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Nest is changing the way consumers use hundreds of products from light bulbs to washing machines.  Owned by Google, Nest reshaped its business model and that of its partners by focusing on consumer outcomes. The home automation product maker is an excellent example of using technology to unearth new opportunity.

Nest makes smart thermostats and safety devices. With its new Works With Nest program, it shifts the focus to the outcomes of using those products, not the products themselves.  In so doing, it is making more than smoke detectors and temperature controls. It is providing consumers with personalized comfort, security and control.  The Works With Nest program collaborates with large and small companies to transform the way products are used. Using an integrated interface Nest provides, consumers can create personalized experiences with multiple products.

How Nest works

Nest makes products to simplify modern living and amplify interactions with its products. It has three core products.  The Nest thermostat learns the temperatures you like at certain times of the day and night. It adjusts itself based on the time of year and your usage patterns. In doing so, it can reduce consumers' on energy costs.  The Nest Protect is a smoke and carbon monoxide alarm that is self-testing and lasts for more than a decade. The Nest Cam security camera allows live streaming, night vision, and activity alerts.  All three products are controllable using an app on a smartphone or tablet, allowing for remote function and adjustments.

Works with Nest

Nest has developed a new business model that partners its products with others. Both well-established and new CP companies work with Nest to deliver new personalized outcomes.  Works With Nest lets other products connect wirelessly with Nest offerings. Consumers can to pair these products in customized ways.

Here are a few examples of how Works With Nest works.

Whirlpool, the maker of home appliances, partners with Nest with its washing machines. Using Nest thermostat data, Whirlpool lets consumers schedule laundry for when energy consumption is ... and the corresponding energy price ... is low.

Jawbone makes the Up brand of wearable devices. The devices connect to an app that tracks food, exercise, sleep and vital signs.

With Works With Nest, Up devices can signal Nest products. An Up device senses when a wearer wakes up and signals the Nest thermostat. Customized settings trigger, and the thermostat adjusts to the preferred temperature.

Lifx is a maker of LED light bulbs that use smartphones to change brightness and color. When partnered with Nest, the light bulbs become a powerful safety feature. When smoke is detected, for example, connected Lifx light bulbs can switch to red and pulsate. This feature provides better illumination and alerts neighbors. It is an enhanced safety mechanism for those who are hard of hearing.

Finally, car maker Mercedes-Benz uses the Works With Nest to connect a smart car to a smart home. Until now, the main interface between car and home has been the garage door opener nested on a sun shield.  Works With Nest lets Mercedes-Benz change that. Now the car sends an estimated time of arrival to the Nest thermostat. The driver arrives to a home at her preferred temperature.

Nest has developed a shrewd branding strategy within these partnerships. It encourages consumers to look for a Works With Nest logo on products participating in the program.

Why it works

Nest has embodied the innovation that leading CP companies are leveraging. Using new technologies, Nest is partnering formally and informally with hundreds of different companies. It has positioned itself as a leader to partners by encouraging and promoting interoperability with partners' products. It has also established itself as the central user interface for consumers.

In doing so, Nest competes as an ecosystem with the ability to orchestrate personalized outcomes for consumers in moments of need. Nest becomes something larger and more vertically integrated than it actually is.

All this new business modeling is possible without any costly acquisitions or incremental investments. By using partner networks, Nest provides these product bundles at a fraction of the cost of owning and managing the capabilities itself.

New business models

What can other CP companies learn from Nest? How can they reimagine business models to respond to consumers in moments of need?

Integrating businesses vertically and virtually opens up new areas of value delivery at little to no cost.

Previously unlikely partnerships emerge allowing for delivery of personalized information, services, and offers in the moment of need. New and different consumer value propositions are created through these collaborations.

The sharing of real-time data allows for coupling and uncoupling with partners as customer, consumer, and market needs shift.  The Nest example also illustrates the ability to deliver products as services. The consumers' brand perception shifts from individual purchase and use to ongoing experiences. Works With Nest delivers comfort, security and energy savings, not just thermostats or fitness apps.

Other possible examples of product-as-a-service are the ability to access manuals, related content or replenishment services in a moment of need.

In the digital economy, assets and competencies are available virtually. They can be capitalized and shared in different ways. Digitized and shared excess capacity can monetize capital investments, including plants and equipment. Traditional metrics focused on reducing per-unit cost can focus instead on agility in moments of need to maximize return on engagement.

CP companies that embrace the digital consumer see information as a sharable, sellable asset.  Combined consumer and market insights offer new understandings of preference and opportunity. in those moments of need. Virtual assets such as consumer insights and network reach are new drivers of growth, differentiation and profit.


Nest's example shows the powerful impact of shifting business models.   By leveraging its existing relationships with consumers, Nest has brought on hundreds of new partners. Doing so has allowed Nest to forge new ground as the center of an ecosystem of products that offer consumers new ways to engage with multiple CP companies. By allowing personalized outcomes when needed, Nest has shown how the digital economy leads to growth, one laundry load at a time.

Learn more about Digital Transformation for Consumer Products at Consumer Products. Reimagined for the new economy.