imagine, built, and test their own ideas” – but, presumably (and crucially) not work in teams? These companies are “maniacally focussed on customers” and “hypersensitive to friction”. They are, the call goes, “the first generation of truly responsive organizations” – implying, of course, that no other organizations have been truly responsive to customer needs.

The inescapable conclusion, so the pitch goes, is that if you want to be a successful company – a small one, like Medium, Hipchat, Circa, Willcall and Quirky, or a big one, like Airbnb, Dropbox, Evernote, Uber, Tesla, Square and Jawbone, or a dominating one, like Amazon, Google, Facebook, Twitter and PayPal, then you need to be a Responsive Organisation.

The key to all of this is Undercurrent’s Responsive OS – almost like a three-ring binder manual for converting your Legacy Operating System into a dominating, globe-spanning, cloud-enabled Responsive Organisation fo the future. It means you need to adopt a “visionary (not commercial) Purpose that guides an agile (not linear) Process that enables People who make (not manage) Products built to evolve (not built to last) which become Platforms for the world (not just your company) to build upon.”

All of which is easy to write down. It’s naturally much harder to do in practice. Otherwise, everyone would be doing it, right?

A Responsive Organisation’s Purpose is probably the most agreeable, and in my mind, nothing more than a tweaking of that trendy 90s fad, the Mission Statement. The tweak, of course, is that Mission Statement: The Next Generation is “something bigger” than a mere commercial purpose, but then, weren’t mission statements supposed to be bigger than mere commercial purposes, too? There’s a part of me that wonders if there isn’t confusion between causation and correlation: that of course people are attracted to world-changing agendas – do you want to sell sugar water, or do you want to change the world? (and we all know how that instance turned out) – Moore’s law and its inexorable, finally, nearly, maybe this year or next it will run out drive for faster, cheaper processing and communication was the thing that *enabled* these purposes in the first place. Perhaps instead the Purpose is just the reflection of those who “got” the concept of software eating the world first – that the Californian Ideology adherents of Kevin Kelly’s manifesto fervently *did* believe that the libertarian-utopian connected future would change the world, and set about making it happen – and they were closest to the coal face.

The Process part is perhaps the one that felt most galling. I can’t see what exactly the manifesto is trying to get across here other than, if you’re a company like Netflix and Valve and only hire the best people, then you can get away with not needing any management, because “rigid Process is unnecessary or even detrimental”. And while you’re not necessarily going to get scores of people arguing in favour of more process, the places where you *will* find that happening are in (surprise, surprise) areas like the recent Github Incident where it turns out that just hiring a bunch of “best people” and assuming nothing bad will happen is at, well, best, shockingly naive and at worst, the quickest way for everything to go south in a blaze of social media infamy. Unless, of course, part of your plan is hiring “the best people at managing who don’t look like they’re managing” in which case, you haven’t really learned a thing. Oh, and process? Turns out it is good for some things: and if you guessed that I’d be including a link to NASA’s Shuttle software team, you get to take a drink[2]. You know what, though, you keep hacking away at things: I bet that OpenSSL you’re using is awesome right now.

The People part is only slightly less galling. It fetishizes “makers”, because that’s the MO of the Californian Ideology – that if you’re not producing product or service, then you’re just wanking around and a waste of space that probably would be better of being converted into computronium sooner rather than later. This section appears only to be saying “be careful and hire only the best people” which, you know, isn’t that bad advice really. But what really gets me is the false argument that “a typical day in corporate America is peppered with meetings and PowerPoint presentations. Planning has become the work. Intuitively, we know that’s not right”, which rhetoric is easy to blow holes in because a) not all meetings and not all PowerPoint presentations are a waste of time, and b) apparently I’ll be painting a target as first against the wall when the revolution comes for piping up and saying “hey, planning might actually be useful you know” and c) “intuitively, we know it’s not right” is the kind of statement that begs holes blowing into.

In this world, “[Makers] are people who have skills (as opposed to credentials)” which again leads you to wonder: what sort of organisation is hiring unskilled credentialled workers and do they deserve to survive, and also the unspoken agenda here being, hey, I get to define what “maker” is and what the skills are that count. The example that’s pointed to is Valve and their now-relatively-famous staff handbook, and the thing about Valve is that while it is undoubtedly a fantastically successful company, it’s also not one without its detractors in terms of its company culture. Valve, it turns out, is just as prone to cliques and just as prone to mismanagement and miscommunication as any other company, and it turns out that just hiring the best people and empowering them isn’t the simple rule to success that’s being presented.

A lot of the work in building large-scale services and products is in internal communication and making sure everyone knows what they need to know and what direction they’re heading in. It’s easy for this in small startups because hey, everyone’s in the room, but what often gets forgotten is the implicit nature of communication. And it turns out that ensuring communication is happening is no small task. Do those people count as makers? Presumably they aren’t as important.

The Product layer is one that seems the most sane and reasonable. There’s a lot to be said for shipping, and there’s even more to be said for shipping, getting feedback and then iterating on that feedback. There’s no argument from me here.

The Platform layer is for those Responsive Organisations who genuinely do want to take over the world. We’ve got a fairly rudimentary description of what a platform is here: it simply “encourages others to build, play and/or iterate on top of it.” This is almost like the super simple building block, because it’s relatively easy for a platform to be built, it’s a significantly harder thing for a viable platform ecosystem to spring from that intention. A phrase describing platforms as “shared innovation engines that outsource costly and uncertain discovery processes” turns me off though, if only because it sounds like consultant-speak and also because what’s being talked about here is merely one aspect of the benefit that a platform brings without the caution that a successful platform is a finely-balanced one with a number of factors contributing to its success. Sure, some successful companies *have* platforms, but I’m not entirely sure if you could say that Airbnb and Uber have necessarily “turned the physical world into a platform for millions”. At least, not yet.

The clash, at the end of all of this, is that on the one hand Undercurrent’s piece ends with the call that “this method of doing business needs space to breathe and mature, before it spreads like wildfire” while simultaneously lacking the restraint to refrain from begging everyone to spread it like wildfire lest those who ignore it be swept aside.

It would be unlike me to talk about something like digital transformation of a business without mentioning, again, the work of the Government Digital Service in the UK. They have, for free, actually given away pretty much the keys for implementing most of what Undercurrent call their Responsive OS for free in their Design Manual[3]. And while it may be because I’m British, the lack of boosterism and pep is refreshing to me. Look, just read Russell Davies’ thing again[4]. Or watch Tom Loosemore’s talk from Webstock[5].

My point is this, and I think it’s a trend emerging from the last few episodes. We’ve known what to do about “digital” for quite a while now. There isn’t a magic bullet. There’s simply a question of doing the hard work. There isn’t necessarily a pattern that can be followed, and it certainly doesn’t have to be one that hails from the West Coast, though it can be inspired by their success. Perhaps the easiest bit to digest, and the easiest bit to understand, is that the strategy is delivery. That’s it. Work backward from there. The Agile is Dead non-manifesto[6], that seeks to clear away all of the cruft and crap that’s grown around it, is clear enough and you don’t *need* more than this:

– Find out where you are
– Take a small step toward your goal
– Adjust your understanding based on what you learned
– Repeat

That’s it. No high-fives required.

[1] http://www.undercurrent.com/responsive-os
[2] http://www.fastcompany.com/28121/they-write-right-stuff
[3] https://www.gov.uk/service-manual
[4] http://russelldavies.typepad.com/planning/2013/04/the-unit-of-delivery.html
[5] http://www.webstock.org.nz/talks/institutions-an-internet-survival-guide/
[6] http://pragdave.me/blog/2014/03/04/time-to-kill-agile/

As ever, I appreciate your notes and, in this particular case, your rebuttals.

Best,

Dan