innovation playground Idris Mootee

What Blockbuster Should Be Watching Now? "Repo Man"? “Die Hard 4" ? May Be Just “A Series of Unfortunate Events”?

It is nice and sunny in SF. have 18 people to interview and 2 other business meetings. So Blockbuster is finally I have been expecting this for 6-7 years and it finally happened - Blockbuster filed for chapter 11. No surprise for many and it doesn’t take a business strategist to tell you no one is driving to a store and rent a DVD. It will cost about 20 shares of Blockbuster to rent one DVD if you do have the share certificates. If you return late you have to provide another 5 shares. May be you will never have any opportunity to return it at all, because the stores closed.

At least they tried to accelerate the death process. How?  An obsolete business model renting DVDs orchestrated an unsolicited $1 billion bid for then a near dealth computer and electronics retail chain. Blockbuster went after Richmond, Va.-based Circuit City in December 2007. There is no benefit of two dying together, other than savings on funeral cost.

How about movie downloading? Yes, they wee talking about a special movie download kiosk that can be placed in stores. But why do you have to go to a store to download? Something is very wrong here. These Blockbuster executives were not sleeping on the wheels, it was not the case that they didn’t see the threats or not acting at all, so what went wrong?

Their business model was under attack by technology innovation as well as low cost competition. $1 a DVD at Redbox or download it somewhere. Yes you can download popcorn, but you can stock a big box at home from Costco. Blockbuster did match its competitors and launched mail-order, Internet, kiosk, and cable distribution, that was a smart move but only when you have their overheads. Your competition did not have the legacies of carrying those hefty retail and operating expenses. Strategic assets suddenly became strategic liability. Cost wise, Blockbuster paid out on average 35-40%of its revenue to Hollywood and Netflix paid under 25% of revenue and Redbox paid even less 20%. How do you compete with them? That’s typical the challenge with established players.

Blockbuster acquired movie download service Movielink a while back, I am guessing it costs them south of 30 mil. Not bad since more than $100 mil was sunk into the company from some big studios building the company, so it was a bargain. Well, depends how you look at it. Movielink has a very broad library of movies, but heavily DRM’ed and the prices were not competitive.

Not only Blockbuster is underthreat, even cable and broadband companies that offer movies are not better. Consumers are all thinking and talking about cutting-the-cord with Netflix, Hulu, and Apple TV are pushing forward closer.

And for many young people, their laptop is their set up box. And the iPads of the world? That $65 to $100 monthly cable bill is looking less and less attractive to many, when Netflix mails discs and streams movies all for $9 a month. Cord-cutting is real and will accelerate particular for the 20-30 year old segments.

What’s the next episode for Blockbuster? The company hopes it can re-emerge a more streamlined entity capable of competing in a digital world. I don’t think they can just copy Netflix, they have to play a “new game” and do what Netflex did to them. Amazon, Google, Apple and some start-ups are all going to offer IP TV and not questions it's going to become ubiquitous. There will be plenty of shareholder value being created and destroyed. Ready for more innovation?

Brand Talk on Love, Sex And Emotion. Marketers Love Drinking Their Kool-Aid.

Can a company/brand create such powerful emotive connections to make customers love them? Your advertising agency will be quick to say yes. I am not sure. I can imagine a few scenarios that it happens but is is very uncommon. Marketers like to convince themselves that you can buy ‘love’ and that’s the ultimate goal for great marketing. What's that book name "Lovemark"?  That's an example of advertisers drinking their own Kool-Aid. Yes, many customers can have a level of enthusiasm because we provide them with a great customer experience, is that love? That’s what I want to write about.

Neurologists suggest that the early stages of love are governed by parts of the brain that are used for goal-seeking and reward, and resembles obsessive-compulsive disorder. Such as the first time you look at an Apple iPhone, a Harley Street Bob, a Hermes Kelley, a Mercedes SL AMG and a Patek Philippe Calatrava.

Here's how our brain works, at the early stage of a romantic relationship sparks activity in dopamine-rich brain regions normally associated with motivation and reward. The intensity is proportion to the activity. Advertising doesn’t make them love your brand; they attract their attention and interest.

The part of our brain associated with emotion, the insular cortex and parts of the anterior cingulate cortex, are not activated until the more mature phases of a relationship. In the context of brand marketing, the emotive connections require consistence good customer experiences including the love and hate. Love happens as a result when the sum total of the interactions that a customer has with a company's products, people, and interfaces reach certain threshold. Starting from the moment when customers purchase a product to the moment when they unwrap the box and sharing their joy with their friends on Facebook.

Here's a myth. Love is not emotion, it is a strategic capability to gain happiness. And love by itself has no object. It is some invisible and unexplainable energy of consciousness sometimes we are not even aware of it. It is beyond form, yet inclusive of form. Love is a capability that can be developed, nurtured and learned. We develop this capability when we were very young. Over the years, we develop the ability to love and care for the other person(s) and sometimes even objects.
Emotion is a different animal. It is feelings (or reactions from our brain activity) that aroused as a result of stimuli. When you see something, you want to touch it, feel it and probably own it. Many people marry for the sake of convenience or benefits. The same way we are loyal to certain brands for the same reasons. Either because there is a lack of choice of simply the product category is of low involvement.

Sex, love and emotion are three different things. In an ideal world, they intersect at certain junction. Sex is not the single manifestation of love (although it can be one of them), regular purchase and consumption of a brand is not a manifestation of love for the same reason. Some people are always under the misconception that the manifestation of love is sex; the manifestation of loyalty is purchase frequency. Yes, it may be. But mostly not.

Take away for you for the weekend, emotion often gets us into trouble but we must recognize them as part of being human and accept them into our consciousness, where they need to be cared for and managed. And that cab be learned.

Have a great weekend and please share your thoughts.

Interaction Design Has An Important Role To Play In Our Future, It Has The Power To Transform Cultures.

There is two articles on IC today, one on Inc. magazine and the other in Globe and Mail. We're getting some good press coverage and we need to continue to make our story heard. In the meantime, we continue onto my journey of building global capabilities. Interaction design (IxD) will be a core focus, and I don't mean just web or mobile interactions. IxD will be one of the most important strategic capability for companies to build meaningful engagement and sustainable differentiation as part of their enterprise level experience strategy.

How would interaction design change in the next 10 years? It is a relatively new area of practice, beyond traditional GUI design or web interface design. Interaction design go beyond just the clicks and links and is becoming an indispensable aspect business design, product design and service design. Interaction design is traditionally define as the study of devices with which a user can interact, in particular computer users or screen related. The practice typically centers on "embedding information technology into the ambient social complexities of the physical world. I think the word 'device' will eventually become irrelevant. I think IxD is about to take on a larger mission -- empowering communities and transforming cultures.

Here's my point of view, traditional industrial design focuses on a product’s form and function, but interaction design requires very different perspectives and approaches for increasingly complex business and design problems. Think media industry, it is transforming itself from a traditional broadcast medium to an interactive one and this change will accelerate faster and faster extending their ubiquity and interactivity to devices, objects and spaces. Rapid technological development is introducing new types of functionality, for example to sense, feel, control, monitor, connect, search, respond and transact for different types of applications.

I am talking about the circle of influence with interaction design. How does interaction design transforms culture; it begins when a small networks of people simply start sharing ideas, feelings, hopes and frustrations etc. and that is when culture emerges. Their behavioral patterns, mindsets, emotional responses as well as aesthetics, rules, norms, and values that are being shared influence culture and as a result produce certain artifacts.

These 'virtual artifacts', through people’s interacting with them, influence cultures and facilitate emergence of new culture. Interactions then become transformative social mechanisms whereby these ‘virtual artifacts’ are made accessible or shareable through networks of communities further facilitating more connecting and sensing, their creations are further linked to specific interactional, locational, cultural and economic context.

The ‘virtuality of our everyday life’ as a result of the interactions powers up new creation and distribution of culture never before in the modern history of mankind. This is where the real disruption is for marketers and media producers. It is hard to distinguish one’s role at the complex juncture of creation/production and consumption in our everyday activities. Interactions of our everyday life take on new meanings. Interaction designer have bigger jobs to do.

My favorite French philosopher Jean Baudrillard (1929-2007) gave us the tools to understand the media society and counteract the total assimilation into capitalist overproduction. Truls Lie finds a previously unpublished interview he made when Baudrillard visited Oslo in 2000. "Disappearing", says Baudrillard, "should be an art form, a seductive way of leaving the world. I believe that part of disappearing is to disappear before you run dry...." An idea for all interaction designers, make sure you include a 'disappear' function in all your designs.

"Corporate Repsonsibility Is An Illusion?" According To Prof Karnani. What Is He Thinking?

This is an argument that will not go away anytime soon. I have had heated debate in our b-school days way back.The question goes back to the core of the modern corporation. What role does business plays in creating value in societies? Or the question should be more about the ‘how’? Among B-schools there are many different point of views on what is a modern corporation.

CSR is becoming a buzzword much as social media. There are many real experts and many wannabes. Why the rush now? Well, the answer is simple, with all those money thrown into advertising whether targeted at institutional or retail investors in WSJ or general public adverting on cable TV, they are almost a total waste of money. Net net, people don’t trust large corporations. Period. This is not even a question of brand value or equity, it is simply difficult for companies to communicate anything—without the trust. Not to mention asking for a price premium.

So how have some companies joined the socially responsible bandwagon? We first launched the Aviva Change Fund 2 years ago with stellar success, followed by Pepsi launching of its Refresh Project. There are many campaigns out there these days and now everyone wants to be like Petagonia. Marriot utilized giving a washer basket from World of Good – a social enterprise helping overseas artisans create more sustainable lives. Liberty Mutual’s campaign with the theme/slogan 'Responsibility'. You have probably seen some of the television spots depicting everyday Americans confronted with a decision to do the “right” thing or “look the other way.” (For full disclosure, Pepsi, Liberty and Aviva are all current clients of Idea Couture).

CMOs are very enthusiastic and are convinced CSR is the answer to customer engagement. The role of CSR in marketing and branding is undeniable and its importance will grow for sure. But what about CSR in business strategy?

I remember in my business school days I had long debates about the role of business in societies. 35 years ago, Milton Friedman wrote a famous article for The NY Times Magazine with title aptly summed up its main point: “The Social Responsibility of Business Is to Increase Its Profits.” The future Nobel laureate in economics had no patience for capitalists who claimed that “business is not concerned ‘merely’ with profit but also with promoting desirable ‘social’ ends; that business has a ‘social conscience’ and takes seriously its responsibilities for providing employment, eliminating discrimination, avoiding pollution and whatever else may be the catchwords of the contemporary crop of reformers.”

I seemed to share the same point of view then but since then my views have changed. I am not a socialist by any definition at all, but I think what is missing is the humanitarian dimension of capitalism. I am not fully convinced that a corporation role of adding value to societies is not just maximizing profits and then perform philanthropies. The order should not be that way; it is not about making tons of money at the expense of the planet and then figure out how to put money in fixing it. This is not how it should work. They need to put people and planet not ahead of profits, but aligned with profits. I believe that the enlightened corporation and CEOS should try to create value for all of its constituencies including investors but not excluding everything else.

I admire companies that make good profits, usually those are the results of continuous innovation, operational efficiencies, strong leadership and great brands and I am not hostile to profits and shareholders. In fact, I believe in relentless pursuit of profits. But I believe good CSR is good for profits.

A recent WSJ report suggested otherwise. Aneel Karnani, a prof at the University of Michigan's Stephen M Ross School of Business, believed the idea that companies have a responsibility to act in the public interest and will profit from doing so is fundamentally flawed.

He argued that CSR is an illusion, and a potentially dangerous one. Very simply, in cases where private profits and public interests are aligned, the idea of corporate social responsibility is irrelevant: Companies that simply do everything they can to boost profits will end up increasing social welfare. In circumstances in which profits and social welfare are in direct opposition, an appeal to corporate social responsibility will almost always be ineffective, because executives are unlikely to act voluntarily in the public interest and against shareholder interests.

I think his views are very narrow and dated. The answer lies in what kind of executives we are breeding today for tomorrow. It is all about maintaining that balance. CSR is an unstoppable movement against the public outcry over corporate malfeasance (you don’t need to agree with me). CSR means building sustainable economic development, sustainable societies and sustainable consumer lifestyles, the collective mission is to rethink and rebuild an economic system that is in balance with the natural world. You can’t have two worlds. Business and the rest.There is only one world.

What Do You Know About The New 3G? Girls, Gaming and Gender. Look Out For The Sony PSG (Playstation For Girls)

Gaming is mainstreaming these days with average gamers over the age of 34 years old that has been playing games for 12 years. The average age of the most frequent game purchaser is 40 years old. Surprised? And many are women.

Social gaming is become a global phenomenon, last year was a breakout year for virtual goods in the US which had been only an Asian thing. The virtual goods industry in Asia generates about $7B a year in revenue, seven times the US, this means major valuation differences between Asia and US with China's nine largest public online game companies valued in the $50B range compared to the top four US companies that are valued in the $22B range. Expect to see continuous growth and new competitors, Apple will eventually join the party, may be 2013.

Many still think gaming is a boy’s things and I think this is worth challenging. Historically speaking, probably yes. Women and video gaming doesn't sound like a fit. In Simone de Beauvoir’s pioneering work (1949) on women, The Second Sex, created impressions of girls at play with their dolls. After the French Revolution then came the eloquent denunciation of housework. Then in the 60s, women in the US pushed liberal feminism that the pre-1914 period never done before. If you looked at the advertising between 1950s and 11960s you will know what I mean. Femininity has come a long way.

There are still a lot of mystique on femininity, these mystique transformed doing housework, bearing children and shopping into almost a religion, a lifestyle many women accept or reject. Consumer ideology continued to reinforce this mystique. Do women like this whole package or it is the ideal lifestyle projected onto them by advertisers and marketers? Did marketers and male media executive try too hard to fool women into paying for a femininity they did not need at all. Or was it a good thing after all? I don't want to get into this debate. But I do have a POV.

No question men like video games. Or there are simply not enough titles that are designed for women? I think women equally like video games. Columbia College Chicago hosted high school girls in a summit focused on gaming and gender equity. What they did was bringing together female game designers and academics to look at the female voice in the digital gaming industry. It is called the 3G Summit, like the name? The Future of Girls, Gaming, and Gender.

It was a four-day event that engaged young women from Chicago-area high schools in a series of discussions about young women’s place in the gaming culture. Video game is rapidly evolving and now delivered over smart phones, iPad and social network sites as part of social connectivity, consumer engagement, and cultural expression.

I think the women’s gaming market is largely untapped. Many games are beginning to look like interactive movies. Where is the equivalent of “Titanic” for video games? I can’t think of any video games that are built around romance. May be the 2008's Prince of Persia, but there's no player involvement, you simply follow the story along and the attempt at non-linearity makes the development of the relationship muddled and mostly nonexistent. I can’t think of a RFG that has a strong romance and sex theme. Here is a screenshot from a sex scene in the God of War.

Sex (not romance) is now part of many popular games, gone are the days when Mario and Luigi were jumping around looking for magic mushrooms. Some video games allow the player character to have sex or romantic relationships with NPCs, wonder how the logics were built behind those romantic relationships. I guess it comes down to enough talking and pick up some good weapons; they will start to like you. I am looking forward to see the first person romantic video game designed by women for women… the PS3 free online feature will proof to be very useful, the age of video gaming romance is here.

What's The Latest Innovation From Credit Card Companies? It Is Time For Them To Do More. We Need To Have Spend Control Mechanism Embedded In Credit Cards.

Credit card fraud continues to be an issue, for banks as well for customers. I remember 15 years ago they tried putting photos on credit cards, I am not sure why they stopped doing that, that seems to be a simple solution to reduce fraud.

Now they are turning to technology to do the job, but often it solves one problem but creates another one. Think about the RFIP credit card, the idea makes sense since all you need to wave your card at the cashier and the chip supplies the card's number and expiry date through radio waves and print our a receipt. There is no opportunity for criminals to copy it since the card remains in your pocket during the purchase.

Many people have concern over the encryption which causes security concern. You can easily set up a gate antenna to scan people’s car when they walk past. The idea is great for small purchase such as cup of coffee or vending machine etc. Take a look at the chip-and-Pin card which has been standard in Asia for years, it is now coming to the US and Canada. Can the PIN solves the problem? I am not sure.

There are more serious problems than frauds in terms of credit card. It should do more than just a spending mechanism. Should we put warning signs on credit cards the same way we do for tobacco? Why not? Let’s talk about the fraud prevention side, a company in the UK has come up with a solution that allowed us to turn off and on a credit card. Yes, a credit card with switch.

The London based CardSwitch Technology has started offering its credit unions under the name of CardLock. There are still some patent issues with Visa who applied for the patent a year later. Basically the product enables cardholders to define their own user limits and prohibitions and turn them on and off.

And then there are cards that have magnetic strips that can be written upon. The two-accounts-in-one card allows user to press a button to switch the card from one account to another. Second, he showed a security-enabled card that kept both the magnetic stripe and the human-readable number on the front of the card obscured until a security code was entered in.

Here is a cool idea, I think we should explore how a credit card needs to be enabled by a cell phone, instead of a PIN, use the cell phone as a PIN. So if someone steal the data on your card but without the cell phone activation, it will not work. This is an easy solution. The cell phone will also allow real time checking on spending and provide summary of spend and warns you about over spending. With a card (and a cell phone), I can view real-time data on my spending (or the spouse of children). Any warning will be posted on my Facebook page and informing both the account holders and the supplementary card users. That's how to make spending social. I like this idea.

The credit card needs to do more than just making itself secured, it should have mechanism to help people who has less self-control. A lot of innovation is needed here and we don’t see enough.

There Is One Thing That Is In Common Between Apple And China. Both Are Unstoppable And Locomotives Of Innovation For The Future.

It is so fascinating that everywhere I go in China this week, people are trying to sell me the Chinese versions of iPhone, iPad and other iThings that Apple has yet invented. I was really interesting to get my hands on the Apple Skin, the nickname of a Chinese original (yes, original, patent cleared) add on device that turned an iTouch into an iPhone but unfortunately they were taken off the market, so I went for an iHaircut instead. Not bad at all, there is really no risk for me here, it is not like buying an iPhone here in China. You never know what you'll get.

One guy showed me how it works; it was working really well when I used it to make a test call. That’s a real innovation that Apple missed. You can make calls and send text with this silicone rubber case with a SIM card slot and a dock connector. It is produced by a start-up Yosion Technology and was selling for RMB 388 (US$57) apiece. The gadget was invented by a 24-year-old Chinese graduate who felt it “inconvenient to have a mobile and an iPod Touch at the same time, and decided to solve the problem himself. We need more people like him.

To make it work for making calls and sending text, users would have to jailbreak their iPods to install Yosion and YsSMS apps. This is innovation Chinese style. I also tried the Chinese 5 inches iPad, pretty good and selling for only RMB600 (US$80) 3G enabled. I was tempted to bring one home for fun.

No one will disagree with me with the statement that Apple is probably the most loved brand by their users, employees, investors and even competitors. It is an innovative powerhouse, a very profitable company and earned itself tremendous market influence. The brand has more clout than BMW or Prada; the retail stores have better economics than a drug store and a market cap surpasses Microsoft. So who do they go from here?

The interesting question arises…what is Apple’s business? Computers? Software? Music? Consumer electronics? Lottery? The lottery business (app stores) is definitely an interesting one, doesn’t matter who wins the lottery, everyone will be paying Apple a fee. To date, iPod, iPhone and iMac are essentially creating a product category and have no competition—at least for now. iPod is not an MP3 Player. iPhone is not just a smartphone, iPad is not an e-reader and iMac is not a desktop PC. How can they do it across three categories?

Another question is how are they planning to extend the iPhone/iTouch/iPad UX platform to others? I don’t like what I am seeing if I am Nintendo’s CEO. And the same for Sony, they got beaten once on music player and can’t afford to be killed on gaming console. A patent application was filed with the U.S. Patent and Trademark Office on a hinged-screen version of Apple's iMac desktop that has a touch-sensitive screen. The hinge appears to allow the computer to alternate between a traditional vertical desktop configuration and a flat, iPad-like surface when rocked back on its hinge. I am not 100% sure if Apple will actually do it or just using the patent to create a barrier for entry. I bet Apple is thinking about a different experience gaming device….iPad is one for many already. So where else would Apple use this touch screen technology? Kitchen? School? Business? Entertainment? Retail? Apple is unstoppable.

If "Design Thinking" Can Power Up Companies, How About "Art"? "Art" Should Not Be Reduced To Something Just For Display. "Art" Is The Soul Of Design.

This is the view from my temporary office. I have received a lot of great feedback from my last post and I guess it is a popular subject. And there are many different point-of-views out there. I want to continue on the subject and this was written on my 18 hour transpacific flight while eating a stack of home made French toast because I can’t stand airline food.

Executives are increasingly convinced that businesses are not merely offering functional devices or products to help customers to get their jobs done, but also visual imagery, customer experiences, user identity and social connectiveness. This new design consciousness is a result of many factors including the commodization of quality manufacturing, proliferation of channels, oversaturation of brands and products and rapidly changing customer expectations. Plus a heightened demand for better aesthetic experience and usability given the increasingly complex interfaces for technology products. Design has (and should) become a critical element within the strategic tool kit for new product development. But it can be useful as part of the business strategy tool kit to create growth.

A question arises here, can art also become a strategic toolkit? “Artistic Thinking” in additional to. “Design Thinking”? How is art different from design? Design is often confused with art; some designs will eventually become art. And some art becomes design. Art is an important force shaping design and design is now becoming an important force shaping business strategy. Is there a connection between art and business? Hey, welcome to the world where everything is complicated.

Is art a state of mind or is design also a state of mind? Art, design and business strategy are about the articulation of an idea and each has different and increasing overlapping tools to help expresses itself and for manifestation. Let’s not talk about the downstream activities of business strategy, design or art. Each one of these has its craft side and toolkit.

People are saying design is important for business today, not many people are saying art is equally important. I think art is equally important for both design and business. Wonder how many of you would agree with me? Part of the reason design is moving upstream is because it is becoming predominant among companies and particularly marketers where the aesthetic/sensorial aspects have become key drivers in differentiation. But the meaning of design should not be reduced to a mere question of just look and appearance. Instead, design needs to be understood as something that powers the entire company. It is viewed more as an attitude that something that is linked producing new ideas from a core set of design-centered beliefs.

Can the same be said about art? Art should not be reduced to be something purely decorative or expressive with no connection (never mind influence) to business strategy. Can art be viewed as something that inspire new perspectives, new experimentation and inspirations for organizations beyond products. Is that a stretch? I am not sure.

Case in point: The Italian company Alessi is a prime example of an “artistic acting” company. Alberto Alessi, head of the company, thinks of Alessi as an applied arts research laboratory. At Alessi, design is viewed as an artistic and poetic discipline, while manufacturing conceives it as a tool for product development and marketing. The process of selecting projects to be prototyped rests with Alberto Alessi. Choices are based largely on his intuitive knowledge of what will appeal to the people. He describes his role as someone who mediates between the most interesting expressions of creativity of our times and the dreams of the consumer.

Apple can probably be classified as the same type of company where intuition is central to the company’s basic innovative processes. If you think about how Apple comes up with new products, it is definitely not a “design thinking” type of company, it is an “artistic thinking” company that relies on intuition and a heavy emphasize on personal expressions.

Someone once points out the paradox on art (the same is said about pornography, no illustrations here sorry) is that art is difficult to explain but easy to recognize. You know it only when you see it. Design is something we can see and touch, art is difficult to be identified. Over 50% of art I’ve seen I would not considered them as art, but other can have exactly the opposite point of view. That is the single biggest distinction between art and design.

And for strategy, 50% of the time you can describe a company’s business strategy by looking at what they do and what they produce or sell, the other 50% of the time you don’t know exactly where a company is going. When a great company (and its brand) touches our deep emotional state, it is only when businesses are to be viewed the same way as a painting or sculpture. They have to be looked upon as an expression of something that the artist experiences and not merely as a functional representation of a real-world product or commercial entity. If you look at companies such as Virgin, Alessi and Apple, these companies are works of art themselves.