February 6, 2008
11:41 am | 0 recommendations | Be the first to comment
Building a business around being cool is really hard. Keeping it there is even harder. But the toughest of all is getting your cool edge back if you ever lose it. The good news for innovators is that refocusing on being credible can be just as profitable as being cool, without as much inherent risk.
Apple is a great example of a company that has been coming out with cool products ever since Steve Jobs and Steve Wozniak started making and selling circuit boards and computers in the late 1970s. Apple’s latest computers and iGoodies are widely perceived as must-have products with people routinely lining up to buy them as they are launched. At $1800, the MacBook Air launched last month is the latest on Apple’s hit parade.
So what will happen if Apple loses its edge? Not a problem if it takes the same approach that Kodak did years ago when its traditional business of photographic films and papers turned to ashes. Kodak is a big company with a long history of introducing cool products that date all the way back to about 1900 when it introduced the very popular “brownie” camera. Kodak saw big problems coming when digital camera sales started going through the roof. Although the company was in the digital camera game from early on, it knew it would face very tough competition from Japanese consumer electronics giants. Kodak simply wasn’t going to remain cool as the competition heated up.
Kodak was able to refocus on B2B offerings using the tremendous credibility it had established over the previous century. The company’s investor information page claims “Kodak is the world’s foremost imaging innovator. With sales of $10.7 billion in 2006, the company is committed to a digitally oriented growth strategy focused on helping people better use meaningful images and information in their life and work. Consumers use Kodak’s system of digital and traditional products and services to take, print and share their pictures anytime, anywhere; Businesses effectively communicate with customers worldwide using Kodak solutions for prepress, conventional and digital printing and document imaging; and Creative Professionals rely on Kodak technology to uniquely tell their story through moving or still images.” These are not consumer product offerings that will have people lining up in droves. Apple brags about its iPhone and having sold over 110 million iPods and over three billion songs from its iTunes online store but it has no major current B2B offerings.
A great advantage of a company that has leveraged and built up credibility to shift from leading edge consumer product offerings towards B2B offerings, is that the business becomes more predictable. This also applies to its R&D returns. Watch and see if Apple remains cool and if it shifts toward increasing its B2B offerings over the next few years. That would decrease the likelihood of the company falling flat on its face if it loses its cool.
Recommend This If you liked this, let others know:
January 29, 2008
11:38 am | 0 recommendations | Be the first to comment
Originality is overrated. Engineers are often told in engineering schools that a good design typically consists of 45% duplication, 45% slight modification and 10% originality. Those who follow this principle benefit from the experience of their predecessors. Their designs tend to work. That is the way it should be.
We think the 10% originality might be a little too high. Engineering tends to be expensive and slow. For many manufacturers, the engineering efforts involved in bringing something to market often become the bottleneck in the process. This is the case whether in designing the product or the process to produce it cost-effectively. Sales people often go out and pick up orders for something, having to later tell the customer that the engineers haven’t yet worked everything out.
Let’s take the example of the compressed air car. In the highly competitive car industry, it is being touted by many as the next big thing in car manufacturing. India’s largest carmaker, Tata Motors Ltd., is preparing to roll out a line of compressed air cars in 2008. These cars are expected to go about 100 km on a charge of air that costs about 1 euro or $1.50 and takes 2 to 3 minutes to fill up. You’d have a hard time buying a hot dog or a cup of coffee at that price.
Compressed air cars produce zero emissions, contain no fuel that can catch fire or spill and are cheap to make and run – getting 50,000 km on an oil change. Search “compressed air car” and you’ll get several pages of hits. But they are not new. Search “compressed air locomotive” and you’ll see what we mean.
Since the 1800s, thousands of compressed air locomotives have been produced for mainly the same reasons: cheap, safe, easy to fill and run, low maintenance and zero emissions. Most of these locomotives ended up in mines where miners couldn’t survive if there were toxic exhaust emissions.
Today’s cars and yesterday’s locomotives also share the same main drawback. A charge of compressed air doesn’t contain much energy compared to fossil fuels. The old locomotives didn’t go very far which was okay in the mines where these heavy beasts only needed to move a few carloads of ore for short distances. They weren’t able to compete with coal or oil fired steam locomotives that traveled between cities and across countries.
Most of the original engineering in the new compressed air car deals with finding ways to keep the weight as low as possible, while using every little bit of available energy as efficiently as possible. The mining locomotives needed to be heavy to give them enough traction to pull heavy loads whereas the cars are coming in at a miserly 330 kg (725 pounds).
Don’t get us wrong, we appreciate how difficult the job is to engineer these car weights down and efficiencies up. The point we are trying to make is that the cars are more likely to succeed because these issues are known and obvious in light of the historical experiences. The carmakers can focus their efforts as they have been doing on overcoming the longstanding issue of range relative to costs.
Tata is likely to have its car in production long before and at a much lower cost than let’s say: the hydrogen fuel cell car. Several billion dollars have been spent worldwide pioneering the development of fuel cell technologies since the first fuel cell vehicle was built in 1959 – a 20 horsepower tractor. There was no fuel cell vehicle experience to build upon. These expensive engineering efforts are not likely to end anytime soon. Recent hybrid cars like the Toyota Prius that use a combination of well-established technologies and designs have already eclipsed fuel cell powered cars.
From a marketing point of view, you need to discount the past. People are not interested in things that look like leftovers. People tend to be interested in things being new and “innovative.” Or at least new to them. No one likes feeling cheated by finding out that what they thought was new and original is in fact yesterday’s news. Except maybe the investors who don’t mind profiting from proven technologies.
So where does that leave the innovator? The answer depends on how success is measured. If commercial success is the main driver, that entails making sure the engineering design is likely to work. Sooner rather than later. Cost-effectively.
So which approach is more likely to get there, the tried and true or something highly original? We recommend the tried and true as much as possible because it is just that: tried and true.
Please comment and share your experience with us.
Recommend This If you liked this, let others know:
January 23, 2008
11:38 am | 0 recommendations | Be the first to comment
When engineering, product development and marketing & sales people get together and do a great job in successfully pushing a new product into the market to rave reviews, things can still fall apart. There can still be important blind spots in the system to watch out for. Big companies are not immune to this problem.
We discovered a hole in Fujitsu’s warranty programs after we went out and bought their latest Scansnap S510 office scanner a few weeks ago. We learned about the product from others, mainly online, who were successfully using these to help convert their offices to paperless environments. We bought one.
We’re located in Canada and when we first learned about the scanner, were unable to find it at our local retailers or at the big box office stores that we normally go to for this type of equipment. We got a good deal on a new unit from a U.S. retailer that has an active online sales business into Canada. We learned that unlike in the United States where the product is widely available, the Canadian distribution channels are shallow. We were delighted at how well the scanner worked until the camera module fried.
When someone called Fujitsu USA via the 1-800 number on the warranty card, after listening to muzak for almost an hour to get service, managed to walk through the technical service process to determine it was indeed a hardware problem.
That is when the ping pong started. Fujitsu USA referred us to Fujitsu Canada who referred us back to the American office. Fujitsu USA doesn’t service units outside of the USA and Fujitsu Canada does not service units that they didn’t sell in Canada. We suddenly felt like homeless outcasts from the Fujitsu family.
Ideally, the Canadian office should be the one providing the warranty service because they have regional drop-off centers plus a great and efficient technical service infrastructure designed specifically to service Canadian customers. In our follow up with Fujitsu Canada, the issue from their perspective was that they did not make a dime from the sale of the scanner we bought from the American supplier and that the warranty service would come out of their budget if they fixed our scanner. The American response was that there was no way within the existing system for the Canadian office to bill the U.S. office for warranty service on units that were bought in the United States and that ended up in Canada.
Globalization is putting these distributors in direct competition with each other because products can move quite freely across the Canada USA border in either direction whereas the warranty service does not. It turns out that many of these units are going back and forth across the border and the default is to send them back to the country they were originally purchased in through a clumsy and expensive system of double-shipping through local addresses.
Fujitsu USA unexpectedly hit upon a solution when it offered to do a workaround and fix our scanner if we would send it to them. The U.S. domestic FedEx pre-paid shipping label that the American manager asked us to apply to the unit did not work for this international shipment. When he talked to FedEx about the label, the FedEx response was a quick and simple “no problem.” FedEx fixed the problem in a couple minutes because FedEx had all the systems in place to do it. The American manager handling the transaction liked the example and noted the stark contrast to his own system where he had zero ability to look into the Canadian system to work out a quick fix.
We were fairly patient with the process, mainly because the Fujitsu people on both sides of the border were polite and friendly. This seemed partly due to them knowing there is a gaping hole in their international warranty system.
The lesson for innovators is to beware of the blind spots that can occur anywhere in the marketing process. This is especially important with the accelerating trend toward consumers shopping globally for their products that easily migrate across national and regional boundaries. FedEx obviously has good reasons to be a global leader in addressing cross border service issues. As things become more competitive, a great product needs to be just as good on the back end as it does on the brochure.
Here are some things companies can do to ensure the back end doesn’t fall apart while developing the marketing strategy for new products:
• Perform a product life cycle analysis from the customer perspective,
• Discuss back end product aspects during product meetings,
• Create systems to reward employees who take ownership of customer service problems.
The whole product experience is becoming more relevant as people increasingly turn to online sources which have no boundaries. Watch out to make sure the experience doesn’t fall apart on the back end. We’re still waiting for our scanner to come back from the shop.
Recommend This If you liked this, let others know:
