Outside Innovation

Bitcoin Hacked Again and Again

Last week we joined the media frenzy that seemed to suddenly swirl around the odd digital currency known as Bitcoin. That same day, one of the top Bitcoin exchanges, Mt. Gox, suffered a denial of service attack, sending the value of Bitcoins down as investors began panic selling.

Value of one bitcoin in U.S. dollars one-minute intervals chart

Last night, Mt. Gox was out of commission again. Another denial of service attack? Not at first. Mt. Gox posted a different explanation on its Facebook page:

“First of all we would like to reassure you but no, we were not, last night victim of a DDoS but instead the victim of our own success!

Indeed the rather astonishing amount of new accounts opened in the last few days added to the existing ones, plus the number of trades, made a huge impact on the overall system that started to lag. As expected in such a situation people started to panic, started to sell Bitcoin in mass (Panic Sale) resulting in an increase of trade that ultimately froze the trade engine!

What You Should Know about the Bitcoin Revolution

What would you do if you feared that your bank was going to confiscate the bulk of your savings? You'd remove your funds from that bank, wouldn't you? That's what's happening all over Europe (and in other parts of the world), triggered by the “haircut”that customers of Cypriot banks received on March 29th, 2013. According to an article in the British Daily Mail:

• Nobody can remove more than 300 Euros a day from their account.

• Nobody can take more than €1,000 off the island in cash.

• 80% of deposits over €85K is gone! 37.5% of it has been converted into probably worthless shares of the bank's stock. And 40% will be repaid to you only if the bank “does well”in the future, while 22.5% will go into a contingency fund that could be subject to further write-offs.

Here’s one example from a British ex-pat, living in Cyprus, who didn’t move fast enough to remove his funds:

“Neil Hodgson, 48, who moved to Paphos, on the southwest coast of the island, six years ago, said he has lost nearly £200,000. The former farmer, who has two accounts with the Bank of Cyprus added:

‘I had more than £300,000 in my deposit account and £20,000 in my current account. When I went to the bank the other day I was told the total balance for both is £100,000.’

They were unable to explain how this had been worked out, but indicated I might get some back at a later stage. I checked online and confirmed that the 20,000 in my current account remains, but that I only have £80,000 in my savings account. It's robbery, plain and simple.’”

~ Quoted by Dan Atkinson and Ian Gallagher in
‘It’s Robbery!’ New Cyprus bombshell as Britons are told they may lose EVERYTHING over £85k

Surprising (?) Rise of a Non-Banking Payment Ecosystem: BitCoin

Even before the banking bailout in Cypress (why are they going after customers and not shareholders and bond holders?), our private Pioneers’ discussion list had been buzzing with postings about Bitcoin since October, 2011. At first, it seemed like an interesting “techie” phenomenon—an anonymous secure way to transfer and exchange digital currency (which can be converted into national currencies) in a peer-to-peer network that is distributed, does not use banks, is unregulated and not easily monitorable by government agencies. Perfect for laundering drug money, engaging in drug or gun trafficking, or just hedging your bets against bank runs and/or massive inflation that devalues your local currency. (Photo Credit: ZCopley@Flicker)

However, Bitcoin is a confusing, highly technical, and not very user-friendly alternative to the current financial system. It is also highly volatile. So the chances of its becoming mainstream seemed pretty slim. But notice what has been going on. The total value of the currency being traded in Bitcoins has now surpassed $1 billion.

How Consumers Prefer to Pay for Online & Mobile Purchases

In the U.S. market, we’ve grown accustomed to the notion that we can buy anything, anytime, online. When we do, we usually are charging that purchase to a credit card—often one that is stored online.

Now that many people are using their mobile phones for everything while on the go, there’s renewed interest in mobile payments.

If you’re interested in figuring out how the new world of ubiquitous mobile payments will look and who the dominant players will be, don’t start with the U.S. market. It’s too backward when it comes to mobile phone usage compared to the rest of the world.

Patterns in Innovation: Bottoms Up Activism

Last week, I immersed myself in the wonderful Business Innovation Factory community by attending the BIF-8 conference in Providence, RI. I always find great case studies to pursue at this event, so stay tuned! For my overview “trip report,” I stepped back and squinted to discern the patterns and common themes that I took away from this rich tapestry of storytelling and conversations. A few things really pop out:

1. People of all ages are building networks (physical & virtual) to make a difference in their world. Despite the economic malaise (or because of it) there’s an abundance of grass roots social movements at the local community level and across the country tackling everything from building playgrounds, to reducing gang violence, to improving the lives of homeless children, to bringing peace of mind to the mentally ill.
   
   
2. New forms of institutions are turning up to take the place of the ones that no longer work—for diplomacy, for education, for healthcare, for citizen-led government, for city-planning.
   
   
3. Customer-led, customer-engaged, citizen-led movements and organizations are where most of the action is. We’re moving beyond social networking to social working.
   
   
4. We now know enough about how to create customer-engaged business models and how to support social movements that we’re entering a meta-model era. There are now “platforms for participation” with online tools and structures that can be used as a foundation and/or a model by business and social entrepreneurs.
   
   
5. The biggest boost to our economy will come from life sciences, as our next generation of programmers creates new bio-fuels and new healthy pathways and we tap the power of the human brain to overcome physical disabilities.
   
   
6. To increase our happiness quotient, we need to counter the seduction of our ever-present electronic gadgets by focusing on the present moment, indulging in physical face-time, and experiencing life as we do music.

Key Players in the Mobile E-Wallet War

While many people are focused on the tablet marketshare wars, we’re more interested in the mobile e-wallet battle that’s about to flare up in the U.S. In fact, we think the smoke will have cleared and the winner(s) will be evident by 2013.

Mobile e-wallets will let you pay for things, or pay other people from your mobile phone. You’ll be able to select what payment type you want to use (which bank account, credit or debit card, or stored value card) and make a secure, even anonymous transaction using your mobile phone.

Google, Microsoft, and Isis are betting on/waiting for NFC chips in our phones and on Point of Sale devices. But other players like PayPal and possibly Apple may be taking an approach that requires no additional hardware at the merchant: generate bar codes and/or matrix codes to convey the payment information at the point of sale. If successful, this barcode approach would enable these players to gain traction quickly and add NFC capabilities later. The e-wallet providers who wait for ubiquitous NFC chips may miss the e-wallet train as it leaves the station.

Whom Do You Trust as Your Mobile E-Wallet Provider?

Coming Soon: Pay for Everything Using Your Mobile Phone
By Patty Seybold

Starting this fall, e-wallets will become available for our mobile phones. When I use the term “e-wallet,” I’m talking about enabling consumers to pay for things using their mobile phones and to pay each other via mobile phone. No cash, no plastic credit cards, no checks needed. You carry your money, credit cards, debit cards, rewards points, and loyalty cards around with you digitally. At the point of sale, you choose which payment type you want to use: take cash from your checking account, use money you’ve pre-loaded on a stored value “card,” charge it to your phone bill, charge it on a credit card account and pay later, and so on. Like a physical wallet, you can put things into it and take things out of it. And you can carry it around with you wherever you go.

© 2012 Microsoft

Microsoft's Wallet Hub will debut with Windows 8

How to Excel in a Customer’s Crisis

One of the “Aha’s” I’ve had over the many years that I’ve been working with companies to improve their customer-impacting business processes is this: Most firms don’t design for exceptions and breakdowns. They design for the “happy path.” Yet, we all know that what makes or breaks most customer relationships is how your organization/people/process/partners and technologies react when things go awry.

What Do Crisis Specialists Do? There are companies that specialize in handling crises and emergencies (emergency road service, ambulances, hospitals, police and fire departments, insurance companies). These organizations specialize in:

• Providing 24x7 personal service with a great deal of empathy and appropriate resources
• Getting to the scene/person quickly (within minutes)
• Anticipating all contingencies (have all emergency supplies handy)
• Coordinating multiple service providers
• Triage (fix what can be prevented/fixed before you deal with what can’t be saved)
• Great execution/follow up (the scope of this varies depending on the purview of the crisis specialist)

Learn from Alaska Airlines’ Director of Customer Innovation

By Ronni Marshak

In her interview with Curtis Kopf, Managing Director, AlaskaAir.com and Customer Innovation, Patty Seybold learned how the commitment to providing an exceptional customer experience resulted in the airline’s pioneering work in customer-facing innovation. It surprised me to learn that Alaska Air Group (Alaska and Horizon Airlines) is the seventh largest airline in the U.S. (Here, on the East Coast, Alaska Air seems very niche and exotic). Further, the airline was the first to book flights and sell tickets via the Internet, the first to offer Web check-in, the first to use onboard POS devices to accept debit and credit cards in the air, among other innovations! Who knew?

Curtis Kopf heads up Alaska Airlines’ digital, mobile, and ecommerce team. Patty is a fan of his combination of responsibilities: “It’s hard to separate e-commerce and online self-service from mobile tools and your mobile-friendly web site. So it also makes sense to combine mobile and e-commerce/online under one role. But what’s different and particularly interesting to me about Curtis Kopf’s role at Alaska Airlines is his involvement in the company’s initiatives to use technology to make it easy for customers to get things done when they’re interacting with Alaska Airlines and its personnel at the airport and/or on the plane.”

How could your organization benefit from an explicit executive focus on customer innovation? Maybe it’s time to hire or promote a Director/VP of Customer Innovation in your company.

~ Ronni

Managing Customer Innovation at Alaska Airlines
Alaska Airlines Combines Customer Innovation with E-Commerce & Mobile
By Patricia B. Seybold, CEO and Senior Consultant, Patricia Seybold Group, May 31, 2012

Why Facebook’s IPO Bombed

By Peter Horne (Reprinted with permission from Pete’s blog, Echoed Thoughts)

I Just Have to Run Faster than You…

And so the Facebook IPO has happened… and the bear has been unleashed on the stock.

What a shock!

Come on… as early as January 2011, Facebook looked like it was starting a “pump and dump” exercise.

Remember when a well-known investment bank took a stake in Facebook and made a market in the shares for private shareholders? Investment banks don’t invest; fund managers invest. Investment banks take risk on to their balance sheet because they think they can make money on the turn. They take it on… they need to get it off at a profit. Time to…
Pump.

Remember when the same investment bank sailed so close to the SEC rules when doing a placement that they had to raise capital outside the US and could not offer the placement to US investors?
Pump.

Remember when there was a steady information flow of private trades that slowly but surely indicated how valuable the stock was in the private market which surely indicated how valuable it was when it finally got to IPO?
Pump.

And what about the breathless press, managed to perfection, who wrote in awe of the second coming of the tech boom?
Pump.

And then finally in the last week pre-IPO – OMG it’s worth so much more than what we initially said and so the IPO price went up.
Pump.

What Questions Do We Want in the Google Privacy Disclosure Quiz?

USING GOOGLE SEARCH, EMAIL, AND OTHER APPS WHEN LOGGED INTO A FREE GOOGLE ACCOUNT. If I were to design a Google Privacy Disclosure Quiz, to better educate consumers about what the risks are, here are the questions I would include about what information about ourselves we trade when we use Google’s free advertising-supported applications:

1. When I have a free consumer account at Google, what user profile information does Google collect and retain about me?

    a. First Name, Last Name, Email address
    b. Gender, Age
    c. Phone Number
    d. Credit Card number and billing address (if I use Google Checkout)
    e. Who my contacts are
    f. Who I have included in my Google+ Circles
    g. All of the above
    h. Some of the above (only a thru d)