« August 2005 | Main | October 2005 »
September 27, 2005
Empathy extension
OK, gentlemen, here's a web site just for you! A new flower delivery service http://www.SaveMyAss.com which will remind you when it's time to send a bouquet for a special occasion (or perhaps what you hope might be a special occasion). What will they think of next?
Posted by Rita at 02:50 AM | Comments (0) | TrackBack
Dubai's winning strategy
I'm just back from a most amazing visit to Dubai, where I learned a thing or two about how strategic a government can be. Dubai's leaders have figured out how to make the place attractive for business, despite the fact that it's historical major industry was -- guess this -- pearl diving!
Among the things they got right were plans for their National airline, Emirates. I took Emirates to Dubai and it was fascinating. Emirates has figured out that it's about 8 hours from many major markets, and is making great progress connecting them - for instance, connecting Europe and parts of China.
Moreover, Dubai's brand new airport features 24/7 service, which among other things allows it to run its planes for 3 hours more per day than competing airlines, a huge advantage in a capital-intensive market. Beyond the airline, Dubai is studded with awe-inspiring office buildings and hotels, and I'm told that they are setting up their own stock exchange. Not bad for a place that not too long ago was in the middle of nowhere.
Posted by Rita at 02:47 AM | Comments (0) | TrackBack
September 18, 2005
Air Miles Protection - Second Order
Well, here's one I'd never have thought of. I just got a note from American Express offering me airmiles protection. It turns out that some bright spark over there must have figured out that with bankruptcy looming, frequent travelers might be concerned about losing accumulated frequent flyer miles. So, for $5.40 per month, you can sign up to protect up to 60,000 miles. There are a few basic problems with this offer, however...
Firstly, they don't actually guarantee miles. Instead, you get a 'credit' of $50 for every 3,500 miles you choose to redeem. So for a round-trip to Europe, say, which would take about 40,000 miles, you'll get back a grant total of $571, hardly what you'd get if you took the miles and used them for travel. Secondly, they only offer to 'protect' 60,000 miles. For most airline programs that I work with, it takes 40,000 miles or more to do much of anything - so the guarantee is not going to protect the truly massive mile accumulations that make exciting trips to Hawaii or Timbuktu possible.
Still, I bet someone will go for it. Probably the same people who buy those extended service plans for household appliances that will be replaced within 3 years anyway...
Posted by Rita at 02:21 PM | Comments (0) | TrackBack
September 17, 2005
Choosing a mobile phone plan small business
I made these suggestions in response to a reporters' inquiry on picking a mobile phone for small business:
First and foremost for a small business is coverage. Even today, most providers in the U.S. offer shockingly poor coverage. Thus, small businesspeople should take advantage of the first-month-free trials that many providers offer and test the phones’ coverage in the areas that the phones will actually be used. It doesn’t matter how cheap the service is, if the calls don’t connect it’s useless. Worse still, if you find calls from customers getting dropped or failing to connect your poor phone service can be what we call an “enrager” in our book.
Once you have found a provider that offers decent coverage in your area, the next consideration will involve the price they are asking you to pay for the services you will actually use. Here is where a lot of small businesspeople make a huge mistake, in getting more features or options than they really need, pushed by the desire of the operators to generate revenue from more minutes. So if you think you will be calling mostly locally, why do you need a nationwide plan? If your calls will occur between specific times, why do you need free minutes at other points of time? Are you really going to use the fancy (and expensive) add ons that providers would like you to pay for?
Some specific options that are useful for a small business person include various push-to-talk plans (free between phones that are on the same providers’ network), SMS and instant messaging, and in some cases on-the-go email to connect field staff. If you travel internationally, a tri-band phone that can work in other countries can be useful.
Blackberries and similar technologies can be a blessing and a curse – consider carefully how much of your precious time you want to spend fiddling with the ‘blackberry prayer’ before signing up.
Of course, a question I would ask is whether as a small businessperson you need a traditional mobile phone at all – increasingly, VOIP (voice over Internet Protocol) services such as Skype, Vonage and Net2Phone are offering far cheaper alternatives. No small businessperson should overlook these services, at least to complement the conventional mobile phones when it is feasible to use them.
In fact, the line between traditional land-line phones and the VOIP networks are blurring, which leads to my final tip: Don’t just look at your mobile phone usage as a small businessperson, look at the whole communication package you need. It may well be that the most cost-effective solution is a combination of a VOIP network and a wireless handset connecting it.
Posted by Rita at 03:12 PM | Comments (0) | TrackBack
September 15, 2005
A Smarter Economy
Our colleague, Walter Derzko, an avid student of new business development, is writing a book about a major category of MarketBuster move, which occurs when seemingly ordinary products get 'smart'. From things like leaves to cement, smarts can show up in unexpected places with unexpected consequences.
Walter's blog on the smart economy http://smarteconomy.typepad.com/ promises interesting visiting.
Posted by Rita at 03:21 PM | Comments (0) | TrackBack
September 12, 2005
iPhone for positioning?
Is Steve Jobs playing the options game? In our book 'The Entrepreneurial Mindset' we argued that uncertain ventures could be treated as the real asset equivalent of financial options, building on a lot of great work done in finance. One type of option, which we call a 'positioning option' is most appropriate when the primary uncertainties are technical, or outside your control. Examples include when some new breakthrough is needed to develop a market, or when you are waiting for a standard to emerge.
So what do you think of this description of Apple's move into music phones, printed in this week's Business Week?
"...it looks like Jobs is making a careful gamble. He doesn't want the music-phone market to soar, at least not right away. That could cut into his iPod franchise, the source of almost all his revenue and profit growth. At the same time, he knows the mobile-phone market could be tremendously important for digital music in the future. So he's positioning Apple to be readcy for a sales boom without leading the charge himself...Jobs, in other words, seems to be trying to define the music phone to his advantage."
Well, will it work? Apple has gotten into trouble before with proprietary standards, and if I were Zander of Motorola, this might be of some concern. On the other hand, wouldn't it be cool to have a mobile phone with the intuitive and straightforward interface of an iPod?
Posted by Rita at 01:51 PM | Comments (1) | TrackBack
September 11, 2005
Framing at HP
I read this excerpt from a story about Mark Hurd (new CEO of HP) with great interest. It reflects exactly the power of 'framing' which is setting forth the parameters for your future business, even if you don't know exactly what the future will hold. We write about this idea in the 'Entrepreneurial Mindset'.
From an article by Peter Burrows, September 12, 2005:
One of his first moves after arriving at HP was to work with his team to set the financial targets they think the company should hit by 2008. From there, he and his lieutenants worked backwards and laid out the metrics for each segment of the company. Those calculations helped them arrive at the 14,500 layoff figure and determine that HP can sustain the $3.5 billion-a-year RD budget they want. With a specific goal three years out, “you can start thinking about the future with a little less emotion and a little more analytics,” he (Mark Hurd) says.
Posted by Rita at 03:51 PM | Comments (0) | TrackBack
Alienware computers - the saga continues
Well, the computers arrived this past week. They got here when I was in Finland, so by the time I got home there was a smoking mound of packaging occupying the entire dining room, and puzzled consternation from the teens, who evidently had decided to forge on ahead and install everything themselves.
Well, I have to say that the looks of the devices were a big disappointment. Although the towers themselves were colored, as promised, all the peripherals are your standard computer silver and black, including the monitor. And the machines are HUGE.
I suppose to contain all that horsepower they perhaps have to be big. They do have very cool blue lights that go on when the machine is working, but they also have a massive exhaust array and run very hot. The set up also seems to have done something to our home network which will necessitate a call to the trusty computer guys to come and sort things out again. I am still wondering why I paid the kind of money I paid for these machines, given what we've now learned. At the same time, I think consumption exhaustion has set in - I'm thoroughly sick of talking about computers for the teens! And both say they are happy, so I guess we'll get the network up and running again and go with the flow.
Let this be a warning to those of you thinking of buying Alienware - the computers basically look like everybody else's, except for the towers.
Posted by Rita at 01:15 PM | Comments (0) | TrackBack
Telecommunications - missed opportunities
I have long thought that the mobile telecommunications industry has left out several vital segments from their market. By making handsets and other devices that are increasingly smaller, more fiddly and laden with features, they are in effect disenfranchising huge numbers of people from ever being able to effectively use their products. Why is it inconceivable to make a simplified, easy-to-use phone with an big, clear display, large simple keys and an intuitive way to work it? Such phones could be targeted at the elderly, technological neophytes - even technophobes! - and children.
My whining has finally been mirrored publicly - in a recent Business Week article (Stephen H. Wildstrom - 'Kinder, Gentler Cell Phones' in the September 19, 2005 isssue - page 24) Business week's tech writer also laments the fact that complexity is on the increase in mobile phones. Stunningly, the best solution to complexity that a tech writer for one of America's leading business publications can suggest is a phone designed to make emergency calls for very young children (the Firefly mobile handset) or to go and buy a used phone created before companies introduced a lot of the bells and whistles that make today's products so complicated.
So why does a whole industry neglect to serve people who have a different appetite for technology than the mainstream? Part of the answer was explained to me last week in Finland. Operators, note one of my Nokia contacts, dictate what features they require in their phones. One global player has 714 required features, another over 800! So even if the hardware manufacturers want to introduce a simpler phone, they are pushed by their primary customers to offer complicated features, most likely because operators believe that these will drive increased services revenue. I wonder if anyone has bothered to do a cost-benefit analysis of making handsets that would bring new customers hungry for simplicity into the market, as opposed ot making complicated phones. Now that would be MarketBusting thinking!
Posted by Rita at 01:00 PM | Comments (0) | TrackBack
Telecom - coming industry shift?
Just back from a trip to Finland - the land of saunas, reindeer and telecommunications. While there had a number of fascinating conversations with those in the know about telecommunications. Clearly, the current industry configuration (with hardware folks being dictated to by operators who in turn do most of the customer relationship work) is going to change. Companies like Skype (eBay reported to be considering a $3 billion bid!) and Vonage are making voice over IP a reality, cutting out the operators' lucrative long-distance and roaming business.
The dilemma for the hardware guys is that even if they see this change coming, they have to move carefully. Experiment too much with alternatives to the operator channel and your main customers of today get really ticked off. Fail to experiment and come up with offerings in that space, and all you do is leave the door open to future competition who will be much stronger for lack of initial competition when the industry finally does shift over.
This is clearly going to call for novel thinking. So what about a JV WITH an operator to help both parties discover where the opportunities might lie? Or innovating with a non-operator model in places where they don't have any business today, or where the business is so heavily regulated that they won't get upset. Come to think of it, why not innovate around low-end markets in places like the one I wrote about earlier in which theft of copper for tourist trinkets is making land-lines unreliable and creating demand for mobile solutions.
Posted by Rita at 12:50 PM | Comments (0) | TrackBack
September 03, 2005
Student Ratings get creative
This one is just for fun - it's the rating scale Mac's students proposed he use for readings in his entrepreneurship course:
Rating / Rating description
1 / Mac, this was horrible. I feel dumber for reading it. Please send replacement brain cells to my home address
2 / I just didn't like it or get it Mac. Maybe a couple more martinis would have helped
3 / I could take it or leave it. Literally. But I've already paid for it so I guess I'll keep it
4 / Really good stuff Mac. I feel smarter for reading it. Wow, so this is what the fuss is about
5 / This was a BrainBuster of a reading! This changed my life, or at least how I think about it. Please staple to my diploma
Posted by Rita at 03:55 PM | Comments (0) | TrackBack
Global gamesmanship-student comments
The following were remarks made on our article 'global gamesmanship' by entrepreneurship students at the Wharton School.
Global Gamesmanship” by Ian C. MacMillan, Alexander B. van Putten, and Rita Gunther McGrath
This reading was extremely helpful. This reading offered us a useful framework to think about how to position our product to take on established incumbents. While many business texts glibly admonish innovators to “strike at the weak spots” or “find the Achilles heel,” their advice seldom extends beyond these platitudes or bothers to explain exactly how to identify these product areas beyond well-intended advice to “think outside the box.”
The model in this reading, in contrast, helped us (1) to map out the competitive space, (2) to locate market segments that we could safely enter without directly raising the full force of our competitors’ ire, and (3) to select a competitive engagement strategy. In mapping the competitive space, we considered both our product’s attractiveness and incumbent providers’ reactiveness, in addition to market clout. When considering such arenas to enter, it is an all-too-common error to overlook competitive response to your proposed activity. The framework provided in this reading, however, forced us to keep a competitive focus in mind as we pressed forward.
In considering our market entry strategy, the guerilla campaign framework described the perfect model to follow. In the consumer residential market segment, we realized that a large host of competitors stood ready to pounce if we entered. For that reason, we looked at arenas with less pronounced reactiveness as opportunities to enter somewhat surreptitiously. With early product successes, decreasing unit manufacturing costs, and improved operations, we recognized that we would be better positioned to subsequently expand in a niche-by-niche strategy—always having the safety of the established market niche to fall back on.
Beyond our current project, this reading will prove extremely useful in our careers going forward, in that—when admonished by well-paid consultants to “think outside the box”—it will help us to decide where and how to do so. This will further directly benefit the consultant since we will be able to overcome our initial impulse to send him/her out to sea on an ice floe.
To get the article, click on http://www.hbsp.harvard.edu Click on the link and search for the title.
Posted by Rita at 03:51 PM | Comments (0) | TrackBack
Sorrow for New Orleans
Although there's not much I have to add, it seems only human to acknowledge the devastation.
Posted by Rita at 03:50 PM | Comments (0) | TrackBack
September 02, 2005
Myopia in the digital conversion?
Here's a little factoid I thought was fascinating: Experts suggest that the number of television sets in the world is around 1.6 billion, with another 700 million PC's in the world. As many of older TV's, which are analog, fall victim to the same sort of thing that's going on in my household ("digital TV, dude, you've got to see it!") they are due to be replaced. So who will win in the move to capitalize on that? Interestingly, I'd predict two possible scenarios: a few key players (such as Dell) become the go to guys for digital sets, leveraging their hard won supply chain muscle and distribution expertise. The other, more depressing scenario from
a business point of view is what some colleagues of mine dubbed "Capital Market Myopia". This refers to individual inability to see the broader implications of collective action. In the TV case, it's highly likely that hundreds of new entrants (some of whom you haven't heard of as this is being written) go chasing after "just 5% market share" in this booming convergence market. In a desperate bid to be among the last players standing, participants in these kinds of markets undercut one another, train their customers to be extremely price-conscious and in general wind up when the dust has settled with a much less attractive prize than they one they thought they were fighting for.
Interested in more factoids on TV's? Visit this web page - very intriguing: http://www.tvhistory.tv/facts-stats.htm
Posted by Rita at 02:38 AM | Comments (0) | TrackBack
Servigistics Inc Key Metrics Play
How's this for a pure key metrics play? Atlanta-based Servigistics, Inc http://www.servigistics.com/has figured out that for companies who provide repair or maintenance services to their customers, keeping track of all the parts involved can be a major headache. The 6 year old company has capitalized on the desires of its customers (such as Subaru, Sun Microsystems, Honeywell, Maytag and GM) to create optimization routines that make sure they have the right parts in the right places, without tying up excessive cost in inventory or other.
Phone services provider, Avaya, for instance
used Servigistics' software to radically cut inventory while still seeing what parts are where in its global networks. Here comes the key metrics part: Avaya's fill rate (% of customers's orders filled from stock) above 95% and cut gross parts inventory from $250 million to about $160 million, a drop of 36% (as reported by Business Week, August 1, 2005). The service parts planning software business has grown to become a $140 million business, with a torrid 24% expected growth rate (compare that to the much more lethargic growth at the enterprise resource providers such as SAP). For more commentary, see
Posted by Rita at 01:54 AM | Comments (0) | TrackBack
Biological fuels a good thing? Think second order
Here's another tidbit from my visit to the heartland. Seems that a lot of potential biofuels, such as corn and soybeans, are currently processed for foot consumption or exported for that purpose. So along come our initiatives into renewable energy -- what could possibly be wrong with that? Well, nothing, except that when biofuels become popular, farmers looking for food supply will find themselves in competition with SUV-owners looking for drive supply.
While we don't know yet what this all means, it's pretty clear that such a shift will dramatically reshape industries that haven't changed much in quite a while. So, if you were historically a farmer in the nutrition industry, now you face the prospect of an entirely new category of demand called "energy". My friends tell me that Ethanol now accounts for 12% of the US corn crop. By 2010, they expect it to be between 18-20% of corn crop, and domestic consumption will exceed exports. The provision of domestic energy will then become more important to the corn business than exports. Say you're in the livestock end of the farming business - this has got to be pretty scary from a pricing perspective. I'd be interested in hearing what people think the opportunities that might be created are!
Posted by Rita at 01:36 AM | Comments (0) | TrackBack
Agribusiness value shift
Just back from visiting my colleagues at the Purdue University Center for Agri-Business, where I was teaching in a program on Strategic Decision Making. I always enjoy hearing what they are up to, because although agribusiness affects us all in many ways, most of us don't have a clue how huge, commercialized and almost industrial this sector is. The world of seeds, for instance, has undergone a revolution since Monsanto's introduction of Round Up (a weed killer) created the opportunity for genetically altered seeds called "Round Up Ready" that withstand the chemicals.
What that means is that to keep a field weed-free without destroying the valuable crop, a farmer that has planted Round Up Ready seeds can just spray away. The business side of this shift is fascinating: instead of value in crop management flowing to the guys that make chemicals, the value now flows to the guys that make the sturdy seeds. This has completely changed the economics of the seed business in less than a decade, and driven phenomenal growth in the modified plants.
Posted by Rita at 01:30 AM | Comments (0) | TrackBack
