The NSA, Privacy, Trust and Tribes of Trust

While I was writing Innovation Zeitgeist this summer (June and July), the only part of the book that I got some pushback on was the suggestion that the Internet was so important, but so difficult for even sophisticated users to manage (phishing, cybercrime, privacy issues) that I predicted that "tribes of trust" would emerge and that privacy would become a major point of differentiation for competitors. The idea behind a tribe of trust was that it represented a managed safe portion of the Internet where you would have higher confidence about information and transacting.

The recent announcements about the NSA and the cooperation of many companies with the NSA has confirmed the importance of digital trust.

I felt like I was going out on a limb when I suggested that there were roughly ten levels of policies on privacy that companies might adopt deliberately or accidentally, but they seem more accurate that I had anticipated. I wrote:

"Roughly speaking one might imagine companies in a market pursuing ten alternative strategies:

1.        Lie about what information is collected
2.        Don’t reveal what information is stored about the user
3.        Reveal policies and superficial description of information stored about the user
4.        Reveal partial information about what is stored
5.        Reveal all raw information stored about the user
6.        Reveal all raw and evaluative information stored about the user including connections to other users
7.        Allow editing and export of privacy information by user
8.        Pay user to use their stored information
9.        Make the information stored useful to the user
10.   .  Make the information stored useful to the user and charge for it as a service

Today, few companies have been aggressive in their use of privacy information as a differentiator. Perhaps an early sign of competitive use of privacy as a marketing weapon is an internal 2013 video developed by Microsoft (http://youtu.be/-Cr6AgUo764 ). Now leaked outside Microsoft, the video’s theme is that Google tracks everything you do so that it can make money off you. While it may not have been intended as an external marketing weapon, it does illustrate the kind of marketing campaign that might be pursued by aggressive companies in the future.

Some of the larger web sites reveal how long they retain information. But as I pointed out in an earlier chapter, innovation for digital content now includes bundling and unbundling of services, legal rights and methods of monetization. Privacy is, in a sense, no different than attaching the right to re-download a book more than once on an audio book service such as Audible. "

Source: Innovation Zeitgeist: Competing in a World of Too Many Competitors, Kindle, Amazon 2013

Moving Beyond Product Innovation

The much anticipated acquisition of Nokia's mobile phone business by Microsoft is a stellar example of the prediction in my recent book, Innovation Zeitgeist, of the importance of moving beyond narrowly defined product innovation to service and solution innovation.

Basically, smartphones are increasingly similar with differentiation becoming harder to achieve. Motorola's well received launch of its MotoX line is demonstrative of this trend. Mid-range hardware features (i.e. it's not worth competing on screen resolution or processor speed any more) with innovation along the user interface dimension.

By acquiring Nokia's business, Microsoft is doing what many companies do in a highly competitive market, using vertical integration to deal with low margins. Owning two layers in the value chain increases the value capture.

By acquiring Nokia, Microsoft also sends an important signal to those contemplating developing apps for the ecosystem. Microsoft is committing in a big way to its future in mobile devices and attempting to stake a claim to being one of the surviving ecosystems.

From a product perspective, Microsoft's mobile operating system was not growing sufficiently quickly to match Android's growing success or Apple's historical success. Redefining what constitutes a product from an operating system to a complete mobile solution, changes the game in the direction of a solution, rather than a horizontal slice that is part of a solution.

Even more importantly, Microsoft's fundamental strategy is not about mobile devices, rather it is about having a portfolio of capabilities that enable both individual and corporate users to use the device of their choice to interact with the data of their choice without necessarily having to actively manage the movement of data and content. This overarching strategy takes advantage of Microsoft's success in the living room with XBox and in corporations with a wide variety of integrated software. Whether you are using a PC or laptop, an ultrabook or hybrid tablet, smartphone or phablet, Microsoft's goal is to enable a seamless experience.

Microsoft is not the only company pursuing this strategy using the Internet and cloud storage/syncing to simplify users life, but it has a huge number of capabilities it can integrate.