investiledysfunction

My wife and I just ordered Dominos for the first time in a long time.  Blame it on laziness and a desire to eat empty unhealthy calories occasionally.  In true New Yorker fashion, we’ve also chosen to have our pizza delivered even though it would only take 5 minutes to walk and get it.

To take things even easier, Dominos now lets you order online.  This removes the need to call and wait on the phone.  It also lets me basically continue to work as the process is pretty easy.

After ordering, the pizza technology and innovation go a bit crazy with Dominos Pizza Tracker.  As the name implies, this lets you track your pizza.  When I first saw this, I thought, this is ridiculous.  But the Tracker is strangely compelling.  I like to know that Lorenzo started making my pizza at 859pm and when it goes out the door so I know when it is likely reach me.  This lets me plan my time better (I can do errands, make some phone calls, etc).  The pizza tracker just made delivery a bit more convenient if that was even possible.  Nice job Dominos on the innovation front and your use of technology to make your customers lives easier.

One note of caution - please don’t start a social network for pizza lovers and screw things up now.

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.

My last post was about companies going after the underserved in order to expand the markets available to them.  This effort of going after the underserved is what I have deemed pursuing Green Prairies.  To understand the name, read the prior post (link here).

Today, I read about Denis O’Brien, the founder of Jamaica-based Digicel, whose company embodies the Green Prairie strategy.  He’s set up his cellphone company in places others avoid like the plague, e.g., Papua New Guineau, Wester Samoa, El Salvador, Vanuatu, Haiti, East Timor and 27 other generally impoverished and inhospitable territories and countries.  It seems to be working as he’s built a $2.2 billion personal fortune with this business.

O’Brien’s strategy which he articulated in the 8/11/08 Forbes is “Get big fast.  Damn the cost.  Be brave.  Go over the cliff.  The competition doesn’t have the balls.”  Not the most common way to articulate one’s strategy, but you get the point.

He’s already tackled these poor markets and is making money and is now thinking about entering the USA where only 80% of the population has a cellphone.  If he does this, US incumbent carriers may be in for a fight.  Digicel has all the attributes of a disruptor.  They go after a market which nobody cares about and then move upstream.   If they can serve the impoverished profitably, their model can work as they move up the ‘foodchain’.

Digicel’s success is attributable to many things including O’Brien’s understanding of the importance of resource allocation.  “If you have limited resources, you have to be more clever, skillful, more defiant,” he commented in Forbes.  Digicel demonstrates why today’s little startup gnat can be tomorrow’s royal pain.  Although at $2.2B, Digicel is beyond the point of being a gnat.

He also has a penchant for risk-taking.  When asked about entering Fiji, he comments, “Everyone was saying, ‘Don’t go.  It’s unsafe.‘”  Accepting risk is part of innovation and pursuing green prairie strategies.   This is why it is always perplexing when companies make risk one of the deciding parameters they use to determine which innovative projects to pursue.  They’ll argue that a project is too risky to pursue.  To compound things, legal, corporate communications and others who aren’t paid to be innovative will confirm these notions.  In fact, if the risk is high, the main dimension to consider is whether the reward is sufficiently large to warrant taking it.  You get rewarded for managing risk well.  Ultimately, if it’s easy/not risky, others will do it. That’s easy.

Digicel is showing that taking risk and managing it well can be very profitable.  At the same time, they’re doing this with less resources.  Their established competitors will not be able to go downstream nor will they want to believing it is too risky, too small of an opportunity, etc.  In the end, they’ll miss the Green Prairie as Digicell lays claim to it.

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.

Amtrak is federally subsidized and to call it’s forecasting capabilities a train wreck (pun intended) would not be an overstatement.  The pseudo-company hasn’t made a profit or met its ridership goals in 37 years.  And yet they’re asking for more money (to the tune of $15 billion) to replace old locomotives and rail cars with more efficient models.

There is a rule of corporate portfolio management and the organic growth it aids and that is you compare promise vs performance for projects and then give resources to those areas where past results and future opportunities are best.  I sincerely doubt that Amtrak’s past projects have done very well, and so it’s fair to assume that this time is not going to be different.  From a federal resource allocation perspective, there are probably better places to place bets.

Managing Director, Pierre Pringuet, of Pernod is looking for some tequila and bourbon.

And while it may make sense for Pernod, the 2nd largest drinks-maker in the world to think of such acquisitions, the organization has for a variety of reasons realized that “organic growth is a must” as Pringuet told the Wall Street Journal in the 7/24/08 issue.

The company’s liquor cabinet is full of brands,  many of which have been gotten through acquisitions (some quite pricey), and now the time and effort turns to generating organic growth.  This is where Mr. Pringuet and his team’s management prowess will really be tested as they aim to generate growth through their actions and investments in marketing, product development, sales, etc.

It’s good to see they’ve seen the light with reference to organic growth.  Now comes the hard work.

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.

Given all of our work focusing on organic growth and its predictive value for revenue growth and total shareholder returns (TSR), I am always glad to see organic growth getting its due in the media.

So when a Financial Times headline from yesterday pronounced that “Kraft Chief Targets Organic Growth“, that was music to my ears.  Kraft CEO, Irene Rosenfeld, commented that the company’s “three-year plan is predicated on organic growth” although she did leave room for M&A to shore up the company’s international footprint.

It’s good to see prominent, world-class companies realizing the power of organic growth and basing their goals on growth measures tied to it.

A brief history:  Based on my iPhone rant, I received a link to a site that offered “Pwnage option for Windows Users“.  Does that mean anything to you?  Yeah me neither until very recently.

And so upon reading this bit of gibberish, I forwarded it to one of our super talented interns in the hopes that she’d decipher this bit of lexicon for me.  And she did.  She explained that for computer geeks and gamers, and in my view, in some altered reality, PWN (pronounced “pone” like ‘own’ with a p before it) means “own”.  So when playing videogames, if one player says to another “I pwn you”, they’re saying “I own you” which translates to “I own you.” (translation not necessary)

From my perspective, this new language is utterly ridiculous, but that is besides the point.  This whole exhange underscores the need to involve everyone in your innovation efforts.  There is no monopoly on perspective or ideas.  The right or most useful ideas and perspectives are not resident with just a handful of the most senior people or even just with the creative genius you’ve anointed as your head of innovation.

These perspectives are around you in the people in your organization and often at varying levels.  We often find a dichotomy exists between the impression of senior leaders and junior staff when it comes to innovation.  The senior team thinks the company makes decisions quickly and is innovating in the right places but when you ask the same question to junior staffers, the answer is often diametrically opposite.  The truth is probably somewhere in the middle. The main things this underscores are:

1. The need to develop communication paths between all levels of people within the organization so different perspectives and experiences are captured and considered when thinking through or developing an idea.  This will help you generate better ideas.
2. The development of these communication pathways also is great for motivation.  When people understand the direction of or why decisions are being made about certain projects and are involved in these decisions, they become invested, and this serves to enhance the process and output of innovation.

Nobody PWNs all the good ideas in the organization so it’s good business to get everyone involved.  If you’re a N00b to this language called l33t, learn more at Urban Dictionary.

I mentioned the bbq I went to this past weekend in a prior post, but I forgot to post a great image I captured when we were leaving.  It is one of NYC’s famous hot dog stands being hitched up to the owner’s BMW as he closes up shop for the day.  You have to love NYC.