Concrete: innovation hotbed

One of the next great areas of technological advance may be right beneath your feet. Concrete, the ubiquitous construction material responsible for millions of miles of paved highways as well as countless gloomy Soviet-era apartment blocks, is undergoing a high-tech renaissance. So says The Economist, which features it in the current issue's Technology Quarterly section.

Concrete embedded with tiny conductive fibers allows bridges and roads to be kept free of snow and ice without damaging salt and plowing. Spray-on concrete can create inexpensive housing in poor areas which is durable, well-insulated and hurricane-resistant. Who knew there was so much room for innovation in such a humble material?

According to the Economist, every year one cubic meter of concrete is put to use for every person on earth—making it the second-most used material after water. Could that amount yet increase? It's a concrete possibility.

innovation, construction, materials

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Vince sells out

Say it ain't so! Vince, the $50 million fashion label founded by Christopher Lapolice and Rea Laccone, and cited in this space as an exemplar of brand-building, has been sold. (See article in today's New York Times.) The lucky buyer is the Kellwood Company, a $2B aggregator of fashion labels.

It seems a shame that they wouldn't have continued to go it alone. Perhaps it got too big for them. (Ms. Laccone had told the Times, ''I would have been really happy if Vince was a $12 million business.'') And I guess $75 million--the purchase price--would be hard to turn down by anyone. The company says the founders have agreed to stay, but... what are the odds that, a couple of years down the line, they'll be at it again?

innovation, marketing, fashion

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It's the handsets, baby

One message at the MVNO Strategies & Markets Conference this week is that the handset has become perhaps the most important aspect of a wireless service.

Time was, people took whatever phone their carrier offered free. Then came the Sidekick and especially the Motorola RAZR and all of a sudden the phone ceased to be a tool and instead became an object of desire. DP Venkatesh of mPortal pointed out that the RAZR was the first Motorola phone that didn't have a techie name (like StarTAC, V810, etc.). Now we have the Pearl, the Kickflip, the Chocolate and the Q.

And we want one.

This causes a problem for MVNOs. They typically don't have access to the best handsets (or even the second-best). The carriers serve their own retail operations first, then offer handsets to their MVNOs. Hamilton Sekino of Diamond Consultants asserted that the RAZR was partially responsible for the slow growth of MVNOs launching over the past year.

Mobile ESPN has the best data user interface in the industry, but launched with a single, low-tech Sanyo model, and look what happened to them?

Helio, by contrast, has sourced their own custom handsets, at great expense, from VK Mobile and Pantech. And they're pretty cool. Perhaps this strategy will prove successful for Helio. And then other MVNOs will follow, regardless of the price.

(picture: the Hero model from Helio)

innovation, marketing, mobile, MVNO

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R.I.P., Mobile ESPN

Well, the news ripped through the MVNO Strategies and Markets conference in New York like a tornado. Mobile ESPN, one of the pillars of the US MVNO market, yet dogged by press and investor questions about its slow growth, has decided to shut its doors, "as soon as today," according to the Wall Street Journal, in order to focus on being a broadly-distributed content provider.

What does this mean for the US MVNO market? I'd said earlier this month that the success of Mobile ESPN, along with Disney Mobile and Helio, was crucial for the long-term health of the US MVNO market. Now one of them is gone. More opportunity for the remainder? Or a sign of things to come?

innovation, mobile, MVNO

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MVNOs need more consumer marketing expertise

Dan Neal, president of the startup tween MVNO kajeet, bemoaned the lack of consumer marketing insight in the MVNO world. “We need more consumer marketing sessions at conferences like this,” he said yesterday at the MVNO Strategies and Markets Conference.

And the importance of knowing the consumer market was underlined today at the conference by Thomas Desarnaud, VP of Marketing for Universal Mobile, the largest French MVNO. Universal, a sister company of Universal Music, the largest global music company, has used its deep understanding of the teenaged market to attract 550,000 subscribers and become the #1 wireless operator in France for customer satisfaction.

The MVNO has capitalized on Universal's success in the music market (35% market share in France) not by simply leveraging their promotion and distribution assets, but by applying the lessons they've learned in communicating and creating a brand that is attractive and desired by their target market—allegedly unpredictable teens.

Desarnaud used terms different from what we've heard from the the other presenters (a nod to Neal's plea). He discussed the service as a status symbol and invoking emotion in its customers. More than simply claiming to be cool, Universal knows the language of its audience and, as Desarnaud said, “speaks to youth in codes they understand.”

They speak a different message to parents, who pay for the service. To them, the message is all about budget control (as an parent of a teen can relate to).

A clever way they've merged the two messages is one of their advertisements, which parodies teen slasher movies with a teen terrorized by an electric-knife-wielding crazy—his mother, upset about a high cellular bill. The message? “Don't get on your mom's wrong side. Keep your spending capped.”

An important factor in Universal's success, and a cautionary lesson for US MVNOs—Universal has been able to succeed as a “SIM-only” MVNO. That is, they don't sell phones, but instead sell SIM cards that users can insert in their existing phones. This model is limited to GSM and as well because of locked phones would be difficult to achieve in the US even for a GSM-focused MVNO... and, of course, the GSM operators (Cingular and T-Mobile) have been the least aggressive enablers of MVNOs in the US. Zut alors!

Desarnaud's final thoughts:

Content is about life style

Mobile is about life style

Therefore, content and mobile go perfectly together. I couldn't have said it better myself.

marketing, mobile, MVNO

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“The world is not being fair right now to MVNOs.”

At today's MVNO Strategies and Markets Conference, Dave Johnson of Sprint's Private Label Services group--speaker of the above quotation--asserted, despite what you may have read in the newspaper, that opportunities still exist for MVNOs.

Sprint has analyzed their numbers being ported out (i.e., being switched to other operators) compared to their MVNOs' port-ins, and is seeing very little cannibalization of its customers from its MVNOs. Therefore, the MVNO market is more attractive for Sprint than people might assume.

Johnson outlined six key capabilities that MVNOs need to be successful:

1. Ability to attract switchers – 90% of new prospects will be switchers – and switchers often want something different from their prior provider (i.e., don't want to trade one basic offer for another basic offer)

2. MVNOs must focus on underserved segments. Johnson implied that MVNOs would not be approved by Sprint if they can't clearly identify a compelling target segment. He displayed data showing that although overall wireless penetration is high (73%), many segments have lots of room for growth (examples shown – children, elderly, low-income)

3. Strong distribution. This we've heard often before (and reiterated several times by speakers today), but, according to Johnson, distribution is the #1 predictor for success of Sprint's MVNOs

4. Strong brand and differentiated marketing

5. Exclusive, relevant or compelling data content

6. Strong financial backing and understanding of wireless financial and user metrics. $5M investment is not enough to sustain. A typical MVNO will be cash flow negative for 3 years

He also cited some example MVNOs (disclaimer – they are all Sprint MVNOs). Movida – strong segment focus on Hispanic market, including in-language content and support. Virgin – superior distribution - 25,000 retailers. Helio – strong financial backing. ESPN – compelling content. Disney – strong brand.

He also highlighted kajeet, a tween MVNO in the implementation stage, for having strong financial backing and admirable patience. They are trying to “do it right” and are “not in a hurry”--a rarity in an industry where people feel they must launch day after tomorrow.

innovation, mobile, MVNO

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MVNO Strategies & Markets Day 1 - here come the Hybrid MVNOs

Posting this week from the Informa MVNO Strategies & Markets conference in New York. The theme of the conference is "Sustainable Business Models."

The first message at the conference, sounded by Andrew Cole, president of CSMG, and Tammy Parker, Informa principal analyst, is: hybrid is the next wave of MVNOs (what the hell is an MVNO? check here). A hybrid is an MVNO that works closely with its network operator and relies on that partnership for many of its wireless back-office and operational needs. The MVNO provides brand, marketing and (often) proprietary content. Rather than receiving a wholesale rate for minutes and megabytes, the network operator shares in the venture's revenue.

Amp'd Mobile's deal with Telus in Canada is the best example of the hybrid model. Amp'd provides their branded content and customized handsets, while Telus provides sales & distribution, network, customer care, billing, collections, etc. Boost Mobile's relationship with its parent Sprint Nextel is a variant of this approach.

What are the advantages for MVNOs? Especially for companies with limited telecom experience (and little desire to build it), the hybrid model allows the MVNO to focus on what it does best--be that distribution, content or branding. The network operator can leverage its existing investments in customer service, billing, etc. It also is proving attractive to the network operators--an important consideration in a market where an MVNO with no network contract has no business.

Hybrid MVNOs will not replace the standard arm's length relationship of MVNO to network operator, but they represent an important evolution that will be an important segment of the MVNO market into the future.

innovation, mobile, MVNO

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SeeMe TV - YouTube for your phone

At the MVNO Strategies and Markets conference yesterday, Andrew Cole of the Cambridge Strategic Management Group discussed what MVNOs can do to improve their business performance via mobile content. As an example he cited SeeMe TV, from the UK operator 3.

SeeMe TV allows users to upload videos, and users to download and view the videos, a la YouTube. Innovatively, however, 3 charges users a small sum (50 pence) to upload, and 10 pence to download. The video producers get 10% of the download revenues for their videos. Fifty downloads, and you've broken even. It's a variation of the self-publishing concept, for video on the mobile platform.

It's all been done, certainly. But never this way with this type of package. And the results speak for themselves. A commendation from the UK New Media Awards. More than 1M downloads of 30K clips in the first few months since launch, according to Cole. And for 3, a distinctive, even brand-making new service.

Upload that!

innovation, mobile, MVNO

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Hello from Mobile Monday

I happened upon a very nice event tonight in Manhattan. Mobile Monday, a monthly discussion series, tonight featured a discussion on MVNOs. How timely!

Kudos to Steve Chang and his cohorts who put on a well-attended, informative session at the Samsung Experience at Time Warner Center.

The featured speaker was Joe Lazlo of Jupiter Research. He had some matter-of-fact advice for prospective MVNOs, such as:

- The barriers to success have risen in the past twelve months.
- MVNOs need an exclusive something... It doesn't have to be exclusive technology; even some kind of gimmick could work, or something that can be pitched in a novel way.
- Prospective media MVNOs have a conflict between distributing via every possible channel versus reserving some content for their MVNO customers.
- The "quieter" MVNOs may end up being most successful. Who are they? Shhh.....

innovation, mobile, MVNO

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What the hell is an MVNO?

This week I'll be blogging from the MVNO Strategies & Markets Conference in New York (registration information here if you're interested). The posts will be more narrowly-focused than normal. Therefore, to orient our non-telecom-professional readership, I'll need to provide some background.

MVNO stands for Mobile Virtual Network Operator. In the old analog days, that meant cellular reseller; i.e., a company that resold cellular service under its own name. Three major changes have occurred in the US and many other markets around the world that have enabled this old reseller market to reform into what we now call MVNO.

1. Digital cellular has replaced analog. With that transformation has come more open standards, such as GSM, CDMA and various advanced intelligent network (AIN) protocols. This has opened up wireless network technology to new suppliers and, important for the MVNO market, improved the ability for partners of the network operators.

2. Creation of multiple, nationwide carriers. Both modifiers are important. Multiple network operators (preferably three or more) create a competitive environment that incents carriers to resell excess capacity to MVNOs. Nationwide coverage allows MVNO to sell service most everywhere in a country with a single carrier agreement, an important simplification that improves the marketing leverage of an MVNO and also reduces cost.

3. Investment in wireless data infrastructure. Carriers throughout the world have spent tens of billions of dollars on 3G infrastructure. Gaining a return on that investment is important and again incents carriers to bring in MVNO partners.

The result has been an explosion of MVNOs around the world. Tesco, a grocer, has brought on millions of prepaid clients in the UK. Disney has created a specialized mobile family application that it is selling in the US. And PLDT from the Philippines provides service to hundreds of thousands of Filipino expatriates in Hong Kong and soon in Singapore.

Will MVNOs remain an important part of the wireless landscape? Or will the marginal ones fade away, and the strongest merely become subsidiaries of the ever-growing carriers? We'll have to stick around for a few years to know.

innovation, telecom, MVNO

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Jellyfish

Question: what do “Spongebob Squarepants” and the New York Times have in common?
Answer: Jellyfish!

In the space of two days, there was a Times Op-Ed article by a doctor who was stung by jellyfish and whose resulting treatment showed how ignorant first responders were of the best treatment...and an episode of Spongebob Squarepants where Spongebob befriends a horde of partying jellyfish... and is rewarded with many stings when he tries to get them to leave his house.

Coincidence? Not to a blog writer. The connection will be made clear in a moment. First, though, a few thoughts on the Times article, by Dr. Jerry Avorn, a medical researcher who focuses on the effectiveness of treatments.

One of several important points brought up by Dr. Avorn is the gap between what's known in general and what those closest to a problem know and can use.

In two minutes of internet research at home, Dr. Avorn found a study confirming that hot water is the best therapy. Yet none of the earnest first responders had any idea of this information. They poured distilled water on the sting and applied ice packs, which Dr. Avorn's internet research confirmed actually promotes the body's absorption of jellyfish toxin. Ouch!

While we focus immense resources on basic medical research, in many cases getting the right information about treatments to the right people in the field--and ensuring they use it--is the most urgent problem. Improving the delivery and application of information may be mundane, yet it may represent the biggest opportunity to improve global health. Are you listening, Gates Foundation?

So, the connection: the “Spongebob” episode ends with Squidward taking a hot bath to relieve his jellyfish stings. The first responders at an island beach didn't know the best treatment, yet it was well-understood by the writers of a cartoon show.

(Picture via the St. Petersburg Times)

innovation, health, medicine

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Memo to bosses: shut up and write it down

How many times has an innocent suggestion from the boss inspired a rush of activity to carry out his orders, only to find out he intended something completely different? According to the Wall Street Journal's Cubicle Culture column on Tuesday (link here, via the Pittsburgh Post-Gazette), countless times. One example has a sales manager's boss asking why one of his salespeople is still in his job. The manager thinks the boss wants the salesman promoted, when in fact he was questioning why he hadn't been fired.

The article doesn't offer much advice other than to ask what the boss means if you're not sure what he's asking you to do. But I've got a suggestion: stop talking so much.

Bosses love to talk for many reasons. It's easier, for one. Saves time, too. And people tend to listen to them (or pretend to listen—perhaps leading to some of the misunderstandings referred to above).

The problem is that oral instructions are very easy to misinterpret. They are also hard to pass onto others without introducing even more error. Oral communication is like a noisy analog network. There's hiss, and static, and breakup. Pass it from network to network, and it gets worse. At some point you have nothing but white noise, or the teachers' voices in the Charlie Brown TV specials.

Bosses need a digital code to communicate better. Digital networks follow protocols and have redundancy of information to allow error detection and correction. But how do we design this error-free communications mechanism for bosses? We don't have to. It's already here—the written memo. Easily copied and retransmitted error-free, the memo is a perfect way to ensure your message gets across as you intended.

But wait! Written communication is time-consuming. It requires the boss to think about what she wants to say, then encode that in words, phrases and paragraphs that convey that meaning. She must review and revise it, and get input from others to ensure it says the right thing. Sounds like a lot of work.

No matter. Want to be a better boss? Shut up and start working at the keyboard.

leadership, management, communication

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The value of business blogs

When business associates or friends hear that I have a blog, their inevitable question is: "what does it do for your business?" A good question.

The answer: nothing at all directly. In fact, overtly commercial business blogs weighed down with advertising (here's an example), not to mention overt spam blogs, better get a lot of click-throughs because the ads are intrusive and annoying, and compromise the authority of the blog. And forget about repeat visitors. They're like high-pressure car dealerships--people never buy more than once.

But we're businesspeople, right? While there are tens of millions of virtual exhibitionists, anxious to share their innermost thoughts, day-to-day activities or even more, we're in it for other reasons. What might those be?

1. A way to keep the knives in the drawers sharp. The requirement to post daily to a blog means you need to be constantly curious and aware of what's going on in your area of interest. You have to read a lot to find material and think some as well. Otherwise, you'll have nothing to post.
2. A dialogue with knowledgeable people in your field. Blogs, via comments and links, allow us to have conversations without meeting or even talking on the phone.
   
3. A multi-megabyte calling card. When someone asks me--a friend, a prospect--what I'm doing for business, I send them to my website, of course. And then I tell them: if you really want to know what I'm thinking about, read the blog. And they do.
4. Last but not least, a way to interest people your services. This is admittedly very indirect. If someone reads the blog, and he likes what's in there, and happens to need help, he might reach out. It's not the main purpose of the blog, but it's a purpose nonetheless.

So, for an effective business blog: work on the content, make yourself visible, connect with people. Keep the ads, if you must have them, limited and low-key.

marketing, blogs, business blogs

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Why you need an elevator pitch

The concept of the elevator pitch is likely as old as the elevator itself. A brief definition from Wikipedia: "An elevator pitch (or elevator speech) is a brief overview of an idea for a product, service, or project. The pitch is so called because it can be delivered in the time span of an elevator ride (say, thirty seconds)."

But lost in the conventional wisdom about elevator pitches (what should they contain? etc.) is another question:

Why are they needed?

Entrepreneurs often wrestle with this question. Primarily because creating an elevator pitch is difficult. On the one hand, because an entrepreneur knows her own vision so deeply she can find it hard to summarize. Or she doesn't know it well enough to be able to summarize it.

So, the easiest thing to do is fold the tent. No elevator pitch.

Not so fast. If you don't have an elevator pitch, you will fail to reach many people who could be helpful to you, or who could benefit from your product or service. Such as:

1. People you meet. That guy eating alone during the conference might be somebody who could be important to you. Or he will know somebody, or know somebody who knows somebody.
2. Friends. They will ask you "What are you doing now?" And many, many of them will want to help you if they can.
   
3. People who happen onto your web site. (How much time do you think you have with them? Thirty seconds, if you're lucky)
   

And finally, if you can't summarize your business idea, product, service or business itself into an elevator pitch, chances are it's not well-formed enough to be successful anyway.

So for all the reasons described above, develop your elevator pitch. (If you'd care to comment, I'd love to see your own elevator pitch. If it's short enough, it should fit well within the comment block!)

(Picture via about.com)

strategy, entrepreneur, marketing

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Ann knows segmentation

Friday's "Boss Talk" feature in the Journal presented an interview with Ann Taylor CEO Kay Krill. Most fascinating to me about the article was the disciplined and effective way Krill and her team created distinct brand identities for their two stores, Ann Taylor and Ann Taylor Loft.

They created two distinct personalities for the women who shop at each store, complete with detailed descriptions and words representing their likes and dislikes. Ann is "appropriate" and "refined." Loft is "friendly" and "spirited" and lives in a house filled with "happy colors"--describing them as if they were two real people. The management team used these profiles to make decisions about what type of clothes to feature at each store. Says Krill:

I would not want to see a hoodie sweatshirt in Ann Taylor. But a little hoodie top in Loft would be OK.

This is a good illustration of one of the toughest assignments in marketing. Establishing a distinction between two offerings--in this case, women's fashion retailers--that share a lot of similar components without them overlapping too much is difficult. It requires thinking hard about what the differences are, then acting on those in a disciplined way.

If that hoodie top at Loft became the biggest seller in store history, do you think the Ann Taylor store GM would ask to stock a version? You bet. Would she be allowed to? That's the test.

marketing, segmentation, retail

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Are delays in complex software inevitable?

Yesterday's Wall Street Journal featured Verizon's frustrations with Microsoft's IPTV software development progress on its front page. Microsoft's Vista operating system has been delayed again and again. Same with Office.

Apparently the 24,000 software engineers at Microsoft can't code. (Only kidding!)

Delays are not just a Microsoft problem. I've worked at four different companies who developed enterprise software and we almost never hit our original target dates, using whatever methodology. Large-scale software development has been unpredictable since the days of punched cards and Fortran.

Agile software development methodologies and Web 2.0 tools and methods can help improve matters, but software delivery dates will remain uncertain.

So let's look beyond technology to a significant part of Microsoft's problem with product delays: marketing. In short: their urge to preannounce ship dates for products.

Google doesn't do that. They don't announce products at all. Google's products appear on the internet and seep into usage, in beta. At some other point they become "released" and then they start marketing, at some level.

Apple doesn't preannounce either. They keep their products secret (to an extreme) until they are ready. Then Steve Jobs convenes a summit meeting and unveils products that will ship within a month at most.

So why does Microsoft insist on preannouncing? They benefited from this tactic in the 1990's, scaring off competitors and causing users to hold off making competing purchases.

But their software is more complicated now, many competitors have fallen by the wayside and their users don't care as much about the precise date of the next release.

So, memo to Microsoft: stop forecasting ship dates. Their marketers will hate it, as it makes it more difficult to plan their huge launch events. But if they don't have to explain why Vista 2010 is late four or five separate times, they'll find it's worth it.

marketing, software

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Vince the fashion label: lessons in building a brand

In another of those stories you see during Fashion Week in New York, the Times profiled a successful fashion label named Vince. Started in 2001, the label planned to grow to $12 million in annual sales; they are now four times that size.

This story comes on the heels of another Times story featuring prominently "Displaced Fashion Persons"--i.e., unemployed designers--Tom Ford, Olivier Theyskens, Jil Sander and others. (Update: Nina Ricci has just hired Mr. Theyskens.)

Why has Vince succeeded while others are struggling? The Times article has some clues:

1. Understand and service the channel. Two of the founders had retailing experience, and the Times article opens with the label's president, Christopher LaPolice, visiting employees at Saks Fifth Avenue before the store opens. This kind of relationship gets his line better support, LaPolice feels.
   
2. It's the products, stupid. The article states: "Instead of promoting a designer, the standard method of building a fashion brand over the last 30 years, Vince focused on the products."
   
3. Find a niche. Vince's original clothes were "cashmere hoodies, pants made of luxury fabrics but cut in relaxed silhouettes, simple T-shirts that fit well — all items harder to find in department stores than you might guess."

And here are some of my thoughts:

1. Pick a great name. (See a prior post on good naming techniques.) It's grounded in reality (the label's original designer was Cynthia Vincent), yet it's fresh and informal. It also has an air of the ironic--Vince, the prototypical guy name, is a ladies' clothing line.
2. Make quality and accomplishment an objective, not growth, and growth will follow.
3. Stick to what you know. The Vince founders had started and sold off a successful label, Laundry, in the 1990's.
   

(Picture: Actress Kaley Cuoco wearing a Crochet Shrug by Vince, via Couture Candy)

marketing, innovation, retail, fashion

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Time for a new strategic-planning process

Monday's Wall Street Journal In The Lead column discussed what the CEO changes at Ford and Viacom say about strategic planning. In short, if you haven't discarded your once-a-year strategic planning process, it's time. Says the Journal:

Companies still wedded to traditional planning each year make just 2½ decisions that are "major," that is, with the potential to boost profits by at least 10%, according to a survey of 156 large companies by Marakon Associates. By contrast, companies that spotlight a few priorities and regularly hold strategy discussions -- instead of reviewing scores of business unit plans all at once -- make more than six big decisions each year, the study found.

Running a company, even a large one, is like driving at night in unfamiliar terrain. You may know your long-range objective. But you can only see up to the range of your headlights. Beyond that is a mystery.

So that once-a-year strategic plan is next to useless. As stated above, it slows the decision-making process and is too detailed to be valuable to the units trying to manage the business. Here's an example of a bureaucratically-created plan (does this type of plan work in any setting?).

Also, the time required to put together that strategic plan typically is months long. Given the speed of change in most industries today, that's just too slow. I've seen, on several occasions, strategic plans incorporating upwards of a thousand hours of work be obsolete on the day they're released.

For the business unit I ran most recently, we were bringing a brand-new product to market. We created a strategic plan during three-times per year half-day meetings of the entire group. This plan was usually ten pages or fewer of bullet lists and action items. A smaller team met monthly to share learning and adjust the plan as necessary, and the core leadership team of three met nearly every day.

We made one hundred or more adjustments to the plan in the first year. Just as you might while driving in unfamiliar terrain.

strategy, strategic planning

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Trying to market music? Don't try to predict hits

This month's Harvard Business Review discusses a study by three Columbia academics on the effect of social influence on selecting music ("Marketing in an Unpredictable World" - $$). Students were grouped into "worlds" and allowed to see how many others in their worlds had downloaded certain songs, compared to a control group who didn't have any information about who else was listening to what.

There were three main findings of the study:

First, social influence increased the inequality of outcomes in all eight worlds, meaning that popular songs were more popular and unpopular songs were less popular. Second, however, which particular songs would turn out to be successful in any given world was more difficult to predict. And third, both inequality and unpredictability increased as the strength of social influence was experimentally increased.

It is well-understood that social networks influence music purchases (what are the metalheads listening to? the goths? etc.). And it's always been impossible to predict certain hits (where did "Mambo No. 5" come from? Or "Come On Eileen"?).

Given the rise of the internet, especially social networking sites like MySpace (never mind the decline in terrestrial radio), social influence--electronic word-of-mouth--is increasing. This study clearly refutes the conventional wisdom that the best way to run a music business today is to find raw talent, create hit songs for them, and force them to the top of the charts via marketing.

The HBR article recommends that media companies instead make lots of smaller bets, monitor the market carefully, and adjust to it as it changes. "Marketers," they conclude, "should therefore abandon the notion that they can either anticipate or determine specific outcomes and instead develop their ability to measure and exploit consumer demand as it arises."

Marketers hate losing control. Can they embrace this world where groups of listeners decide what hits are, and the record companies simply respond to those groups? We'll see.

marketing, music, media

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An early example of the power of the internet (salute to Jon Postel)

Rewind back to 1984. The Mac had just been introduced (it was a beige cube the size of those blocks of ice people carried with tongs). Van Halen was topping the charts. The World Wide Web was a decade away.

I have just started my first job out of college, working for GTE Labs (Sylvan Road, Waltham, Massachusetts), in their IT group. I am helping develop a local networking strategy for the labs. (Never mind that I don't have the first bit of practical knowledge.)

And there is this new networking protocol called TCP/IP that people are starting to talk about. "John," says my boss, "take a look into this TCP/IP thing and see if it's something we should be working with."

Where to start? There is nothing in the company library, the public library or the bookstore (even special-order--remember, no Amazon.com for another twelve years).

Flummoxed, I go back to my boss. He says, "Why don't you try posting a message on CSNet?"

I stare at him blankly.

"It's a network of colleges and labs. Try putting a post on this electronic bulletin board and see what happens."

So I do. My post, more or less: "I am interested in learning more about TCP/IP. Can anyone help me find some resources on this subject?"

Within a week, a large shipping box appears at my cubicle. Inside are the complete TCP/IP specifications, including, IP, UDP, TCP, FTP, Telnet and SMTP. With a note: "Read these in good health. Best regards, Jon Postel, Information Sciences Institute, University of Southern California."

"Who is this person?" I think to myself. Then I read the specs. For several of them, he is the author or co-author. Oh. And I am a kid barely out of college who can't even spell TCP/IP.

This is the internet in a microcosm. Every cool thing that's happened in the internet since is in some way related to this event (think MySpace - Ebay - chat - email - blogs - wikis - etc.). Person A is interested in something. Person B is too. They connect as peers. Information flows from Person A to Person B (sometimes in reverse, too). And ignorance dissipates a little.

Thanks again, Mr. Postel.

internet, collaboration, innovation

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A simple solution to fashion knockoffs?

It's Fashion Week in New York, and once again the subject of fashion knockoffs (do they help or hurt designer sales? how to stop them? etc.) is in the newspaper (see today's article "Can Fashion Be Copyrighted?" in the Wall Street Journal) and on the radio (a National Public Radio piece today as well).

Intellectual-property lawyers are weighing in on the subject as well. Here's an interesting paper on the subject from a Boston College law student (in 1997! This issue has really been around forever), and another from a Harvard law student in 2000.

Knockoff manufacturers are unanimous in stating that they help designers, not hurt them. The Journal states: "Joel Paris, who offers some 2,000 handbag styles resembling designer models on his Anyknockoff.com Web site... maintains that knockoffs can boost a design house's profile."

But rather than focus on what can be done to inhibit and punish infringers, what if there were a more straightforward way to navigate between complete freedom to copy, on the one hand, and a completely proprietary market, on the other? Would that be something the fashion industry might be interested in? (Apologies to Bob Ryan.)

It's been done in the music industry for a hundred years. Songs are copyrighted, yet anyone can record or perform a song, as long as they pay a standard royalty to the copyright holder.

Couldn't this be done in fashion? Allow copyrighted designs, yet allow knockoff manufacturers to register their copies and pay a standard royalty (say a percentage of the wholesale price) to the copyright-holder.

That way, the designers would have protection (and participate financially in any knockoff), the knockoff artists could still function, and if there were any promotional value in having the knockoff, it would continue.

marketing, fashion, intellectual property

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Worst Practices In Customer Relationship Management

We are adding onto our house. My wife is managing the project, and I'm trying to stay out of the way. It's been a long process, and it's almost complete. Everything looks great. But yesterday I got a taste of what she's been living with for the last year (caveat: our general contractor has been excellent throughout). Yesterday's case study? The company finishing the new hardwood floors.

What she experienced are some of the worst practices in customer management. If you employ these practices, you are guaranteed to have lousy relationships with customers, no matter how good your products and services are. (My wife tries to explain this to the flooring guy, and he just can't get it. Isn't it good enough that the floor looks good? Answer: no.)

Set unrealistic expectations, then spring surprises on your customer: the flooring company told my wife that the polyurethane would be "low-odor" water-based. Instead, when the finisher arrives, we ask if the poly will be low-odor. He says, "Oh, no. This is the smelly stuff." (Note: my wife has learned you have to confirm every commitment a subcontractor makes. Otherwise it can be as if the commitment never existed in the first place.)

Don't communicate: it would have been OK if the smelly polyurethane were used, AS LONG AS WE'D BEEN INFORMED IN ADVANCE and had time to prepare.

Bait & switch: The office told my wife: "Yes, the owner is available and will be doing your work himself." Did he show? No, sir. Why commit the owner if he was at risk of not showing? Any good feeling we had after the call with the office was more than erased when the underling showed up. By the way, did anyone say, "Look, I know we told you Fred the owner would be doing your project. Unfortunately he's not available. Jerry is very qualified and he will do a great job for you." No.

Don't listen: When my wife told him she was disturbed they'd changed the polyurethane from low-odor to smelly, the owner told her, "Well, we've had some issues with the quality of this product." That wasn't the issue now, was it? The issue was that they'd never told us!

Turn the complaint back on the customer: My wife told the owner that when they'd applied earlier coats of the smelly stuff, the residual odor was strong and it bothered us when we tried to sleep. He replied: "Well, I smell some paint or something now. That's much stronger smelling than our product."

Now, I know what you're thinking: "Of course a small, local businessperson would employ such poor practices, but I work for a large company. We are ISO-certfied, or Six Sigma, or whatever."

Don't be fooled. I've seen variations of these practices at world-class companies over and over again. No one is immune. They are like any bad habits: easy to learn, hard to unlearn.

Look for these worst practices around you, and work hard to excise them. It'll do your company and your customers a world of good.

customer relationship management, marketing

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A startup consultancy for $1000 down and $40 per month

There's been lots of talk on business model innovation, but you haven't read much on how radically new technologies have changed the professional services business. Online collaboration tools, email, portable computing and wireless have all increased consultant productivity and lowered cost.

Business Week recently described how to start an online retail business for $3,000. Well, we've got them one better. How about a consulting business for less than $1,000?

Time was, a consultant needed either a corporate affiliation (how expensive is that?) or a sizable infrastructure including an office, telephone system, staff, computer network, etc. Today, many of these items can be outsourced or shared. Consultants can both use subcontractors to staff their projects and be subcontractors themselves. With the internet, clients can come from anywhere, and with strong local networks, bartering can lower cash outlay substantially.

It's a whole new world out there, where the value a consultant and his network can bring is most important, and the size of the office, or prestige of the address fades appropriately into the background.

Here's a business model, using products and services readily available in the marketplace, to run a consulting business on a radically reduced budget. Will it offer a professional appearance to prospects? More to the point, will it work? We'll see. I'm trying it myself.

Upfront Costs:

Used laptop	$220.00
Office software	$0.00		OpenOffice.org
Accounting software	$200.00		QuickBooks
Web site development	$0.00		DIY using Yahoo Sitebuilder
Wireless email device	$100.00		With 2-year contract
Corporate filing fee	$125.00		State of Pennsylvania
Business cards	$80.00
Business card design, logo	$0.00		Barter
Legal	$0.00		Barter
All-in-one printer	$250.00
Total	$975.00

Ongoing Monthly Costs:

Home office	$0.00
Broadband	$0.00		Shared with home use
Wireless voice	$0.00		Shared with home use
Wireless email	$20.00		Verizon EVDO add-on
Web hosting, email, etc.	$12.95		Yahoo Small Business
Business line	$4.00		Skype with call forwarding
Salaries	$0.00		Use subcontractors as required
Total	$36.95

innovation, business model, consulting

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Will regional WiFi networks change the US broadband landscape?

Today's New York Times reported on an initiative by IBM, Cisco and others to create a regional WiFi network in Silicon Valley. The consortium will offer free basic WiFi (up to 1Mbps) and cover 1500 square miles and 2.4 million residents.

The typical US residential customer has two broadband options: cable modem service through their cable operator, or DSL service through the landline phone company. Prices are as low as $17.99 per month for very slow (768Kbps) service, and go up to $40-60 or more for 6 Mbps service from the cable companies.

Meanwhile, residents of other countries, such as South Korea, enjoy speeds of up to 20 Mbps at competitive price points. There are lots of factors at play, including high population density in South Korea making wiring broadband more efficient. But greater competition is also a factor.

So, will these regional wireless networks be the answer to Americans' need for more broadband options?

There's room for optimism. Municipalities across the country such as Philadelphia and San Francisco are embracing WiFi for city-based networks (see MuniWireless.com for a running status on these and other municipal initiatives). Large companies such as those named above, as well as Intel, are investing in these networks to create markets for their equipment and services. Sprint owns a swath of spectrum on which they plan to run a wireless broadband network. So the proper tailwind is there for WiFi and WiMax, as they emerge.

Technical problems will follow. They always do with new technologies. Let's hope that the consortia sponsoring these networks, and the munipalities and companies that are hosting them, persist through the obstacles. For broadband customers, the more options the better.

innovation, broadband, wireless

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Success of Helio, ESPN Mobile, Disney vital to US MVNO market

Business Week today published a story on Sky Dayton, the founder of Earthlink (an early US internet service provider) and currently chief executive of Helio, a Mobile Virtual Network Operator which is a joint venture of SK Telecom and Earthlink. Dayton is placing big bets on alternative wireless, both via Helio and Boingo, the WiFi hotspot aggregator he also heads.

Helio has gotten a lot of press recently, mostly unflattering--see this story from CNET.com. After one quarter, they are getting crucified for missing their numbers. (Question: what startup ever made its first quarter numbers? Answer: the one that didn't advertise its projections.)

Ditto Mobile ESPN and Disney Mobile. The gleeful headlines smack of schadenfreude ("US MVNOs Fail To Capture Market Imagination," "Merrill Lynch: Time To Pull The Plug On Mobile ESPN").

These three are the highest profile startups from the US MVNO market, which has been around in some form for many years, but which accelerated with the success of youth-oriented MVNOs Virgin Mobile and Boost Mobile.

Why should we care if ventures like Helio succeed or fail? After all, large parent companies finance them and have plenty of other profit options if their MVNO plans wash out.

To put it succinctly, do we want a wireless market in the US with roughly four players providing very similar services at similar prices? That's what we have now. Or do we want one with eight, ten, twenty vibrant choices, challenging each other to deliver better services, faster, at good price points?

If ESPN, Disney and Helio give up the fight, we have little chance of the latter result. People will find other ways of investing their money , so new MVNOs will stop emerging. The carriers will stop enabling MVNOs. And while Verizon, Cingular, Sprint and T-Mobile provide fine service, innovation in wireless services will suffer unless the MVNO market in the US stays with us for the long run.

marketing, innovation

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Everyone Sells

Over the weekend, I came across a student guide from a course my wife took years ago. She worked for a computer services company and all the technical, training and marketing personnel could take this course.

It was called, "Everyone Sells."

In the years since, I've thought about this course and how important its concepts are for selling complex products and services to the business market. In short, selling takes more than the salesperson. It takes more than the sales organization. It takes more than sales & marketing.

It takes everyone. (Here's a nice article from Inc Magazine on the same subject.)

Operations must demonstrate that they can take on a new piece of business without disruption. Prospects remember very little of the specific content of their site visits, but they will remember general impressions very deeply. Was the operations center neat? Did people seem to know what they were doing? Was there an environment of chaos, or of control? Were there metrics?

Engineering must demonstrate mastery of their subject area, an openness to customer input, and a focus on delivering quality product, not just conceiving it.

Customer support must show how well existing customers are taken care of. Employees working efficiently and calmly, in a problem-solving environment, will make a prospect feel that they'll be well-taken-care-of, too.

Account management must be able to deliver strong customer references.

Perhaps most importantly, senior management must demonstrate via their actions that they welcome and value new business, and that they are committed to the success of their new customers. (I've found it surprising how many senior managers find helping the new business process inconvenient or unpleasant.)

And everyone who is put in front of a customer must be able to communicate verbally. This kind of training is woefully absent in most companies for "back-room" personnel. Yet these people have expertise that is often important to new customers, and they need to communicate it.

Think you aren't involved in the sales process? Think again.

marketing, sales, B2B

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Reading the blogs - week ending 1 Sep 2006

Lots of interesting things in the business blog space this week.

The terrific Business Innovation Insider blog, affiliated with the Fortune Innovation Forum, posted on a trippy idea: how massively multiplayer games can be used as an alternate model for organizing companies. In another post, it discussed how a "lunatic fringe" of engineers at Texas Instruments is the source for many of its most innovative new products.

The Wall Street Journal Law Blog covers the interesting topic of emerging technologies to protect and certify sensitive email traffic, including messages that destroy themselves (Mission: Impossible lives!). The Law Blog also presents an update on the first options-backdating-related trial of executives from Brocade Communications. Surprise: they pled not guilty.

If you're an aspiring business-focused blogger, Business BlogWire lays out helpful tips for increasing traffic to your site. A sample: "The better you track page views, the more easy it is to think about improving your traffic. So get a good stats program like Sitemeter or Google Analytics and use it to see what your traffic is currently like."

Finally, in Business Week Blogspotting, Stephen Baker recounts the advice he gave his college-bound son as he began his freshman year. I'll have to file these for the next thirteen years, till my oldest son starts college.

Have a great weekend, all.

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