May 31, 2010 | Innovation, Strategy
Providers of what eventually become seen as “Legacy” systems have the most to lose from a disruptive innovation, so they usually fight the hardest to maintain the status quo simply because they have so much to loose, and the collective vision in the business obscures the potential of the innovation to disrupt and destroy their existing franchise.
Kodak, invented digital photographic technology, but the margins in photo processing business were too attractive for them to disrupt themselves. Kodak simply failed to take the next step and go beyond film, and as a result is a shadow of its former self, its cash cow of film processing virtually gone.
Similarly, Polaroid “owned” instant photography, they had figured out how to apply emerging digital technology to photography, but the sunk cost of the existing business model was huge, they were a virtual monopoly, they underestimated the market drastically, so they sat on it, believing they had too much to loose by disrupting the ststus quo. Too bad!
Look at the frantic legal rear-guard action that has been a feature of the on-line music war, and the current woes of the newspaper industry, in both cases the losers have been the former incumbents, who had the game sewn up for years, and had the resources to remake their business model.
The only way to ensure longevity, is to be the one disrupting your own market.
May 23, 2010 | Alliance management, Innovation, Leadership, Operations, Strategy
The momentum of innovation in the auto industry has picked up a notch, as a resurgent Toyota allies with Tesla to re-open the NUMMI plant closed earlier this year to produce a mass market electric car.
Toyota got the ball rolling 10 years ago with the Prius, and still leads by a mile in the eco car market, but the competition is emerging. This alliance with Tesla in the plant where Toyota allied with GM for its first plant outside Japan, demonstrating comprehensively that the quality of Japanese cars was not a function of some cultural phenomena peculiar to Japan, but simply a function of good management (a lesson GM never really got) may be just as significant.
It is reassuring to those of us who have watched Toyota transform the manufacturing mentality of the world over the last 30 years with their development and wide sharing of TPS, that after the recent stumble over quality, a stumble some predicted as the Toyota juggernaught seemed to be taking over the auto world, that they have been able to embrace the alliance, and return to the basic values that made them great.
With luck, they will be as open about the engineering and operational evolution of the JV electric car, and the lessons they learn from the alliance with Tesla, as they have been in the past. If so we will all learn a whole lot more.
May 19, 2010 | Leadership, Management, Strategy
One of the best leading indicators of commercial activity I know is the level of activity at 6.30am late in the trading week at the Flemington markets in Sydney. Whilst it is entirely qualitative, and covers retail activity in a single category, fresh produce, over a long period of observation it has nevertheless been a pretty potent macro forecasting mechanism.
Over the past few weeks I have been out there on a number of occasions, in the critical early hours. The standholders are all sounding worried, their sales are down, and the competition for the sales that are there is fierce, and there is even no real problem getting a park, and wheeling around a barrow.
You can show me all the macro economic models, spreadsheets, and learned forecasts you like, but none have the immediacy, intimacy, and sensitivity as a bit of time at the coal face.
My FMFM (Flemington Markets Forecast Model) developed view, is that we are in for a really tough time. In 6 months, coincidently when we are likely to be in the agonies of another federal election campaign, I will come back to this post, and see again, if the FMFM model is better than all the gumph spin, misinformation, and hubris coming out of our “leaders” in Canberra.
May 18, 2010 | Innovation, Marketing, Strategy
Digital interactivity has moved to the centre of marketing strategy. The launch of the iPad by Apple has moved it noticeably.
I have not seen one, just read the reviews, and when you sift through the hyperbole, it seems that the iPad has a pretty good chance of changing the way a large section of the market behaves. For communication centric uses, the iPad will possibly be a revelation, but to applications that require number crunching, it will not replace a computer. Now the market will segment by what sorts of applications you require, not just the size, and performance characteristics, and PC Vs Mac segmentation that has prevailed.
The other segmenting drive is the coming battle in “e-book” publishing, which will be facinating to watch. Amazons Kindle got the ball rolling, but the momentum will be built by the iPad when they get the iBook store running properly, which should not be long. It took Apple several years to get the iTunes store running, and it created a tsunami in the music world, it may be a bit harder in books because they are simply harder to digitise, but the lessons from launching iTunes will not be lost, and the current book publishing business model is clearly about to be broken apart.
May 6, 2010 | Change, Communication, Leadership, Strategy
For years there have been libraries written on the value of business purpose, vision, mission, and values, consultants have made a good living out of running workshops and managing implementation projects. Now, at a TED event, all the complication has been stripped away by Simon Sinek in a terrific presentation about “why” .
As managers, and in my case, a consultant and advisor, we talk about all this stuff, but never have I seen it put so simply, and so compellingly.
May 4, 2010 | Innovation, Marketing, Strategy
Marketing is much more than a menu to be picked from, it is an evolution of characteristics specific to a purpose a place and a competitive environment.
Some is visible above ground, most is invisible, underground, the roots of the ecosystem, but the needs are similar, if growth and health are to be maintained.
As in nature, marketing in a market tends to be similar, FMCG marketers pick from similar menus of options that are a function of the forces driving the marketplace, but those menus are subtly different from those that are in other markets.
Again, as in nature, a step change really only occurs when there is a cross pollination across boundaries, when a smart marketer disobeys the “rules” of his market, and adopts a different approach, sometimes with insights from others. That is when the really interesting stuff happens.
