investiledysfunction

I’d previously written about “Pay As You Go Models” and said, half-jokingly, that the idea could be applied to airline passengers where they could be charged based on their weight.  Forbes Magazine quantified the extra cost of big passengers which I wanted to share.  The impact is 176.4 million gallons of fuel which costs $538 million. Although they’d never do this, for an industry which is hemorrhaging money, every penny and pound helps.

Oddly enough, that’s a picture of my dad playing Nintendo’s Wii Fit which I snapped one morning when home visiting my parents.  In fact, my parents who’ve never really been fans of video games actually went out and bought a Nintendo Wii so they can play the Wii Fit.  My mom is pretty industrious and has decided that she should purchase several more to sell on eBay, but that’s a whole other story.

The short of it is that my parents are addicted to it.  My father does it for 30-45 minutes a day as does my mom.  This is the genius of going after what experts will call white space or pursuing blue ocean strategies.  To coin my own term, I’m calling these green prairies as it seemed a color describing a large space was necessary.

And so Nintendo has done this phenomenally well.  Instead of pursuing the hardcore gamers with their first person shooting games, Madden football updates or a game that lets you carjack civilians although that sounds like a great deal of fun, Nintendo decided to go after the “underserved”.  And as they’ve recently overtaken Sony in the USA, it seems they may be on to something.

Unfortunately, this is not a strategy that many large organizations take when it comes to innovation.  They go after the same old slice of the pie and find new ways to divide that up even further, and as a result, there are whole sets of customers left out but who likely have money in their pocket they’d gladly part with if the right offering came to light. Going after the underserved doesn’t mean the people at the bottom of the pyramid as CK Prahalad has made so famous.  It might mean this, but as Nintendo has shown, the underserved can also be people with money.

The problem with going after the underserved is that it requires taking risk.  The market research, the gurus, the pundits, the industry experts, etc will all say that there is no opportunity here because their worldview is narrow and confined to the market as they’ve defined it.  Your internal experts in the business, risk, strategy, legal, etc who are often Chief No Officers will also come up with a litany of reasons to do nothing.

Therefore, going after the underserved requires going against the prevailing wisdom (I use the term wisdom loosely here).  It is also risky as it will require changing your own organization’s view of how to interact and deal with this underserved population.  This population is underserved for a reason - because your current offerings are unattractive to them (for price, quality, etc reasons) or just not catered to them.  Just putting a new package on your existing product and calling it “Product for the underserved” won’t work.  You’ll have to understand what they want, how they want it, why they want it, etc.  And in many instances, the people who’ve worked for so long in your organization on serving existing customers may not be the best equipped to do this or even be all that willing because it may be seen as a competitor to the ‘old guard’.

But, the model of going after green prairies (I’m really hoping this terms sticks) works as shown over and over again.  Nintendo is just one prominent example.  Yellowtail wines, Cirque du Soleil (both discussed in Blue Ocean Strategy) and the Tata Nano are all examples of products and companies going after the white space - sorry I meant green prairies.

But doing this requires having the right people at various levels of the organization and a willingness to zig when others are zagging.  There is personal risk here if you are the person in charge because if it doesn’t work, people will come after you and blame the company’s failure on your risk-taking.  If it works, people will write Harvard case studies about you, the media will make anoint you a superstar, and other companies will mindlessly follow what you’ve done thinking that your “best practice” can be exported to them and somehow miraculously, they’ll get the same results.  There’s an overused concept around this that many talk about — it’s called risk-reward.

If you were hired to or feel it best to maintain the status quo, don’t bother finding the green prairies.  Someone else will and then they’ll write about what a dinosaur you are.  If you’re inclined to spend some time carefully considering opportunities, you might develop some pretty interesting ideas and see that green prairies are where it is at.

I’ve previously written about Randy Pausch’s Last Lecture which is a fantastic view on living life by a guy who unfortunately was told he didn’t have much more time to live his own.  It’s funny, touching and full of great life lessons.  Today, sadly, he succumbed to pancreatic cancer and passed away.

For those who haven’t seen the Last Lecture, please check it out on YouTube (link is here).  It’s 4:42 very well spent.

A barbecue is a place where I expect to see some friends, enjoy some good food and witness the power of the internet in matching people with talent, however niche, to those in need of that talent.

Okay - maybe not the last one, but let me explain.

Old-school barbecues - The host ends up working the grill the entire day/night and so cannot mingle with guests and enjoy themselves.  This is a problem.

New-school barbecues - Our friend went on Craigslist yesterday and put up a post indicating he was looking for a grillmaster.  Within a few hours, he got nearly 20 responses and selected one person sight unseen and without even speaking to him.  His selection was made based on the quality of the email he received.

The outcome - The grillmaster was tremendous.  The food was good, and our host enjoyed his evening.

I fall in love with the internet more and more every day.

The idea of customer lifetime value shows that retaining an existing customer is often more profitable than acquiring a new customer.  The math and the logic make a lot of sense unless of course you are a monopoly.  When you are a monopoly, you needn’t worry about retention since your customer is an indentured servant.

Manhattanites know a lot about monopolies or in some instances strong oligopolies.  My least favorite monopolist entity in NYC is Time Warner Cable.  Unfortunately, I’ve had to be tethered to them for the last 8 years.  TWC and I have a thoroughly dysfunctional and abusive relationship where the victim of the abuse is me.  And yet I still keep going back (monopoly).  If I had a choice, I’d have left some time ago for greener pastures but such is life as DirecTV, Dish and others are not viable options (monopoly).

My latest example of TWC’s abuse started this past Sunday when my home internet connection went down.  This is not ideal.  Here is a synopsis of my conversations with them.  (note:  somewhat lengthy)

Sunday afternoon

Fast forward to today, Thursday, July 17th.

4:50pm - Tech arrives cheery/happy with no mention of being late.

4:52pm

They gave me a free month of cable TV but that is pathetic compensation for the nearly 6 hours of my life I will never get back that have been wasted on TWC not to mention the followup calls I will likely make to get requisite credits.

There is not one element of this experience that endears me to TWC.  But given history, I’ll look forward to a repeat of this in about 6 months.  And the customer abuse continues…

Till next time.

Talon Merchant Capital of Chicago, a private equity firm, has struck a deal to purchase Lava World International from Haggerty Enterprises also of Chicago.  This deal is not notable because of its size or implications for the economy but because Lava World International is the world’s largest maker of lava lamps.

Yes lava lamps.  I bet that’s not a term you’ve heard in a long while.

More interesting yet is that the company still sells 1 million lava lamps per year in the range of $30 to $150 with some models going upto $1100 (from the 7/1 Financial Times)

So while I’d errantly thought Lava Lamps had gone the way of the Brontosaurus and were no more, boy was I mistaken?  1 million of these things sold per year and 75% of those sales coming in the USA.  Eventually, this psychedilic kitsch will have its time in the sun with family rooms in China, Russia, Malaysia, Tanzania and all places in between being infested with this marvel of modern science and Americana.  I’m sure the folks at Talon are hoping for this.   It goes to show you that (1) there are probably lots of underappreciated and profitable market niches out there in esoteric and long-forgotten markets and (2) there is still no accounting for taste.

Prestigious license plate numbers are all the rage in Abu Dhabi per a July 1st Wall St Journal article.

“Earlier this year, Abu Dhabi businessman Saeed Khouri made headlines and the Guinness Book of World Records when he paid $14 million for the tag (car license plate) sporting a ‘1′”.

Innovation is a good thing.  Usually.

In the case of the LZR swimsuit made by Speedo, we’re seeing great innovation that needs to be reigned in.  For those unfamiliar with the LZR, it is for lack of a better description “spandex on crack”.  Swimmers wear it and it contours their body and does all sort of other crazy things that ultimately makes swimmers more aerodynamic and faster.  Here’s a picture for the curious.

Since the LZR’s release, 41 world records have been set and 37 of the swimmers setting them were wearing the LZR.  Hmmm…I think me sees a trend.

So first of all, I must tip my hat to Speedo who I always thought of as the makers of ill-fitting banana hammocks for coming up with this technological marvel.  I must also say that I think the Olympics organizers should ban the LZR from the Olympics (I know they don’t care what I have to say but I’ll put it out there anyways)

As Italian swim coach Albert Castagnetti has commented, the LZR is basically “technological doping” and he is right.  The Olympics are about human skill, talent, perseverance, etc.  With the LZR, two swimmers of the same exact caliber (impossible I know but indulge me) would have different times because one has the LZR.  The LZR is not cheap and so those who can afford it are advantaged.  Ultimately, the LZR is a performance enhancing swimsuit so like doping, it shouldn’t be allowed.

Enough on that topic.

But while on the Olympics and performance enhancement, lets talk about the prosthetic wearing runner who was disqualified from running.  Per the Engadget blog from earlier this year,

“Oscar Pistorius, a double-amputee sprinter, has been denied a shot at the Olympics… for being too fast. The runner — who uses carbon-fiber, prosthetic feet — was reviewed by the International Association of Athletics Federations (or IAAF), a review which found the combination of man and machine to be too much for its purely human competitors. According to the IAAF report, the “mechanical advantage of the blade in relation to the healthy ankle joint of an able bodied athlete is higher than 30-percent.” Additionally, Pistorius uses 25-percent less energy than average runners due to the artificial limbs, therefore giving him an unfair advantage on the track… or so they say.”

We’re on a slippery slope with the Olympics.  Here are some enhancements I expect to see by the 2020 Summer Games.

• Javelins with engines
• High jumpers with jet packs
• A USA basketball squad that plays like a team

OK.  Well, I never thought Speedos and proshetic limbs would make it into my Brilliont blog, but there is a first for everything.  I’m off for a swim.

We do lots of work around innovation and one of the things we do is keep on top of what is going on out in the marketplace especially amongst new, innovative startup companies.  To this end, we have created a database of 6000+  innovative companies to ensure we’re on top of the latest & greatest technologies, business models and ideas.  The database grows basically daily and our knowledge of what is going on out there grows with it.

Oftentimes, our understanding of these innovative companies leads us to venture capitalists who provide the fuel (aka money) for these young companies to take shape and grow.  In recent work on green companies, I came across an article on Vinod Khosla of Kleiner Perkins fame and now on his own with Khosla Ventures and his outlook on the green movement.

Khosla has created a presentation entitled “Mostly Convenient Truths From a Technology Optimist” and in this, he states that global warming is “a technology crisis, not a resource crisis” and that solutions to large problems require “a dash of greed.”

While we may not wish to admit it, Khosla is entirely right when we think about what will make green efforts successful.  Except for a notable and loud contingent of folks, many people are not going to go green unless their greed is satiated.  By greed, I don’t mean necessarily mean monetary greed although if going green will help people earn more or save money, that will help in adoption.  It could also be greed for their time (make things simpler so I save time or save effort).

Ultimately, Mr. Khosla hits on a very human sentiment which is “what is in it for me?”  He is using this to drive his own investments forward in various green tech areas.  Overall, efforts that are grounded in this idea of enlightened self-interest will do the best.  Whether it is for VCs like Khosla or for companies who wish to be more green or for individuals aiming to go green, self-interest will save the day.  For companies, being green in a way that impacts and benefits your bottom line will be much more sustainable and impactful than much of the public relations efforts tagged as green that we are seeing these days.

Multiple choice question.

Times are tough and your organization is feeling the pinch.  What should you do?

1. Restructure & reorganize - The street likes cost cutting.  Let’s do that.
2. Blame it on headwinds - With high oil prices, credit issues, commodity prices spiking and the housing downturn, let’s just tell folks we’re facing headwinds and chalk up poor performance to that.
3. Talk to a corporate psychic - Since I’m not sure what is going to happen, let’s talk to someone who does.
4. Invest in growth - While everyone else is freaking out, let’s cut non-strategic expenses so we can invest more in growth (marketing, R&D, innovation, etc) and then we’ll be sitting pretty when things turn.

1 and 2 are pretty conventional and strikingly ineffective and/or signs of poor management.  4 makes a lot of sense.  And surprisingly 3 is becoming an increasingly popular option for corporations to call when they need some help.  Scary, huh?

As Newsweek reports, “When business people need a crystal ball, they turn to consultant Laura Day, the ‘intuitionist’.”  So I’m not sure what an intuitionist is.  It’s probably similar to calling a magician an illusionist, but given the hokey image of psychics, the rebranding makes sense.  It does scare me that “psychic advisers are crossing over into the world of business” as Newsweek reports.

Has it really come to this?   What happened to old fashioned good management, e.g., picking the right places to allocate resources, hiring the best people, eliminating unproductive complexity, etc? Guess we can add psychics to the list of corporate elixirs.

For those who are interested, Brilliont has just started a Tarot Card reading service that helps you determine which businesses and products you should invest in based on input from the spirits.  Contact us if interested.