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Business Model Innovation for Growth and Renewal

Posted by Jeffrey on Apr 22, 2010

Mark Johnson, Principle of Innosight Consulting gave a talk at the Rotman School of Management where he led off the talk with a discussion of the Music industry- a common story which leads to a well known conclusion: others started the industry but couldn’t capitalize because they were trapped in their old modes of thinking. Apple really won the war because they understood that customers didn’t just want a cool device (although that helped) but a whole package (including software) that helped make the process of downloading and listening to music easy and painless. Except that Apple didn’t originate this solution: Tony Faddell brought it to them after he had been kicked out of many other companies up and down the 101.

But I digress…. The traps that most established businesses find themselves in is that they can’t grasp the fact that in contrast to their existing business (where their knowledge to assumption ratio is high) in a new business venture it is low and the metrics, processes and norms that surround their existing business don’t apply in the new.

With some examples he illustrated that there are 3 traps that established businesses find themselves when trying to create new businesses. (Note that this doesn’t [shouldn't] apply to start-up businesses (unless you have real problems.)]

Trap 1- failure to allocate resources. Basically this is the “Holy crap! Is this thing as big a disruption to our model as we think? Better not pay too much attention as we don’t want to rock the boat.” Think DEC and the personal computer.

The second trap is in trying to graft new technology onto an old business model. How to develop a digital camera? Make it work the same as a film camera. At least this is what Kodak thought in the early 90s when they released the $30,000 DCS-100 that had the same quality as film. (Except users didn’t want the hefty the price tag!)

The third trap is companies don’t let these new innovative businesses mature and are impatient for growth. In this case because HP was a multi-billion dollar company, they wanted their newly developed HP Kittyhawk 1.3 inch hard drive to be a $100M business within 12 months, because that’s the growth rate established by the rest of the company. They didn’t allow the product a “Test and Learn” that would have made it apparent that the main market that they were targeting with this device was wrong and they needed a different business model to succeed where the device would have the most traction.

At this point, one asks, “What is the problem with these companies? Cant they see that you have to be aware of all these “traps” to succeed?” Where it really becomes a challenge is around culture and operational norms. In the rigidity of rules, norms and metrics established business find they are “trapped” in how they evaluate new opportunities and how they fit into existing business models. They really need to step back and think about how they currently make money and what needs to change if they are to really take advantage of a new opportunity. In a lot of cases, the whole business model has to change.

Think about the Tata Nano. It was created not to compete against other cars but as an alternative to a scooter. They had to change everything about the model (supply chain, distribution, manufacturing) in order to compete on that level.

Or what about MinuteClinic? Its not a competitor to existing medical services but meant to take care of many routine health care issues that can be treated by rules-based procedures.

The biggest problem comes from the inevitable commodification of business models as new entrants come in once and attractive market is carved out. You can ignore it to your peril or do what innovative companies like Hilti have done. They’ve created a new business that realizes that one source of frustration to contracting companies is tools and tool failure. Rather than simply selling tools they now sell a “tool fleet management service” with a monthly fee covering leasing of the entire tool category. They had to completely rethink their model. Rather than selling through distributors, now they sell direct. Before they had to think of low cost manufacturing, now they need IT systems to track inventory and repairs. They had to really think about the stakeholder and the job that needed to be done and how they could serve that stakeholder.

Finally the example of Better Place was raised. With the advent of the true electric car close to fruition, a key problem still exists- the long charging cycle of current batteries. Shai Agassi, the entrepreneur behind the company thought, What if we could reinvent the whole model so that we didn’t actually sell cars, but we sold “miles?” Their target is not other new cars, but used cars- they need to be competitive to someone who might not consider a car at all! Their model is similar to the cell phone where the initial cost of the vehicle is subsidised by an ongoing distance contract.

For me the real takeaway once again was getting to the heart of the job to be done that the customer needs. This leads to a clean sheet thinking about what the appropriate model is to serve that customer and how to integrate that model into a system. The ever-present question is whether this can truly ever happen in an established company with and established model and established ways of thinking. Time will tell if there are ways of breaking out of established patterns, but given the above examples of very competent companies, the jury is out on if this journey is one that has a happy ending.

Is Apple’s iPad the next big thing, or another Newton?

Posted by Jeffrey on Jan 27, 2010

There has certainly been a lot of digital ink spilled over the last little while trying to determine whether the Apple Tablet would be the second coming or just another device with superfluous hype. Now that the iPad has been unveiled I sense a bit of a letdown – with some justification – from the tech community.

Given the amount of press and speculation feature expectations were bound to overshoot what even arguably the leading consumer device manufacturer could deliver. But in the afterglow of today’s launch I am starting to wonder if we need to look beyond the actual device and features as some have mentioned.

With any new category it firstly is difficult to envisage what the eventual maturation of devices will look like. When automobiles were first starting to be delivered to mass markets, they took a lot of design cues from horse drawn carriages. It took quite a few years for cars as a new distinct category to emerge and people to accept that the two categories were different. What’s also exciting is the potential that cars would promise and deliver in terms of mobility and even urban design and travel.

Now I am not suggesting that Jobs and company have delivered something so life changing as the automobile, but we might want to separate out a few things from the hype to see if indeed there is promise that would justify even Apple’s internal hoopla. If we move past the shiny device itself to the ecosystem then to behaviour, are there any indications that this device would impact developers / users to create new ways to use / interact with the device? Could it then be a new way of interacting with content that is significantly better than what we have now?

I am only asking the question because the iPhone (which isn’t really just a phone, but a most personal computer) and its data plans changed how people interact on the go. Heck, it even changed how I interact in the home! It broke the carrier model of aggregating applications behind a pay-wall and brought more of an ecosystem approach to app creation and consumption. Are there any aspects in the iPad which may break existing content models?

Time will tell, but one thing is for sure: no one ever got rich underestimating Apple’s ability to create interesting new markets.

Tony Lacavera gives an update on the evolution of Canada’s wireless industry

Posted by Jeffrey on Dec 18, 2009

In a presentation that could have been entitled, “Can an entire industry change?” Tony Lacavera, the founder of Globalive and Wind Mobile spoke at the MobileMonday event at MaRS about the current (and potential future) of the wireless industry. In a wide ranging, very frank and interactive presentation that touched on more than a few industry complaints, Tony engaged the audience with Wind’s vision for how the wireless industry could change when they get to launch. Now that they have just been approved by Industry Minister Tony Clement in a dramatic reversal of the CRTCs ruling, Wind can build on the momentum they’ve been building for the past year or so.

But in an industry that is one of the most criticized from a customer service point of view, why would a company try to compete against very established players with deep pockets. The answer is contained in a dramatic slide which showed the veritable duopoly of control of the wireless market between the incumbents Rogers, Telus and Bell. Because of this, Tony made the case that there is a disincentive for the incumbents to be aggressive outside their home territory for risk of retaliation by the other players. Simply stated he believes “…that the root of all or our problems is contained in this slide.”

With a story that many of the audience members could relate to he recounted that when he stared Gloablive in 1998 he needed a cell phone, but he found customer service from the big carriers was lacking. This started a decade-long quest to somehow find a way to bring a customer-centric wireless company to the market. So when Industry Canada set aside wireless spectrum for new entrants for an auction in 2008, he went looking for partners that would provide him the scale to introduce a legitimate challenger to the incumbents. He found that partner in Egypt’s Orascom which is the 9th largest wireless operator in the world.

However, after bidding $445MM and winning spectrum in most of the provinces, the company was put before an ownership review by the federal government. In the first review, both Industry Canada and the Department of Justice approved the ownership structure, but was turned down by the CRTC. After what could only be described as an excruciating delay, the approval to launch was announced on Friday December 11, 2009, clearing the way for the company to begin selling wireless services.

The root of their strategy comes from the thousands of customer suggestions and submissions from their site, wirelesssoapbox.com. Lacavera said that he “talked to so many people and the problem that most of them talk about is the complexity,” of the whole process. “It’s so complicated, it’s like a car lease for 3 years,” Lacavera said, and we “need to make it simple and enjoyable.” To illustrate this, the company recently put together a humorous campaign that pokes fun at the way the incumbents currently sell wireless services.

Lacavera says that taking the complexity out of the business won’t be easy – customer service needs to be at the core of everything the company does. Along with a keen focus on the customer he mentioned a few of the “fun and cool” things they would have at launch including person-to-person mobile top ups; an open mobile application platform and social media and instant messaging integration.

As far as handsets go, Lacavera noted that they will have the “latest Blackberry” devices as well as the same ones which are available on other GSM networks. As for the iPhone, he said that it won’t be available at launch but there is “no reason” why it wouldn’t be available in the future.

In summing up his talk, Lacavera said that Wind Mobile is “in it for the long haul” and has every intention of competing and succeeding in winning business from the incumbent players. As everyone knows, it will be a challenge, but with the right customer focus and strategy the company looks to continuing to challenge the status quo and maybe just push the whole industry to change. And as one audience member later remarked, “It’s about time.”

OECD Broadband Pricing- Is Canada falling behind?

Posted by Jeffrey on Dec 16, 2009

From this data on the OECD site, it looks like Canadian consumers pay the third highest rates per megabit/sec in the world. Statistics show most of the growth in super high speed networks will come from fibre rollouts, not DSL or cable. About one in ten consumers around the world access the internet over fibre.

According to a new OECD paper, government investment could be justified based on even small direct benefits in just four key sectors of the economy – electricity, health, education and transportation. The full paper is available here.

ThinkFlood’s RedEye iPhone Remote for your stereo

Posted by Jeffrey on Aug 7, 2009

Well lets start off by repeating that as posted on the ThinkFlood website “this is a BETA” product.” I mention this because not only was it available for a significant discount off the eventual retail price (which worked for me!), but because the company is still doing significant development to make the product better.

You might be asking yourself, “What is RedEye and why should I care?” Good question! It is a device coupled with an iPhone app that allows you to control all your A/V  equipment through WiFi . This is a great idea that has been attempted before with IR blasters, but no one has brought in the power of the iPhone application to control all the devices in the stereo cabinet.  Which is why I was attracted to this solution in the first place. I wanted my stereo equipment (Tuner/Amp, CD/DVD, surround speakers) to work in my newly painted and redecorated living room, but didn’t want to look at all the components sitting on a shelf collecting dust.

So I went to IKEA and bought a cabinet with a solid door so that I could close off the components to the outside world. So what’s the problem you ask? With the solid door, I couldn’t get an IR signal to control the devices. Not really a big deal when you consider I’d only have to open the door and turn on the Amp and then close the door; then open the door and adjust the volume and then close the door… Well you get the idea.

So as every good tech enthusiast asks, “Why expend energy when we have a technological solution to throw at the problem?” So I got on their site and ordered it through Amazon. After a few hiccups the product shipped out and arrived at my house a few days later.

First the packaging- really great job on all the design and how it is displayed! It looks top notch.

When I started to do the install I realized that I had some space limitations- it was difficult to get the unit inside the cabinet to send a signal to the devices so I had to jiggle with that a bit. But I am getting ahead of myself. Let me explain how it seems to work.

There is a device that sits on or near the stereo equipment which flashes a blue light (looks pretty cool) that is “seen” by the IR receiver on the device(s) and controls all manner of functions. This device has a WiFi receiver built in so it gets the signal from the iPhone and transmits it to the stereo equipment.

The other part of the system is a free app that you download for your iPhone or iPod Touch that gives you a neat, clean interface to control the devices. So I could be sitting in my chair and fire up my iPhone (which of course is more readily available to me than that darned remote which keeps getting lost) and adjust the volume, change the station, flip on a CD or anything I could do with the regular remote(s). Best part? This solution is also a universal remote so I can do it all from one device. At least in theory, and here is where you have to go back to the first paragraph. Repeat after me- Its still in BETA!

So one thing to keep in mind is that everyone sets up stereo components after they’ve been drinking a bit (oh, wait- is that just me?) So the instructions seemed a bit cumbersome and didn’t make sense until I realized that not only could you control something in the living room, but you could control multiple rooms (as long as you are within range of the device). You have to use WiFi, so switch your iPhone to WiFi then initially look for the RedEye device and connect to it. You add your component by name in the setup screen, and add commands by capturing the remote setting by holding the remote to the device. Sometimes it works, sometimes not.

So after trying a bit more for about an hour, I gave up and went to bed. When I opened the iPhone app the next day and connected to my home network (as in the instructions) the app looked and looked but couldn’t find the device. So as I do with most electronic devices that aren’t behaving, I unplugged it and plugged it back in. Then I got the stereo to turn on! Awesome!

So I closed the door to the cabinet and tried again. Nothing. I could see the device flashing but no change. So (and this is because of my cabinet door) I taped a piece of silver tape (usually used for HVAC) and it bounces the light off and turns devices on or off pretty well. Except when I get “Network Time out” errors on the application.

The company has been updating the app on a regular basis which is great and making it somewhat more reliable, but I still have some issues with the UI. You set up commands for each “room”, and then group the commands (ie turn on amp, turn on CD, press play on CD) into activities. So I get this, but it doesn’t always work. So I think there might be a way to have more of a step by step system in the app to walk through what would be likely use cases for 90% of the population, then hide the setup stuff unless it is needed.

Also when the app starts it looks for the rooms (I guess it tries to contact the device and read the info stored in RAM) and most times it just looks and never finds the device). When it does find the device, it tells me I have to select the room before I can do anything. But I only have one room! So it should know that and autoselect so I can just go to my activities.

Finally it is a bit slow. In this world of insta-on, it takes a bit of getting used to. What I mean is that you have to wait a bit for the command to get sent to the device, then for the device to respond. If you keep hitting the command it will either time out or eventually all the commands will get sent and the volume will go up, up, up! All in all, I love the concept, and am eagerly looking forward to having some of these small bugs worked out!

iphone 3G tethering on Fido

Posted by Jeffrey on Jul 3, 2009

I spent a few minutes yesterday setting up tethering on my iPhone 3G using Fido (actually Rogers, but that’s another story). It didn’t take that long once I actually realized that you need a few things to make it happen:

• A PC (in my case a HP dv6000 Laptop running Windows Vista Home Premium)
• iPhone 3G with the iPhone 3.0 or better update
• iTunes 8.2 or better
• Either Bluetooth (don’t have it on my laptop:<, or the USB cable from the iPhone)
• 3G or EDGE coverage (not a problem in the city, but maybe in outlying areas)
• A big data bucket!

The reason I set it up is that we are going out of the city and I want a way to check email etc without using (shudder) dial-up.)

So after updating my iTunes on Vista and restarting it was just a matter of going to Settings->General->Network ->Internet Tethering and turning it on. Then I hooked up the USB cable to the port on the side of the laptop and Vista recognized it as another broadband connection in  Network and Sharing Center.

To test it I shut off the wireless on the laptop and found that I could surf at a pretty speedy pace on the iPhone. Pretty neat although I’d want to be careful what I did online to make sure I stay within my data bucket. Well, not really because I have a 6GB limit, but I don’t want to be pulling down too many movies from iTunes!

Plantronics Voyager 855- now working with iPhone

Posted by Jeffrey on Jun 18, 2009

I’ve been looking for a Bluetooth headset for a while but didn’t want to settle for a voice only one- I wanted to listen to music as well. Problem was, my iPhone didn’t do stereo Bluetooth because up until 3.0, it didn’t support A2DP which is the audio standard the devices need to communicate.

So I though I was SOL because I didn’t see how Apple could possible update the device with software. But I was wrong! Imagine my surprise when one of the features announced at WWDC ’09 was stereo Bluetooth! I didn’t even think it was possible but Apple, being clever, built in into the hardware and turning it on became possible with the right software upgrade.

So that solved the biggest problem. All I had to do was wait. And wait. And wait until June 17th for the upgrade to become available so I could download it and install. [I always worry when I upgrade software on most electronic devices about turning them into bricks, especially something that I use as frequently as my phone! But it went pretty smoothly all things considered]

Now a bit about the headset. The Plantronics Voyager 855 comes in an attractive package, suspended in clear plastic within the main outer box. I carefully pulled the headset out and took a look. It appears to be made to a high quality standard and although very light, looks like it will stand up to daily use.

It came with several replaceable ear buds that should help fit most ears. Except of course mine. Now this is not a new issue – I can’t get any ear buds, including the ones that came with the phone to fit. I just have a non-standard ear I guess….

The unit comes with two over the ear clips and I am still fiddling with them to get the headset to sit properly and comfortably.

So when I pulled the phone from the dock all looked good. I paired the two devices really fast (with QuickPair technology, the unit stays discoverable for about 10 minutes and makes pairing a snap.) I made a voice call and the call quality was great- some background noise but better than I was expecting.

But to my surprise when I played music it didn’t play through the headset. I consulted the manual to no avail. I went online to a few sites and quickly determined that I need to restart the phone. Oh yeah! After this I turned the headset off then back on and then off to the races. Stereo music with no wires!

As I write this, I am wearing the unit and its so light I forget I have it on. I have had to experiment with different earbuds and I think I will investigate if I can get custom ones made to fit if I can find a source. So far no luck but I’ll take any leads/suggestions.

And the best part? I got it on Amazon for about $100 off! It came from an Amazon store called shopcell.com and they shipped it out same day. With shipping it came to about $42 which is fantastic and I am looking forward to more testing. Stay tuned!

Not just WiFi, but MiFi

Posted by Jeffrey on May 8, 2009

Here’s an interesting item: have you ever wanted to take your WiFi with you?  I’m new device that runs on the cellular Data Network allows you to surf at broadband speeds and share your connection with up to five other people.  Now it’s not as fast as a cable modem but it does provide an interesting alternative to traditional broadband connections.
Where it becomes interesting is when you have an existing cellular data plan and are able to add this device to that plan.  You can use the device in your home and if your coverage area isn’t too big you can send share it with your entire family.  If you don’t surf a lot, and you’re going to use both a wired connection and this, it might allow you to actually get rid of your current wired connection [and WiFi modem] to save yourself about $50.00 per month.  The device itself costs $99.00 in signing up to a new plan after rebate.
Now it remains to be seen whether the providers of the service will allow you to add to this device to an existing plan.  And the range of the device is only about 30 feet. Oh, did I mention that are runs on batteries?  So it may not be the solution for every one but if you have a small home and travel a lot this might be a great alternative to allow you to surf through out the coverage area and save a bit of money in the meantime.

New iPhone coming out – enough for me to switch?

Posted by Jeffrey on Apr 9, 2009

Well, the rumours abound that a new product is due from Apple that will once again tempt current iPhone users to switch to the new device. Is it enough for me to break my contract to get one of these hot little units into my hands?

Let me just say that so far this device has exceeded my expectations on a number of fronts. I call it my mobile window into the world and for the first time since I can recall (basically since I started using a “mobile phone” back in 1987) I don’t feel cut off from the digital world when I am out and about.
The app store has given users the ability to personalize the device in a way that is far more useful than ringtones and screensavers, which were pretty much the limit of customization a few years ago.
So overall I think this is far and away the best handset I’ve ever owned.

That being said, there are a few things that I could imagine are on the radar to be fixed. Number one is that for me, the battery life is terrible. I was at the Mesh conference the past few days and with using Twitter and other apps, the battery was dead at around 2PM. And I didn’t even make any calls!

The other item that stands out may be a bit easier to take care of; namely that the IMAP mail application often cant connect and mail sits in the outbox seemingly for hours which is extremely frustrating. Again this might just be an issue which can be covered in the upcoming 3.0 update, due out this summer.
So the answer to that question is that unless the battery life improves by at least 2x I won’t be switching to a new device.

DEMO 09 – Morning sessions

Posted by Jeffrey on Mar 2, 2009

Even thought I wasn’t able to attend this years Demo conference in Palm Desert, CA (which looks pretty good right now with our wind-chill this morning adding up to a balmy -27 degrees Celcius!).

This year since I wasn’t able to attend I got online and used the live stream and facebook integration to see the presenters and get a real sense from the chatter on the facebook widget, what people thought of the presentations. As usual my hunches were right! There were a few demos that stood out for their value propositions (that is their approach to solve a customer pain point), and some which were not so good. Sometimes its just the presenter which is awkward; sometimes the product/service is something that you’d question the need for;  often a combination of both.

I always like this conference as the pace and structure is different from most that you attend. It goes like this: there are sometimes 80 presenters over the 2 day event and each presenter gets 6 minutes on stage in front of all of the conference attendees to explain their product/service and demonstrate how it works. Hence the name “Demo.”

This year it seemed like the energy level was a bit low compared to my previous visits and I won’t ascribe that to the economy, but maybe to the fact that Demo creator Chris Shipley is passing on the reins after this conference to Matt Marshall, co-executive producer.

Here is a quick rundown on the morning’s sessions-

Pixetel- adds voice and video interactivity to emails, plays in any browser. Users can also send as secure links / email. You can verbally and visually explain spreadsheets, drawings, designs, proposals… anything on your screen. This was something that people online in the chat seemed to think was interesting and even though has been done in other applications, its good to see it brought to email

Rallypoint – End-end Enterprise crisis management platform, but through the demo, didn’t really get a clear sense of the service until almost the end of the presentation.

Vokle-  This company’s service is about adding live communications to the web. It adds an ability to discuss news/submissions live sort of like a video chat room. [Might be good for an enterprise?]

Gwabbit- We’ve all been there: cutting and pasting each line of a signature in an email to put into your address book. This service scans emails and moves contact info to address book with a single click, but isn’t this more of a feature than a service? Shouldn’t Microsoft buy them?

CC:Betty- In an interesting approach to bringing some more innovation to the email application (since Gmail who has really changed the paradigm?) This service brings content and items from email to web interface (They called it Facebook for email). I think this could be a great app from a network point of view.

Citrix-“GoView” – This company wants to make screen recordings so simple your mother could use the service. (Why is everyone so disparaging of mothers?) Its still not that simple to use. My mom would have walked away long ago.

Zuora-  There are lots of Facebook apps and lots of Developers and the “Z-commerce platform” allows them to monetize their apps. But I guess the question is, how many people would want to pay for the apps?

Document Depository Corp –  This application is all about managing important documents like Corporate Governance and legal processes. Important for sure, but didn’t get a sense of excitement from the demo.

Home accounts – If consumers had this service before the credit crisis, maybe we wouldn’t be in such a state now. It gives applicants a sense of the most appropriate (re: money saving)  mortgage for their situation. They are independent and not funded by the banks so can give (hopefully) less biased advice.

Zipadi- A publishing platform to convert paper catalogue to ecommerce site. Hmm, hasn’t this been done before?

7billion people- (weblegend) person sales tactics; can change tactics in real time. Click stream based analysis of behaviour and site customization. Neat and they demo’d using the Amazon site even though Amazon is not their customer. [How’d they do that?]

Liquid media-personalize advertising not sure how it works- is it voice mail only?

So a full slate in the morning and I will try to get a handle on the afternoon sessions as well.

Color and creativity

Posted by Jeffrey on Feb 8, 2009

Interesting post on Discovery’s website about a study that shows color affects creativity. According to the authors, blue lends itself to more creativity while red tends to enable attention to detail. Something to think about when painting the home or office! (But what about purple? Detailed creativity?)

The color red boosts attention to detail in tasks such as memorization, while blue encourages creativity, according to a study published online in the journal Science.

The findings apply to advertising, warnings on medication, and especially environmental design for offices or classrooms, said Rui (Juliet) Zhu, who teaches marketing at the University of British Columbia in Vancouver.

Zhu, who wrote the study with Ph.D. student Ravi Mehta, recommends that marketers selling creative or innovative products use blue, and brainstorming sessions be held in blue rooms. Using red in advertising would prompt consumers to pay more attention to product details, she said.

Previously the effect of color on performance was a mystery because earlier studies, which did not match colors to different kinds of tasks, yielded conflicting results, said Zhu, who also studied psychology.

Zhu and Mehta ran six tests involving 600 university students working at computer monitors with a background set in blue, red or white for control groups.

The City State and the Creator Economy

Posted by Jeffrey on Jan 26, 2009

I just came across a fantastic interview with Stanford Professor and futurist Paul Saffo who talks about how we have moved from the Producer Economy (from about 1900 – 1950) to the Consumer Economy (fueled by Advertising and Marketing ) (from about 1950 till about 3 months ago (!)) and to the Creator economy, which we are entering right now.

According to Saffo the Producer Economy was preoccupied by overcoming the scarcity of making stuff. It ended after the WW2 when firms realized they could make more stuff than people wanted.The next economy was dominated by the introduction of the credit card – and it was less about the workers who produced than the consumers who purchased the goods and services. Power shifted to those who created desire which pushed sales/ marketing (and especially advertising) to the forefront of the purchase process.

Interestingly enough he highlights that in the Producer economy the promise was abundance but actually scarcity was the key motivator in the continuing goal of producing more goods and services.
In the Consumer Economy, the mantra was buy more, then repeat. And we all know now that endgame.

The fundamental difference he outlines in the creator economy is that the fundamental actor is the person who neither just produces nor consumes but does both in the same single act. People can create value without it costing anything and its all about interactivity. Google, YouTube, Wikipedia all exist as part of this new economy.

He continues to detail the rise of the City State (not the Nation State which was prevalent up till now) and how mega regions will start to define how economic decisions are made in the future. As interests fragment keeping nations together with an incredibly diverse population will increasingly difficult. But people will self-select with others in creative geographies to provide the most opportunities for expression.

He maintains that the essential theme for the next economy is uncertainty and he contends that’s not necessarily a bad thing, and we have to get used to it because that’s the way it is. I think he is largely right but additionally we have to somehow realize the flipside of uncertainty is opportunity because we can do so many things we have less constraints on our lives than ever.

The implication is on the financial models that underpin this new economy. In the past, if you had invested in credit card companies at the beginning of the Consumer Economy you would have done well in hindsight. (Well up to about 6 months ago!) What is the model which underpins this new economy? Is it selling advertising against a whole bunch of creators work like Google? Or is it some other non-economic model like reputation or credibility?

Only time will tell but Saffo’s advice? Always look back twice as far as you are looking forwards.

Design and HP- Boosting sales in tough times

Posted by Jeffrey on Nov 6, 2008

I have been a big believer in design and the benefits not only to consumers, but to the bottom line. There are various studies out there which show that there are direct financial benefits to “good” design but its interesting to see which companies are heading down the design path and for what reasons.

In a recent Bloomberg article, HP is focusing on design to help it widen its lead over 2nd place Dell in terms of sales of computers. With an eye to Apple, it has started producing machines in a variety of colors and materials that challenge previous wisdom that computers are “boring beige boxes.”

Taking a page from one of its competitors is nothing new in the PC business but HP is aiming to deliver “lighter, more stylish laptops at prices that beat or match those of Dell. With little to separate the machines’ performance, design may be the tipping point.” As Roger Kay president of researcher Endpoint Technologies Associates Inc. in Wayland, Massachusetts explains, “They’re not charging a premium for design — they’re just doing great design.”

What is really interesting is the way HP is introducing design to its line-up. Since the company started to understand that design is a differentiator, they have made “cultural shifts” in order to foster this type of thinking within the ranks. In an early meeting with designers, PC chief Todd Bradley told employees that PCs should be an “object of desire and possession” and that designers had permission to explore form and function not just cut costs. “Not only did they have the permission to be creative and design beautiful products, it was a mandate,” said Bradley, 49. “We made design a very visible priority.”

The team even has a different physical environment in which to work reflecting the increased focus on design with frosted glass Hermann Miller partitions rather than the grey cubes housing workers in the rest of the company.

The team is challenged to think about all aspects of the value chain, not only the end product. For instance, the company is re-thinking its shipping process, slimming down the amount of packaging used not only to cut costs and get more units on a skid but using less polystyrene is better for the environment. In looking at the way colors and designs are laid down on the laptop cases the company switched to a process called imprinting which is used in car detailing and fuses the designs right onto the material. This has improved the yield of units coming off the assembly line to 90% from 60%. In fact HP is working with BestBuy to offer special edition notebooks to target groups such as students, gamers and women.

This focus on design is estimated in a recent Sanford C. Bernstein & Co. report to help boost sales 6% over its rivals in the coming year as customers in challenging times become more discerning in their PC purchases. Not one to be outdone, Dell has introduced new colors to its laptop line and is rumoured to be completely revamping its line-up within the year.

An end to Shampoo, rinse and repeat?

Posted by Jeffrey on May 5, 2008

I was taking a look at a bottle of shampoo the other day and remembered the story about how a Proctor and Gamble marketer came up with the concept of “Shampoo, rinse and repeat.” I have to ask: is this really better for the customer? Is it going to get an average customer’s hair twice as clean? Did they ask to use twice as much shampoo? According to the story, its probably more of a benefit for the manufacturer, than the customer.

In fact, this used to be the holy grail for marketing; selling more products that the customers maybe didn’t necessarily want. So I’m looking at maybe a return to traditional marketing where actually retailers and manufacturers ask customers what they want and give it to them.

Bill Buxton – Design Culture and Apple’s success

Posted by Jeffrey on Apr 15, 2008

I’ve always thought that Bill Buxton had a good view on what was essential in design and technology. Even way back when I saw him in 1996 or 1997 when he was at Alias Wavefront he caused me to think about how Design impacts how we interact with products on a daily basis.

Now having done innovation from the inside of a large corporation, I can’t agree with his view more. It sounds like he could be talking about my (or I bet 90%) of the organizations out there when he recalls stories from his experience. His view is that many companies still need to be convinced of the value of design and how design affects (and requires) co-ordination with all parts of the organization.

But this is not design (or “Design”) that is the equivalent to window dressing or chrome or garish menus, but really a holistic approach to approaching problems. One of the questions he answered at the conclusion of his talk revolved around how he would characterize design. In addition the aforementioned “way of thinking” he very emphatically stated that it was not traditional problem solving, but a way to facilitate a conversation. In fact he mentioned that design is probably the “most negative” profession out there as it required a continual progression from a blank sheet of paper (millions of possibilities) to exactly one, with all the rest being thrown out!

But seems to be redeeming about this process is the conversation and improvement it causes as the ideas are thrown out; each idea informs the next to make it even better than it could have been on its own. This however, requires that design is supported at the proper level in the corporation, which he noted was part of the success of Apple and part of the continuing lack of progress in the 90% of other organizations currently producing products.

During the early days of Industrial Design, designers such as Walter Teague, Harley Earl and Henry Dreyfuss brought something unique to large organizations; how to differentiate their products based on context. They also had a distinct advantage in the early days as they reported in to very high levels in the company, usually the President or CEO (partially because they were “expensive”) but also because they could bring something distinctive to products which were becoming quite similar in customer’s eyes.

Today most design firms report into levels below senior management (in large organizations) and at this point are “positioned to fail.” He went on to ask the audience several hard questions:

• Is Design an Executive level position at your company?
• If not how can you claim it’s important?
• If it isn’t what message are you delivering to your employees?

The key message was that firms have to stop paying lip service to the value of design and actually incorporate it into the strategic decisions of the company.

This lead to a quote from one of Buxton’s mentors, Alan Kay:

“It takes almost as much creativity to understand a good ida as it is to have it in the first place.”

Upon which Buxton added his corollary:

“It takes even more creativity to make an idea real as it is to have on in the first place,”

which I can wholly agree with given my experience in product development!

So where it really gets interesting is his assertion that you need a design culture, not just products to be successful in a chosen industry and he (of course) gives Apple as an example.

In 1993 when Apple’s stock price was declining, future head designer Jonathan Ives started at the company. Through the next two CEOs the stock price declined further (likely through no fault of Ives) until the Apple board brought Steve Jobs back to the company and the rest, as they say is history, with the introduction of the iMac and later the iconic iPod.

So what did Jobs change? Buxton just mentions that Jobs became the Chief Design Officer and promoted the value of design throughout the company. And the remarkable thing to keep in mind is that he did it with largely the same staff that was around during the previous leaders’ tenure. He really just gave the existing staff the tools they needed and the right support to be able to execute on those good ideas.

You may ask what about the Apple G4 cube and hockey puck mouse? Well design is not always about a straight path to success and those “failures” positioned the company to really hit the ball out of the park on their next endeavors. Which meant that the conversation (and risk tolerance for failure) had to exist in the company or they wouldn’t be able to come back and build successful, game-changing products after previous ones failed to catch on in the market.  And it also suggests that corporate culture can change to support design if it is supported from the top and becomes a part of the organizations conversations to deliver contextual products customers crave.

Richard Florida interview – Who’s your City?

Posted by Jeffrey on Apr 9, 2008

I recently had a chance to see Richard Florida speak at the launch of his new book, “Who’s your City” hosted at the Rotman School of Business at the University of Toronto. He was ostensibly being interviewed by his old friend Meric Gertler, but he was able move the conversation fluidly from the question at hand to such topics as keeping talent in Atlantic Canada and even on the “Singles index.” But more on that in a moment….

He started out by mentioning that one of the working titles for the book was “Why Place Matters” but upon finishing the draft felt that the title of “Who’s your City” really captured the essence of the book better. Because as he noted, with increased global mobility of everything from goods and services to citizens, where you choose to set up shop and live out your life can be a very telling indicator of how successful you’ll be in life.

Common wisdom says that advanced in communication technology combined with advances in transportation technology means that the world would tend to become more decentralized as in “The world is Flat” by Thomas L. Friedman. Or basically that with a PC and broadband you would be able to work anywhere. But Florida said this is only about half of the explanation. These advances are not spread evenly throughout the world and as a result, would lead to clustering around certain centers.

As further evidence, this year (2008) more than half of the world’s population will live in cities and that in around 200 or so nations on earth there are only about 40 “Mega-regions” that really matter. These regions have less than 20% of the world’s population but produce more than two-thirds of the world’s output and 80% of the world’s innovation.

But what if you’re unlucky enough to have missed out on the opportunity to be born (or live) in one of these Mega-Regions? How can these areas like Pittsburg or Hamilton (his examples, not mine!) help to transform themselves? There are two main things to recognize:

• Urban policy transforms economic policy (not just social policy);
• People policies are the key to a vibrant economy (attracting Artists, musicians etc.)

The key to understanding this is to keep in mind that the manufacturing jobs that made these “blue-collar” areas great in and around the turn of the 20th century (with Union involvement and increasing wages) have largely disappeared in favour of service economy jobs which are by and large less lucrative. So these cities must fight a battle against a rapidly increasing vacuum, sucking prosperity out of these cities to more “attractive” Mega-Regions.

Another topic that has caused some debate is Florida’s assertion that regions exhibit their own personality and that certain people are drawn to these personalities. Among the five kinds of personalities are “extroverts” and those that are “open to experience.” Those that are open to experience tend to migrate and cluster where they can “identify” with the regional personality. The critical message in this discussion is that one needs to understand the regional profile (and make sure it matches yours at that time) or you won’t be happy with your choice (or lack of choice).

To switch gears Gertler asked Florida what drew him to Toronto (besides the great job opportunity)? His answer surprised more than a few audience members in that he asserted that Toronto is one of two great cities in North America! To further his point he noted that the city is on the upswing and he really sees that he has an ability to make an impact (and it certainly helped his case when he mentioned that the city was a hybrid entertainment/ creative centre, with a heart!)

When asked about the Singles Map, Florida seemed a bit exasperated stating that this is the only thing that the media in the US seems to want to talk about from the book, whereas in Canada, there was a more broad based debate on many aspects of the book. In fact if you look at the map it seems that if you are a single man, the eastern US (and particularly the north east) is the place where you would seem to do all right. His research leads to the conclusion that this clustering occurs even within the dating game, though not sure how this would translate to other segments.

When initially considering cities to relocate to Florida made a map on a napkin with the pros and cons listed and Washington, DC and Toronto rose to the top. He noted that he chose Washington because at the time he thought that he could have an impact and change the entire nation, based on his work. But then Bush got elected… twice, and he pretty much gave up that notion.

In an interesting twist, he asked aloud whether the cities we live in are somehow matched to our situation in life. Even thought it is a tradeoff between our jobs and our lifestyles we do make those calculations based on what we think will match our aspirations at a given point in life. And corporations should become more adept at realizing these choices as they search for talent to help them grow. He noted that Google has become extremely strategic about location and bases some of their decisions based on the “people factor” in the surrounding region.

He then mentioned that Jane Jacobs said Adam Smith had it wrong; cities and people drive development by creating new work and that now instead of government planners, market forces are increasingly responsible for our urban outcomes. Because in the end we have to be responsible for our choices, even if we don’t end up making the decision to move out of our current locations. He also mentioned that in his adopted city of Toronto, he wished its citizens would “stop whining about how bad the city was” and really start to lead to make the city truly great, because in his eyes it seems as if the best days are still in front.

Millennials and Music

Posted by Jeffrey on Mar 5, 2008

I was at a conference recently (called The Millennials - the generation roughly born from 1982 to 2001) and the most notable session in the morning was chaired by Alan Cross whose “Ongoing History of New Music” really was influential in giving me a new appreciation of how popular music forms around trends and influences. The topic of the session was “Connecting to a New Generation of Music Consumers.” The session focused around how they consume music and other content. On the panel was Jodie Ferneyhough – MD, Universal Music Publishing; Dave Kines- Manager, Music Partnerships, Rogers Media; Daniel Ewing – EVP, Ticketmaster; Dave Jaworski – CEO, Passalong Networks.

Alan Cross posed the first question “How will the Millenniums consumer music?” The response from the panel revolved around how these consumers had access to many devices (phones, iPods, computers etc.) and wanted their content to be more mobile, just like they are. Furthermore, they have also shown that they will not be content to wait for content and wanted it faster than previous generations. The conversation turned to convenience and not only getting the content ‘whenever, where-ever,’ but how this generation appears to want to purchase ‘a-la-acarte’ instead of getting a CD with ‘one or two tracks’ they like.

The next question from Alan brought me back to my youth in that he asked “What happened to broad consensus in music?” It seemed to me that back then, there were a few stragglers who liked country or jazz or new wave, but at a certain time everyone liked Kiss or Cheap Trick and God forbid if you didn’t… One of the panelist mentioned that maybe the format imposed this type of restriction on behavior, but now consumers could customize their playlists so it didn’t seem as relevant today.

 But if this is true, what happens to the ’social experience’ of music? The listening party; the ‘tribal experience’ of belonging to the ‘metal heads’ or ‘new wavers?’ Are we really programming to a listenership of ‘one?’ How then could the industry market to this group? One theory was that it had to be an ‘experience’ that was the actual thing being sold, not just the recorded music and perhaps the expectations of selling millions of copies of a track were not based in this new reality.

This led to a lively discussion on the question of whether music is still a unifying force for this generation. Given the prevalence of protest songs of the 60s and 70s and the rebellion songs of the late 70s and early 80s is this generation still expressing themselves through music? Sounds like the jury is still out on this one as there were several theories floated ranging from expression in different ways (rather than writing songs, Millennials were actually joining NGOs and going to Africa)  to a thought that the songs were out there, but we weren’t seeing them.

So amongst the music execs, there is not a whole lot of consensus, although they did agree that the model of selling hardcopy tracks is in transition and the eventual ‘replacement’ for this model is still not certain. Now where is my copy of Live at Budokan

Design Thinking – Process or Product?

Posted by Jeffrey on Feb 29, 2008

Last night I had the pleasure to attend a talk by David Smith, President of NSCAD (Nova Scotia College of Art and Design) at the Rotman School of Business at the University of Toronto. The topic was “Why business people needed to think more like designers” and drew a packed house which was quite an achievement on such a cold wintry night.

After a brief introduction by Heather Fraser, David quickly went into his prepared notes. He started off by saying that this session was going to be more about him asking questions to the audience rather than telling the audience what he thought was the right answer, which aligned with his premise that “critical inquiry” was part of the hallmark of successful designers. I’ll get into this a bit further later.

One of his first questions to the audience was “What are the benefits of an Arts Education?” He proposed that a key attribute was being curious about how things worked and to then remain curious throughout life and not be satisfied with the status quo. He delved into this a bit deeper when he later asked the central question, ” Why do business people needed to think more like designers?” His answer came back to the ability to ask the right questions, not necessarily come up with the “Be-all and end-all” product. His rationale was that designers (and business people) who ask the right questions can come up with the right solution for this moment, but guaranteed at some time in the future that solution will not be the right one for all time.

After concluding the formal part of the talk, he took some questions from the audience. One of the first questions was around asking the right questions and this lead to a discussion of whether process was indeed more important than product as he submitted. (One group which really values process is the Government and we know how fast they move on things….)

While he admitted that the government does surround itself with process, process in this context is not the end goal. The key thing to remember is that while products may be right for today’s constraints and opportunities, as these constraints change, designers and business people have to be willing to go back and question the initial assumptions (in the process) to come up with a new “right answer” for the new constraints.  He insisted that the Apple iPod of today may be the Microsoft Zune of tomorrow and given the fast rate of change (especially in technology) this may be something to consider.

But if indeed creativity and artistic intent are valuable skills in society why are they arguably not as highly valued as business and technical skills? It all comes down to (in his estimation) the education system and how imagination in children is eventually supplanted by the ability to determine “right and wrong” answers and to be authorative on subjects.

So how do we then encourage creativity in business people? It really can be learned (I am an example of this!) by never feeling so comforable that “you think you know what you know.” (Or the often heard refrain, “Been there, done that.”) One has to be willing to think be curious about how things work and question assumptions to come up with a “right” solution for the problem at that time.

Search- is interface the new battleground?

Posted by Jeffrey on Feb 19, 2008

I was thinking recently about all the work being done around “natural language” search with several startups (notably powerset.com and textdigger.com) looking to make everyone’s search experience less frustrating. Let’s face it; despite all the work going into algorythms behind the scene, I don’t think that search today is significantly different than 5 years ago.

You type in your word combos into the box and hope and pray that something relevant comes back in the first 10 entries on the page. Or you can repeat with a slightly different boolean combo. And still hope and pray…

But maybe its not simply in the initial search terms that determine how successful the search for information will be. Maybe if we acknowledge that its really really hard to get back the results we want on the first try, that the way to develop a better search experience is how you engage with the results to refine that search.

 That’s why I was interested in Quintura and more recently in silobreaker.com.  In each case they look at related items in a search visually in order to expose connections to the key search term. Don’t think an item is related? Just get rid of it either by clicking the ‘x’ or in the case of silobreaker, dragging it to the trash.

 

It makes refining the search more intuitive but also exposes linkages between items by proximity and size. Which helps you understand what the internet google Quintura/Silobreaker thinks of you.

Note: Another visual search engine was launched in Beta called SearchMe. Techcrunch covers it here

Demo-Wrapup

Posted by Jeffrey on Feb 2, 2008

Well another Demo has come and gone with a whirlwind of information and opportunities. There are a few things which I found at this year’s session. 

It seems like collaboration is no longer a nice to have but a feature that is really becoming standard when it comes to online products. Notably, Cozimo, LiquidPlanner and some others are taking it to a new level as they are allowing simultaneous work across multiple locations which points to the new, geographically dispersed nature of projects these days. And LiquidTalk allows simultaneous translation across differerent groups all within an IM client.

Social media as a concept is also being rolled up into all products; so much so that Demo is going to stop having a separate grouping for these products. How’s that for validation of a concept?

Gadgets and devices are still around (even thought sometimes it feels like all the services are being delivered inside the browser). Livescribe’s pen

Livescribe’s Pen.

brings your voice (or any audio) to the printed page. Even translation of words into other languages!

And for another audience alltogether (kids 4-8) Leapfrog’s tag system (available Nationwide in June ‘08) gives little ones the ability to interact with books with audio and music with their pen-like reader.

Green has to get bigger at Demo and the buzz around the pavilion was that having only two companies there representing the category was a real letdown. There have got to be more worthy companies out there (besides the great offering from Celsius and GreenPlug.) With the amount of monitors and cpu’s buzzing over the sessions, there is growing awareness of the impact of this sector.

Video is not just for broadcasters anymore and although we’ve know this for a while, there are a bunch of new tools out there (VisibleMeasures, TubeMogul) which help monetize and analyze online video for publishers, be they consumers or national brands.

And of course, the web is a Web 2.0 (sorry couldn’t resist) playground as everything is and can be, mashed up together. One service (Flypaper) even allows searching and viewing of flickr photos right from inside their application. Sprout brings the power of custom flash applications to a wider audience with their cool builder application which allows users to create cool flash apps right from inside their browser. No download needed.

But my concern as always with these new services is how they will sustain themselves over the long term to support their rapid advancement and integration of really fantastic functionality. I have heard that funding for “Ad-supported” services has tapered off over the past 6 months or so, and if that is the case, what other type of subscription, transaction or other models are out there?

For other views on this check out ZDnet and Rafe’s column.