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DEBT

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Apple Pay case example from WSJ


Podcast

⁠
⁠
⁠

Takeaways, using the
DEBT
⁠
framework

In order to understand this case example, either listen to the podcast, or read the
excerpt below
⁠
.
There are a series of Dependencies, External factors, Balancing factors, and Timing (DEBT) to be considered when introducing new products and services
Ignore them at your peril, predict them to your advantage, and prioritize them for critical focus in your execution

The Apple Pay example

Dependencies
iPhone and Apple Watch tech such as NFC technology
Merchant infrastructure in place to receive payments
External factors
Covid pandemic causing people to want to go contactless
Balancing, Burden vs Leverage
Persistence vs annoying “pestering”
Apple leveraged existing Credit Card payment rather than reinventing that whole value chain
Of course they also leveraged their own iPhone and Watch customer base that gave them consumer reach
And finally they incrementally added the right technology such as NFC (Near Field Communication that makes contactless payment possible) and FaceID
The
Gain/Pain
⁠
for all of this is interesting too.
For example there was clear Gain for consumers to be able to simply touch and pay, but first they had to go through the Pain of adding their credit cards and getting both used to and comfortable with (security) accessing and using them them on their phone or watch.
Verification systems such as FaceID and in the case of the Apple Watch, it being on your wrist took some of the Friction out of the process too.
Timing
Significant change, especially human change and societal change takes time.
Sequencing, not forcing a market can make all the difference in GTM motions being efficient and productive
⁠

Podcast Excerpt

It may have taken longer than Apple wanted, but it seems like the iPhone has finally started to replace many people's wallets. We'll discuss after the break. Back in 2014, a week after Apple launched its new contactless payment system, Apple Pay, CEO Tim Cook spoke at The Wall Street Journal's big annual tech conference, where he was asked about reports that some big name US retailers were refusing to accept Apple Pay. Cook characterized the standoff with the retailers as a skirmish and struck a positive tone about Apple Pay's future.
Tim Cook: Now, we've got a lot more to go. We've got a lot of merchants to sign up. We've got a lot more banks to sign up, and we have the whole rest of the world. We're only in the US right now. And so we're just getting started, but the early ramp looks fantastic. And I'm getting...
Zoe Thomas: That sunny outlook, well, it seems like it's finally come to pass. And it seems like everyone is using Apple Pay. It just took eight years. With the speed that tech typically moves, that duration and the steadfast belief that a product will live up to its goals, despite initially slow adoption, is rare. Joining us to discuss what Apple's endurance can teach the tech world is Ben Cohen, the WSJ's Science of Success columnist. Hi, Ben. Thanks for joining me.
Ben Cohen: Hi, thanks for having me.
Zoe Thomas: So plot this course for us that Apple took from its launch to now. How did it increase usership of Apple Pay when it looked in the beginning this wasn't really going to happen for it?
Ben Cohen: Yeah. In the beginning, Apple Pay was widely dismissed and almost mocked. I mean, no one really thought that it would be a success, and for a very long time, it wasn't. So Apple Pay was introduced in 2014. By 2016, only 10% of iPhones had activated Apple Pay. By 2017, that number was only 20%. And so three years into the service, by which time Tim Cook had already declared 2015 to be the year of Apple Pay, and in 2016 said that it was happening much faster than he anticipated, it really did not look like it was going to be a consumer hit. And yet the adoption rate doubled the next year. And then it hit 50% by the start of the pandemic. And now the activation rate for Apple Pay on iPhones is around 75%.
Zoe Thomas: Yeah, it's interesting because Tim Cook and Apple seemed to have so much faith that Apple Pay was going to pay off for it. But how did it get that kind of adoption when it looked like it was moving so slowly? How did they get to a 75% activation rate?
Ben Cohen: So there were a few things. The first is that they were very, very annoying, and sometimes pestering can help. So there was a while when, if you hadn't activated Apple Pay, you would see this little red bubble on your iPhone that you wanted to get rid of. And so people started adding their credit cards and debit cards to the Apple Wallet just so they would have a cleaner iPhone to look at. But that was one thing. But the real thing was that they needed the rest of the world, and especially the United States, to catch up to their vision of the future. So when Apple Pay was introduced, only about 3% of retailers and stores in the United States had the technological infrastructure for contactless payments. So if you tried to use Apple Pay, you wouldn't have been able to in the beginning. That number is now 90%, Apple says. So some of it was waiting for stores to get there. And the rest of it was humans, and human behavior had to change. So when Apple looked at the rest of the world and the way that Europe, especially, used contactless payments, they saw that they were several years ahead of the United States, and that gave them confidence that Americans weren't so different from the rest of the world. It would just take a little bit of time to catch up. And then the last thing that happened that really accelerated the growth of Apple Pay and changed its trajectory was the pandemic. And there was a time when people did not want to hand their cards over to cashiers or stick their credit cards into terminals. And just being able to hold your phone near a reader was a much more preferable option.
Zoe Thomas: How did they get the stores on board? How did they start getting more places to accept Apple Pay?
Ben Cohen: In part, because more people wanted to use Apple Pay. Some of it was just time for stores to upgrade their own technological infrastructures and add contactless terminals. So this was never going to happen overnight. And I think Apple knew that, and sometimes it can be hard for companies to stay patient, but the long game is an indulgence that the world's richest corporation could afford. If there were anyone that could afford to be patient, it was Apple. And I think this is a case study in how valuable that patience can be in business sometimes.
Zoe Thomas: Yeah. Let's talk about that a little bit. I mean, why did Apple even stick with this to get Apple Pay to this level in the first place?
Ben Cohen: For one thing, they had data from other parts of the world that suggested it was going to work, even if it wasn't quite working in the United States already. But the second thing is that this is not just about how we spend money in restaurants or at stores, right? I mean, Apple is really trying to make the physical wallet obsolete. They want your phone to replace the wallet. And that means putting credit cards on your phone. It means putting your driver's license, an ID, and insurance cards on your phone. I mean, there is research that human beings would rather leave home without their wallets than without their phones. And if Apple can come up with a service like this that makes the iPhone more useful and more valuable, that is just incredibly beneficial to their bottom line.
Zoe Thomas: Is this something, though, that another company could have pulled off? I mean, you called it an indulgence. Tech is known for that move fast and break things culture, so could other companies afford to wait around for a new technology or for consumer habits to change?
Ben Cohen: Probably not, and not just wait around for consumer habits to change, but make those consumer habits change, have the market power and the sheer force of will to bend human behavior to their favor. But I think it's worth keeping patience in mind because I think that moving fast and breaking things has become for a while, it was so popular among tech companies and that kind of ethos trickled down to all sectors of society. And I think that patience is kind of undervalued.
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