innovation playground Idris Mootee

Can You Prototype Your Business Strategy?

Oh Yes. Three things that we do a lot at Idea Couture are 1/ Innovation 2/ Ethnography 3/Rapid Prototyping and each of them are closely related. 2 and 3 are  common in the product design world but remains rare to business strategy and innovation process. Business strategy planners always struggle in developing new business concepts even though tons of quantitative data were being reviewed and at certain point they want to see to touch and fees those possibilities. organizations only get tangible about new business concepts after they’ve done planning, have a business case and already decided to go ahead with it. The problem for senior executives who make important resource decisions is they have a hard time getting a visceral sense of the concepts they are responsible for writing those big checks.

This is like when rapid experience prototyping comes into plan, being applied at an earlier stage to
support important decisions and to de-risks the projects. Design prototyping is often used in the design development process for the purpose of bringing the prototyped entity to market. The use of prototypes, however, has been moving upstream from design development to solving big strategic problem is new. I find that this is very effective although never taught in B=schools. I've been to a few of those and I have not seen a prof that can draw. Doesn't matter the quality of the drawings, this is about applying visualization at an earlier stage to support different decisions.

Upstream prototyping is useful before the decision to pursue a new business concept in uncharted territory has been made. It is used to show executives what no one is yet doing, but could do; and
what are the new possibilities and unanticipated surprises. It is about crating tangible futures of your business, isn't that called "strategy"?

There's a business week story about how visual interpretation of strategy can be extremely useful. In the fall of 2006, a group of senior European executives at Microsoft entered a meeting expecting to see a PowerPoint presentation. Instead, Steve Clayton—then the chief technology officer for Microsoft's U.K. Partner Group—showed them a hand-drawn image of an impish blue creature bearing gnarled fangs and sporting the provocative caption "Microsoft: Change the world or go home." After a few initial gasps, recalls Clayton, the attendees engaged in a lively discussion around the current direction of the company and the brand. "People liked the way it changed the angle of conversation," Clayton says.

Visual Thinking Solve Problems - In a corporate landscape awash with slick computer presentations, charts, graphs, and logos, some managers still utilize an age-old tool for business problem solving: the hand-drawn doodle. Whether sketched on a legal pad or drawn on a whiteboard, a doodle has the power to humanize the abstract and simplify the complex. It's a way to add humor into a dry topic. And, when doodles are used in meetings with colleagues and clients, it's a way to pull people into the process of solving a problem. "The reaction that you get from an audience is like magic.

Are You Ready For The Coming "Feminitizaion Of Everyday Objects"?

Companies that are squeezed by low cost competitors and channel proliferations are looking to ways to add value to their brands and products. Fancy packaging will not do the job as it adds cost and creates more waste.  The best way out is to look to “design” to create a higher level of aesthetic sophistication and emotive elements for the brand. It is fiercely competitive in industries including cell phone and the  consumer electronic and they are looking for cultural inspirations everywhere. But whatever the cultural inspiration, if a new phone does not catch on quickly, it is not likely to catch on at all. You cannot afford to wait 3 months. If you hit, you hit. If not, next. Even good designs do not necessarily spell success. Dale of Motorola puts it this way “The strongest marketing tool is the first 20,000 people who buy the device. If they like it, they will tell their friends.” Someone asked me what’s the biggest macro trend next five years, here's my answer.

I think we are seeing a new feminine movement in design. I don’t simply mean more products will be designed for women, although that itself has been under-explored market. I mean a softer approach in design that applies to mainstream products from cell phones to computers and cars and even hotel and coffee shops. I think this is the turning point from a “male-centric” design culture to a softer and more gentle, emotional and intuitive brands and products.  The early signs of this “emotive feminine branding” we can find in Blackberry Pearl or Apple Mac.  I don’t mean products in pink or red or with floral pattern. I am taking about the softness in design sensitivity which gives rise to the new “feminocracy in design” or “feminitization of everyday objects" and experiences.

Most products in this world were designed by men for men with the assumptions that everyone loves that “performance” look.  And that’s why many products are so insensitive. The Apple iPod introduced an emotional element to its design which men love. Sony introduced the line of VIAO computers that has a feminine sensitivity to it versus a Dell. The Nintendo Wii is another example of design being used in a female way versus the Xbox 360. This is a larger movement and don’t miss this. America may be on the verge of a post-metrosexual moment.  There needs to be something between the style-deficient and culture-deprived straight middle class suburban man and the vane metrosexual that jumped out from Wallpaper. That’s the opportunities space.

I wonder why is the world of design are dominated by men? What are the particular challenges that face women designers in the male-dominated field of industrial ir user experience design? Bad design has no gender! If anything women are better and more observant consumers than men....being the traditional caretakers of households and families.  I don't think our world will turn pink, but definitely better usability.

Since When Has Everyone Become An Ethnographic Expert!

There is no much hype around innovation, (including customer inspired innovation) and ethnography these days almost and every research firm is telling you that they do ethnography and every design firm is an innovation firm. It is like every cab driver in LA is a screen writer and every good looking waitress is a model. Nope, you are not. Even if you read the faces on those eggs.

Innovation is innovation and not just design. Ethnography is not market research.  Let's be clear about that here.

What are the differences or connections between innovation and design? Innovation is much much larger than design whether is product, space or experience.  It is about discovering new ways to uncover insights and connect those insights to concepts that can fulfill customer needs (both articulated and unarticulated, met or unmet). It also includes carefully map out the development requirements and linking them to business economics and delivery. Plus managing risk along the way. A design firm does not do that. But "design thinking" can be very useful for that.

What are the differences or connections between ethnography and traditional market research? Ethnography is a social science research method that relies heavily on up-close, personal experience and possible participation, not just observation, by researchers trained in the art of ethnography. These ethnographers often work in multidisciplinary teams. The ethnographic focal point may include intensive language and culture learning, intensive study of a single field or domain, and a blend of historical, observational, and interview methods. Typical ethnographic research employs three kinds of data collection: interviews, observation, and documents. This in turn produces three kinds of data: quotations, descriptions, and excerpts of documents, resulting in one product: narrative description. This narrative sometimes includes diagrams and artifacts that help to tell "the story". Ethnographic methods can give shape to new constructs or paradigms, and new variables for further market research. Most market research firms have not ideas of how to do this and often casually throw in some interviews and call them ethnography. I can buy a Mark Jacob outfit and it doesn’t make me a model. Please stop misrepresenating yourself.

Ethnography is closely tied to innovation because ethnography enhances and widens top down views and enriches the inquiry process, taps both bottom-up insights and generates new analytic insights by engaging in interactive, team exploration of often subtle arenas of human difference and similarity. Through such findings ethnographers may inform others of their findings with an attempt to derive instructional innovations from such an analysis. Often traditional qualitative researchers perform near-ethnographic field work, they bring with them market researcher lens and end up getting useless data.  My 25 years as a strategist 80% of the time research company failed to interpret the data.  So 80% of the time the money was totally wasted. How often you the recommendation you get is 1/ Be innovative 2/be creative or 3/ focus on customer needs?

May be next week I should start an advanced research masterclass here to follow up on my advanced branding masterclass. Or should start a model screening masterclass to help people figure out the real deals?

There's Never A Better Time For Digital Media Start-Ups

I've been talking to my investment banker buddies in NYC quite a bit this week about the subprime crisis and how it will affect the media (digital) M&A activities. There are no questions that there will be some short term impact but many of these deals are not highly leveraged. I've been talking to a couple of start-ups lately and helping them to figure out their business models, they all have potentials and we're exploring if we should incubate one or two of them. The problem is they all see only one part of the total picture, but If they can understand more abut the media 2.0 dynamics, they will have a better view of their business models.

Looking back at 07, the adv market substantially underperformed the general economy delivering just 0.2% growth; Consumer magazines have done well with good growth at 6.3%.  In fact, the consumer magazine sector will likely reach an historic milestone this year, thanks in part to a steady 5 years growth. It will probably overtake newspaper to be the second largest media after TV. Funny it is not impacted by the Internet all all, in fact, the Internet just make their content more valuable.

The media market is ripe for big disruptions. We all see this coming and boundaries of media companies have blurred. Give you an example, the number one biggest deal, News Corporation sold its remaining interest in TV Guide, once one of the very  biggest consumer magazines, for $2.8 billion (as recently as 2000, the business was valued at $30  billion).  The new owner, Macrovision Corporation, is NOT a publisher, but a software and digital rights management company.  The value driver from the buyer's perspectives is not the venerable magazine they, but the Gemstar technology and the TV listings IP.  Taken by itself, this single deal crystallizes the transforming power of digital media. The number two deal is also another example of the tendency of media to break out of the conceptual box:  Primedia’s Enthusiast Media group of specialty magazines was acquired by a major newsstand distributor, Source Interlink, whose primary business is magazine distribution and other ancillary activities rather than publishing content itself.

This is spring time for digital media and don't expect this will be affected by any slowdown. Glam Media and Adconion Media Group separately announced today completion of new funding rounds despite concerns of the macro environment could spill over into the digital media market. Glam, a closely held company that has both its own sites and an ad network of partner Web publishers, raised $65 million from investors and an additional $20 million in debt, on top of $30 million in investments it had received to date. The investments -- by parties including Hubert Burda Media, GLG Partners, Duff Ackerman & Goodrich and Hercules Technology Growth Capital -- value Glam at around $500 million as reported in WSJ. London-based Adconion, an online ad network that recently started expanding into North America,  announced today that it has closed an $80 million investment led by Index Ventures and Wellington Partners.
 

Building An Innovative Culture - What Does it Mean?

Our move to the new office is almost complete. The latest batch of Herman Miller Nelson Sweg tables arrived.  I always think the starting point of building an innovative culture is the workplace. I am a big believer of open work space particular in our business (see photos above of our typical work sessions). It reflects who you are and also shows your collective identity. If done right, it creates a possible energy sphere that will help organizations overcome many necessary hurdles that one may encounter during growth. I am seeing the return to the power of creativity and innovation in the next 10 years as organization ran of ideas for growth.  The kind of thinking - the emphasis om innovation and invention in all its forms - has always been revered by entrepreneurs. Steve Jobs credited Land's inspiration for the culture of Apple. (Edwin Lands is the founder of Polaroid who owns more than 500 patents). Not every company has a Steve Job or Edwin Land, and what do you do when you don't have one?

What is a high performance culture? What is a creative culture? Will performance means sacrificing creativity? Are your people motivated to act like the defender of the company's culture? Do they know how to innovate and are they encouraged to bring those ideas to the company? Will they be thinking about how to advance the business without being explicitly asked what to do? Will they spend their own time dreaming up new ways to delight customers?  Every leader wishes that they have a culture for all threats to happen. Having the best of both worlds - performance and creativity. Many are pushing too hard on the performance front and as a result creativity and innovation suffers, and so their performances.

For a handful of top performers, however, the picture looks different. These companies inspire loyalty from customers and employees, who want to stay and be part of something special.They generate commitment to go the extra mile, to do the right thing rather than just the easy thing. At these companies, people not only know what they should do, they know how to do it and also deeply believe in why they do it. That's the power of a high performance culture. Founder and chairman of Southwest Airlines, puts it this way:“Everything [in our strategy] our competitors could copy tomorrow.
But they can’t copy the culture—and they know it. It is the ultimate sustainable competitive advantage.

Companies are increasing global, distributed and extended, so culture provides the glue that creates
trust and a sense of shared purpose.  It is easy to wish that there's a magic formula and thinking that all high-performance cultures look alike.They don’t, and that is part of their power. Almost all of them are unique and often influenced by the personalities of their leaderships. To be effective, a high-performance culture must be customized - called it "culture couture".

Making it real requires a is a mixture of common values, beliefs, and their manifestation in everyday behavior (including the leadership). Sometimes it becomes a visible artifacts, such as a mission statement or companies news letter. This is becoming less effective these days. What good is a piece of writing that so company is acting in it. Clues  exist in the ways people act every day on the job, in the language, in the conversations. How much time does the CEO spend with the staff and customers? Does he/she spend time on the field listening to customer problems? How many bottom-up ideas get implemented and celebrated? Will the CEO personally encourage new ideas and make sure they receive the right attention?  This is not about talking innovation, it is about showing that innovation is part of the authentic core—the unique soul and personality that define a company’s character. Here are some ideas that CEOs can do:

Create “buffer zones” for the most innovative people: Creating “buffer zones” means building a kind of  cocoon around the innovative teams.  That means eliminating the ways that policies or other work pressures get in the way or discourage the experimentation in the early stage.

Use outsiders as "innovation catalysts:" This can make a difference as they not only bringing fresh thinking but also tools and cross-industry experiences.  Try to encourage the use of "design thinking" to conceptualize new ideas and explore all possibilities.

Give them room to “play:” For innovators, anything they can do to mess around with the kinds of data or projects that they see as helpful - will be helpful. But during the incubation stage, activities that may look like useless diversions - that may not even look like work - are all necessary to allow the deeper parts of the brain to solve a problem and make new connections. 

Don't look for quick results: Any team can develop innovative solutions, there is no business or customer interfaces that can not be improved through play and modification. But to build a culture that truly encourages innovation, the pressure to get immediate results will yield only incremental improvements, and the need to meet deadlines can sometimes kill the creative process while they are still fragile.

Commit to driving the best ideas through to implementation: Innovators are seldom the best salespeople for their ideas although there are a few exceptions. CEOs who want to encourage innovation must act as the first-line filter to test the best ideas and solutions, choosing which ones are the right ones to see through to fruition.  Then the they must appoint advocate commit to the internal sales and marketing project to build coalitions.  This takes courage and persistence, and an ability to work the political and social process involved in getting others to adapt to innovation. 

Does Your Business Strategy Have A Purpose?

The following is one of my first few posts on this blog back in July last year, I thought it is worth sharing with you again here. The conversation started when a friend of mine called me and wanted to talk about his new venture idea. I am happy for him. No question that it is a big decision to give up your job and go after your dream. The question came up was “why”, is it about money or is it about something else?

I asked him the question "Do you have purpose?" He was a little surprised as he expected me to ask him about the strategy. I said to him “purpose” is bigger than “strategy”. Way much bigger. At best, strategy is just a number of smart ideas to take advantage of a market opportunity or re-configuration of the value chain. But purpose is different, it is a journey. Strategies are about means; they cannot be an end in themselves. An end is a reason. Many companies today are not lacking strategies, they lack a reason--they lack “purpose.”

Purpose is crucial because of its scope and ubiquity. It is large, much larger than any other elements in a business model or organizational design. It is much more involving. It is a choice to pursue your destiny--the ultimate destination for yourself and the organization you and your partners founded... It draws equally upon your emotional commitment and intellectual whole--it calls upon everything you are, everything you've experienced and everything you believe in. How many leaders out there today can talk intelligently (and authentically) about “Purpose”? Purpose is he most powerful mobilization and any successful CEOs must be able to talk about it--although they may not actually use the word itself. Business is about “Purpose” and Management is the art of bringing that "Purpose" to everyone in the organization and even to their customers. There's a lot of be learned from the non-profits guys.

Here’s a good comment responding to my post earlier this week. I thought I should share that with you. It is from Norman Wolfe, CEO Quantum Leaders.    

Idris, I couldn't agree with you more that there is a terrible misunderstanding of the relationship between for profit and not-for-profit. Your friend at the airport said it right when he said all organizations are in business to serve a certain customer base. Success of an enterprise is defined by the simple equation Revenue less expenses = profit and profit re-invested provides growth. Every organization has a revenue stream that is driven by the acceptance of the product/service by the market (whatever the customer base might be). When we provide those products/service with the most optimized set of resources we are doing so with the least amount of expenses. This does two things for us (us being the whole society), it means we are maximizing our profits which allow us to grow and provide the market with more of our products/services. And two it means we are also utilizing the least amount of resources hence we are being appropriate stewards of our society's resources. It matters not whether an organization is a for profit or a not for profit. The revenue for not for profits may comes from sponsoring organizations rather than the end user but it is still revenue. Think of it as selling the product to the sponsor who is purchasing it on behalf of the end user and we drop ship it directly to the end user. The model is the same. One thing I would say that for-profits can learn from the tax exempt world, is the power of purpose, meaning and passion.

Thanks Norman for sharing.

Web 2.0 + Social Innovation = Business Innovation

I am not a non-profit guy not because I have any issues with them but because I'm just not wired for that. As a career corporate business strategist (trained in three business schools and I can dissect any complicated business in 15 mins), I am probably too deep into the modern day capitalism. My idea has always been if I can help large corporations make as much economic profit as they can and let them decide how to give back to the society. Having worked in many industries and non-profit is probably one of the very few that I have little experience. I also don’t work for the "involuntary non-profit", these are the people who have no idea how to run a financially sustainable business.

My view has changed over the years and I am quite eager to help companies to develop a social component (double or triple bottom line) as part of their business strategies. I think this is shaping the future of organizations. I am still not a pure NGO guy.

Here’s a conversation I overheard in an airport lounge that I wanted to share with you here:

“Let’s be clear, we are a non-profit, but non-profit is also a business.” The man said to the two younger persons travelling with him.  One of two persons responded, “But we don’t make a profit and we aren’t meant to make a profit. Not to make a profit is our missions, isn’t it?” The older man responded, “The real purpose of any business is not about making money or providing jobs, it is to provide goods and services to fultil customers’ needs. The profit is only something that permits them to stay in business and attract investors and capital.” The two guys went away thoughtful. The older man turned over and looked at me and said “Do you agree?”

He is right. Businesses’ number one goal is to satisfy customers and provide value. Monopolies are only temporarily (thank God) and duopolies last a little bit longer. And if satisfying customer means more than fulfilling their physical needs, then business should try to think beyond products. That’s where social innovation crosses over with business innovation.

During the past week, I’ve talked with some entrepreneurs from India (tea), Scotland (spirits), Toronto (online mkt and travel), Stockholm (communications) and New York (media). They all have some disruptive elements in their business strategies. A few of them have a social component in there too and that’s makes their business ideas powerful. Just look at microcredit, I think it may eventually become just something that every business does in one shape or another. Microcredit has attracted untold billions of dollars. Grameen Bank alone disbursed $4 billion in microloans over the last 10 years, and it now has 7 million borrowers in Bangladesh. In India, about 1,000 microcredit organizations and 300 commercial banks lent $1.3 billion to 17.5 million people in 2006. Worldwide, 3,133 microcredit institutions provided loans to 113.3 million… a growth industry.

Microfinanciers use innovative contractual practices and organizational forms to reduce the risks and costs of making loans, such as lending to groups, rather than just to one person. Some microcredit organizations give their clients more than loans, offering education, training, healthcare, and other social services. Typically, these are NGOs or owned by customers or investors who are more concerned about the economic and social development of the poor than they are with profits. There is no reason this cannot be a business.

Not sure you’ve heard about Kallari Rainforest Chocolate (70% Cacao—medium dark) and it was made by the Kichwa people in the Amazon in Ecuador. Through it’s 50 X 15 initiative, to connect 50% of the world’s population to the internet by 2015, AMD has been working in small villages in Latin America and Africa and they helped set up the Kallari cooperative in Ecuador. The wrapper reads “the only indigenous cooperative that harvests, processes and markets our very own line of chocolate.”

By linking the people to the net (here's where Web 2.0 can be very powerful0, AMD also helped establish a global market for their incredible product. The Kichwa of the Kallari villages are using their own form of collaborate innovation and social networking to create organically-grown (no GMOs), delicious chocolates that people can by and feel great about it. If they can do it with chocolate, why can't you do that with hundreds other things. Let's start with tea.

10 Design Thinking Principles For Strategic Business Innovation

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I was often asked the question of what "design thinking" has to do with business strategy. When talked about "design thinking" people refer to asthetics (mainly high stlye design or usability) and generally they cannot relate to strategy (strategy means spreadsheet). I explained to them that “design thinking” is crucial to any innovation effort if a company wants to break out of its current competitive structure. Today's managment concepts are heavily based on "optimziation" and "scale economics". It means making better use of your resource and exercise your market power to gain competitive advantage. It does not really address the other side of the problem which is "size" can create a different set of problems. That's when legacys and bureaucracy hinder imagaintion and opportunties for growth for large organizations.

During the last century we saw the perfection of the bureaucracy -- a form of organization that has been enormously successful and is the result of thousands of years of trial and error evolution. Max Weber outlined the key characteristics of a bureaucracy:

1. specification of jobs with detailed rights, obligations, responsibilities, scope of authority
2. system of supervision and subordination
3. unity of command
4. extensive use of written documents
5. training in job requirements and skills
6. application of consistent and complete rules (company manual)
7. assign work and hire personnel based on competence and experience

I think this is really a BIG part of the problem. Do you see what's wrong with this?  (I like to hear your views on which ones are the biggest issues before I go into each of those next time) In order to fully expore a full spectrum of growth opportunities, stratgists must not only be  collaborative but “empathic" as well. Many make the msitake of thining this is a spreadsheet (market sizing) exercise. This is a overly simplistic view of the world. The key is to bring the emphathic mind set to explore a “landscape of innovation” that has everything to do with people, their needs, their lifestyles, how they technologies and how they make brand choices. It is in fact a process of "applied imagination and creativity".  To do that well, you cannot have hard core MBAs alone, you need the collaboraiton of designers, anthropologists and brand managers, collaborately investigating how people experience the world and objects around them both emotionally and cognitively.

The bigger question is what frameworks and processes are required to support innovation and how “design thinking” come into play?  How do we apply "design thinking" to inspire the exploratory process in corporate strategy development? Many companies fail in their attempts to innovate because they lack the balance between business discipline and imagination. It is drastically different from brainstorming. Here I'm sharing with you a short version of a presentation which I often give at b-schools, let me know what you think. Ops, need to turn off my Macbook Air, landing in 15 mins.

Innovation Risks And Corporate Imagination

Innovation is not a discipline or taught specifically in most business schools. Most of the thinking and development were happening within the academic arena and seldom address the practicality of real world business. The last two years there has been a lot of hype around it. Yet the market has not fully appreciated the needs for innovation consultants or a more rigor approach to innovation strategy. There are very few companies like us that focus on innovation as a core practice supported by business economics rigor and inter-disciplinary design sensitivity. I think many of us have yet mastered the skills to fully mobilize the human minds and our hands are tired by some old management models. That's why 'deisgn thinking' is about creating the future.

The traditional approach was, “How do you get employee to buy into the vision and work towards the organization’s goals?” This is still valid, but not enough. Today we also need to ask, “In additional to the alignment question, how do you build organizations that harness the power of creativity and imagination?” You cannot command those human capabilities. Imagination and commitment are things that people choose to bring to work every day—or not.

The opportunities for organizations are huge for sure. Against the backdrop of waves of digital disruptions, accelerated globalization, and the declining predictability of strategic-planning models, only new approaches to managing organizing talent and corporate imagination to maximize shareholder value creation will provide companies with to win. Embracing uncertainties are unavoidable (I stress unavoidable, but the key is not to avoid the but take advantage of them) for any innovation initiatives, from new customer applications to new business ventures. These strategic innovation initiatives, no matter what nature, will always have the following risks:

1/ Technology risks – Can we deliver on time and will it be robust enough?

2/ Customer risks – Will they buy and use? Do they appreciate our customer value propositions?

3/ Business risks – Do we have a viable economic model? Can we make money?

4/ Organization risks – Can we successfully integrate with our current system and processes? Or the underlying culture that drives organizational behavior?

This uncertainty arises from many sources—the disruptive, complex and rapid changing nature of the technologies; the complication risks of integration within and across organizations and the extended supply/demand chain. Customers' level of engagement and rate of adoption of any innovative offerings are hard-to-predict in nature (So much about the hockey stick). It is often a painful process to push any innovation project forward within any large organizations, it takes both courage and wisdom. It is easy to see many are looking to each other and ready to do the nodding of their heads for the sake of getting a painless consensus or quick to point out a hundred reasons why it never worked in the past. Unfortunately, that does not improve the quality of the decisions without legitimizing constructive conflict and by encouraging critical evaluation. The art of managing the future.

What is needed are better assumptions and recommendations and to a higher level of critical thinking and corporate imagination. Given the potential risks of innovation projects, the defensive posture expressed by many organizations towards these efforts naturally come as no surprise. The results are translated into defensive posture and penalize high potential projects that have larger risks but also larger upside potential by using an excessively high hurdle rate.

Another manifestation is applying a veneer of predictability to innovation project investments by demanding rigidity in project planning and execution. These defensive maneuvers actually increase an organization’s exposure to unnecessary risk as to reduce it: downplaying uncertainty discourages vigilance to potential problems; rigid project plans invite corner cutting; and a blame-the-risk-takers-first mentality deters forthright communication. Innovation project investments are pursued because there are strategic reasons. It can be an attack or defensive move. There need to be a built-in option to change scale when the investments can be increased or decreased in response to future conditions, or when the production system enabled by a project can be scaled up or down. Thus a scale-down option may be viewed as an alternative to simply cutting the project. It can be used as an option play for a creative process into the future.  As Janice Kirkpatrick wrote in her book  Innovation—the politics of change (1996)

"The creative process, the process of designing, is an excellent ‘tool’ for analysis, synthesis and reconstruction of the world. It reveals the ideologies that motivate us and excite us. This gives us clues which we can then use in developing an innovative strategy which may yield a future which will be appropriate: familiar yet new, challenging yet supportive."

 

Mac Addicts' Bling Bling

Everyone fancy our MacBook Air when we were using to for presentations today. As far as I checked with the people at two New York Apple stores, the wait lsit is still 4-5 weeks. So before everyone gets them, we will use them to show off.  It is a matter of time when jewelry meets technology.  The idea of blinging-out your electronic gadgets is here. Computer Choppers has gold-plated one MacBook Pro for the public to ogle, in all its gleaming wonder. They also offer a great deal of electronics customization, aside from coating your MacBook in 24 karats of yellow precious metal for $1,200-$1,500.  I am not sure if they can coart your iPhone in gold too. I don't see why not. They also offer an upgrade path for platinum or gemstones. If you have a few bucksto burn, they will glamor up your Apple logo with diamonds or sapphires. I think they also do regualar laptops, but who would want a gold Dell? Uh. And if you are really into gold, this is the car for you.

For all of you MacAddics, MILK desk from Heckler Design is just for you. This sleek desk, “OneLessDesk” combines 2 desks in one, one for your 24-inch flat-panel display rather two 24-inches and other Apple goodies…iPhone, Shuffle, Nano, Touch, iPod Classic and the other for your peripherals. Once you are finished with the work, lower ‘deck’ glides effortlessly under the upper deck for a neat and spacious feel. OneLessDesk occupies about one foot of space from your wall so you can enjoy the extra space anyways or you can use the independent desks in just about any configuration. The designer desk also features an out-of-sight, rear-facing perforated shelf to hide the wiry mess all in ventilated, heat-sinking comfort. OneLessDesk is constructed entirely of thick, 12 gauge stainless steel, fully welded, and sports a beautiful, non-directional brushed finish. perfectly match your ultra modern style. Only 100 OneLessDesks will be produced and they only costs $900. Hurry up.

Valentines Day And Customer Experiences

 

Valentine’s Day should really be experiential rather than material and unfortunately it has become a little too much of a product event. There simply not enough imagination on thinking what company can offer from an experiential perspective. Scott and I walked into Le Mason DeChocolat (picture above) in NYC and bought some chcoclates. They are really a master in creating expeiences. It has been a while since I visited theie main store in Paris. I remembered when I opened the door, I was greeted by the wonderful smell of real chocolate.  There's a very mall area to have a coffee or tea, and I love the spacious counters filled with all types of fine chocolate. And valentines day makes it even more special particualy with the valentines' gift packs *they usual packaging color is brown). if only large companies can learn from them. Truthfully, I wonder who invented Valentine'.

I was offered three vastly distinct versions of the origin. One comes from England and has something to do with birds mating. The other two trace the beginning all the way to the Roman Empire. The more popular one of the two, is about a priest in the third century who secretly held weddings for lovebirds when the tyrant of the day, in an attempt to conscript all men of a certain age, banned all weddings. When he learned of the priest's act of defiance, he did not hesitate to arrest and execute the holy man. That was on February 14 and the priest's name was Valentine. The day was later canonized by lovers to commemorate the great sympathizer of love. The association with romance dates from the middle ages, where most of the legends surrounding St. Valentine were written. Not sure if this is a real story or not.

Retail marketers really put a lot of thoughts into this day and I wonder how much other non-retail marketers can learn from them. If only they can treat their customers with a little love. The life of a consumer in general is painful. From deciding what package you need for your cell phone (it toften akes a GMAT of 850, last time I checked I only got 830,in order to find the optimal package not to mention I never understand how the billing works) or calling your credit card company (American Express is one good example, you’re not talking to a person, you are talking to someone reading a script politely and simply cannot help you. I suggest they go for full automation with only voice recording or simply booking your vacation (try to book a cruise yourself without an agent, good luck).

There are still many marketers who believe that their job is to 1/ confuse customers by making even simple things as complicated as possible such as return a piece of merchandize 2/ to come up with as many strategies as possible not to allow customer to have any real choices 3/hoping that customer will prefer some short term gain and instead get some long term pain. 3/ trying all kinds of way to prevent customer from having any means to complain so to make them helpless. If you can do all of the above, you are really hopeless.  But don’t complain about customer churn or lack of loyalty. You deserve it. For those industries that rely on heavy customer interactions, poor service was the predominant reason that nearly 50% change providers. Smart companies strike the right balance between using technology to help reduce costs and streamlining the customer experience with well-considered processes that contribute to more personalized services. More technology is not answer. Don’t they get it?

Customers simply want their customer experience to be like a good short cut - they expect the first customer service representative they talk with to have the knowledge, tools and empowered to help them. A better way to do this is companies should smartly categorize inquiries by mapping their volume and type against the revenues they produced. On one occasion it was discovered that five kinds of queries accounted for 50 % of its total call volume but generated 75% of its additional profits. Company then considered which types of calls were easiest to automate, and it introduced automated systems to route low-value inquiries by category whenever possible. I think company should consider live agents before automation instead of the other way around. Understanding the value of each kind of interaction helps a company boost its revenues by meeting its customers’ most exacting needs and can easily improve the overall customer experiences.

Happy Valentines Day!

Random Thoughts On Marketing

This is not the best day being in New York City with the big snow storm and everything was messy. It’s kind of reminding me of the state of marketing today. It was a typical work day packed with meetings back-to-back. Some how we managed to spend some eating out with our friend Jason. We've also met with some great people and have good discussions about some stratetic partnerships opportunties. We ended up eating at the Fatty Crab (Chelsea meets Malaysia) and quite honest curry crab is not really my favorite.

The state of marketing today? Marketing is often misunderstood (and still much so today) and narrowly associated with tactical advertising or direct marketing opportunities, it should really be about the organizational culture focused on creating and delivering customer value; through its business strategy, mandates of growth, customer segmentation, targeting and positioning; and with its tactical dimensions of communications and promotional management including pricing and most of all providing inspiration to customers and make the product you’re selling more desirable.

It is not difficult to understand why it is seen as tactical when In its earliest organizational forms, beginning in late 20s, marketing had developed in field sales support and as product and brand-management activities in consumer packaged-goods companies. Marketing research is also seen as part of the marketing function. 30 years later marketing has grown up to become a full-blown function in its own right. With the rise of strategic planning in the 70s marketing management became strategic and intertwined with business strategy. Another 15 years ago, with the Internet it brances out into technology-based marketing (CRM for the lack of a better word). It is not being disrupted again by social media and influenced by a new customer-centric and communities-centric focus. Almost all marketers need to go back to school and relearn what works. Ad agencies are scrambling to deal with the change. The biggest argument remains unchanged: Should marketing be focused on the long-term (building a brand) or short-term (driving sales)? There is always a view that the most important spending represents long-term investments in the growth and future profitability of the brand/business…so called the competitive advantage. Unfortunately marketing is often treated as an expense item. The emphasis on quarterly earnings per share to long-term business building can only come from top management. Those short-termism are hurting brands and companies’ long term competitive advantages. In the current economic climate, no question that this has become a common debate among senior marketing executives.

There is also a question of how the ad agencies (as an inudstry) are prepared to deal with the sea change. It is beyond reconfiguring service offerings or simplye cross office integrations. They need to rethink individual roles, culture and organiztional form. I have lots of ideas what is needed to make it work.

Tiffany - Extending The Brand Magic To New Categories?

We did a little shopping this weekend my wife and I stumbled upon a few good finds including a pair of Burberry snow boots and a pair of elegantly designed Tiffany sunglasses (with Swarovski crystals on the sides). This may be a category that they are planning to enter into.  I don't recall they have a large sunglasses collection. Companies such as Tiffany that cater to the affluent always face the same dilemma: how to balance growth with exclusivity. If you expand too far down the luxury ladder, you cheapen the brand and lose cachet. If you stay exclusive, your market base will always be limited. The question is not whether you should or not, it is how. Companies like Tiffany need to deliver growth but not at the expense of the brand.

There is so much talking about recession and one would think that luxury goods will be the first to be negatively impacted. Tiffany just gave an upbeat forecast for 08 despite everyone worries about the consumer sentiments. Tiffany CEO Michael Kowalski expects a 10% rise in total sales and mid-single-digit profit gain, pretty good taken into account the macro conditions. Tiffany touted growth will primarily be from China and Japan business will continue to falter. This is unarguably one of the best managed brands in the world and the blue box is almost magical to consumers. I am a fan of Tiffany. This little blue box company has grown in to a $2.2 billion 150+ stores company.  Even with a slowdown in front of us, I think they will still do fine. We can always expect a shakeout in the industry from the this slowdown and it will widen the gap between strong and weak brands. The key is to renew their focus on what they're really good at and innovate within or next to those categories. Many luxury brands have entered into categories where they have no expertise because they fell into the trap of "lifestyle" brands.

Up-market consumers are highly discerning and sophisticated. They are always willing to pay a reasonable price premium for, brands that are specialists in certain categories. Tiffany in jewelries, Hermes in handbags, Louis vuitton in leather goods and luggage, Christian Louboutin in women's shoes, and Berluti in men's shoes are brands that up-market consumers rate highest as category leaders. Part of the strategic exercise is to cnduct a rigorous assessment of your brand's category portfolio and get rid of the non-strategic extensions. This is when the brand makes a difference. The challenge for Tiffany is to find growth that doesn’t require new real estate investments but retaining the brand’s exclusivity and prestige image. That's why they did this deal with Swiss watch giants Swatch. I think the idea is to design and produce an extensive collection of watches under the Tiffany brand. and to be distributed beyond Tiffany's boutiques.  They do carry a small watch collection and mostly are on the high end. Is this a smart move (if so what is the strategy behind it) or a deprecate attempt to create new revenue stream at the expense of diluting the Tiffany brand? I think this is a smart strategy and will be a key part of Tiffany’s growth strategy.

The Tiffany brand will help Swatch market to women as well as more upscale market. The watch industry is still a man’s world. Women’s watch market makes up 35%-40% of the luxury watch market. There’s no reason why it cannot be at 55-65%. There is tremendous market potential to turn that into fashion watches like handbags. Tiffany hopes this deal will make them a strong competitor to Cartier and Bulgari , two jewelers that have successfully moved into the luxury watch business. Louis Vuitton and Hermes are also key players too. Hermes watches are good value for brand, design and price. Tiffany will launch in the second half of 08, with the first full collection to follow in 09.

I think the company will continue to move slightly (I really mean slightly) down market  and will continue to look at other high margin categories for extension and leverage their brand. What’s next? Sunglasses and leather goods? How about a Tiffany cell phone? I think it is a matter of time. Expect them to boost lower-priced goods like key rings, pens, stationary and porcelain should also lift profits because margins are attractive for those items. They need to learn from the mistake they made in Japan and not opening too many stores back home. The key is to explore the digital channel and also focus on the, business-to-business and catalog purchases (currently only 9% of total revenue). There are so much untapped opportunities that Tiffany can explore in the online space. This is also an area of vulnerability when we think how Generation Y goes shopping for engagement rings? Are they still going to pay a premium for the blue box from Tiffany, or are we going to Blue Nile? But for now, we all love the blue box.

Up-market consumers are highly discerning and sophisticated. They are always willing to pay a reasonable price premium for, brands that are specialists in certain categories. Tiffany in jewelries, Hermes in handbags, Louis vuitton in leather goods and luggage, Christian Louboutin in women's shoes, and Berluti in men's shoes are brands that up-market consumers rate highest as category leaders. Part of the strategic exercise is to cnduct a rigorous assessment of your brand's category portfolio and get rid of the non-strategic extensions. This is when the brand makes a difference. The challenge for Tiffany is to find growth that doesn’t require new real estate investments but retaining the brand’s exclusivity and prestige image. That's why they did this deal with Swiss watch giants Swatch. I think the idea is to design and produce an extensive collection of watches under the Tiffany brand. and to be distributed beyond Tiffany's boutiques.  They do carry a small watch collection and mostly are on the high end. Is this a smart move (if so what is the strategy behind it) or a deprecate attempt to create new revenue stream at the expense of diluting the Tiffany brand? I think this is a smart strategy and will be a key part of Tiffany’s growth strategy.

Saving Your "Zombie Brands" ?

This is what I hate most, checked online making sure flights are on schedule and only discovered when you get to the airport that it was cancelled. Wonder if the system allows them to send those update to passengers through cell phones. That way I can turn around and drive home.  Anyway this has been a productive week.  If I can keep my travelling to three days a week that’s pretty good, I do need to spend more time at the office.

I have not been written much on brands since our Advanced Branding Masterclass so I thought maybe I should start that dialogue.

“Zombie Brands”, “Dinosaurs Brands”, “Ghost Brands” or “Graveyard Brands”, these are names that people use to call brands that have either customers have completely abandoned or simply hanging in there (often on the bottom shelf or only showing up occasionally in 99cents stores or Costco in totally unrelated product category). Some of them gone through some revitalization efforts that were unsuccessfully and some ended up existing only in some emerging markets. Others have simply lost their relevance in their core market place (Xerox, Oldsmobile) and the brands are used casually on products that are totally outside their product categories (Teac, RCA, Polaroid etc.).

If you happen to own one a “Zombie Brand”, what can you do? You have the following options: 1/ Invest and attempt to revitalize it, 2/ Milk it, 3/ Position it for the emerging market 4) Sell it for whatever it’s worth, or 5/ Dump it. People who have special relationships often have sentimental reasons to give them a second chance.  The cost and risk of bringing a brand back to live is enormous and what is needed to make sure the decision is based on sound logic. If you run a large portfolio, the question will be, “Which brands are worth the revitalization effort?” and “Why?”

Many b-school case studies have been written about of how brands were “brought back from the graveyard.” Unfortunately, however, the lessons are often so idiosyncratic. There 100X more cases where companies tried revitalizing old brands, hiring new advertising agencies and throwing endless amounts of money in advertising hoping to rebuild a great brand even when if there wasn't a relevant product or service or a sound business strategy behind the it. First question is ask is how bad your situation is and here are the three most common ones:

My Brand Is Sick. Market changes direction and the brand become irrelevant. Everyone used to understand what the brand means and they all stick to it -- advertising to product design to promotions -- and they believe it all connects to something larger and more enduring. Until one day they woke up and realize there was a big disconnect. Your brand is stuck in the past. In another word, your brand is IRREVELANT.

My Brand Is Dying. The brand is becoming boring. It doesn't create excitement for the customers or even employees anymore. Younger customers think of us as their Parents’ brand. This is quite common for brands that have made their successes and achieved market leadership. This is in fact the result of being too successful. Remember every business success laid the seeds for business failures. Don’t remember who said this. In another word, your brand lacks customer ENGAGEMENT.

My Brand Has No Vital Signs. Or it’s just a walking dead. You ignore your brand for way too long, or simply let it ride for too long, and at some point, it just expires. Every drop of goodwill has been squeezed out. It loses all of its mystic, energy, its power to capture your customers' or even your own imagination. In another word, you brand has been reduced to just a LOGO.

The interesting question is can social media save the "Zombie Brands"? The Social Media Generation has phenomenal impact over determining the fate of brands. These digital communities are vocal, active and mobile. They would share their joy, anger and frustration of their daily experiences with friends and anybody. These web 2.0 tools that allow continuous and immediate connectedness at all hours and regardless of location and geography. Brand Communities are formed as a result of the connectivity. What is a brand community? A brand community is a brand-centered, non‐geographically bound community, based on a structured set of social relations among admirers of a brand. These brand communities include four core markers of community:

- Shared hobbies and interests

- Shared consciousness

- Shared rituals and traditions

- Shared purposes and destinies

The commercial and mass‐mediated ethos in which these communities are situated affects their character and structure and gives rise to their particularities. This is the most disruptive trend from a brand and marketing perspective. I wrote about the service episodes regarding my Lenovo experience earlier this week, I received responses both from Lenovo and from national publications like the NY Times who is interested in my story. Just as Mark Hopkins (Social Media Specialist from Lenovo) wrote in his email to me “I think write ups like yours are actually very constructive to the long term decision making of global companies. Creating tangible evidence of marketplace damage, in a visible fashion helps to sharpen focus on the customer at all levels. Thanks to the web, visibility to customer experiences is no longer geographically limited.”

A customer community has now become the collective “sources of truth” for brands. It is also a possible cure for "Zombie Brands".

(Photo: Toronto Annual Zombie Walk- a group of some 200 Torontonians setting the Guinness World Record for the Largest Performance of "Thriller" - in full zombie ensemble.)

Who Would Microsoft Send To Run Yahoo!

I was talking to my investment banker buddies about the Microsoft deal. If Microhoo proceeds as planned, what would happen to Yahoo?  Would they want to keep the company seperate or bring it closer? What platform will be used across the two? I have no doubt that Redmond will send in the generals as soon as the deal is closed and Jerry may or may not have a non-executive role.  I think there’s a 80% chance that he will leave in less than 6 months. They don’t see him as a corporate person and there’s big culture differences. So who would Ballmer send in?

They probably won’t bring in someone from outside, in my opinion is the three top candidates would be Kevin Johnson, president of platforms and services; Brian McAndrews, SVP, advertiser and publisher solutions group and Steve Berkowitz, SVP, online services group. Not in any particular order. I think Merkowitz stands a hslightly igher chance.  I am hearing stories that some of them are actively lobbying for the job.

Berkowitz seems like a strong candidate. He is currently responsible for the marketing, sales and business development of Microsoft's online services, including MSN.com and Windows Live. Prior to Microsoft, Berkowitz was chief executive of Ask.com and has been credited for its turnaround.

A few weeks back there's stories that McAndrews circulated a note to shareholders, touting his success in integrating aQuantive into Microsoft and outlining plans for search, video and mobile adv at Microsoft. He is selling his vision of how integration should happen between the two companies. McAndrews currently reports directly to Kevin Johnson.

i guess we will see more lobbying in weeks ahead.  Hey I want to run Yahoo too.