Category Archives: Business

Is Kindle adware-able?

Posted on November 26, 2007 | 6 comments

Amazon came out with their much talked about e-book reader – Kindle. The device is no doubt impressive, but it is $399. To place it one way, well if you can buy a music player for this much (remember iPod early days?), why not an e-book reader? This is fair, and yes, Kindle will get its share of early adopters. But what Amazon must be wanting is to get this reader in as many hands as possible so that it can build and sell its exclusive library of e-books. I think it will be really hard for the company to get deep penetration with the reader if it is sold with this price tag. So what are the alternatives?

Well one alternative is to subsidize the reader and sell it at a loss with the hope to make it up with e-book sales. This is a time tested strategy used by everyone from printer manufactures, betting on cartridges, to gaming console manufactures, developing market for the video games. Thought this might not work that well for Amazon, because Amazon is selling e-books for $9.99, and this includes royalty costs for the publisher/writer and transfer cost for the wireless service provider. So it is very much possible that the lion share of Amazon profits are coming from selling the Kindle hardware, and not the e-books.

But there is another, much compelling and hopefully much more successful alternative. That is to make Kindle adware-able. Adware is the growing source of subsidizing cost of many things online, be it news, search or communication applications. So why not an e-book reader? Kindle has wireless access powered by Whispernet (runs on Sprint network in USA, and by other cellphone providers globally as and when Amazon takes it to global markets.) Amazon uses this wireless access to download e-books, newspapers, and even wikipedia articles on customers’ Kindle device. At the same time, it is very much possible for it to download advertisements on the device. Amazon has an added benefit here. It can very well serve contextual or location based advertisements to make them more effective for the customers and compelling for the advertisers. I believe customers won’t mind seeing advertisements on bottom corner of their reading screen every ones in a while if they get the Kindle for substantially low price, or may be for free. Amazon can of course use its creativity to make ads as less obtrusive as possible.

Amazon can make this adware enabled Kindle optional. They can sell a premium version of the device for the existing price tag, which will have no ads, and sell an adware version of device for the ones willing to go for it. Even if Amazon is making its money just by selling the device, I believe it will be an incredible business opportunity for Amazon to try an adware based Kindle, as it will be a win-win for both the customers and the company.

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Posted in Advertising, Business, Technology

Change is constant

Posted on November 4, 2007 | 3 comments

Change is inevitable. There is nothing that stays constant for ever. Things change, businesses change, markets evolve, customers move and to succeed in this continuously evolving world, you need to stick to only one constant, and that is change. Any entity, be it an individual, a group or a business needs to change with time to succeed. Businesses change and evolve in many ways, sometimes to lead a change in the industry and sometimes to adjust to the changing environment, sometimes using an experimentation approach and sometimes using a gradual approach, and at times even out of desperation to succeed.

One of the best examples of change, as described by Jim Collins in his book Good to Great, is the change in the retail industry led by Kroger in the early 1970s. Kroger understood and managed radical change in the way Americans wanted to shop, and changed the way Kroger stores sold goods to the people by shutting down its small stores and opening superstores. Kroger understood what customers wanted and gradually went on to replace all its small grocery stores into big superstores. This exemplifies the importance of change very well because during the same time, other grocery chains like A&P did not feel the importance and need to change and suffered major losses loosing most of their market share.

Another way change occurs is when companies explore different ways to sell their products to the customers. An example that comes to mind for this type of change is the change and development in the software industry. With the advent of Internet and increasing penetration of broadband connections, more and more software companies are operating like service companies providing services to customers by hosting their software and letting customers access it through the web. The change is making the world of software better in many ways like reducing the cost of the products for the end customers, better manageability of the software at central locations and faster evolution of the software over time. With more people spending more time on the Internet, and increased budget of ad money spent online, another change that has been seen in the software industry is the way companies make money. The software companies can now subsidize their services which they provide to the end customers with the help of targeted advertisements alongside their services.

Yet another way change occurs is in the way products are developed and owned by the companies. More and more companies are moving to a more open model of development as compared to the closed model with strict ownership. One of the most clear evidence of this change is the change in the way Apple operates and develops on its platform. A traditionally closed company Apple, even after striking gold with its end to end controlled platform of iPod, now plans to open up to let third party developers and individuals develop software on their iPhone framework.

There are lots and lots of examples of how companies drove change or adapted to change to succeed in the industry. At the same time, there are equal number of examples of times when companies refused to change and suffered in the long run. The success of any business largely depends on how well it manages change and sooner they move in the right direction to implement change, stronger it builds the foundation for success.

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Posted in Business, Technology

Purpose-driven Branding

Posted on July 23, 2007 | 2 comments

As the competition in a market increases, the challenge of attaining and retaining customers for a company in that market increases as well. Customers quite rightly believe, until they are shown otherwise, that hidden motive of any brand is to sell something. This reduces their affinity towards a brand, and with the growing number of options available in the market, it is easier than ever for a brand to loose customers to competition. But if the brand is able to prove to the customers that its profit making is only a by-product of a larger purpose, it gains affection of the customers making it harder for the competition to break this customer-brand bonding. This concept of branding, where a company works towards a larger purpose considering profit-making to be a by-product, is known as purpose-driven branding.

Now let’s look into how this purpose-driven branding works. Each company has a mission which gives it the direction in the long run. Any company that is successful has a very clear mission statement. The company founders and leaders have a vision which is the primary driver for attaining that mission. Some brands have a mission that is more than just selling something or being a market leader in some area. This “larger purpose” mission is something that, knowingly or unknowingly, sets the brand on this incredible path of purpose-driven branding, making success a definite “by-result”.

The first brand that comes to mind while talking about purpose-driven branding is Whole Foods. Whole Foods clearly states that its a company that works towards setting the standards of excellence for food retailers. You visit a Whole Foods store and you get a vibe that this is not a place where making profits is the primary objective (even though the items at Whole Foods are more expensive than those at a Krogers or Safeways). Whole Foods creates an affinity with its customers by making them realize that its primary objective is not to sell them groceries, but to work towards a larger goal of providing them with better stuff, stuff that is good for them and is also good for the environment. You hear Whole Foods founder John Mackey talk, or read the company blog, and you will certainly get a feeling that this company is doing more than just making profits, placing it right at the top of the list for Purpose-driven brands.

Another brand that is able to do purpose-driven branding successfully is Google. Google made its customers believe that its primary objective is not to make profits but just to organize the World’s information and make it universally accessible. Google does not alter its search results to push up sponsored pages and marks sponsored links clearly to prove that they are sticking to their mission. This has won the brand great customer affinity in a market where barrier to entry is almost negligible.

A not so typical example of purpose-driven branding is Wikipedia, the free encyclopedia. It’s a brand driven by volunteers who maintain the most up-to-date information repository in the World. It’s not so typical, because making profits is not even a by-product over here. Another purpose-driven brand to watch for in the future is Wikia, which is founded by Jimmy Wales (the founder of Wikipedia), and has profit making as a by-product.

Purpose-driven branding is not something that can be easily faked by the brand managers. Brands should really keep themselves away from posing as if they are working towards a larger purpose to attract customers. Customers are too smart to identify a poser and such tactics can lead to permanently damaging the image of the brand. The drive towards the larger purpose should be there in the roots of the brand. It should be something that the customers are able to sense, not something they are to be told explicitly. Authenticity is very essential for the success of purpose-driven branding, and if a brand gets that right, it develops the muscles to even take on competitors with far deeper pockets than theirs.

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Posted in Business, Marketing

The Swiss Knife Concept

Posted on July 16, 2007 | 1 comment

Product designing is one of the most challenging and interesting jobs in any industry. A good product design is something that can provide a great competitive edge to any company. I think there is no golden formula that can define a good product design, but by analysing some successful products, which have good designs, we can find some characterstics of a good design. One such characterstic is to cover all the features of a product under the wrapper of simplicity and provide pivot points to access these features. This is what I call the Swiss Knife Concept of product designing.

Swiss Army Knife, or the “Offiziersmesser” (original name), has a really great product design of its own. The way a small pocket device, that looks like a knife handle, contains half a dozen tools hidden in it is really fascinating. The adoption of this product from Swiss Army and its enormous success speaks great volume about what a consumer is looking for in a product. I think the basic design principle here is to have one really transperent product feature for which the product is primarily known (in this case, a blade) and along with that have lots of other useful features. Then provide the product a real simple user interface and make it easy for the customer to access each feature individually.

Now let’s see how this very concept of product design is consiously or unconsiously adopted outside the World of this pocket device. Search giant Google seems to be built on the Swiss Knife concept. The most transperent feature being search and this surrounded by a few dozen other products is what defines this multi-billion dollar company. The simplicity with which Google has created its primary user interface with a search bar and “pivots” to reach to other products makes the product design as closely related to a Swiss Knife as it could be.

Another place where you can see this concept is in the SmartPhones. The basic feature of these mobile devices, for most of its customers, is to use it as a phone. But along with that there are a lot of other features that almost make the phone as feature rich as a personal computer. These features are discoverable by its customers using the software interface which provide options to the customers to reach to each one of these individual features. Apple iPhones took this even a step further. The iPhone includes iPod music player as an additional feature on the phone, and as the iPhone ads puts it so beautifully, its (Internet, music player and what not), on your phone.

Microsoft Word is a Swiss Knife of its own. Microsoft Word, that looks like a real simple word processor, has a lot of really useful features in it. Same is true with other products in the Office Suite. Normally, 80% of the customers end up using only 20% of these features. In order to ease the discovery of the zillion features that are there in Word and other Office products, The Office 2007 product suite has a ribbon at the top instead of the normal menu list. Word has always consisted many features, or what we can say is it was always a Swiss Knife, what this ribbon has done is added those much required more visible pivot points to make discovery and use of these features easier.

Of course you can not apply this concept to all the products out there. So how can we find out whether a product is right for Swiss Knife Concept? I think this can be done by analysing some things about the product like its primary feature, how its secondary features complement the primary feature, what problem is the product trying to address for its customers and how it is doing so. So if a product is having lots of complementary features, along with the main product feature which is essential for the product to exist, and all these compementary features should be there for the customers to access on demand, Swiss Knife Concept can be worth exploring for the product designers.

Basic thing here is to make the use of a product easy for the customers. How the Swiss Knife Concept does it is by providing customers with a real user friendly interface, which makes the adoption of the product seamless, and along with that provide other features that are easy to discover and use. Swiss Knife Concept gives the unique ability to a product designer to have lot of features in the product without taking away the similicity element out of it.

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Posted in Business, Technology

Customer segmentation – it’s all about the connection!

Posted on June 3, 2007 | 1 comment

Customer segmentation is no longer a good to have feature. With more and more companies using customer segmentation as the base of their marketing and advertising efforts, it is something that is required for success in any industry. Effective use of customer segmentation will no longer give you a competitive edge, but in-fact it has become a feature that will keep your company competitive in the market. So what is the use of customer segmentation? You can find good amount of literature on this topic, but to sum it all up in a few of words – effective customer connection.

Online stores like Amazon and retailers like Best Buy have done great work in this area. Amazon pioneered the space with customized recommendations for the customers and a personalized home page. Best Buy’s application of customer segmentation in the brick-and-mortar World is very impressive. They remodelled their specific sections and at some places entire stores based on the segmentation data, trained their store associates accordingly and sent out coupons and set discounts based on this data. Best Buy now has radically different strategies to target different segments from young professionals to soccer moms.

To put it in very simple words, what these companies are doing is trying to get their customer what they think the customer is interested in. To lay parallels with an everyday example, you go to your favorite deli or coffee shop around the corner and the person attending you comes and asks – “the regular?” and (most of the time, if you are not in mood for the complete opposite or something else,) you say yes! That’s customer connection in its purest form. But if your business is not the deli or coffee shop where you can remember all the customers, with the help of computing power and analytical software, you can very well “remember and recall” what the customer is looking for and connect to the customer in a proactive way.

Another way customer connection can be enhanced is by proposing the customers what meets their requirement based on what features they used or products they purchased in the past. This can be done using the techniques of inference. Going back to our analogy of the deli, you order a specific sandwich most of the time, and the deli just came up with something that goes well with that sandwich or is a new sandwich similar to your favorite one, the person attending you can suggest it to you and most of the time you might go for it. Customers love suggestions or recommendations when they are sensible and unobtrusive. By forming segments, it can be inferred what the customers in this virtual segment will be interested in and can be served accordingly.

So let’s look into the specific contribution of segmentation over here. I think segmentation provides a couple of very important handles in the entire concept of customer connection. It helps companies deal with large number of customers. Most of the times it is practically impossible to connect to each customer one-on-one. So in order to give a close to one-on-one experience, the marketers can segment customers into buckets and connect with a segment of customers in the same way. Another benefit of segmentation is adding relevancy. By reviewing the activity of customers in a segment, a pattern can be derived and used to target that particular type of customer. The basic concept is to add relevancy to what customer is looking for, whether it is in form of showing relevant advertisements, promoting products or providing relevant content. By adding relevancy to the advertisements, they are not obstructive, but in-fact informative. Same is true for product promotion. If the product you are promoting is useful to the customer, it is not hard-selling, it is being helpful to the customer.

To sum it all up, segmentation basically provides the touch of practicality to the entire process of customer connection. In today’s World, where customers have lots of options and their time is more valuable than ever, proper customer connection is becoming a required feature. And to scale this to millions of customers in this global economy, customer segmentation is nothing but an essential tool.

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Posted in Business, Marketing, Technology

Business Wikification

Posted on March 27, 2007 | Comments Off on Business Wikification

What does Linux, Second Life, the Human Genome Project and the Chinese Motor Cycle industry have in common? They are all projects where success is attributed to mass collaboration. All of them fall under the category of product development where there is no owner but thousands of contributors, something we refer to in the technology World as open-source development. With the advent of the new web, it is becoming easier and easier to collaborate with each other and mass collaboration is becoming a new economic mode, changing the way people innovate and create products (and services). 

The finest example to explain the evolution of this phenomenon is Wikipedia (wiki meaning fast + encyclopedia) – a collaboratively created encyclopedia owned by no one and authored by tens of thousands of enthusiasts. With five paid full-time employees, it is about 10 times bigger than the Britannica encyclopedia and is more up-to-date than any other source of information online. Wikipedia uses free wiki software to allow multiple users edit the encyclopedia simultaneously. Critics have questioned Wikipedia’s reliability and accuracy, but despite all the risks of an open source development at this scale and continuous battles with detractors and saboteurs, studies have concluded that vandalism is normally short lived and Wikipedia is generally as accurate as other encyclopedias.

Product development through mass collaboration has reached diverse fields ranging from an encyclopedia to operating system (Linux) or application software (SourceForge has thousands of them), video game (Second Life) to mutual fund (Marketocracy), lending service (Zopa) to designing T-shirts (Threadless) to about anything. But success of Wikification is not limited to product development. The World of social networking is another example of how mass collaboration can be revolutionary. I am talking about the likes of MySpace, Flickr and YouTube. People use these portals as platform to share and connect across boundaries.

In order to thrive in this World of mass collaboration, businesses need to wikify themselves. There are a few things that are critical to the process of wikification of any business. First and foremost is sharing. Deciding how much to share beyond the organization is a judgement call. Share too much and you may loose your advantages. Share too little and you may not reap the benefits of collaboration. Scope and extent of sharing varies from one business to another. Other things that hold great importance are openness and peering. Communicating openly and honestly with the customers and lowering or eliminating boundaries go long way. Customers should be treated like peers and collaboration should be direct and global.

If you have dismissed wikification as irrelevant for your business, let us talk about an example that will make you think again. Goldcorp Inc., a company that mines gold went on to wikify its operations. When a main mine seemed to be dying and the company was struggling, the company came up with the “Goldcorp  Challenge”, where company offered prizes of more than $500,000 for new ideas on how to find and extract gold. Ideas poured in. Some came from wildly unexpected quarters and applied new disciplines to the problem. The result? Miners found about eight million ounces of gold since the challenge, pulling the company out of trouble.

Creating products based on market research and distributing them through traditional media will not take your business too far. Today more and more companies are developing products by engaging their customers in the process to have customer-driven innovation. Customers participation starts from the planning phase and is there throughout the product cycle. This produces immense opportunities for the marketers. Marketers can nurture the community around their products. They can use these communities to engage the customers at various stages. And it really doesn’t matter if you are selling baby diapers or sports cars or commercial aircraft, engaging customers in the process will always lead to better products and you will end up having an edge over the competition.

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Posted in Business, Marketing

Success and Change

Posted on March 19, 2007 | Comments Off on Success and Change

How will you define the relationship between success and change? At one end, success is by far the biggest catalyst for change. It’s the motivation behind the change. People put immense energy, time and effort in change if they can see tiny hope of success on the horizon. On the other end, success is the biggest roadblock in the path of change. People do not change something that lead them to success. Both these relationships between success and change are widely true for almost everything from heart patients to the business World.

There is always a resistance towards changing something that has given the taste of success. But as everyone knows, change is inevitable. Everything needs to change with time and people employ different means to attain change successfully. So first let’s see what does not work when you are trying to go for a change. First and foremost is fear. Fear is the worst motivator for change. Big corporations know that competitors out there are trying new things. Company executives are aware that they might have to face adverse effects, the stock price might fall and what not, but fear seldom motivates a change.

Next thing that doesn’t work is the force or show of authority. Authority from the Board of Directors and the force from them to meet the numbers does not make executives choose the path of change. They would rather stick to the well proved means in which they have confidence and that got them this far. Another important thing that doesn’t work is facts or information. Corporate executives have no shortage of information. They have all rational information in great depth with thorough research and analysis about how they are doing, where the industry is going, what is their future price to earning ratio and what not, but it doesn’t make them adopt change. Somehow all these facts start to look irrational and the past track record take precedence over everything else.

Same is true for even heart patients. They have lived a life so far in a certain way, and if that’s satisfying for them, to change it fear, force or facts have no role to play. Heart patients do not go for a change even after knowing that unhealthy eating habits and stress can take their lives. Fear does not bring the change. Force from doctors and family members is often incapable of changing the person. Doctor can provide them with accurate information that the change is required, but that doesn’t lead to change.

So now let’s talk about Success – the thing that works to bring change. The hope of success has immense power to lead to change. All the constraints and ego that lay in path of change are shelved instantaneously if there is a glimpse of positive results at the horizon. Giving an example here will be really unfair, because I think whatever change in the business World actually occur is fueled by the hope of success.

Another important thing that is required for a change to occur is the confidence of the people in the leader. People who are asked to implement the change should believe in the leader who is trying to lead the change. What better example here than Apple? Apple required change for more then a decade before it actually went through one. And why did it happen at the turn of the century? Because people in the company believed in the drive Steve Jobs had to bring about the change.

Experience also plays a big role in leading to change. Everyone has a tremendous potential for change, but to go for change, there should be an experience of positive results. Then that thing can be repeated to lead to a bigger change. People wanted a better search engine to use, so they tried Google. This was a positive experience, so they went on to use it again and again; this lead competitors to change their base and improve their search engines. All this is now leading to a massive change which has the potential of changing the World of computing and advertising.

Back to our analogy of heart patients…success, confidence and positive experience plays a major role here as well. Heart patients may change when they see hope on the horizon that the World can be a better place to live, and the people around them will have a better life if they change. By trying the change if they have a positive experience, they will start to believe in it and repeat it time and again to lead to positive change. No one can force a change, but only confidence and determination of the person can lead to it.

One of the biggest dilemma is how to kick-off change. Often the kick-off for change is against ones basic instinct. So the right way to go for it is to do a pilot and expand it. Try to get some short term wins along with keeping the long term view clear. The short term wins inspire people, motivates them and give them hope, which is required to fuel the long run. Success and change can lay down an intense and complex game of snakes and ladders, where success that is pushing back change is the snake which can take you down and the hope of success that motivates you for change is the ladder which can take you to new heights where sky is the limit. What you have to do is roll the dice carefully, because results here can change lives!

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Posted in Business

Integration vs. Innovation

Posted on March 4, 2007 | 1 comment

Innovation is the well known recipe for a success. Innovation in Product Development makes a company’s product (or service) stand out above competition. But it is not always true that the companies that makes the most innovative products are the most successful ones. So there got to be something that beats innovation. If we look carefully, success in most of the industries is dependent on mass production and distribution. Creating a breakthrough innovative product is just one piece of the puzzle. The product needs to take into account the different ways the customer is going to use it, the accessories and support system for it, the partner network and so on. It is important that the product attains mainstream adoption. Without all this, any level of innovation is of no use. Therefore, the one thing that I think challenges innovation is Integration.

By integration I mean creating an ecosystem for the product. Success of a product depends greatly on the packaging of the product. How well the product meets the complete requirement of the customer? How much percent of the market actually uses this product? How many products in the market use this product as their base? Answers to these and many other questions define the success of the product. The product, along with its ecosystem, should be the market leader and should meet all the requirements of the customers.

Let’s look into videocassette recorders (VCRs) format war to see how integration out beats innovation. Producers of Beta format for VCRs were the first to develop VCR commercially in 1975. Beta got substantial technological head start due to the innovative product they brought to the market. The producer of rival Video Home System (VHS) format were the follower to Beta in the market. But there was one difference between the operations of the two companies. Beta kept the exclusive rights for production and distribution of its format of VCR. They were reluctant to share the technology or form alliances with other producers in the market. On the other hand,VHS formed strategic alliances with other producers, producers of prerecorded tapes and distributors to manufacture and market their VCR format. This integration strategy gave VHS an early lead in the sales of its VCRs giving it a dominant position in the market. By the end of 1980’s, Beta was no longer in production making the VHS format the de-facto standard for VCRs. The VHS format VCRs were neither technologically advanced nor cheaper as compared to Beta format VCRs. But they were able to beat competitions in the global VCR market due to the creation of the ecosystem around its product.

There are numerous other examples that shows the importance of integration. Windows operating system can be another prime example in the category. The number of applications that run on Windows exceeds the numbers on any other commercial operating system. This acts like a base for the success of Windows. More than ninety percent of the computers in the World run Windows. Microsoft has a networks of thousands of partners who make applications for Windows enabling the ecosystem. So any company with innovation alone cannot take on Windows operating system. They will have to do the complete integration and create an ecosystem to make their offering attractive and usable by the customers.

It is important to note that integration in no way is a substitute for innovation. Innovation in product development is still required for the success of the product. But as we just saw, integration is something that can challenge innovation. So the new recipe for guaranteed success of a product – Integrated Innovation. Let’s keep on innovating and evolving the product, let’s keep beating the expectations of the customers, let’s keep challenging the competition, but at the same time, make sure that the ecosystem is moving along with the product. The bigger and denser the ecosystem, more is the integrated innovation and higher are the chances of success.

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Posted in Business, Technology

It’s not us, it’s you

Posted on January 28, 2007 | 2 comments

Open-source  software and services like Linux, Firefox Web browser and Wikipedia are very famous. These are some well known examples of product development with the help of the community. This is a phenomenon that started purely as a community effort backed by a foundation or a non-profit organization. But the massive effect this has had over the past years made even the corporations with big bets on IP involve the customers in mass customization of their products. And this is not limited to high tech products anymore, even conventional products like t-shirts and shoes are getting co-designed by the customers. The open innovation wave is touching everything from food-flavors to music systems to video games. 

Let’s skim through a few examples to add value to what we are talking here. Slim devices is one of the favorites in open innovation. Slim devices has a community of music enthusiasts who help the small staff of in-house designers give shape to their next music player. The community is so strongly knit that sometimes its even hard to tell who is an outsider and who is a company employee. Some top contributors in the community have complete access to the designs and source of the Slim’s future releases.

Big names in the footwear industry are asking customers to help them design shoes. Customers can evaluate new designs, give feedback or even create totally new designs in a CEC-made-shoe project launched by the European Confederation of footwear industry. Famous Canadian shoe designer John Fluevog has also been soliciting ideas from the customers. Brand enthusiasts are encouraged to submit their own sketches for all kinds of shoes including leather boots, high-heeled dress shoes and sneakers. The submissions are posted on the company website and customers discuss and vote for the design leading to the best ones being manufactured by the company.

Start-ups like Zazzle.com are leading to an even more innovative open source development. Zazzle customizes all kind of merchandise for the customers. Customers can contribute their own designs at Zazzle or pick from one of the designs available in there. If other customers choose to get mechandize designed by a contributor, the contributor gets loyalty from the site. Zazzle is creating a massive community of designers who are using it as a platform to sell their design and add an additional avenue to their business.

Even food-flavors are customized to suite the customers’ taste. Frito-Lay customizes the taste of their chips in each geography based on the feedback from the customers. Same is the story with burgers at McDonald’s. So the taste of chips and burgers you will get in US will be considerably different when compared with the ones in Europe or Asia.

Involving customers in designing products is a real blessing for marketing. Marketing department in a company acts like the voice of the customers. They are the one who make sure customer requirements are fulfilled and the product has all they need. By involving customers in co-designing the products, the company is easing the job of the marketers. When customers call the shots, they generate an affinity with the company. This makes the task of marketing organization even easier because they get advocates in the form of these customers.

Product development also benefits a lot from customer involvement. They are able to tap in a lot of unexplored talent for almost negligible cost. In order to make sure there is good customer involvement, the company will have to create a good community experience and make the customer feel that they are welcome. The important thing to remember is that the company is in a way doing marketing and advertising all throughout the product development.

In a nutshell, I think involving customers in designing the products and services is like a win-win scenario for everyone. The customers get what they want and the company gets a lot of assistance in their marketing and product development. George Costanza claims that there can be no better break-off excuse than his invention – “It’s not you, it’s me”. In a (kind-of) similar fashion (though I don’t claim it as my invention :-)), I think there can be no better product out there than the one co-designed by its customers with the company stating loud and clear – “It’s not us, it’s you”! 

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Posted in Business, Marketing, Technology

Innovation in Product Development

Posted on January 14, 2007 | 2 comments

Innovation is a word with varied definitions and interpretations. I think the definition that makes the most sense is the one given by Jet Blue CEO David Neeleman. He defines Innovation as trying to figure out a better way to do something. I think that’s very much true. Innovation is all about solving problems in a way better than ever done before. When we talk about product development, this definition makes even more sense. Customers are not looking for a product or service, they are looking for a solution of a problem. Addressing those pain points and making improvements in the existing products is innovation.

Innovation is the pursuit of perfection. It is very well said that perfection is a fine goal, but improvement is much more realistic. Perfection is something that is not achievable. There is always a better way to do anything. That is what innovation is – always trying to do something in a better way. What fuels the best innovators in the World? It’s the pursuit of perfection. Innovators can be in any field. One of the greatest innovators to idealize is Tiger Woods. He is someone who has taken the game of golf to the next level. If you ask him what keeps him going, the answer you will get is number 18. So what’s number 18? It’s not the number of majors Tiger Woods wants to win (to match Jack Nicklaus’s World record). It’s the perfect score is golf. The never achievable. That’s where he has set the bar and that’s what keeps him innovating.

Innovation is all about applying creativity. It’s trying to do more with less, get more resourceful, bring the costs down and develop products better than before. Innovation is something that really meets the needs of the society. An innovative product development is looking at what’s out there, what’s bugging the customers and then trying to fix it.

I think this paints a pretty clear picture of what is Innovation. But before we move any further, it’s very important to understand what is not Innovation. Innovation is not trying to hit the home run or finding a killer application. In fact there is nothing like a killer app. Whatever gets the name of the killer app, be it the IPod or the Xbox 360, it is actually improvement over something that already existed in the market. Of course both IPod and Xbox 360 are great innovations, but that’s because with the help of creativity and improvement these products tried to identify and meet the needs of customers in their respective markets. Innovation is not trying to solve problem not tied to anything. Till you don’t have something that solves a problem, you have not done any innovation. Creating something just for the sake of it is not innovation. And of course, last but not the least, innovation is not adding bells and whistles to a product to tick mark the checkbox features to out beat the competitor.

Toyota, the Japanese car maker, is the most common example cited for an innovative enterprise. This is one company that has market worth more than the market worth of all the other car makers in the World combined. So what fueled this amazing growth at Toyota? The millions of innovation that took place in the company over the years. Toyota defines Kaizen, or continuous improvement, as the base of innovation. They have some very simple principles that they follow to keep the innovative machine running. They implement small ideas as close to the front line as possible. They create a standard, follow it and find a better way to do the same thing. Standards are made by people at the front line, not by an uber committee sitting in an ivory tower. And more important than anything else, standards are made to be changed by doing something in a better way. Toyota believes in reflection of success. They evaluate the success and failure at various steps in product development. They focus of failures and try to find out ways to avoid them. The Toyota employees are not just making cars, they are continuously trying to find out better ways to make cars, and are trying to make a car that is better than the one out there.

So does your company believe in innovation? In order to answer this question, take a look at the products and services your company develops. Look at the value they provide to the customers. Are the customers better-off with the help of these products and services? Are these products better than the ones already available in the market? If yes, then you can claim that your company believes in innovation.

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