Tag archives: Product Development
How can the crowd change your business model?
Posted by Shaun Abrahamson on Tuesday, 23 February 2010
During Social Media Week, we covered lots of crowdsourcing.
Advertising was up early in the week, followed by hardware focused crowdsourcing (like the Rally Fighter) and at the end of the week, crowdsourcing was discussed in the context of the news business. I also had a chance to talk with John Winsor about “the age of abundance in marketing” about the implications of access to talented crowds.
After all this great discussion, I was left with one main question:
How can the crowd change your business model?
I made a first pass at an answer using a framework from Business Model Generation.
I. Key Activities
create something
create the communications about the thing
find other people to create (recruiting)
Questions:
- what activities should we be asking the crowd to help with?
- who exactly is in this crowd? customers? experts?
II. Key Resources
People, financial, intellectual, physical
Questions:
- how many people need to work for us full time? where do the others come from?
- is is possible for us to have all the best skills “in house”?
III. Key Partners
- optimization + economy
- reduction of risk
- acquisition of particular resources and activities
Questions:
- can some of best partners come from the crowd?
- see I
IV. Value Proposition
Questions
- isn’t the crowd well positioned to help with this (assuming they are your customers)?
V. Customer Relationship
Questions
- is co-creation is a good basis for a relationship?
- is ongoing dialog that is not always focused on sales, a good basis for a relationship?
VI. Channels
Questions:
- can the crowd help decide how they can best be reached?
- can the crowd help with: awareness, evaluation, purchase, delivery, after sales (support)?
VII. Cost Structure & Revenue Streams
Questions:
- can the crowd lower cost of resources? (for example if you only work with people as you need them or as they need you)
- can the crowd help to lower cost for specific activities (awareness, support, recruiting, etc)
My initial conclusions:
If you find specific places where the crowd can help and if you choose the right crowd, you have a shot at transforming your business model. Yes, some testing will be required.
If you look at crowdsourcing narrowly as the creation of anything by anyone, you’ll miss the opportunity.
How can the crowd change your business model?
UPDATE: fortunately, ALEXANDER OSTERWALDER, one of the creators of Business Model Generation just helped to answer this question with his post on Social Media on Business Models.
Posted in: Crowdsourcing, Uncategorized | Tagged: advertising, business model generation, Crowdsourcing, Product Development | 3 Comments
How Obama’s Presidential Campaign Can Change the Marketing of Products
Posted by lramella on Tuesday, 20 January 2009
On Inauguration day, it only makes sense to reflect back on how our new leader became President. As is evident, a number of things were remarkable about the 2008 Presidential campaign, and many experts have reported on the adoption and widespread use of technology in determining the final outcome. Few, however, have focused on what the Presidential campaign can teach marketing and PR professionals about effective brand building. Indeed, Barack Obama’s Presidential Campaign, if viewed through a marketing lens, resulted in a perfect two-year “product” launch that created a consistent “slogan” or brand message, an empowered and passionate “consumer” base, and confirmed the importance of extended brand relationships. The Obama team even now has a wealth of consumer information with which to continue to grow the brand in Washington.
When Obama announced his intention to run for President in February 2007, there was little belief that he could actually win even the Democratic nomination. He first had to beat Hillary Clinton for the Democratic ticket, which at the time was viewed as a nearly impossible task. It was akin to Apple taking on the music industry a few years back – everyone knows how that turned out. Obama quickly established a consistent campaign slogan – “Change We Can Believe In” (later slightly altered to “Change We Need”) – and surrounded himself with a loyal team who recited this mantra at every possible moment. This consistent brand message throughout the entire campaign provided both a rallying point for his consumers and an effective counter to his entrenched opponents who argued that he did not have enough experience. It also provided the campaign with a brand “mission (1)” that appealed to their consumers, in sharp contrast to other candidates who changed their mantra with every speech.
In addition, Obama and his team realized more than any prior political campaign in recent history that a grassroots community of consumers could be built through the use of technology. Obama met early on with Mark Zuckerberg, the founder of Facebook, to discuss ways to mobilize his campaign. Four years earlier, Howard Dean’s campaign established the Internet as an effective way to fundraise and communicate. By 2007, political consumers had caught up with technology, and indeed, the Pew Internet & American Life Project found that 46 percent of Americans used the Internet, e-mail or text messaging to get information about the 2008 campaign or to mobilize others – more than the 34 percent who read newspapers daily, the 39 percent who watch cable news or the 29 percent who viewed network TV news. The Obama campaign first built a database of brand supporters (essentially an Internet-enabled direct mail list) that the campaign then mobilized for fundraising; voter registration drives, phone banks, videos on YouTube, and posts on every social networking site. Obama and his team effectively created and empowered a core of brand consumers online to then spread the product message throughout a broader community.
Finally, a key component of building any brand is responding quickly and effectively to criticism (negative “reviews”). Once again, the Obama campaign effectively tackled bad reviews the moment they surfaced. During the course of the campaign, the minister at a church Obama attended in Chicago, Reverend Jeremiah Wright, made a number of speeches that contained harsh racial rhetoric. Obama himself admitted to having been a member of Reverend Wright’s congregation, but immediately distanced himself from Reverend Wright. His campaign realized it was not simply enough to distance one’s self, but that any negative publicity must be addressed head-on, and that the Obama brand must prove that it can maintain its message and rise above the negative press. Obama effectively did both by tackling the difficult issue of race in his famous speech on March 18th – the video of this speech has been viewed more than four million times on YouTube (2).
To conclude, there are a number of key takeaways from the 2008 Presidential Campaign marketing and PR professionals:
Be consistent – Companies that provide a consistent brand message that conveys the core of their product maintain a loyal base of consumers. The message does not change with trends (it may modify slightly, as when the Obama campaign changed from “Change We Can Believe In” to “Change We Need”), but is flexible enough to be widely embraced over time. Think of Nike’s iconic “Just Do It” or Microsoft’s recent “I’m a PC.”
Build local, and then go global – Obama’s campaign was effective in part because it started at a grassroots level, and built from the ground up. A number of passionate, early adopters act as a tipping point and an effective testing ground for brands. Obama was able to put his product and his brand message out there, and receive instant feedback from a small, core group.
Empower and engage your consumers – The best consumers feel actively engaged with a brand (their feedback is valued, they contribute to spreading the brand message and they assume some level of brand ownership as in the case of the campaign’s MyBO website), and develop a passion for their product. These consumers provide feedback, reviews and spread brand awareness. The Obama campaign also leveraged new technologies and social media to make it easy for their consumers to feel empowered. People these days are happy to engage but they need to be able to do it in less than five minutes.
Actively respond to negative reviews/bad press – Negative reviews are often underestimated by companies. An extreme example of a company not responding to negative reviews and bad press is The Sharper Image, which is now going through a messy bankruptcy partially related to poor product reviews. In a desperate move to boost sales in 2004, the company became an early retailer of air purifiers, in particular the Ionic Breeze purifier. By 2005, air purifiers accounted for 28% of the Sharper Image’s sales. A Consumer Reports article that year, however, stated that the Ionic Breeze purifier could be a health hazard for consumers as it released small amounts of ozone while in use. Sales of air purifiers for the Sharper Image tanked, and the company did little to respond to consumers about this particular product – there were few alternative options offered, no “bring your purifier back” campaigns, and indeed, not even an open apology to loyal consumers. Instead, the Sharper Image funneled efforts into suing the manufacturers of the Ionic Breeze. Clearly, the Sharper Image bankruptcy is more complicated, but there is no doubt that a failure to respond to poor product reviews added to the company’s demise. Of recent note, companies like Dell are now actively responding to product criticism on outlets like Twitter. New technology can be an effective tool for marketing professional to instantly respond to any bad “press” regarding a product.
Brand relationships do not end with a “purchase” – Brands need to move beyond the point of sale as the ultimate goal. Brands that extend their consumer relationship beyond the purchase and into daily life guarantee future success. Now that Obama has secured the Presidency, his campaign did not end – consumers receive emails asking for input, details of current Cabinet appointments, information about upcoming events, and opportunities for community engagement. One can only imagine that with time, the Obama brand’s database of consumers will be a powerful tool for change in Washington. – Leah
(1) Grove, Lloyd. The World According to David Plouffe. Portfolio Magazine. December 11, 2008. http://www.portfolio.com/views/columns/the-world-according-to/2008/12/11/David-Plouffe-Interview#page6
(2) Talbot, David. How Obama Really Did It. Technology Review. September/October 2008. http://www.technologyreview.com/web/21222
Posted in: Learning, Politics, Social Media | Tagged: Brand building, marketing, Mobile, mobile data, Product Development, Product launch | 3 Comments
Help them to help you grow your business
Posted by Shaun Abrahamson on Saturday, 10 January 2009
How much would your business benefit if people showed up each day to help out for FREE?
Some might help you find new customers. Others might help you support your current ones. Some might even help you make your product or service better.
Under the right conditions people like to help. Some because they don’t even realize they are helping. Others for social currency and yet others for the hard kind. We’re not so interested in the pay-for-play folks, though.
Fittingly, Wikipedia defines “crowdsourcing” and has some good examples and references. But knowing what it is, is not the same as taking advantage of it. So what interests us is: how can you make it easier for potentially willing helpers, to help you? How can you create situations where someone can easily move from thinking to acting on your behalf.
Its getting ever easier online - When you join a cause a group on Facebook, it doesn’t take much. In fact, there is a huge difference between those who join a cause and those who act on its behalf, as these statistics show. But what would happen if it just took another click to donate? (like Amazon “One Click” or even purchasing on iTunes). How much more money might be donated?
Offline works too - When HP asks you to recycle, they take a few steps to make it easier. You don’t need to search for a way to dispose of your toner cartridge. HP makes sure you can reuse the packaging to return it to them and they include a shipping label. So all you have to do is call UPS to pick it up. Could you make this easier? Are more people returning cartridges as a result? How much is HP saving?
And offline, is going online - When Barack Obama asked volunteers to call potential voters on his behalf, he didn’t ask them to come on down to their local call center. No, he didn’t ask them to go anywhere, just a few clicks and they would be connected. They didn’t even have to dial a phone number.
We like all of these ideas because its seems like everyone wins, as a result of some simple, well thought our design and communication. So we wanted to look at different business activities, to understand where and how people can help businesses grow. And then dig into how these examples might be generalized into some framework to put this all to use. And finally, take a look at some open questions presented by having non-employees doing work for free.
Product & Service Development
This is probably one of the fuzziest processes of all, but this doesn’t mean you cant get help.
Just Ask
Companies like Dell and Starbucks have formalized the process via Dell Ideastorm and My Starbucks Idea. But even before companies were asking, ideas were being volunteered.
Companies like Muji or Cafe Press take this a step further. Muji.net[in Japanese] is used to solicit ideas, too, but Muji also holds design competitions. Some of the winning designs find there way into the stores. In the case of Cafe Press, they are in fact, asking people to use their tools (including design and manufacturing resources) to create products for themselves and others.
Then there is Wikipedia. There have been a number of analyses about just how many people contribute, but regardless of the numbers, the point is – there are unpaid people working on the project. Ditto for Linux and a whole host other software programs. In these cases the community relies on some simple infrastructure to get the work done such as Source Forge.
But it doesnt take software development tools to open up the process. As Jeff Jarvis discusses, the news production process is easily opened up when the process is viewed differently. i.e. along the way, feedback is sought, not just from a small group in the newsroom, but far and wide. The result is something that resembles the agile development processes on Source Forge. And something as humble as a blogging platform can be made useful to receive help in producing new content.
Steal With Your Eyes
As an engineering student I spent one summer working in a refrigeration construction plant. The most interesting advise I received from one of the technicians – “steal with your eyes”. It doesnt translate nicely from Afrikaans unfortunately, but the point he was making was that he had received no formal education, but had figured out how to observe and learn.
Observation is tremendously powerful. In fact, people just doing what they normally do, might be one of the most helpful things they could do for you. It’s no longer unusual for product developers to ask to observe people using products in their “natural surroundings”. Like animals, we tend to be more ourselves “in the wild” – whether online or off-.
But beyond asking people if you can stalk them, there are increasingly ways to observe from a distance via “public personal histories”.
Public Personal Histories
Flickr feeds. Blog posts. Tweets. These are chronicling different aspects of peoples lives. In many cases they describe shortcomings of existing products or wishes for products or services. Companies like Dell are using these published histories to reach out beyond Ideastorm to better understand the conversations that involve Dell online, wherever they might be happening.
The beauty of these data points is that people created them primarily for themselves and others they know, so they have taken the time and expended the effort to create and share their experiences. And they are doing this at NO cost to the people who wish to review and learn from them. So you actually dont have to ask anything of them.
Activity logging
Increasingly data is generated whether we want it or not. Its not just site analytics, but actions taken on our phones or driving actions in our cars. But to gather this data in the first place, you need instrumentation – it might be simple sales statistics or more details logs of how long people spend waiting in an airport security line or when deciding when someone last visited a store. Instrumentation is getting cheaper – Google Analytics is free, so there is not excuse not to know what people are doing on your website.
But increasingly other instrumentation is possible, like location data – we have talked about companies like Sense Networks who are able to help companies make sense of this abundant location information now being generated by phones, GPS devices, etc. And products like Nike + or SNIF Tags generate data which can be shared online, too.
Promotion
The simple Hotmail promotions in the footer of the free e-mail service, have come a long, long way.
Flu versus a conversation about flu
There is a big difference between talking about flu and getting flu. Too often today, viral marketing is used to describe some alternative to buying media to distribute some communications. This is just not the same as designing viral elements into the business from the beginning.
For example, talking about Youtube in the abstract is one thing. Receiving a link to a specific video from a friend, is something else.
In the first case, it might take some effort to go and visit the site and then see if there is anything relevant for me. But if someone I know, sends me a link to something I am likely to like, my experience with Youtube will be quite different. That first experience might be pivotal – in one case, people might hear about Youtube (hear about the Flu), in the other case, they got the Flu and become one of the people helping to drive Youtube to the most popular video destination.
Today, many services capitalize on this idea – attempting to convince users to take some step to get others to act (visit,view, share, register, invite, donate, buy, etc).
Get an echo
Specific parts of personal histories can cause others to take action. For example Facebook users see various details of what their friends are doing – what groups they join or what events they will be attending, for example. How important are these actions in causing others to take action? Companies like Social Amp are trying to understand this behavior.
I think there are some interesting relationships to things like recommendation engines, which use specific user actions to predict what they might like. On a simpler level, companies like Amazon use specific actions such as “customers also bought…” or “what do customers ultimately buy, who view this page?”.
So how exactly do you cause actions that cause others to act? This will be the subject of future post, but at a minimum you have to convince people to take a few initial actions – it might be convincing friends and family to buy your product on Amazon to get the ball rolling. Or getting a lead customer to take the plunge and talk about it. Perhaps a good way to think about this, is an expansion on the classic reference – you want your customers to take a visible action on your behalf which you know others are going to see.
Let others show you off
Zipcar does a wonderful job of using their cars to simply let people know that about the service. The more people who drive, the more people who see the cars and might be curious about it. My own experience has been that on a few occasions, when I first started using the service, people would ask us about the car and how it worked. It happens less now, or maybe just because its winter and everyone is cold and in a hurry to get where they are going.
Method Products created beautifully designed soap. Soap users were proud to display their products in their bathrooms and kitchens, making soap a-suddenly-much-more-visible-thing. Other things around the house that seem to be shown off include all manner of electronics gizmos which brings us to a funny area we like to call demoability.
Demoability
Demoability is designing in some aspect of the product or service use that just wants to be demoed. Or at least making it really easy for someone else to demo the product or service. I do this all the time – its the – “you will get a kick out of this, so I must show you” in me. The iphone had a few wonderful touch screen demos which ensure that it was hauled out and shown around probably more than any other phone that preceded it (I am not aware of any stats to confirm this). But here are some others someone might have felt inclined to show off: uploading Nike + run info, folding a folding bike, Nespresso coffee making, remote control helicopters, Nintendo Wii remote, Seamlessweb ordering process, Zipcar car finder etc. Not everything can happen in real-time, but increasingly products and services can do a great job telling their stories with some semi-scripted help from their users.
Interestingly I have seen a few toys which have “demo” modes. And I have used these to show people what they do. Perhaps this was mainly intended to use this way in the packaging, in the store, but it makes it easy for me to explain when asked, so…
Distribution
Its increasingly easy to find and buy what you are looking for, so for example, following a recent demo of a Vinturi, I realized it was the perfect dad gift and immediately used my iphone to buy on Amazon. As it become easier to buy in response to a demo, for example, the lines between distribution and promotion will blur. But there are many ideas specific to distribution that help smooth the way for product sales that dont have to take place via retailers.
Let anyone sell for you
But this is not really the point here. Getting others to distribute on your behalf is increasingly the domain of enterprise software, where companies like Salesforce pioneered ideas around letting users sign up for personal use and then expand the user base by inviting others and opting in to new features. In this way, selling was done by users, selling to potential users within organizations. In the case of 37Signals, Basecamp, this goes a step further, since many of the projects might involve multiple organizations, so now people from different organizations are showing off the product and helping to distribute it. More than a few of our clients opt to use Basecamp once they have used it with us for a while.
Support
Support can be a tremendously frustrating experience, particularly if it is not timely and if it does not resolve the problem. While some companies fear discussing their shortcomings in the open, there users are online actively seeking help. GetSatisfaction offers a great example of how these support requests are being facilitated with and without the participation of companies who make the products.
Either in a peer-to-peer mode or with the participation of the manufacturer or service provider, these services provide a way to expand support possibilities.
At some point, support feeds back nicely into product development, as it helps to prioritize issues and is likely to spur discussion of new features (as GetSatisfaction is benefitting from).
Other Actions
We think there are more examples around actions such as recycling, donating, etc. We will expand on those in subsequent posts.
Beyond Examples: Suggestions & Questions
We have lots of work to do here and will allocate future posts to these ideas, but here are some initial thoughts on how you might make these ideas work for your organization.
Reciprocity design
Much of online commerce if focused on finding ways to move users through a funnel. Get people to a site, get them to click through to learn more and then purchase something. Or maybe just to fill out a lead form.
So we know that multi-variate testing techniques can help you test options. But you still need to hypothesize on things to test. So what should you be testing? What actions should you focus on improving?
We think you should look for opportunities to make it easier for people to help you. And then you can apply some of the same design and optimization thinking to refine and get the most from these interactions.
Help is on the way, for you too
Google Analytics, Various Google Searches, GetSatisfaction, Twitter, SocialMention, Salesforce (used by Starbucks and Dell), as well as a host of Wiki and Blog tools, etc. All these companies are building tools to enable companies to quickly begin deploying some of these ideas around their existing products and services.
In many cases, they have figured out how to use these ideas to enable win-win situations for their company and yours. We will delve into some of the tools we are using and recommending to customers, in some follow-up posts.
Organizing things differently
We think there may be some lessons from outsourcing and partnering – these are critical decisions about how you work with another organization to help them or to have them help you. You need to know who they are, if they can be helpful, how they might help, if they are qualified, etc. But then you also define a way to work together to deal with poss
IP: who owns the work that results from the collaboration?
Disagreements: What happens when disagreements arise?
Legal: ”Discovery” is an increasingly important part of the legal process and used to be limited to e-mail. Whats the impact of having more communications in the open?
Privacy: what permission is required from users?
Info deluge: you thought your inbox was busy before, its going to ramp up significantly when you ramp up interactions…
Too much openness: can too much disclosure become a competitive disadvantage?
We are just starting to dig in on these questions and will likely discover more. But right now, in the spirit of seeking help, we would just appreciate any initial thoughts and ideas in response to this post.
Posted in: Creative Process | Tagged: collaboration, communications, Crowdsourcing, outsourcing, Product Development, Social Media, support | 5 Comments
MUJI – Just Enough Design by Everyone
Posted by Shaun Abrahamson on Thursday, 23 October 2008
MUJI began life humbly, as a store brand sold in Japan’s Seiyu LTD stores in the early 80s. In 1989 it was spun off as its own company. The idea, still embraced today was simply to make what is necessary, nothing less and nothing more.
MUJI was conceived to be different from the start. The complete name MUJIrushi Ryohin means “No Label. Good Products”, which is at the core of what the business is about. MUJI was conceived to be different from the start. It was one of the first brands to spell out a Japanese word in English (English characters are not uncommon in Japan, but usually they are used to spell English words).
Beyond the name, the process of creating products was different. MUJI product developers would survey 1000s of customers to understand what they needed. And then they would try to meet these needs in the simplest, cheapest ways possible. The slogan for “R&D” was to “make what you want, as a customer”.
The approach proved very successful. During Japan’s recession, MUJI flourished while other floundered. But between 1999 and 2001, the company suffered through a spectacular financial crisis. The company had expanded quickly into new lines and abandoned much of the focus on customers. Towards the end of the decline and just before their remarkable comeback, the product development team was ordered to oversee the dumping of their unsold product inventory as a sign that they would be starting again to refocus on what customers wanted.
Today, the focus on the product development is evident in a number of ways, from Investor messages to the unbranded products which are increasingly recognizable by their simple forms and deliberately absent logos. Beyond the products themselves is a focus on the experience of buying these products.
MUJI is not just a creator of products, they also take great pains to provide the right environment to show and sell their products. Many people who visit the stores, have commented on the sense of calm they feel when entering and walking around the stores. Try visiting MUJI online – its an experience unlike any online retailer, conveying the same peaceful this-is-enough-not-too-much philosophy of its products and stores.
Perhaps most interesting, is what evokes the fanatical following they have developed, which caused much chatter and celebration in NYC when they finally launched their store here. Although not everyone believes MUJI’s approach will work in the US against the likes of Target and Walmart. We’ll see – MUJI’s prices are higher since they dont have much footprint in the US yet. Companies like Zara have had similar market entry economics issues.
Perhaps most interesting is that MUJI shares openly their design philosophy at their core of their success. And they encourage others to help them create according to these rules. They actively seek out ideas from anyone who touches their business and then work hard, with employees and partners alike to design products to instantiate these ideas.
The Best Ideas from Everyone
MUJI has a systematic way to constantly harvest the best ideas and present them, ultimately to the design team, for he creation of new products. The process makes use of all touch points. In stores, employees are encouraged to make and collect notes. MUJI.net has almost 500,000 members and is used as another source of ideas. And then anthropological opportunities are presented when people go to MUJI camps where people can be observed using products so that additional insights might be gained.
Enough Design
At the core of the MUJI culture, is simple design – or more specifically, just what is necessary, simultaneously creating beautiful, simpler to manufacture and therefore cheaper, products. The cutting board example, explains nicely how MUJI approaches design to reduce products to their essential functions.
Can you spot the difference? Its still a cutting board, just more so, or less so, depending on your perspective, but for sure it is likely cheaper, or for the same price, it can use better materials.
I see some parallels with some of Apple’s recent work, as they talk about their latest Macbook in terms of simplifying, reducing the unnecessary and the focus on materials. Unlike Apple, MUJI will not allow disclosure of their designers, in keeping with the strong no-branding policy. But there is much speculation that many of its items are designed by some of the best desigers in the world.
Finally, to get even more ideas, the Muji Award has been running for 3 years (although MUI ran prior competitions, I believe). The entries are solicited globally and has resulted in a number of products that have found their way into stores.
If We Build It, Will You Come?
MUJI takes advantage of many opportunities to figure out what people want. But it goes a step further. Even when MUJI has a design, it takes the final step of checking who will by it, before it is produced. Easy way to avoid a complete flop.
In 2006, business week covered how MUJI.net, is used to solicity and select new product and design ideas. And then:
MUJI then tests the market by soliciting customer pre-orders rather than conducting a focus group or survey, or using other traditional market research methodology. Simply put, if 300 customers pre-order an item online, it goes into production.
As the MIT Sloan researchers point out. MUJI in effect collaborates with customers to plan their products. By getting commitments upfront to buy, MUJI gets a definitive commitment beyond anything they might get through surveys and estimation. One might suspect that these initial commitments might correlate with lifetime value much like opening box office weekends can be good predictors of the lifetime value of movies.
So enough with the boring analysis, lets just see what all the fuss is about. Buinessweek has a good slide show featuring some of the better known products.
Special thanks to Makoto Arai (fellow Berlin School participant) for his help in researching, analyzing and translating coverage of MUJI in Japan.
Posted in: Product Development | Tagged: collaboration, crowdsourced, design, MIT, muji, Product Development | 1 Comment
What makes Zara work?
Posted by Shaun Abrahamson on Saturday, 16 August 2008
Its funny you ask. Below is the answer, nicely spelled out, thank-you-very-much.
I am currently trying to understand, as part of a larger research project, how a company that does little to no advertising (from what I can establish they spend .3% of sales versus 3-4% spent by their competitors), is ranked as one of the fastest growing brands. Oh yes, and they recently surpassed Gap (after passing H&M 3 years ago) to become the worlds largest clothing retailer.
Back to the image. Inditex, Zara’s parent, published this in their 2007 annual report. Its actually part of a more complex machine, highlighted in the upper left of the image. But we wont worry about that. What is interesting to me, is where they are focusing to enable them to build an industry-beating brand.
Customer at the center
As the picture shows. But everyone says this. According to Inditex, they focus on taking customer requests from the store and move it through the process of design and manufacture as quickly as possible.So each time they interact with customers there is potential for new inspiration. Its not clear exactly how this happens, but it is clear that new products hit the store twice per week, enabling them to respond quickly to new trends and ideas.
Zara only distribute in their own stores, as they want to control the entire experience with the customers. This too is highlighted in the image. From site selection and window displays to store architecture and service, the store is where Zara invests most, according to its 2007 annual report.
The store is the company’s main image vehicle
Zara has been expanding with openings in the world’s largest cities. Zara is very comfortable adapting prize locations and buildings to their needs, as you can see from these examples.
Projects are designed individually to take maximum visual and functional advantage for the store, by turning each establishment into a special place.
Approach to design and manufacturing
While competitors such as H&M outsource their production, Zara situates its 200+ designers alongside the manufacturing process – by collocating design and manufacturing, they are able to speed time to market. Zara is unmatched in the speed with which they take product to market (Harvard Business Review).
Openness
This is something Intitex is proud of, going to lengths to explain various ways in which it interacts with society at large and enables clear visibility into its activities.
At a tangible level this means it tracks on site visits and measures interaction with the media in a variety of ways. Metrics may be the key to understanding that Zara’s success is not just about one thing – it perhaps best reflected in the enormous number of metrics used to understand how the company performance in areas ranging from human rights in countries in which is does business to levels of waste produced for each garment created.
These types of measures are laid out in the annual report. And increasingly, these measures are not from Inditex themselves. In the same way that their financial are audited they have a range of 3rd party audits to help them better understand everything from how they are implementing their “code of conduct” to how they rank on a variety of sustainability indices.
All the details matter. In 2007 the company switched all store shopping bags to d2w which will result in plastics degrading (to water, CO2 and biomass) within 1-2 years versus 400.
Back to the question of how the company manages without advertising. Certainly the store experience has garnered them great “word of mouth” (I’ll need to come back to this and see if I can put some numbers against this claim, but Google clearly shows the trend in interest, which has ultimately been reflected in sales, too). And their first to market capability has to help too. But its clear that the magic of the machine, is the result of lots of moving parts and a focus on controlling the complexity which results from making these parts work together. In some ways this seems to follow the Apple script – control more of the key pieces that need to work well together, for example hardware and software or the in store retail and customer support experience.
Posted in: Uncategorized | Tagged: advertising, architecture, design, DGPSA, fashion, marketing, Product Development, retail, zara | 4 Comments
Summary Engine
Posted by Shaun Abrahamson on Tuesday, 1 July 2008
Pluribo launched their summary engine yesterday and has been quite widely covered. The first implementation is based on a Firefox plug-in, which you can use when browsing Amazon.com. Rather than having to read reviews, Pluribo summarizes the reviews and shows how the product compares to other products along the most critical dimensions (as determined by use reviews).
Another Firefox plug-in. Great, hopefully they will add a Facebook app, too. Does the world really need another plug-in, widgety thingy? Why would I use this thing?
The Pluribo team identified an interesting issue – that is, while there are more and more reviews on sites like Amazon, Newegg and even Walmart (powered by Bazaarvoice), you still have to read them to figure out what people think.
Now you might want to find the best. But is your best the same as my best? What happens if your version of best is “lightest” or “fastest”. The star rating doesn’t tell you this, so you cant cheat and look at that. You have to read through reviews which might not even talk about your best.
What Pluribo does is figure out criteria – i.e. what dimensions are people talking about. So if people offer their thoughts on weight, you can find the lightest. If people weigh in on other issues, such as “scratchiness” or the likelihood that the product will scratch – thats there too. So you might want to take that carry case after all.
This seems like it could make life really easy. Imagine standing in best-buy and asking – is this the lightest? You could summon Pluribo and get short summary, readable on a small screen.
Or what about manufacturers. If I am a product designer, wouldn’t it be nice to know the most important attributes which people are talking about? And which products score best for these attributes? Pluribo already knows. You have a permanent, always available focus group and Pluribo is constantly summarizing the results.
I’m excited to see what is next. Maybe Pluribo will summarize their reviews to see which dimensions users think are most important.
Posted in: Product Development, Quant | Tagged: Amazon, Bazaarvoice, newegg, pluribo, Product Development, reviews, summary engine | No Comments
WordPress vs Typepad – Game Over
Posted by Shaun Abrahamson on Monday, 16 June 2008
Google trends, WordPress in the red trunks. Typepad in the blue.
Alexa, WordPress is the top line, this time in the blue.
So, why did it take me so long to make the switch? Well, I had realized that I might be missing out. Certainly if I took the time to play with WordPress, more could be done. But I have tried desperately not to tinker of late and free up some time to focus on other things. And I have likely become a little dumber, technically, in the process, I suspect. But wordpress.com seemed like it might be worth a look.
But what pushed me over the edge this weekend, was quite simple. I had a CSS problem. Seemed obvious- was pointing to the wrong place, but it wasnt clear how it was changed or in fact how to fix. Help was helpless. Contacts failed to provide a number. I really am cheap to support- I try to figure stuff out first. In fact, I am often embarrassed to call. But I needed to call, to avoid the embarrassment of a non-functioning site.
When help did come, over e-mail. I was told, politely, that there was no problem. Ok. Contrast this with todays response from folks at WordPress.com (thanks Nick). When I mistakenly mapped my domain twice and paid twice, I sent a note asking for one of the mappings to be removed and credited – Shazzam! Quick response, all fixed.
I’ve never felt happier about a change.
I’ll be adding WordPress.com to my research about why great products and services dont need advertising. I would be interested in understanding from the Six Apart folks what they are doing to respond.
Disclosure: we have absolutely no relationship with either WordPress or Typepad. Just trying to keep the blog up to date and make a few changes here and there. And avoid some embarrassment (we always manage without technical difficulty, to achieve this on our own).
Posted in: Product Development | Tagged: alexa, Product Development, reviews, trends, typepad, wordpress | 1 Comment
Experience Creators
Posted by Shaun Abrahamson on Thursday, 3 April 2008
We are trying to understanding the intersection of a number of trends. So what better way to do understand than to try and write about it, right?
First, we have become unhealthily obsessed with reviews. It seems that everywhere we look, we hear about reviews. In fact, we have been making more and more decisions about what to buy based on what others had to say, for a long time with Amazon and more recently Newegg.
Amazon still seems to have cornered the market with customer reviews and were probably one of the earliest to understand their value. But when Walmart.com embraced online reviews almost 9 months ago, it was clear to many that something big was happening and today, if you look at walmart.com, customer reviews feature almost as prominently as price reductions or “roll backs”.
Looking at this from another direction, is there increasing focus on customer service or more broadly customer experience and making better products? Almost 2 years ago, Adage ran a piece of how US R&D spending had been steadily catching up to advertising spending (not in all industries mind you, but certainly many high growth, competitive ones). The article is not directly accessible, but Joseph Jaffe was kind enough to capture the key ideas. This trend seems to be continuing, but we plan to investigate further.
From a less product centric perspective, important to the growing service section, Zeus Jones created a nice graphic showing the convergence of 2 previously siloed functions – namely marketing and operations (for example, call centers). Some companies have had this as religion for some time – for many years Intuit has made extensive use of their call centers to better understand what their customers need and what their product designers should be doing. But more recently, the CEO of one of the fastest growing online retailers, Zappos, explained how “…Zappos takes the money it would have used on paid media and pours it into the customer experience”.
We think what this means is that companies are finding that their products and services, simply need to be better. Because it is increasingly difficult to support bad experiences with great advertising. And competitors have to spend much less to rapidly gain market share – they just need great reviews!
(image from www.ivoshaap.com)
Posted in: Product Development | Tagged: customer service, Product Development, reviews | 2 Comments