Category Archives: Business

You got the solution, look for the problems

Posted on January 7, 2007 | 2 comments

In a previous post titled One size doesn’t fit all, I mentioned about thermoplastic microspheres to adjust shoe size. I did a web search for thermoplastic microsphere and found that it has many other applications. In fact, DuPont is actively trying to research different places where they can use thermoplastic microspheres, along with adjusting shoe size for which it was primarily developed. The basic property of this material is it widens in width on applying heat, never to compress again. That means it can solve problem where you want to adjust the width and then keep that width constant. DuPont came up with some very interesting “problems” for which this is acting like a good solution. They are trying to use this as a solution for cancerous tumors in blood vessels. Thermoplastic microspheres can be injected in blood vessels having cancerous tumors, it will expand on applying heat and the tumor will compress and die (this is in clinical tests at this time). Another interesting use of this material is to inject it in wood floors to act like a foaming agent. Yet another use of it is to mix it with concrete to yield more consistent thickness in finished products. This is fascinating. Something that was developed to adjust shoe size has found application in fields as far as healthcare and construction.

This is a perfect example of how innovation can be used to reach to problems from a solution. There are lot of positives for such an approach. It distributes the cost of research and development amongst different problems, hence putting the cost down for each individual solution. This kind of applications prove that creativity has no limits. By applying creativity and looking at something from a completely different perspective, you can find different applications for it.

Thermoplastic microsphere is not a one-off thing where such innovations are possible. This kind of innovative approach has lead to great corporate successes as well. Take Google for example. The basic problem they addressed was finding information on the Internet. They defined the solution in form of a search engine that arranged the findings in an order defined by their page rank algorithm. Now they are applying the same solution to problems like finding stuff on Intranet, finding an email from years back, locating items on your desktop and so on. Another problem they faced was monetizing search. They found a solution in form of advertisement based revenue. This led to another “search” for problems on the web where applications can be monetized by serving relevant ads next to the content.

The Fast Company magazine recently had a story about a Chicago based design company, Inventables, that uses each of its solutions to solve more than one problems. This company has clients of the likes of Boeing, Motorola and Nike. They design solution for a particular problem and then look around for problems where the same solution can be applied. For example, they developed Impact-Absorbing Silicon for General Motors to create safer and more efficient car bumpers. This inch thick silicon absorbs the shock, even microvibration. So if you drop an egg on it, the egg doesn’t break. Now they started looking for more applications for this material. Some applications they found for the silicon were flooring under the baby crib and shatterproof flooring in a restaurant where every dish is breakable.

Looking at these examples, an algorithm seems to evolve for this problem search mechanism (yeah, I know it’s not a technical space, but can’t help!). Here’s the pseudo code:
WHILE a Problem [P0]
         Research and development
         Find Solution [S]

PROPERTY [UVP] = Uniqueness about [S] isolated from [P0]

Problems [P1…Pn] = Set of Problems
COUNT [c] = 1

IF [Pc] can be addressed by [UVP]
          Develop a solution for the problem using [S]
          [c] = [c] + 1

RESULT [R] = [P0…Pc]
         WHERE Solution = [S]

2 Comments

Posted in Business, Technology

Just do it!

Posted on December 31, 2006 | Comments Off on Just do it!

Every ones in a while I come across some product and say why didn’t I think of this first? Equal number of times something strikes me but I think this is too obvious; someone must have done it or must be working on this already. And the third category is to find a successful product or service and exclaim – I thought of this long time back and knew this was going to be a home run. Carefully observing these ideas turned into products, we can see a couple of things that are common between them. First and foremost, most successful ideas are the simplest ones. I think that is like a prerequisite for them to be successful products. The idea being simple implies there is something that is missing from the existing market and the customer is in need of the missing element. That makes the idea simple and obvious. Second, someone with a “just do it” attitude to convert the idea into reality. These are the people with ultimate faith in their concept. The drive and passion that they bring with them separate innovators from the crowd.

World around us is full of examples of such concepts that are now cash cows worth billions. Let people rent movies online and mail it to them eliminating the store trips: Netflix. Reed Hastings brought one of the most innovative concepts to reality. It was simple because people were looking for something like this. No one liked to go to the movie store looking for a movie and come back without one of their favorites because the store didn’t have shelf space to store it or pay outrageous late fees if you were late for a few days. So Netflix came up with an online movie rental service where you can select and queue up the movies you want to watch from thousands of selections (their long tail), pay a flat monthly fee to watch as many movies as you can and keep the movie as long as you want. Reed Hastings had the courage to invest in the idea and create the service to take on the blockbusters of the business at that time.

To name a few more – Sell Personal Computers directly to the end customer and let them configure it to fit their needs: Dell. Create a universal bidding platform: Ebay. Create an online community for people to keep in touch: MySpace. Let people make their own sandwich: Subways (or let people make their own Pizza: Kramerica). All of them have baked in simplicity and drive of passionate people to make sure the idea materialize into reality.

The important thing to understand here is that idea is not important, what’s important is the implementation of the idea. There is nothing in this World that only you can think of and no one else can. So just getting an idea and letting it go earns you nothing. The drive to bring this idea to reality is what counts. The passion in building a team of people who have faith in you and your concept, the tireless work in creating the financial backbone, and the endless marketing efforts to face the pre-existing mammoths in the market is what is required to turn your idea into a product. If your idea is simple and obvious, it’s even better. Don’t give it up assuming that someone out there has done it, do your market research. If it is already done, look for what’s next. If you thought of something that is now a successful product, it means you had a good idea. Look for the next thing that strikes you, and this time, take it with the just do it attitude!

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Posted in Business, Management

Adware offline

Posted on December 23, 2006 | 2 comments

Adware based products and services have become very common online. Giants like Microsoft, Google and Yahoo are providing services like email, instant messaging, web sites and a lot more to the customers free of cost. The main revenue generator behind these services is advertisements. In any industry where advertisement is the main source of revenue, eyeballs = dollars. With more and more advertisement dollars finding its way on the World Wide Web, the competition between these companies to attract customers is greater than ever before. It will be interesting to see how we can apply some of the strategies of adware offline, i.e. in the World outside of the World Wide Web.

Adware is nothing new, it has been around for a long time now. Newspaper, magazines, television channels etc. are some very good examples of adware. The publishing cost for newspapers and magazines is much more than what is collected from the readers when they purchase their copies. But they are sold cheap. Reason being the same…the main source of revenue for newspapers and magazines is advertisements. By keeping the cost low, the circulation increases, hence making each ad spot more expensive. This concept can be expanded beyond broadcast mediums as well. There are lots of things out there that can be subsidized by thoughtful use of some part of more than a trillion dollar advertising budget Worldwide.

Let’s start with some very basic things that can be funded by advertisements. Construction and maintenance of roadways fall under this category. These contracts can be given to construction companies and they should be allowed to generate revenue, most of it if not all, using billboards on both sides of the road. This will reduce the expenditure of tax money on road development by the government and the same money can be used at better places like education and healthcare. Speaking of healthcare, the distribution of drugs at many places can be subsidized using advertisements. At many places, drug distribution is a very difficult task. The cost of medicine increases exponentially because of the distribution cost. Even the ones which government wants to distribute for free does not reach the people because of the road blocks in distribution (especially in the under-developed and developing countries). This cost can be reduced by setting vending machines for drug distribution in kiosks and funding these kiosks with the help of advertisements. Expanding this concept even further, any kind of commodity distribution can be subsidized in the same way.

I think any product or service can be subsidized to some extent by leveraging the adware concept. To pull a not so common example, let’s talk about collect calls. Collect calls can be made cheaper by making the caller and acceptor listen to a minute of ads before they can talk for 3 minutes. I think such advertisements can have more impact than some generic broadcasted advertisements, because the advertisement is getting complete attention of the customer at most times. The advertisers can make the ad more targeted because they already know the approximate location of the customers from their phone numbers.

Using advertisements to make the products and services cheaper for the end customer is like a win-win proposition. The sellers of the product or service don’t lose anything. They are charging the same amount from the advertiser to make up for the discounts given to the end customer. In fact they end up making more money because due to the low cost, the end customer normally uses more of the product or service. The advertiser meets their goal of publicizing their product. They can use all the normal tactics of effective advertising to make such advertisements give more bang for the buck. And as for the end customer, I think they are the biggest beneficiary. They get the same products and services cheaper by just having to stand some advertisements, which if targeted properly can act more as an informational than a commercial. 

2 Comments

Posted in Advertising, Business

One size doesn’t fit all

Posted on December 17, 2006 | 3 comments

I was listening to David Pensak the other day and an example from his talk really challenged me to think what difference personalization can bring to a product. He was talking about the Teva Gamma’s innovative application in personalizing the women shoe line using thermoplastic microspheres (this is an innovative solution he came up with at DuPont and is currently being tested by Teva Gamma shoe manufacturers). It was observed that in case of shoe fitness, the biggest problem for women was the width of the shoes which makes them not fit perfectly. So David and his team developed these microspheres that are half a millimeter thick and can expand up to one and a half millimeters on applying heat and being spherically symmetrical, cannot compress again. Teva Gamma applied a layer of this material in the walls of the shoes and by applying heat to the shoes using a hair dryer, they can adjust the width of the shoe right there in the stores. Now Teva Gamma is planning to launch this line of shoes under the name Perfect Fit which has about 4 cents of this material applied to it and are going to charge $75 more per pair of shoes claiming that they make the shoes personalized just for you and that too instantaneously! Their initial market research of this product shows that women just loved the shoes which custom fit them and are willing to pay extra dollars for it. This is the kind of difference personalization can bring to your product.

Lot of products out there are personalized and this personalization factor makes a company’s product stand out above others in many cases. I can’t think of a better example than Dell Computers here. Dell changed the way PC industry functioned in many ways, and letting the people personalize their own computer is one of those. It is more appealing to anyone to configure a computer personalized to their own needs and fit their own budget as compared to picking one from three standard configurations on a store shelf. Another personalization example from a completely different industry that stand out is from the fast food industry. People love eating at Subways and Chipotle for the same reason, you can get whatever you want to put in your sandwich or burrito respectively. Personalization does not have a fix magnitude attached to it. Amount of personalization can be as big as building your own BMW and as small as getting your name engraved behind your IPod.

Personalization is one of those things out there that is not required for your product to sell, but if you add it to your product, it adds a lot of value. And more than that, people love getting special attention and getting a personalized product. Personalization gives a big boost to the marketing department of a company. Marketing is normally the voice of the customer, and what better thing can be out there as compared to letting the customer build their own product. Personalization essentially puts the customer at the driver’s seat hence easing the task of the marketers.

Personalization sometimes bring hidden value for the company as well, along with the obvious ones mentioned above. For example Teva Gamma, they are now personalizing their shoes to fit a woman’s feet. But it gave a hidden benefit to them which they didn’t even think about at the beginning. It reduced their shoe production categories by a factor of three. Shoe companies normally have three categorization of shoes based on the width – wide, medium and narrow. The width differs by one millimeter between each of these categories. Now based on this shoe customization technique to change the width of shoes, Teva Gamma only produces wide shoes at their factory and reduce the width in their customization process. Another example of hidden benefitter – Dell computers. They have a system set up where they order parts from the manufacturers only after they receive orders from the customers based on their personalization, hence reducing the unnecessary inventory in this fast moving industry and getting a payment lag of approximately three weeks (the customer pays them right at the time they order a PC and Dell pays the manufacturers three weeks after the part is supplied). In fact Dell only has total space to store 200 computers in its factory that assembles more than a few thousand computers every hour.

Personalization is one of those things that people are starting to take for granted in many industries nowadays. How long can you survive without personalization? Till you or one of your competitors do not introduce it in your industry. I think there is no product out there that cannot be personalized, so the call of the hour is to knit the perfect fit for each one of your customers.

3 Comments

Posted in Business, Marketing, Technology

Chase the customer (if you can’t show the way)

Posted on November 18, 2006 | Comments Off on Chase the customer (if you can’t show the way)

I recall a speech by President Bill Clinton to the Saudi leaders sometime back where he said that Middle East should not be Oil repository of the World, it should be Energy repository of the World. He exclaimed that with big open desserts, high degrees of temperature and so much sunlight, what better place can be there to invest in solar energy! That’s so much true. There is continuous effort out there to locate alternative sources of energy as a primary means to fulfill the energy needs. Why not use this as an opportunity instead of threat? Same applies for the oil companies out there. These companies should see that the customer is trying to find alternative means to fulfill their energy requirements. So if they are not the ones showing customer the way by providing oil supplements, they should at least chase the customer and be in the business of meeting the customer needs. There should be no Oil company, there should be Energy companies that address customer needs of energy with oil as well as other alternative energy sources.

The same principle applies to any business. It’s the need of your customers that’s important, not the product that you are providing them to address the need. If there’s only one thing that’s constant in the World, it’s change. Change occurs with revolutionary new things or continuous evolution in existing things, but sooner or later it occurs. When it is lead by revolution, some new product to address customer needs in a better way comes along and the customer slowly starts moving towards it leaving the existing product they are using. When it occurs by evolution, it’s a gradual process and the customer keeps adopting the better product as the developments occur. Most of the existing companies try to retain their customer base by gradual improvements in their products. But what they tend to miss are the revolutionary new products in their field which pull the customers away from them. Why? Because of some obvious and some not so obvious reasons. These companies are so much concentrated in satisfying the existing customer requirements and making improvements in their existing products that they place these revolutionary products in their blind spot and completely miss them. In other cases, the big corporations generate high revenues and profits by marketing their existing products. When a start-up brings a new product to the market and till it doesn’t reach to mass adoption, the revenues generated by this product are considerably less and gets ignored. And then there are companies that believe in the “Used Apple Policy”, who like to wait and watch for the first comers to take the risks and jump in after the first comer shows the signs of success. So what do these companies do if they missed the opportunity to show customer the way? The smart ones follow the customer in the new product segments, start in-house development of the new product and/or do acquisitions, mergers and partnerships with the companies involved in developing the new products. Others either remain content with their existing products and try to retain customer with improvements in them or start to go downhill depending on how revolutionary the new product is.

There are several examples that can highlight this principle. To pick one, let’s talk about the entertainment industry. This is one industry that has evolved continuously over the past, taken several tangents and will keep doing the same in the future. Starting with the revolutionary part…(not going back to the medieval ages,) there was live theatre entertainment, then came cinemas, radios, televisions and now the Internet. With each of these revolutionary new platform of delivering content, new players evolved and several existing one made adaptions to the new platform. Most of the ones that became successful chose to either show customer the new platform of entertainment or chased them to the new platform and provided them content in there. The latest shift in the industry is from television to Internet. With the evolution of the World Wide Web and the broadband, slowly customer focus is increasing on getting more and more content on their computers. Television will always be there, but a very large customer base will adapt to the Internet providing the first stop for entertainment. Several big broadcasting networks like Viacom, News Corp and so on didn’t notice this at the start because either they were highly concentrated towards television based entertainment, or the revenue stream from videos on Internet was not clearly identifiable. This lead to new players like Yahoo, MSN and lately YouTube, MySpace etc. to evolve in this field. Observing the shift, the obvious happened – MSN and Yahoo started showing news and show snippets online and News Corp acquired MySpace. So what’s next? Very soon we will see all the big networking companies either going in for stronger partnerships or more acquisitions to keep hold of its customer base. The ones that won’t chase the customer, will still be there, but their growth might not be as fast as the ones that make the move.
Moving on to improvements with continuous evolution of the platforms…let’s consider television as an example. In case of television it started with black and white televisions sets, to color television sets and so on leading to high definition television sets to something much better in the future (I am no expert in this area…but change is constant). Most of the companies providing content to the customer on television kept evolving and providing content on improved platform and will hopefully do the same in the future.
The important thing to understand is that in the entertainment industry, it’s the content delivered to the customer that holds the importance, not the platform of delivering the content.

This is the case with every industry and will remain the same. A company should focus on the entire industry and not just the product they are delivering to fulfill some needs in that industry. Everyone should acknowledge that changes will occur and the better way to deal with them is to lead the way to bring changes and if that’s not happening, try to align yourself to adapt to the changes. Either show the way to the customer or chase them wherever they want to go.

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Posted in Business, Marketing

“Used apple policy” and Success

Posted on November 4, 2006 | 4 comments

“Used apple policy” in layman terms mean you don’t have to get the first bite of the apple to make out. The second or third juicy bite is good enough. Just be careful not to get the tenth skimpy one. In the business World, this can also be defined as product development by imitation. There are many pros of this approach. Like if the apple is rotten, you won’t suffer, i.e. if the industry is not ready for the product or for any other reason if the product is unsuccessful, your company won’t be hit by the damage. Another pro – fetching the apple to take the first bite is lot more expensive as compared to waiting for the second bite, in business terminology – innovating a product is more expensive in terms of research and development as compared to doing innovative imitation using reverse R&D. Now let’s switch sides to look at the cons. The biggest con is that someone else got the apple and they have the advantage to take the best and the biggest bite out of it, i.e. your product doesn’t have the first comer’s advantage in the market. Most of the time, you won’t be the only one there to take the second or the third bite, there will be many others looking to take the bite off the same apple, in other words you will have considerable competition from other imitating products in the market to grab the same market share.

Let’s talk about the more interesting part – how companies with used apple policy succeed? I think lot of factors help them in getting successful. To kick-off, they tend to keep an eye on the industry developments and put the competition activities under the radar. It is very important for a company to wider their horizons and look for opportunities in the industry outside the segment their products address. As always, you got to make sure that the customer needs are getting addressed. Following closely how the competition is trying to address the customer requirements and what innovative steps they are taking to succeed also helps in successful product imitation. It is very important for companies to correctly and truthfully evaluate the potential of the new products launched by the competition. This goes long way in successful product imitation. I think it’s clear that to be successful in the used apple policy, you got to be the second or third one to take the bite, not the tenth one. For this, it is critical to evaluate the new territory which the competition’s product is addressing. By doing the correct evaluation, you can get a quick start in getting a competitive product to the market while the territory is still hot and happening.

A very vital step for the company to be successful in this process is to locate the right apple. You got to look for the products closer to your company’s expertise. Going for out of the bound extensions are very risky for the company as a whole. It is always helpful to package or set links with the existing products of your company to attract the customers to the new product. In order to succeed using the used apple policy, it is important that the imitator does some innovative imitation. I think we should get it correct when we talk about innovation. Innovation is not just doing great research and development to bring new products to the market. That’s one type of innovation, but an equally important type of innovation is to start with existing products in the market and do creative and breakthrough developments in them to come up with more compelling solutions. The imitation of the product should have the correct mix of innovation in it to challenge the market leader in the segment. Imitators should establish concentrated reverse R&D units to do such innovative imitations.

Other factors that help companies with used apple policy succeed are better execution, stronger monitory muscle and better marketing. It is critical that an immitator develops and delivers project in an agile fashion to tackle the already existing innovative leader. The execution to bring this product out should be top-notch and the entire product unit should be alligned to achieve a clear goal. To invest in reverse R&D efforts and catch a leader from behind, you got to have enough cash flow to support the efforts and take risks. So there is no denying that strong monetory muscle is one of the most important part of this entire process. But I think the most important factor is to do the right marketing for the product. It’s critical that the product is presented in the market not like an immitator, but like an innovation to address the customer needs in the future. Marketing should make sure that their product looks like a better alternative as compared to anything else out there.

No company can be first in all products they launch. Every company at some point or the other follow the used apple policy and success in it is as critical as any other product development effort. The good part here is, you got the problem and the solution, now all you got to do is solve it in a better way. If you can do that, no one will remember down the road if you were the first one or not.

4 Comments

Posted in Business, Marketing

Online Communities – the growing phenomenon

Posted on October 28, 2006 | 3 comments

If someone asks me to pick one thing that Internet has provided the World, I would pick connectivity. Internet has shrunk the World and brought people closer to each other due to this immense power of connectivity. Communication is easier and faster, Information is cheaper and globally accessible and Collaboration is more possible than ever before. With the emergence of broadband, all this has gained another layer of seamlessness and excellence. People can spend more time connected to the rest of the World. An important byproduct of all this is the advent of online communities.

Communities in form of newsgroups to discuss issues, marketplaces to buy and sell things, sites to share information and so on. Online communities is a growing part of anything and everything on Internet. There are communities to do anything online. Prominent ones that come to mind are Craigslist and Ebay to buy and sell things, Orkut and MySpace to do social networking, Messengers to communicate with people, MSDN and TechNet for technology discussions, Flickr and Picasa to share pictures, YouTube to share videos and many more. People spend a growing amount of time in these communities. And with more eyeballs spending more time somewhere, it becomes an obvious destination for the advertisers.

So what are some unique properties of these communities from the business perspective? This is one business that has an immense first comer first correctly done benefit. If a company gets a community established correctly and gains a critical mass of audience, it is nearly impossible to displace its position in the market. It’s sometimes not that obvious to understand why, but if we think about it, it makes a lot of sense. Just ask yourself some simple questions – where would you like to go if you want to buy something online – a marketplace with more buyers and sellers or less? Or where do you think a commodity will be rightly priced? I think the one with more. Along the same lines, which site will you choose for social networking? One where all your friends are massing or a deserted one? Obviously the former. Where will you search or share pictures and videos? Some place where there is a bigger crowd looking for it. Communities have a huge first correct doer advantage. Ones an online community of large number of users is created, it is very difficult to attract all of them to a new place. I think that justifies the reason why corporate giants are bidding huge amounts to buy some of these online communities. I think everyone knows that Google didn’t pay $1.65 billion to buy the technology expertise of YouTube. It basically bought the user base, or the established online community of YouTube.
Another uniqueness of the online communities is that they grow with the word of mouth. Advertisements can pull the initial customer base to a community, but the growth of a community is basically fueled by the word of mouth along with help from search engines for some communities that provide information. The initial adopters participate in these online communities, generate the buzz around it and pulls the masses over to it.

Online communities can act as a big boon (or bust) for any business. Communities can act as a big source of advertisement, through the word of mouth. People trust (or distrust) a product when others like them recommend it. Online communities are used by people to find recommendation for anything from a restaurant to an electronic equipment. Companies also use online communities to create buzz about their new product releases and getting the feedback for their products. Company representatives participate in the online forums and discussion groups to answer queries from the users of the products. In a way, online communities opened a whole new channel for the company to connect to their customers as well as potential customers.

How can an online business, in specific, use this communities phenomenon? In case of business on web, any company faces a very hard time maintaining their customer base. In most cases the barrier to change is as low as typing a new url in the address bar of the browser. So how can a company retain their customer base? The most common answer given by any dot com company executive will be by keep innovating and staying ahead of the competition. Of course, that’s true, but is there a way to raise the barrier to change for a customer? This is a very important issue and I think the answer lies in the communities phenomenon. Create a community experience around your business. Whoever your customer is, it is always possible to provide them the community experience out there, and ones a community of users is created, it significantly raises the barrier of change for the customers and even draws more customers to your business. The important thing to understand is that almost any online business can have a community designed around it, and with the breathtaking success of this phenomenon, there is no reason not to do that.

3 Comments

Posted in Advertising, Business, Technology