by Adam Hartung | Apr 14, 2009 | Books, Current Affairs, Disruptions, General, In the Rapids, Innovation, Leadership, Lifecycle
Last week I blogged about how Segway and GM were taking all the wrong steps in launching the PUMA. Today let me explain why Amazon is the mirror image – doing the launch of Kindle correctly. Kindle is the new "electronic book" from Amazon which allows people to download whole books, or parts of books, onto a very small, light and thin device where they can read the material, notate it and even convert it to audio. Even Marketwatch.com is bullish in its overview of the product "Amazon's Kindle, e-books are future of reading."
Firstly, Amazon recognized it had a Disruptive innovation and didn't pretend this was a small variation on printed material. Perhaps "over the top" a bit with the PR, Mr. Bezos called Kindle the biggest revolution in reading since Gutenberg invented the printing press. This bold claim causes people to realize that Kindle is something very different than anything prior. Which it is. Kindle is not like reading on a PC, nor is it like reading a book, nor is it like reading a magazine or newspaper (should you download those). It's different, and it requires buyers change their habits. By highlighting the uniqueness of the product Amazon doesn't undersell the fact that users really do have to change to enjoy the product.
Secondly, the product isn't being run through some high volume distribution that will struggle with the uniqueness and potentially low initial volumes. Amazon isn't trying to sell the product today at Best Buy or Wal-Mart, which would demand instant volume in the millions supported by huge ad spending. Something which would not only be expensive, but probably would not meet those retail expectations. Instead, Amazon is selling the product itself and closely monitoring volumes.
Thirdly, Amazon isn't pushing Kindle as a product for everybody. At least not yet. Amazon isn't offering Kindle for $20, losing a huge amount of money, and saying everyone needs one – which would likely lead to many people buying a Kindle, deciding its not for them, and then throwing it away to wait a very long time before a repurchase – with lots of negative comments. Instead, Amazon prices Kindle at $359 and targets the product at early users who will really benefit. Like the heavy volume book reader. This allows Amazon to build a base of initial users who will use the product and provide feedback to Amazon about how to modify the product to make it even more valuable. Amazon can cycle through the learning experience with users to adapt and develop the product for a future mass market.
Fourthly, the Kindle doesn't come with 30 options to test. It has just a few. This allows Amazon to learn what works. And add functionality in a way that tests the product. Amazon can add features, but it can also drop them.
Will Kindle be the next MP3 device. Probably. How long will it take? Probably not as long as people think. Because Amazon is introducing this innovation correctly. Publishers, authors, book readers and other application users are all learning together. And while traditional paper publishers (from books to newspapers) are waiting to see, Amazon is preparing its new products to "jump the curve" on these old publishers. It's not hard to imagine in 3 or 4 years how authors might go straight to Amazon with their writing, for publication as a Kindle-only product. This would be incredibly cheap, and open the market for many more authors (books or periodicals) than have access today. Since the cost of reading drops precipitiously (due to no paper) the pricing of these new books and periodicals may well be a few dollars, or even less than a dollar. Thus exploding the market for books the way the internet has exploded the market for short-form blog writers.
Even in a recession, people look for new solutions. But capturing those new customers takes careful understanding of how to reach them. You can't act like Segway and dump a strange new product onto users with mass distribution and a PR highlight reel. You have to recognize that Disruptive innovations take better planning. You have to find early customers who will enter White Space with you to test new products, and provide feedback so you both can learn. You have to be honest about your Disruptive approach, and use it to figure out what the big value is – not guess. And you have to be willing to take a few months (or years) to get it right before declaring your readiness for mass market techniques.
Amazon did this when it launched on-line book selling. It didn't sell all books initially, it mostly sold things not on retailers shelves. It didn't sell to everyone, just those looking for certain books. And it learned what people wanted, as well as how to supply, on its journey to Disrupt book retailling – later about all retailing – and build itself in to the model for on-line mass retail. Following that same approach is serving Amazon well, and portends very good things for Kindle's success.
by Adam Hartung | Dec 18, 2005 | Books
If you haven’t read it yet, I strongly encourage you to read The World is Flat by Thomas Friedman.
Too many of us get up every day and do our jobs without looking just beyond the horizon. Yet, what’s over there is available for us to see if we will just take the time to look. Thomas Friedman gives us a great look at what the future holds by examining the existing trends and what promotes those trends.
Those who are Locked-in to old Success Formulas may choose to disregard this book. That would be a mistake. Every company in America and Europe – and increasingly developed Asia – will find themselves Challenged (if not already so) by the emergence of new competitirs in the developing world. These competitors don’t survive just on low labor rates, but by finding new ways to compete. These new competitors aren’t Locked-in to old processes. They are busy upsetting existing competitive Lock-in and creating new Success Formulas. They are succeeding by targeting the Lock-in of existing competitors. Targeting you.
Let The World is Flat get you "Outside the Box." Then think —- think about what you’ll have to do to succeed in this rapidly changing competitive landscape.
by Adam Hartung | Sep 6, 2005 | Books, Defend & Extend, General, Lifecycle, Lock-in
There’s a new book out that’s well worth reading. Bait and Switch by Barbara Ehrenreich. There’s a great review (in case you don’t have time to read the whole book right now) In the Chicago Tribune by a University of Chicago Professor of history – Eric Arnesen.
Barbara’s thesis is pretty simple – there are a lot of white collar people unemployed and underemployed. So, as a quasi-anthropologist/journalist she faked up a resume, joined some networking groups and went job hunting. What she found is all too familiar to those struggling with white collar unemployment, and simultaneously insightful.
Barbara learned that unemployed and underemployed people tend to blame themselves for their difficulties. As if they simply didn’t work hard enough, try hard enough and diligently pursue all possibilities. Likewise, the herds of advisors in network groups, outplacement firms, job counselors and authors all put the blame for the unemployed squarely on those without good jobs and looking. Lots of advice is "more, better, faster – and consider making yourself cheaper." The same sort of lousy advice that gets businesses with broken Success Formulas into deeper trouble (and failure).
What Barbara also points out is that this answer is….. well…… insufficient. The economy has changed. The work world isn’t like we were promised in school. Globalization of skills, rapid "boom to bust" lifecycles of companies and wicked swings in market shares have made employment opportunities shorter and underemployment a fact of life. Much of what people are suffering through isn’t caused by them – but rather by a change in the working environment in which we all participate.
I regularly speak to networking groups. I find the same phenomenon Barbara describes. People searching for their "last job", rather than the "next job." Individuals become locked-in to a personal Success Formula developed early in their careers, and they keep trying to find a way to make that Success Formula work. But it won’t. The world has changed. What’s needed isn’t "the old jobs" but rather for those who are looking to realize they really have to change what they are looking for, how they are looking for it and often their own primary strengths. They have to compete in this new, transparent "information economy." And that requires a personal implementation of The Phoenix Principle.
Those who will continue to succeed will be able to understand that the employment market has changed. They must recognize their lock-in to old notions, and they must attack that lock-in so they can open doors to new approaches for developing their careers. They need to disrupt themselves, internally, and create personal White Space in order to find new search processes and improve those strengths which are valuable in today’s job marketplace. The Phoenix Principle doesn’t just apply to industries and companies that lock-in to old competitive structures – but to individuals as well.
Give Barbara’s book a read. And then think about what it will take for you to stop trying to Defend & Extend your career, and instead grow into a whole new set of opportunities. We all have to face the fact that retirement age is being pushed higher and higher, and thus we’ll all have to work longer. We might as well enjoy it – and that means modifying our Success Formulas to fit the working world of the future.
by Adam Hartung | Apr 18, 2005 | Books, Disruptions, General, In the Rapids, Innovation, Leadership, Lifecycle
I wrote recently that IBM looked like an elephant that could continue to dance (taking off on the title of Lou Gerstner’s book about his days at IBM.) Shortly after that, IBM announced quarterly earnings and its stock accelerated a 2005 decline. A fair question might be "would I like to retract my earlier BLOG?"
Definitely not! Yes, IBM missed its earnings projection by $05/share. Right; a nickel. That was about 6% lower than expected but a nickel higher than last year. The stock sold off like you’d think they’d announced a quarterly loss – falling about 10%. From its peak at the beginning of 2005, the stock is down about 25%.
Over the long term, the markets are efficient. But in the short-tem — well it’s anyone’s guess. Not even the famed Peter Lynch could make money timing a market. What makes money long-term is finding companies that can sustain success (read the latest great book on long-term investing by Jeremy Siegel for more info.)
IBM is taking actions to continue sustaining its success. The stock might be volatile, both up and down, along the way. But few make money trading stocks. The way to riches in a creatively destructive world is finding companies that can sustain success. Since its turnaround in the 1990s IBM has regained its ability to disrupt itself and demonstrate the characteistics of a long-tem sustained growth company.
If you want a portfolio of long-term winners I would say that IBM is a company worth considering. Even moreso today.
by Adam Hartung | Apr 8, 2005 | Books, Defend & Extend, Disruptions, In the Swamp, Leadership, Lock-in
Hewlett Packard has been having a tough time the last 5 years. As reported in Business Week, most analysts realized in 2004 that HP had stalled. The HP printer business was the only unit making money, and growth was weak as resources were being poured into the faltering PC/server business — which was not helped by the Compaq acquisition.
Jim Collins did a great job of describing the decades of early success at HP in Built to Last. The HP Way gave work teams permission to create new solutions and pushed the decision making, as well as resources, as low as possible. Great innovation was the result, and years of prosperity.
But with the acquisition of Compaq HP definitely lost its Way. Decision making moved up, often to the CEO. As HP adopted the Compaq Success Formula in its effort to grow PC sales management found itself focused on Defend & Extend management practices like budget slashing, R&D reductions, new product cuts and layoffs (over 17,000 since 2002). This was not the HP Way, and business results went from bad to worse.
Now some are calling for the new CEO to even more aggressively pursue cost cutting and layoffs. To "execute – then strategize." That surely won’t turn around HP. What’s needed is unleashing the innovation amongst those thousands of silicon valley employees. What’s needed isn’t price slashing, but new products, new markets and new competitive models to deal with Dell. HP needs to go back to creating and managing those high performance White Space teams that made it great.
Changing leaders at HP certainly provides a pattern interrupt to the business. If he takes the popular route with analysts, and executes more disturbances like his predecessor, he can expect to continue the string of results below expectations. Instead, HP’s new CEO needs to follow through with effective disruptions that create White Space and returns HP to the HP Way.
by Adam Hartung | Mar 15, 2005 | Books
C.K. Prahalad is a colleague of Adam’s. His most recent book The Future of Competition is going to be highlighted March 30, 2005 at a University of Michigan symposium on experience co-creation. The university is launching its co-creation center. Good luck to Professor Ramaswamy on his efforts to get more businesses to incorporate customers in the marketing process!!
Ramaswamy and Prahalad use the same facts about business troubles as we use. They then use these facts as a burning platform to say businesses need to change their approach to marketing. They recommend bringing customers into the marketing process – co-creating products, distribution, promotion and pricing with customers. Overall, the act of co-creation is undoubtedly a good thing. I think better competitors already recognize the need for co-creation, and some are beginning to adopt such activity.
My speaking experience confirms that these facts are easily absorbed and agreed to by audiences. Unfortunately too often these facts are not "compelling" to people. The facts do not create a great enough sense of fear to cause people to change. Despite the ominous predicted outcomes (and they are ominous), reciting the facts does not create a Disruption (pattern interrupt) for people. The fact that businesses are in trouble is accepted. People seem willing to live with a disquieted concern while continuing past practices. In order to consider change, audiences want to know what to do about it. And here the co-creation authors say "go undertake experience co-creation."
As good as this idea is, it seems to me the authors have underestimated the organizational challenges faced when implementing a transformation of the magnitude they propose. We would recommend the authors augment their recommendations with more about how companies will change their embedded process, which (after all) was built upon past success. Our fear is that existing organizational Lock-in will keep organizations from embracing the next practice of experience co-creation.
It would seem to us that the only way experience co-creation can be implemented is if people incorporate it into their Success Formulas, and accomplishing that requires starting the effort in White Space and then migrating the organization toward these new processes. Our experiences would indicate that for most companies existing processes will be totally effective roadblocks to any organization actually attempting to implement this powerful new approach.
Overall, what these authors want readers to do is clear, but we would recommend they more powerfully explain the re-invention gap which exists between what companies do (from a traditional firm-centric vantage) and what would be more successful (a robust two-way dialogue with customers) in sufficient detail to drive leaders toward undertaking a disruption (pattern interrupt). Our case work has shown that only after this challenge-based disruption can White Space for these ideas take root. It’s unclear from this book exactly what these authors would have companies do to implement, but we would observe that simply attempting to change existing processes to incorporate co-creation is extremely unlikely to work.
Our work indicates that readers who want to fully capitalize on the promise of experiece co-creation can increase markedly the odds of a big win if they apply co-creation to White Space projects which can operate freed from existing Lock-in and thus develop a new Success Formula built on co-creation. These new Success Formulas forged in White Space can then act as magnets for the existing organization to migrate toward a more customer-centric approach to marketing. The co-creation idea is clever, and combined with our approach using disruption and white space can have tremendously beneficial impact – quickly.
by Adam Hartung | Mar 8, 2005 | Books, Disruptions, Leadership, Lock-in
On February 11, 2005 BusinessWeek printed an article by the President of an ad agency specializing in small-budget clients. The article said that a survey of 400 companies indicated growth stalls were caused by external factors, but that overcoming these stalls was up to internal company dynamics.
Adam wrote to BusinessWeek in an effort to overcome this traditional, but wrong interpretation. The solution to growth stalls is not found in an internal analysis and improvement in operations. Rather, it requires understanding the use of White Space in order to develop new Success Formulas which can overcome the market challenges and simultaneously address existing Lock-In which got the enterprise in trouble in the first place.
Read the letter by clicking here
