COMMERCIAL REPORT: Scottish Power - Firms can adapt to thrive

“The underlying trend is that technological processing power effectively doubles every 18 months,” explained Chris van der Kuyl, whose Dundee and East Lothian-based business 4J Studios is behind the Xbox, PlayStation and Nintendo editions of Minecraft, the global computer game phenomenon.

“There’s a theory called Moore’s law, named after Gordon Moore, the Intel co-founder and chairman. In the 1950s and 60s, he realised that the density of transistors that can be put on a silicon chip doubles every 18 months. This means that, every 18 months, the power that you can fit on a chip doubles and the price reduces accordingly. When you start plotting it on a graph, it’s nuts – because the line keeps growing exponentially.”

Addressing the ScottishPower event “Powering the next generation of Scottish business in the new digital age”, held in association with Glasgow Chamber of Commerce, Mr van der Kuyl predicted that, in the next 10 years, tablets and mobile phones would be replaced by devices using artificial intelligence and “augmented reality” – which superimposes computer-generated imagery on a user’s view of the real world.

The secret to survival in this new digital world order is to take one step at a time – and get perfect later.

“The most successful businesses of this generation, like Facebook, are all based around lean and agile methodologies,” Mr van der Kuyl explained.

“That’s about trying things in a small and concise way to see if they work – and then releasing them to real live customers before anyone knows yet whether you’ve built the right thing. So your product could be a bit broken and not very good – everyone knows that.

“But you’re then using feedback from customers to further develop, design and market the product. The companies that have embraced that process and taken it to the heart of their businesses are the ones who are really successful now – and I think that is essential for anyone going forward.”

The way the Minecraft game was developed by Swedish programmer Markus Persson is a good example of this. “Markus came up with the idea to develop the original game and then let customers tell him where they wanted it to be taken,” Mr van der Kuyl said. “Over a short period of time, it grew to be arguably the biggest game in the world. Then Microsoft bought the business
for $2.5 billion just over a year ago – so it’s undoubtedly a global phenomenon.”

ScottishPower’s chief executive of retail and generation, Neil Clitheroe, said the “internet of things” – where everyday objects are connected to the internet – and “big data” – the crunching of extremely large datasets to reveal new patterns and trends – could unlock a range of new blue-sky products and services for customers.

“I see things like boilers and washing machines being connected to the internet, and exponential growth in the amount of data being produced by individuals and businesses,” Mr Clitheroe suggested. “This produces a massive opportunity to develop new real-time, personalised and customised products, services and advice.”

Mr Clitheroe said digitalisation was already changing customer behaviour, by decentralising decision-making and putting consumers in control.

“Over the last 50 years, it’s been about companies doing things to customers,” he explained. “We told you what your direct debit was, what you were going to pay and when, and how to interact with us. It was a one-way relationship.

“But right now we’ve got 20 million customers visiting the ScottishPower website every year and five million customers who access their account via our app or through a mobile device each year.

“We’re making it easier for customers to do business with us by putting the customer in control. These customers are now making more informed choices than they did before – they’re changing their tariff in a few clicks, entering meter readings, checking their energy consumption, changing their direct debit or processing a refund if their account is in credit.”

Recent ScottishPower innovations include the launch of an app that allows customers to control their central heating from anywhere. This has led to customers changing their central heating every day instead of relying on pre-set timings. The roll-out over the next five years of 5.5m smart meters – which show users how much energy they’ve used and automatically send meter readings to the energy supplier – will also generate huge amounts of useful data.

“This will bring insights into how customers use energy, and present opportunities for new tariffs, ways of paying, alarms and control systems,” Mr Clitheroe said. “The potential is only limited by our own imagination.”

With the growth of mobiles in particular, the ability to talk about brands immediately on social media and share widely has to be confronted and embraced for any future looking organisation.

ScottishPower has seen a 300 per cent rise in social interactions over the last few years and said this was now a key focus for the company’s service models going forward.

“We are investing heavily to integrate social media into our existing contact management systems,”

Mr Clitheroe said. It’s about delivering convenience for our customers and being willing to engage wherever they are.”

MALLZEE: A 15 second purchase journey for clothes shoppers

THE numbers are impressive. In its three years since launch, online shopping app Mallzee has raised more than £3 million in three funding rounds.

It has signed up more than 150 top fashion brands to its platform, including Gap, H&M, John Lewis, Jigsaw, Hugo Boss, Lacoste, Paul Smith and Nike.

Around 500,000 shoppers have downloaded the app. And last month it hit a new high when its shoppers rated a million products in a single day.

“Our first round of investment was £75,000 and that allowed us to have a team of seven for one year,” explained Cally Russell, who founded Edinburgh-based Mallzee in 2013. “Our last round was £2.5m in July. We now have 23 staff and that will hopefully be 30 by the end of the summer. We’re growing dramatically right now.”

A fan of shopping but not going to stores, Mr Russell said the idea behind Mallzee was to make mobile shopping easier. “Retailers like Asos and House of Fraser have tens of thousands of products – so how are you meant to find exactly what you’re looking for on such a small screen?,” he asked. “We decided we wanted to build a product that brought all the different stores into one place, to help people find clothes that suited them.”

Inspired by dating app Tinder, where users swipe through profiles to find ones they like, Mallzee has created a store browsing system that learns from shoppers to build personalised shopping profiles and make purchases through its checkout in less than 15 seconds.

“I think we’re proudest of the team we’ve created,” Mr Russell explained to the audience at the ScottishPower-Glasgow Chamber of Commerce event.

“Any business is based on its people – and we’ve worked really hard to ensure we get the best people – and then also support them to grow.”

All Mallzee staff have shares so “if the company succeeds, everyone is rewarded”. The support of the Scottish business community – including Scottish Enterprise, incubator programme Entrepreneurial Spark and the £1m Scottish Edge fund – has been vital to Mallzee’s success. Investors include Gareth Williams, chief executive of travel search group Skyscanner, Scots tech entrepreneur Chris van der Kuyl, Edinburgh-based Par Equity – backed by recruitment entrepreneur Paul Atkinson – and the Scottish Investment Bank.

“People are willing to share their knowledge and experience – and that’s critical for any early stage business,” Mr Russell said. The 27-year-old – who has been named on the “Forbes 30 under 30” list – has come a long way since turning down a £75,000 investment on Dragon’s Den from Peter Jones.

“Dragon’s Den was fantastic, everyone was lovely,” Mr Russell said. “But we couldn’t find a valuation that worked for us.”
There has been no dampening of ambitions though.

“We want to be the mobile shopping company of choice for everywhere in the world,” Mr Russell said. “We will help people find clothes wherever they are from their mobile device.”