Conversation with Tim Kobe, Founder and CEO of Eight Inc., on working with Apple’s Steve Jobs, the essence of good design and reasons why customer experience fails to differentiate in banking.
Here is the transcript of the video
Emmanuel Daniel (ED): Tim Kobe, you are sometimes called one of Apple’s best-kept secrets. As the founder of a design firm called Eight out of California, and now head of Eight’s offices in Singapore, Beijing, Tokyo and Hong Kong you have designed for many global brands including Nike and Sony as well as Apple. You helped Apple design their branch experience
Tim Kobe (TK): That’s right. We started with Steve Jobs when he came back to the company (Apple), primarily doing the product launches. After two years of doing the product launches globally, we put together a white paper on retail and spoke with him about that and he hired us to start the retail program. We are now in our 18th year working with Apple.
ED: Where was Apple in its “retailisation” or the retail experience of its stars at the time that you were engaged?
TK: When we engaged we started with a white board with Steve in the boardroom. It was really started by drawing bubble diagrams. Ron Johnson joined following that, George Blankenship, a few other key personnel came into the program and it really grew from there.
ED: When you say a white board, there wasn’t a legacy that you were building off or you were throwing out of the window; you were starting from scratch?
TK: There was really no precedent in consumer electronics in a way that was compelling. There was certainly a history of third-party presentations, but Apple was suffering from the same kinds of situation that many other retailers were, which was they weren’t controlling the (product) storage and the relationship to their customers.
ED: Now, part of the story has to do with space and design, and part of the story has to do with distribution and ownership, right? And control and how fast you can scale that up. Did you have to deal with that quandary, that tension between the reality of the business itself and the design of the store?
TK: Well, I think the design was fundamentally a part of the reality of the business. So the fact that certain aspects that dealt with inventory control and some of those types of things, were woven into the programming of the retail program. The thing I would say is that the overall experience is something that had always been the core focus. What was it that would distinguish Apple from the competitors? So I would say the more technical aspects of how the inventory was managed and controlled, that was something actually that Tim Cook (Apple’s current CEO) was very focused on at that time. It was something that probably distinguished Apple because they had a lot of innovation in that part that was really behind the scenes. Much of our focus was around what the customer experience was.
ED: What was the customer experience for consumer electronics? At that point there were a lot of counters and display sets and so on, so what was the magic here that differentiated Apple from the rest?
TK: Well, it was really to not behave like the others. We talked about “beware of best practices.” What the design had to do was distinguish Apple within a fairly crowded marketplace, and do it in a way that built on the core values of Apple versus the core values of an industry. So rather than look at it as an industry standard, we looked at it as a very specific brand kind of standard.
ED: Well, was there a core value that Steve was trying to emanate and project that was specifically Apple that comes from the product, but also from his ideas in interaction?
TK: No, it comes from the history of Apple; what it was as a company. It comes from the values that Steve felt were the most important. If you’re going to develop a technology where ease of use, a democratic access to the products, and an openness and simplification of technology are givens, those qualities are in the product, those qualities are in the communications, and those products are in the space as well. So the environment that we created in the retail program had to support those qualities.
ED: Tell me about the experience, which was eventually successfully created in the Apple store, and not transposable to a Target store or any other sort of businesses?
TK: We receive many calls from people saying “hey, make an Apple store for us! All we need is a white store and some wood tables, right?” And we have to start to explain that it has to come from the brand and a culture. I think that when you start to just translate that as a look and feel, it means it’s really a misunderstanding of what the value of design is, that it’s not just look and feel. It’s not about styling a space, but the entire experience is built on behaviour and communications and products and the environment.
ED: Where do you get this feel for behaviour? Is that quantifiable? Is that data? How much of it is human? I think that’s the one element that you miss when you go into an Apple Store, and probably the element that actually defines the store.
TK: The first feedback in the first few years, all of the commentary was around the interaction with the staff and that it was the people that made the difference. That was a core piece of it. If you look at the Genius Bar – creating a proprietary name for what would otherwise be a service counter, creating a proprietary role in the store, and something that people can talk about – that idea is something that Apple could own. Therefore it would become part of the language that people would use when they describe the experience.
The essence of successful design – making the human connection
ED: Tell us a little bit about yourself. You studied design, and you had the opportunity to work with, ground-breaking design ideas for good brand names, so what were the other memorable ones that you’ve worked with?
TK: I went to Art Centre College of Design in Pasadena. It’s probably one of the leading design schools in the US And coming out working in really multi-disciplinary firms, firms that did different types of things.
Our breakthrough really was being hired by Steve. We had done work with Nike, we had done work with The North Face, we had done architectural work, and we had done industrial design work. But because of the Apple work it became a big portion of our office. As we grew and worked weekly with Steve, the things that we were able to do in other categories increased, for example we were designing the Coach Global Retail Program as well.
Apple and Coach became the number one and three largest retailers in the US, respectively. We were working with a number of companies that weren’t in categories that we were necessarily familiar with. So we would be hired for example by Citibank working with their Ventures Group to develop a smart banking program here in Asia.
We have just completed a project in China for Lincoln, launching the Lincoln brand there and it’s now doing very, very well. So, we’ve been able to take the approach, which is really around understanding what the experience is that you’re creating – take that approach and apply it across different types of categories.
ED: When I looked at the Lincoln ad and the Lincoln experience as they were trying to sell it, and the Apple experience and so on, so much of it is actually a conglomerate of previous experiences. I mean the Lincoln one reminded me very much of Lexus. The whole idea is that it’s not just the car that you come for, but the experience of being looked up and all that. The same thing with the Apple Store. How much do you see around you in terms of businesses that are getting it right, but then just don’t crack it at the highest end to become really successful? What keeps them from it, and why was it that you were involved in two of the top brands that did crack through their categories?
TK: There are lots of reasons why companies struggle with the execution. A lot of people think if you get the idea or a look and feel right that you can be successful. But in fact execution is a very, very important part of it. The attention to detail, making sure the priorities of the decisions are continually rooted back into what the customer experiences –
ED: What are the decisions? Are they choice of wood, are they engineering decisions?
TK: No, I think it’s about an emotional outcome. That is if you’re developing a relationship with your customer, which is really what all of this is about, that you want to generate a certain type of emotional outcome. In the automobile industry, the most common emotional outcome is either a fight or flight response. That’s not a great response if you’re trying to develop a relationship with someone.
So when you’re designing experiences that support a very positive emotional connection, if you demonstrate acts of generosity, if you’re being able to serve them in ways that go beyond a normal relationship, but one that demonstrates that you care about that relationship, you tend to get traction and you connect with people.
ED: But all of that has to do with training rather than design.
TK: Well, we consider it design. So in our behaviour models we actually design the roles and the responsibilities. We created an entirely new cast of staff that would man the Lincoln centres in China because the old way of doing it with the other car manufacturers couldn’t generate the distinctive experience that we were looking for. So in fact, we design what the behaviour model, what the human interaction, should be as a part of this overall program.
ED: How much of that is business, and how much of that is reality? You know that it’s a reality when the staff walking into the office on any particular day enjoys doing it and feels part of that whole experience.
TK: We try to break down the walls between what is business and what is humanity. People are people fundamentally. If you’re able to deal with them on a human basis, you tend to have a deeper connection with people. If you want to use the firewall of the business terminology, you’re naturally inhibiting your ability to connect in a meaningful way. And so it’s about structuring a manner, a way of engaging and designing that into the things that you do, making those things in the decision priorities.
Because we’re taught in business school to be very efficient and create very efficient, linear verticals. And what happens is we end up working with CEOs because it’s one of the few places where all those verticals actually intersect. And that’s actually the point of developing any type of a relationship. We experience things holistically, and so to design something that’s going to resonate with a customer has to be considered holistically.
ED: But at the same time, the retail business is cutthroat, very tight fisted. I don’t know of any retailers who would come and talk to you and say “please walk in and help us out.” What is the selling proposition that you have in your pitch, when you pitch? How do you pitch the bottom line? Do you say that, you know your profit will be this much higher, or you know, that we do believe that this will result in X amount of sales?
TK: We demonstrate how we approach a project, and I think that they need to see that that’s different to what some of our competitors would say.
ED: Do you put numbers with that?
TK: We don’t try to specifically say if you hire us you get five percent increase in sales, but what we can do is we can say look, we work with the most successful brands in the world and that when we started with them they were here, and when we developed their program, they went here. In most cases we can point to an incredibly positive growth.
We’ve made more money investing in companies who hire us. The first thing we do when a company hires us is we buy their stock. We’ve made more money in stock than we’ve ever made in fees, and the reason is it’s because if we feel like there’s a great opportunity, that the organization gets it, that we have a chance to do what we do best, then we know that there’s going to be value in the end.
ED: Today you would say that there are a number of Asian brands that are globalising, partially because they are successful in their own home country. I mean from China, you have Xiaomi and from Korea there’s Samsung and Hyundai. In Singapore, well you could say Singapore Airlines. Now, where do you think these brands are? Is there something that is organic and domestic that you respect? Is there something that’s global in reach to which you think that you make a contribution?
TK: We don’t consider ourselves either global or local. I think that what we do bring to any conversation is a sensitivity to both of those things. The research that we did in China was very, very specific around who the Lincoln customer would be.
The kinds of things that we look at in terms of opportunities in designing the experience are things that we would have learned from Singapore Airlines. I know if I stretch my arm up like this that somebody on the airplane is going to see that and see it as a clue to come and bring me a pillow. It’s the level of depth of understanding of the engagement that is something that the successful brands I think are doing well.
Working with Steve Jobs
ED: Tell us a little bit about working with Steve Jobs. What was it like for you, being part of the whole process? How much of his decision making was clear and distinctive? How much of it was, test and learn and ephemeral and emotional?
TK: I think a lot of people in business really want things to be framed within an analytical perspective. One of the unique things about working with Steve was he was incredibly strong both in right and left-brain thinking. So if you came to him with an idea, a proposal or a project, he would look at it from an analytical perspective first – almost the way you write software. If this, then this, if this etc., and he would go through this checklist in an instant. And he would say this is the part that breaks; this is the part that doesn’t work. If you made it through the analytical part, then he would switch over to the emotional side and say, you know, I don’t feel this piece. If I think of the most brilliant people we’ve been able to work with over the years, it’s the ones who have a mastery of both right and left-brain skills.
ED: But at the same time, his decision-making was at every point of the experience so you couldn’t have a predictable business relationship with him. I mean you could have rolled out a hundred stores and he’d say that something’s wrong and you’ve got to go back and recast them.
TK: Everything was up for grabs. If somebody had a great idea we would figure out how to try it and see if it would really work. I think that a right and left-brain thinking skill set is probably less linear than most people are comfortable with, and so there was experimentation, there was development of things that would take a long period of time, and some things that would happen very quickly.
ED: How big is your firm? How many people were exposed to the Apple client from your firm?
TK: Our company today is about a hundred people but when we started working with Apple we were probably half of that size. There’s a number of our staff currently working at Apple. We have a portion of the San Francisco office that is purely dedicated to a secure Apple box.
ED: Was it always important to work with the CEO or somewhere at the very top?
TK: I think so. At Apple it made sense because Steve was really the decision maker at that time. Again, the company was much smaller than it is today. But he really was able to control that. When you think of other companies where it’s a much more traditional corporate structure, you don’t always get that kind of immediate decisions that are made in driving that. So we have to take on some of that responsibility.
ED: How has that changed with Tim Cook now?
TK: Tim is a great guy. I think the breadth of what he takes on in the company now is – he’s probably incredibly well positioned to deal with that breadth. Certainly he has Johnny to drive the design piece, and I think together – you know, Steve was always there in the equation – dealing with such a loss like that is difficult for anyone. But I think he’s been able to step in, with maybe a few stumbles, but he’s had a great supporting cast, and I think his skill sets are probably more widely dispersed.
ED: The Apple Store is 15 years old now. In 2001, the whole social media thing didn’t exist yet. That dimension didn’t exist so is there a reason to recast it taking into account this ephemeral part of that whole human experience?
TK: The design has always evolved. One of the things in traditional retail is you should evolve your source every five years. Steve, after we opened 23, 24 stores in the first year he said okay, let’s go back and learn from what we’ve done and make it better. And he wanted to continue that learning component throughout the time that we worked with him.
ED: It’s been tested now.
TK: It’s pretty set, but then you have new challenges. If you introduce a wearable product now, how does that wearable product fit into the mix of the other things?
ED: So it will be redefined by the product that breaks through the need for something different?
TK: That’s where you see the pressure to change. I think the competitive things – I mean when we were developing certain materials or certain parts of the design he wanted to make sure that it would be incredibly hard for competitors to duplicate that as well. Part of the decision criteria was: How you can maintain that proprietary advantage?
Developing customer experience – and where banking falls down
ED: What is your take – and I’m thinking about banks at this point – what is your take of banks customising or breaking up their customer experience with the transaction, advice and something else? Like they actually break up the store into three different experiences rather than a flow in that sense. So is that a result or a constraint or the back end where you need to have an engineering process in place? Or is that bad design?
TK: I don’t know that its bad design, but I think that it’s limiting the ability for the customer experience to be very, very strong. When you start to fragment things – the financial industry is full of fragmentation. I would say that one of the big things that I’ve seen consistently through banks is when you look at other lifestyle consumer brands, other brands, banks tend to not spend the effort developing what they stand for as something that separates them from their competitors in the same way that other retailers or other lifestyle brands might do.
So, I think there’s a lack of appreciation of what the core brand value can do in terms of separating your experience. If that’s the case, I think you’re already starting to put yourself into that commodity posture. You’re creating parity between yourself and your competitor by default. That’s fundamentally a challenge.
What we know is that banks are tied up with their legacy technology. The back-end system is the thing that’s really hurting the front-end experience. If what you’re trying to do is take that back-end system and now carve it up more efficiently and parse this, I think fundamentally you’re not solving the real problem.
The real problem is just that you have to step outside of the legacy systems, take on that investment. There’s a lot of fear in doing that because of technology and evolution. One of the things we use consistently as a guideline is; if it matters to the end-user, making it more complex never wins.
ED: How much of that is data-driven, research-driven, and how much of that is intuition and something that you put your head on it and say no?
TK: This isn’t sort of just testing the wind kind of thing. We look at this and we know from experience in other projects that these ways of approaching a problem has worked in the past. But for example in China, we would set up this hypothesis and then we would test with their customers in different environments.
Get data and feedback; is this something that their target audience is going to respond to? If they respond, is it positive or negative and to what degree? We try to validate that before you ever turn it live. We validated a lot of those pieces because you only have one time to launch the new thing.
If you bring it out and you approach it the way a lot of software companies do, which is you iterate and iterate and iterate, people are just expecting you to continue to fix.
That idea works in some technology applications, but I think that you want to do as much as you can when you first start so that your degree of success is very high. And you can iterate from that. But we rely on research and we rely on intuition or right-brain and left-brain, and I think we try to bring those two things together.
Eight Inc. in Asia
ED: Why Singapore? I mean why are you living in Singapore? What’s your own thought?
TK: From a personal perspective, we were working with Steve for so many years, when he passed away it was a major turning point in terms of our career. Honestly, after working for 12 years doing computer sales it’s time to work in other categories.
I think that we as a society, as designers, have much more complex problems than selling more computers, or frankly solving banking transactions. There are much bigger issues to solve. I really felt that the next generation of thought leadership is in Asia. It felt like it was a more vibrant, more interesting place to be part of. So for me that’s it – I want to go where I can learn.
ED: What’s the next challenge that you’ve set for yourself.
TK: I’m actually very interested in the future cities – things that are going on here in Singapore. I think Singapore’s probably one of the few places on earth that will be able to demonstrate something that’s going to be what we’ll look at as our future. I’m very excited about that.
Also the region, I’m in China some days, I’m in Tokyo some days, I’m in Dubai some days, so I get around a lot in the region. But for us the kinds of bigger challenges, more complex problems, are the things that are keeping it exciting.
*Tim Kobe was interviewed by Emmanuel Daniel, editor-in-chief, The Asian Banker