This may be one of the most valuable podcasts I ever do. I know that that’s a pretty big assertion, but in this podcast I pull together innovation from three major perspectives. These add up to an overview blueprint you can use in any business, for any need by utilizing innovation best practices to sell more and make more.
I just completed the two podcasts that tie together Jim Collins’ good to great best practices. From those podcasts, I will focus on the hedgehog concept in this podcast. I will then add a quantum idea generating perspective followed by Merwyn insights that can translate the work from the two previous steps into an optimized, persuasive customer selling platform.
Hedgehog concept. Collins says that this concept is the one driving business focus that takes companies from good to great. It is defined by the intersection of three circles, which is another way of saying it is the point of common elements for three criteria. Let’s briefly review the criteria that were covered in the last podcast.
What you can be best that in the world. Companies that go from good to great do so behind the concept that leads to a product/service where they are best in the world. That’s a very high bar to set. What Collins does not say enough about is that what you are best at in the world needs to be something that is very important to customers. It is a big need for customers and one that they are less than totally satisfied about. In addition, to being a big business, there need to be many, many customers with this big need. If the need is relatively low in importance and there’s not a lot of customers with the need, you will not sell much.
What drives your economic engine. This is all about the business model. You need to determine what and how are you going to sell your product/service and how much revenue and profit it can generate. This often requires innovative thinking. You have far more business model options than you might imagine. For example, you can sell your product and then have no more economic relationship with your customers. Or you can sell your product and then have ongoing selling of additional products – think of Gillette that sells the handle and then sells a continuing flow of razor blades. Or you can sell your product and tie it to an extended service agreement for products where ongoing service is important. This just scratches the surface about the various ways that you can make money.
What you are passionate about. Most people tend to be passionate about benefiting themselves while some people are passionate about helping others more than themselves. When you’re primarily passionate about benefiting yourself, you might be interested in something that establishes a legacy, gets you promoted, gets you a big raise, to name a few. When you’re passionate about helping others, you often engage an effort to identify the noble purpose you want to align with and support. I covered this important topic in an earlier podcast.
So the hedgehog concept that can take a company from good to great involves a product/service that is best in the world that can be very profitable, and is something you and others can be passionate about. Just hearing these words, you know this is the path for a good company to become a great company.
Quantum idea generation. Now that you have your hedgehog concept, you need to take the concept to the next level – building on the skeleton that the concept represents. There is no better process to do this with than a quantum idea generation session that consistently produces 12 X more ideas than brainstorming.
You need to specifically define the what and how of your hedgehog concept. In the session you need to get very specific about what the product/services are that best represent the hedgehog concept. Quantum idea generating is a great way to do this because you can examine many options in a short period of time.
There are various types of stimulus you will need to bring your hedgehog concept to life. Your group needs to start with understanding the three circles that produced the product/service concept – how did you get there? This stimulus gets everyone on the same starting line. You will then want stimulus drawn from best products and processes around the world that are closely and not so closely related to what you want to do. You then want to look even further to associated product/service types and what the best of the best are doing. Stimulus will become very important to your success.
When you want to become best in the world, you often need to draw upon the best diverse expertise in the world. It is very doubtful that you will have all of the diversity in the company. You will need to seek world-class diversity – exactly what we do at i2ge.com – in the 3 to 4 critical capabilities you need to develop your hedgehog concept into a product/service.
No fear and left/right brain. You will also want to make sure that in your quantum idea generating session that people are excited and not fearful to share wild and wacky ideas. You will want to understand the left and right brain makeup of your group so that you can tailor a sequence of idea generating exercises.
This brief overview in combination with the earlier series on quantum idea generating should put you in a good position to plan and execute your own session.
Merwyn technology. From earlier podcast you know that this technology can very accurately predict a product/service’s chances for success based upon the strength of three communication elements you use to persuade customers to buy your product/service.
Benefit communication. You need to very specifically define the benefits you deliver that meet important customer needs. You need to translate words like more and better into specifics like 35% more and better. You need to use customer language in communicating these benefits. You need to focus on the very few benefits that you are best at and that the customer needs most.
Reason to believe. Any time you’re making a claim that your product/service is better than any other one in the world, you can expect a high level of customer skepticism. To counter this you need to create an exceptionally strong reason to believe communication that you can deliver the promised benefits. There are five strategies for doing this. You need to choose the ones that are most appropriate and where you have the greatest facts and the strongest story.
Dramatic difference. Communicating that you are best in the world at is a dramatic difference. Dramatic difference communication, when done right, gives the information to a potential customer about why they should immediately switch to your product/service. Most often this is woven into your benefit communication coupled with your reason to believe story.
Closing thoughts. By combining a key insight from Jim Collins good to great book with quantum idea generation and Merwyn technology you have a step-by-step process that can absolutely optimize your innovation program. To be clear – there is a lot of work that has to go on in to identifying your hedgehog concept, running a quantum idea generating session, and making sure that you have optimized customer communication using Merwyn technology. The good news is that when you do all of this right there is a very big payoff – you go from having a good business to a great business that is driven by innovation that results in you selling more and making more.
This may be one of the most valuable podcasts I ever do. I know that that’s a pretty big assertion, but in this podcast I pull together innovation from three major perspectives. These add up to an overview blueprint you can use in any business, for any need by utilizing innovation best practices to sell more and make more.
I just completed the two podcasts that tie together Jim Collins’ good to great best practices. From those podcasts, I will focus on the hedgehog concept in this podcast. I will then add a quantum idea generating perspective followed by Merwyn insights that can translate the work from the two previous steps into an optimized, persuasive customer selling platform.
Hedgehog concept. Collins says that this concept is the one driving business focus that takes companies from good to great. It is defined by the intersection of three circles, which is another way of saying it is the point of common elements for three criteria. Let’s briefly review the criteria that were covered in the last podcast.
What you can be best that in the world. Companies that go from good to great do so behind the concept that leads to a product/service where they are best in the world. That’s a very high bar to set. What Collins does not say enough about is that what you are best at in the world needs to be something that is very important to customers. It is a big need for customers and one that they are less than totally satisfied about. In addition, to being a big business, there need to be many, many customers with this big need. If the need is relatively low in importance and there’s not a lot of customers with the need, you will not sell much.
What drives your economic engine. This is all about the business model. You need to determine what and how are you going to sell your product/service and how much revenue and profit it can generate. This often requires innovative thinking. You have far more business model options than you might imagine. For example, you can sell your product and then have no more economic relationship with your customers. Or you can sell your product and then have ongoing selling of additional products – think of Gillette that sells the handle and then sells a continuing flow of razor blades. Or you can sell your product and tie it to an extended service agreement for products where ongoing service is important. This just scratches the surface about the various ways that you can make money.
What you are passionate about. Most people tend to be passionate about benefiting themselves while some people are passionate about helping others more than themselves. When you’re primarily passionate about benefiting yourself, you might be interested in something that establishes a legacy, gets you promoted, gets you a big raise, to name a few. When you’re passionate about helping others, you often engage an effort to identify the noble purpose you want to align with and support. I covered this important topic in an earlier podcast.
So the hedgehog concept that can take a company from good to great involves a product/service that is best in the world that can be very profitable, and is something you and others can be passionate about. Just hearing these words, you know this is the path for a good company to become a great company.
Quantum idea generation. Now that you have your hedgehog concept, you need to take the concept to the next level – building on the skeleton that the concept represents. There is no better process to do this with than a quantum idea generation session that consistently produces 12 X more ideas than brainstorming.
You need to specifically define the what and how of your hedgehog concept. In the session you need to get very specific about what the product/services are that best represent the hedgehog concept. Quantum idea generating is a great way to do this because you can examine many options in a short period of time.
There are various types of stimulus you will need to bring your hedgehog concept to life. Your group needs to start with understanding the three circles that produced the product/service concept – how did you get there? This stimulus gets everyone on the same starting line. You will then want stimulus drawn from best products and processes around the world that are closely and not so closely related to what you want to do. You then want to look even further to associated product/service types and what the best of the best are doing. Stimulus will become very important to your success.
When you want to become best in the world, you often need to draw upon the best diverse expertise in the world. It is very doubtful that you will have all of the diversity in the company. You will need to seek world-class diversity – exactly what we do at i2ge.com – in the 3 to 4 critical capabilities you need to develop your hedgehog concept into a product/service.
No fear and left/right brain. You will also want to make sure that in your quantum idea generating session that people are excited and not fearful to share wild and wacky ideas. You will want to understand the left and right brain makeup of your group so that you can tailor a sequence of idea generating exercises.
This brief overview in combination with the earlier series on quantum idea generating should put you in a good position to plan and execute your own session.
Merwyn technology. From earlier podcast you know that this technology can very accurately predict a product/service’s chances for success based upon the strength of three communication elements you use to persuade customers to buy your product/service.
Benefit communication. You need to very specifically define the benefits you deliver that meet important customer needs. You need to translate words like more and better into specifics like 35% more and better. You need to use customer language in communicating these benefits. You need to focus on the very few benefits that you are best at and that the customer needs most.
Reason to believe. Any time you’re making a claim that your product/service is better than any other one in the world, you can expect a high level of customer skepticism. To counter this you need to create an exceptionally strong reason to believe communication that you can deliver the promised benefits. There are five strategies for doing this. You need to choose the ones that are most appropriate and where you have the greatest facts and the strongest story.
Dramatic difference. Communicating that you are best in the world at is a dramatic difference. Dramatic difference communication, when done right, gives the information to a potential customer about why they should immediately switch to your product/service. Most often this is woven into your benefit communication coupled with your reason to believe story.
Closing thoughts. By combining a key insight from Jim Collins good to great book with quantum idea generation and Merwyn technology you have a step-by-step process that can absolutely optimize your innovation program. To be clear – there is a lot of work that has to go on in to identifying your hedgehog concept, running a quantum idea generating session, and making sure that you have optimized customer communication using Merwyn technology. The good news is that when you do all of this right there is a very big payoff – you go from having a good business to a great business that is driven by innovation that results in you selling more and making more.
In this podcast, I discuss the major points in Jim Collins best-selling book Good to Great and how the elements of great companies relate to innovation. Looked at in one way, this book is about best practices needed to make a company great. What I’m doing in this podcast is directly addressing innovation best practices as they relate to the overall best practices.
As you know, this podcast series is completely based upon innovation best practices. When it comes to taking a good company to a great company, the insights from Jim Collins definitely fall into the category of best practices.
In the part one podcast, I addressed level 5 leadership, first who then what, and confront the brutal facts – yet never lose faith. In this part two podcast, I address what Collins calls the hedgehog concept, technology accelerators, and the flywheel and the doom loop associated with making a company go from good to great.
As background, Collins addresses the transformation process of a company going from good to great as a “build up followed by breakthrough.” He identified three broad stages that he calls disciplined people, disciplined thought, and disciplined action. The breakthrough stage includes the three elements being covered in this podcast.
Let’s start with the hedgehog concept. Here is Jim Collins introduction to the concept – “to go from good to great requires transcending the curse of confidence. Just because something is your core business – just because you’ve been doing it for years or perhaps even decades – does not necessarily mean you can be the best in the world at it. And if you cannot be the best in the world at your core business, then your core business absolutely cannot form the basis of a great company.”
This is about creating simplicity of focus or as Collins says, “a simple, crystalline concept that flows from deep understanding about the intersection of the following three circles.” First is to identify what you can be best in the world at. Second, what drives your economic engine? Third, what are you deeply passionate about? It is at the intersection of these three circles where the simple focal point for turning a good company into a great company exists.
Collins shares some examples. For Walgreens, it was how they could become the best at convenient drugstores. For Gillette, it was how they could become the best at building premier global brands of daily necessities that require sophisticated manufacturing technology. For Wells Fargo, it is about how they could become best at running a bank like a business, with a focus on the Western United States.
All of this is 100% consistent with what Merwyn Technology taught us about what it takes to increase your chances for long-term success. Recall that of the three factors – benefit, reason to believe and dramatic difference – the dramatic difference is the most powerful of the three. In this case, dramatic difference is identifying how you can be the very best – better than all of your direct and indirect competition – in a specific business by meeting specific and important customer needs.
When you are the very best at delivering important customer benefits then your chances for success are high. Thus, in your innovation efforts you want to set the bar at this very high level. Specifically, you want your quantum idea generating session to have the goal of developing the quantity and quality of ideas that can accomplish this objective. It rules out most evolutionary innovation ideas – including line extensions and product improvements. It can require a disruptive innovation – an entirely new portfolio of customer benefits for example. It can also require a bold and dramatic leap forward in the benefits your customers value for most.
Let’s take a look at the second element in this podcast – technology accelerators. Collins says about this, “good to great companies think differently about the role of technology. They never use technology as the primary means of igniting a transformation. Yet, paradoxically, they are pioneers in the application of carefully selected technologies.” He goes on to add, “when used right, technology becomes an accelerator of momentum, not a creator of it.”
As I’ve talked about in some previous podcasts, many people get enamored with technology, often for technology’s sake. The focus becomes the technology when the focus should be on the delivery of customer benefits.
Not surprisingly, I think one of the best examples of this is Apple with their iPhones and iPads. There is a ton of technology behind the swiping from page to page in these devices, but 100% of their focus is demonstrating ease-of-use and convenience. This is a good example of when technology enables the delivery of great customer benefits.
The other trap that companies often fall into with technology is believing that the more powerful the technology, the better the customer will like it. This is not necessarily so. Powerful technology can often be complex to use and subject to bugs and crashes. Technology, in my opinion, is most powerful when it simply and easily delivers major customer benefits. There’s no need for a 112 page operator manual. You learn easily. It works every time. You love it.
The third of the three elements in this podcast is the flywheel and the doom loop. About this Collins says, “no matter how dramatic the end result, the good to great transformations never happened in one fell swoop. There was no single defining action, no giant program, no one killer innovation, no solitary lucky break, no miracle moment. Rather, the process resembled relentlessly pushing a giant heavy flywheel in one direction, turn upon turn, building momentum until a point of breakthrough and beyond.”
Collins shares of the example of UCLA basketball under John Wooden. Most of us remember John is the winner of ten NCAA basketball championships in twelve years, which included one season with a sixty-one game winning streak. What we fail to recognize is that from 1948 to 1963 – fifteen years – he was a relatively unknown, somewhat successful basketball coach at UCLA before winning his first national championship in 1964.
When you bring your customers something that is dramatically better than what exists in the market prior to your product, the world does not immediately beat a path to your door – at least in most cases. There are very few exceptions to this – I believe the iPhone and iPad are a couple of those exceptions.
You have serious marketing challenges when you make dramatic improvements to be better than all of your competition. First, you need to create awareness and there are many, many hurdles to creating this awareness. People are very busy. For the most part they are reasonably happy with the products they currently have. As a result, they pay little attention to advertising. Having spent decades in the consumer products business with significant advertising budgets, I can testify that it takes time to get momentum with a new and dramatically better product. Second, dramatically better products often require customers to change what those of us in marketing call habits and practices. Put simply, to realize the benefits of our now dramatically better product, customers need to change the way they are currently performing a task. Learning new ways for many people is not an easy task. I remember the in trepidation my wife had in moving from a flip phone to a smart phone – the process took a few months with associated anxiety of missing calls and losing messages with the fancy new phone.
When you have your hedgehog concept, you need to be ready for a long, long journey to success. Often the rewards go to those who can have a continuous learning process that produces quick improvements in marketing, product performance, or any other area needing improvement to accelerate your path to the goal. When you do this there is a clear sense of momentum – the rate of increase in year-over-year business continually becomes greater. At some point you realize you’ve optimized the idea and you have at least a temporary template for success. You invest even more and you invest as a long-term undertaking.
Inherent in this element is that it takes time to succeed. While you are pushing hard to succeed, competitors are noting your success. Along the path, competitors will try to mimic you while other competitors will try to outdo you. Innovation requires boldness, courage, and persistence. It also requires continuous innovative improvements, primarily by listening to your customers and how they react to your products and the products of competitors.
Sometimes you build momentum only to be derailed by a whole host of potential factors ranging from macro ones like an economic recession to or micro ones like an entirely new, powerful competitor entering your market space.
No one ever promised you that innovation would be easy. Having said that, you need to enter into the process with your eyes open and your ears alert.
All three of the good to great elements in this podcast are relevant for just about any business owner and leader listening to this podcast. These two podcasts present the broadest time perspective I’ve shared with you so far on the topic of innovation. This is perspective that is proven, practical help that when used wisely does help you to sell more and make more.
In this and the next podcast I discuss the major points in Jim Collins best-selling book Good to Great and how the elements of great companies relate to innovation. Looked at in one way, this book is about best practices needed to make a company great. What I’m doing in this podcast is directly addressing innovation best practices as they relate to the overall best practices.
As you know, this podcast series is completely based upon innovation best practices. When it comes to taking a good company to a great company, the insights from Jim Collins definitely fall into the category of best practices.
In this part one podcast, I address level 5 leadership, first who then what, and confront the brutal facts – yet never lose faith. In the part two podcast, I address most of the other elements associated with making a company go from good to great.
As background, Collins addresses the transformation process of a company going from good to great as a “build up followed by breakthrough.” He identified three broad stages that he calls disciplined people, disciplined thought, and disciplined action. The buildup stage includes the three elements being covered in this podcast.
Let’s start with the level 5 leadership. The author describes this kind of leader as “self-effacing, quiet, reserved, even shy – these leaders are a paradoxical blend of personal humility and professional will. They are more like Lincoln and Socrates than Patton or Caesar.” This kind of leader was associated with every one of their good to great company examples.
Here are a few more direct quotes from the author describing this kind of leader.
They are “a study in duality: modest and willful, humble and fearless.”
People in the companies that went from good to great described their leaders with words like “quiet, humble, modest, reserved, shy, gracious, mild-mannered, self-effacing, understated, does not believe his own clippings.” They also point out that the modesty was in no way a false modesty.
Lastly, “it’s equally about ferocious resolve, and almost stoic determination to do whatever needs to be done to make the company great.”
On the flipside, the author found that about two thirds of the companies that went from great to horrible had leaders that “we noted the presence of a gargantuan personal ego that contributed to the demise or continued mediocrity of the company.”
I strongly applaud this level 5 leadership as the type of leadership that helps facilitate high levels of successful innovation.
You will recall from quantum idea generation that I made several points about what it takes to have successful big ideas.
First, I spoke at some length about the power of and high need for diversity of thought in the idea generation process. Your chances for successful innovation go up dramatically when you add people to the creative process who have diverse experiences and capabilities. It is the combustible mixture of these experiences and capabilities that produces a high quantity and quality of ideas.
Second, I talked about the need in a creative process to reduce fear. I specifically talked about the steps I take to have a one-on-one conversation with senior managers that are in a creative session. In the session, I need these managers to abdicate their judging and evaluation roles and become peer idea generators.
A level 5 leader has all of the qualities necessary to create a culture where people feel free to contribute ideas with a leader who is open to learning and knows that innovation success is a team sport.
The second element he calls first who….then what. In describing the good to great companies, the author says, “they first got the right people on the bus (and the wrong people off the bus) and then figured out where to drive it.” The importance of this is that when you begin with who instead of what “you can more easily adapt to a changing world.” The author adds two more points. “If you have the right people on the bus, the problem of how to motivate and manage people largely goes away. The right people don’t need to be tightly managed or fired up; they are self-motivated by the inner drive to produce the best results and to be part of creating something great.” In addressing the risk of having the wrong people, the author says “if you have the wrong people, it doesn’t matter whether you discover the right direction; you still won’t have a great company. Great vision without great people is irrelevant.”
Again, when it comes to innovation this is a point that I strongly applaud and support. In describing the right people, especially from an innovation perspective, you need a mix of diversity and commonalities.
Diversity: skills, capabilities, experiences, left and right brain ways of thinking, age and gender. The importance of this diversity is important to understanding the context of quantum idea generation. You need this internal mix of differences to tap into the depth and breadth of innovative possibilities.
Commonalities: core values and associated behaviors – like respect for others and the Golden rule, goals – team/company goals and noble purpose. The commonalities tend to be relatively more important than the diversity, but you need both. The author states, “in determining the right people the good to great companies placed greater weight on character attributes than on specific educational background, practical skills, specialized knowledge or work experience…… They believed dimensions like character, work ethic, basic intelligence, dedication to fulfilling commitments, and values are more ingrained.”
The third element of a good to great company covered in this podcast the author calls “confront the brutal facts (yet never lose faith)”. In introducing this element the author says, “you must maintain unwavering faith that you can and will prevail in the end, regardless of the difficulties, AND at the same time have the discipline to confront the most brutal facts of your current reality, whatever they might be”
Here are a few key headline points that he makes that I think are relevant to innovation.
First, “facts are better than dreams.” In working with clients in my innovation business, I often hear at least some leaders dwelling on their dreams or vision of the future. Unfortunately, when I dig deeper into their business facts, I see little basis for their ability to achieve their dreams and in some cases even the desirability of achieving the dream.
Second, “a climate where the truth is heard.” Most of us have heard stories – even horror stories – of shooting the messenger or, put another way, the manager who delivered the straightforward truth that a senior leader found highly objectionable. To avoid this situation, the author makes a couple of key points. First, leaders should ask questions in a genuine search for truth. Leaders should avoid pronouncements of wishful thinking that make sharing the truth an act of courage on the part of another person. Leaders should engage in dialogue and debate, not coercion. When there is a failure, conduct an investigation to learn what can be done better the next time while avoiding placing blame.
In my innovation work with clients, some of the most difficult situations have been working with leaders who hang on to unrealistic visions and, maybe even more importantly, the absolutely most optimistic interpretation of a set of facts and conditions. Much of this is driven by ego and some of it by pride. Both of these can be highly toxic for innovation to be nurtured and prosper.
Once a company has confronted and accepted a brutal truth, it needs the boldness and courage to stay connected with that truth as it moves forward. A company does not waver in its effort to overcome bad news.
Innovation is often called upon to deal with some of these brutal truths. Brutal truths usually have a negative impact on the business. It can be the entry into your market of an unexpected competitor with a much lower profit margin business model. It can be an existing major competitor that suddenly becomes much more aggressive by introducing a disruptive innovation whose benefits are all superior to the ones your products deliver.
Innovation is often about the necessity for a company to survive. In earlier podcasts, I talked about successful company turnarounds and the role innovation played in those turnarounds. The very nature of a turnaround company is one that is in some level of distress when it calls upon innovation to reverse their fortunes – to take a company from good or struggling to a great company.
The three elements of a good to great company covered so far in this part one podcast, are all directly relevant to virtually any business leader listening to this podcast. You need a culture of level 5 leadership at every level in the company, but especially in the president/CEO office. Getting the right people into your company is critical for successful innovation. Having the courage to boldly face unpleasant truths is critical for a company needing to reverse negative business conditions.
Given that all of us in business have competitors, what happens when the competitive environment changes significantly? All of a sudden you find yourself with a major competitor that previously had been only a potential or minor competitor.
This podcast addresses this situation. The sources for the information in this podcast are drawn from a Fast Company article titled The New Rivalries plus my own independent research.
Let’s get started with the first example in this podcast. This is the rivalry between DJI and Go Pro. When I first saw this rivalry in the article, my reaction was that Go Pro has very few meaningful camera competitors and who is this DJI company.
First about DJI. To my surprise this Chinese company is the world’s largest seller of drones. So one company is in the drown business and the other company is in the mobile, action camera business. How is this a rivalry?
This was especially a good question since last year these two companies were deeply engaged in a collaborative business venture. DJI featured the ability of their drones to use GoPro cameras. They had gone so far in their business discussions that there was talk that they would produce a GoPro branded drone. Their collaborative efforts ended when GoPro demanded two thirds of the profits.
So today DJI is getting into the small action camera business in direct competition with go Pro and will have these cameras available on their drones. Conversely, go Pro is getting into the drone business. While the drone business was an interesting $609 million in revenue in 2014, by the end of the decade it is estimated to be almost a $5 billion business. Net, there’s a lot of business to be had here.
So to companies that last year were looking to collaborate are now locked in a serious competitive battle for what will become a very, very big business.
DJI is deeply committed to dramatically improving drone reliability, intelligence, batteries, and navigation. Reportedly one of the new features in their drones will be an automatic obstacle avoidance system. In parallel with this effort, DJI is working on cameras that will be directly competitive to go pro.
Go Pro is already a very big and successful company – sales of $1.8 billion in 2015. When the collaborative effort with DJI fell apart, go Pro scrambled quickly to develop their own line of drones.
Both companies are leveraging an innovation program that optimizes their current strengths.
Here are some comparisons and key issues relative to this competitive rivalry.
How interested are future consumers of drones in a drone only versus a drone with a camera? I am guessing that for many consumers a drone and a camera are seen as one essential system. The drone makes the camera better and the camera makes the drone more valuable.
It appears that go Pro has a much stronger marketing starting point. Their brand-name has increasingly greater recognition. They have strong relationships with retailers and presence in retailer stores. Go Pro has developed outlets for video shot on its cameras through a partnership with YouTube. It is also exploring relationships with Hollywood for the creative coming out of the go Pro cameras.
DJI’s strengths would appear to be its drone competencies, especially innovative technologies. With China as a base, they may also have economic advantages when it comes to drones, although go pro would seem to be able to acquire similar economic advantages in China or other favorable manufacturing locations.
This is an interesting story to me for of a couple reasons. First, two companies that were friends and collaborators quickly became serious competitors. This is a potential lesson for listeners of this podcast. When you explore collaborative efforts with another company, you need to be careful. You need to be careful in how much you share about your capabilities and future plans. Early on it will help if you agree on a business model before going too deep into discussions – recall that go Pro’s demand for two thirds of the profits derailed this effort.
Second, which innovation and marketing strategy will be most successful? From my perspective, it is likely that the drones and cameras developed by DJI will probably be technically similar in many go Pro models. If this is the case, I can see go pro becoming the profit leader and maybe even the sales leader. They become the profit leader because of their brand reputation for quality and innovation coupled with a system where users can publish their video. DJI’s path to success depends on developing a brand presence and a reputation for drone capabilities that are just a step ahead of whatever go pro has at the moment.
When looked at this way, you can see where each company will want to focus its innovation – leveraging and developing its strengths.
The second rivalry is between the NFL and FIFA – after all, both are in the football business. Looked at from the perspective of the United States market, this does not look like much of the competition– the NFL dominates FIFA. But when looked at from a worldwide perspective, the competitive balance is dramatically different – FIFA dominates the NFL.
Each organization is increasingly invading the others stronghold. The NFL has been having a regular-season game presence in England while FIFA is making significant inroads into the American market. Regarding the latter, the 2014 World Cup soccer games beat out the last game of the NBA finals in the number of TV viewers. On the other hand, the number of weekly football watchers in the UK doubled to over 3 million viewers between 2009 in 2015, according to the NFL’s data.
Soccer under the FIFA banner and professional soccer clubs have infiltrated the United States market far more than the NFL has infiltrated the international markets. Soccer has the strength of both men’s and women’s competition as it looks to strengthen its presence in the United States. We just need to recall the recent win by the United States women’s soccer team in their World Cup, a FIFA competition.
The NFL is looking to go to two regular-season games per year in Europe starting in 2018. Unfortunately, initial efforts have focused on the Jacksonville Jaguars, a team that does not necessarily show the NFL at its best.
Worldwide soccer and FIFA are dramatically bigger in fans and financial results than the NFL. They are not only bigger, but also increasing their worldwide presence, which is already impressive, is growing at a faster rate than the NFL from a worldwide perspective.
Current trends and cultural factors suggest that these trends will continue. The NFL has some serious player safety issues, especially concussions. The impact of this is already seen in Pop Warner and high school programs where participation is down about 10%. Hall of Fame NFL players saying that they would not let their kids play football compounds this. Add to that the NFL’s messy and unsuccessful player discipline efforts, and the shine of the NFL brand has diminished. Only time will tell if this trend continues. FIFA has its own serious image problems as an organization with arrests and charges for corruption.
How might this rivalry be important and helpful to you? It is always important to look at the big picture of customer behavior. One of the big picture perspectives is who is competing for the customer’s entertainment dollar—not just American football and soccer dollars. Customers have only so much that they are willing to spend on an area like entertainment, which is discretionary spending. The NFL and FIFA are competing with movies, video games, other sports like basketball and collegiate football, concerts, and many, many other events.
As a business person, you need to widen your understanding of your competition, especially trends like innovative new benefits in your and competing industries. If the NFL were only to look at the competitive football matrix, they would see they dominate the pro-business. Their main direct competition is a very vibrant college football industry that is attracting some of the entertainment spending from them. When the NFL looks at the competitive matrix it is far more than just football at the pro and college levels. They see that the competition for entertainment spending is far more serious and complex.
Innovation in one industry will not only impact other competitors in that industry but also in many other related industries competing for the same customer dollar. You can see this as good news. Your source of potential sales growth through innovation is far more than just the business of your direct competitors but also your indirect competitors that are competing for the same budgetary dollars.
When looking at competition from this broader perspective, it impacts your innovation strategy. You need to understand the benefits you have and each of your more broadly defined competitors have. You also need to understand your weaknesses relative to these other competitors and the innovation initiatives they are undertaking. It’s always easier to develop competitive advantages by leveraging already existing strengths or competitive advantages that you have. As a result, your first option should be to innovatively explore how you can make your strengths mega strengths.
This is clearly a much bigger topic than can be deeply covered in this one podcast. If you are faced with the broader competitive matrix outlined here, you may want to contact us at Innovate2Grow Experts….i2ge.com.
Life would be so much simpler in business if we had no competitors. Unfortunately, that’s either illegal or a government owned entity or a business that is so uninteresting that no one else wants to compete.
So given that all of us in business have competitors, what happens when the competitive environment changes significantly. All of a sudden you find yourself with a major competitor that previously had been only a potential or minor competitor.
This podcast addresses this condition. The sources for the information in this podcast are drawn from a Fast Company article titled The New Rivalries plus my own independent research.
Let’s get started with the first example. When I talk about competitors to the iPhone, you probably think of brands like Samsung, LG, and several others. You probably have not considered Xiaomi (show me) as one of their major competitors. You probably have never heard of the company before. You can be sure that Apple views Xiaomi as a major competitor.
Xiaomi’s phones have a very innovative and focused business model and marketing strategy. Their target is younger customers who want a powerful phone but can’t afford the iPhone or Samsung’s comparative phones. For example, in China the Xiaomi 64 GB phone sells for about half the price of the 64 GB iPhone. There has been no shortage of companies attempting to compete in China on a lower price point but Xiaomi is the only one to experience significant success. Their phones work on the android operating system, have fast chips, and have high resolution screens. Their business model appears to be one where they sell the phone for a breakeven price and make money from apps and other content. This is a variation of the shaving business model where companies like Gillette are willing to sell the shaver handle for a very low price or even free and make their money on the many repeat blade purchases.
As a Chinese company, Xiaomi is a very strong competitor with Apple products in China – selling about 60 million phones in China in 2014. This makes them the third-biggest seller of smart phones in the world after Apple and Samsung. As I’m presenting this podcast in the third quarter of 2015, Apple, which is seen as a luxury product in China, has sold more smart phones in China than Xiaomi has in the last two quarters. While Apple is experiencing some success, Samsung took a big hit to their China business in 2014.
As Xiaomi looks to grow beyond China, they recognize that they have a very specific target audience – mostly younger consumers who cannot afford the iPhone. Their next market launches appear to be focused on countries like India and Brazil. As the author of the article states, their ideal customer just does not exist in the United States since most of the techno geeks can afford the iPhone in the United States.
They are already taking significant steps to enter India. They have developed a custom model for the market and entered into a production agreement with a partner to make phones in India. They clearly are hoping that the “made in India” tag will help them given the longer term reluctance by some consumers in India to Chinese made products. India is a market where Apple currently has less than a 5% share. Net, it looks like India will be a major competitive battleground for these two companies.
Apple clearly is not happy with Xiaomi. Apple’s design chief, John Ivey states, “I think it’s theft and it’s lazy” in referring to what they do and how they go about selling and developing smartphones.
What can you learn from this example that can help your business?
First, when it comes to identifying who your competitors are, you need to look well beyond your local markets. The competitors you have in your current markets may not be the competitors of the future. Within the United States, there are so many examples of companies in one region expanding into a whole new parts of the United States. I am reminded of Kohls a Midwest company that had a dramatic expansion into the Western United States – opening up many new major stores at the same time behind a region wide advertising campaign. You need to stay plugged into information about potential competitors outside of your market. One good way to do this is to use Google alerts to send you daily information on each of your current and potential competitors.
Second, you want to closely examine the business proposition of potential new competitors. In this example, to fully understand the competitive matrix between Xiamoi and Apple you needed to go beyond just a comparison of the product features. You need to understand the business model differences – Xiamoi selling hardware at breakeven and making money on services while Apple clearly makes money on their hardware sales plus their app business. This comes under the good business practice of “know your competition.” Apple might choose to compete with a much lower price than their current pricing knowing that its services and apps are far more lucrative an what Xiamoi has.
Let’s move to the second example. When I mention Amazon, you probably think of its competitors as Walmart – both online and the stores and just about every other online company.
But when you take a look at the emerging trends in Amazon’s business you realize that Instacart is a rapidly emerging and potentially serious competitor. So you may say, what is Instacart? The company started in 2012 and generated more than $100 million in 2014 revenue. Investors have beaten the door to their path so that today the company has a $2 billion evaluation. Instead of becoming the seller of a wide range of products like Amazon does, Instacart has working relationships with companies like Costco, Safeway, Kroger, and Whole Foods in 16 metropolitan areas. Whole Foods has reported that they sell about $1 million a week that gets delivered by Instacart. In those markets customers can order products via the web or an app from the stores and Instacart delivers them to the home. Their Instacart Express is an annual subscription program that offers free one hour delivery with a certain minimum order requirement.
You may be aware that Amazon has its eyes on the $638 billion grocery and convenience goods market. It’s looking to have home delivery of supermarket products with their Amazon fresh service. In addition, their prime now service sells major sellers in the grocery channel plus many Amazon products where prime members can get two hour delivery. More broadly, Amazon is looking to create an extensive system for expedited ordering and delivery of products. Earlier in 2015 they introduced their Dash program which is a series of Internet buttons in the home that consumers can quickly reorder items with a single tap their finger. In May 2015 Amazon made its voice controlled echo system capable of ordering products via voice commands. In addition, we know that Amazon is experimenting with drone delivery of products.
This will be an interesting battle. In previous podcast I took a look at the fast food home delivery category. This is another example of where customers appear to be willing to pay a certain amount to have the convenience of home delivery.
Instacart has a very simple system. It works with well respected names in the grocery business. It uses an independent contractor system to deliver orders. It has simple apps making it easy for customer orders.
On the other hand, Amazon, a very well respected name in its own right, is developing an extensive system – customer ordering and warehouse infrastructure to handle grocery products, especially perishables. This is no easy or low-cost task.
How might this example be valuable to your business?
First, if you’re in the business of selling products directly to consumers, you need to be aware of these major moves to dramatically improve delivery convenience. Almost any product sold directly to consumers can be bought at Amazon so that Amazon is probably a direct competitor of yours whether you see that or not. As I’ve mentioned in previous podcasts, convenience can be a significant benefit for many consumers. If you have competition that is selling as good or even better products than yours and they can have a delivery convenience advantage, life could get tough. Amazon has already made it tough on many competitors with their prime program and free two-day shipping.
Second, sometimes we look at competition as only those companies that offer comparable services to ours. As this example demonstrates, that is not always a good and prudent way of identifying your competitors. On its face, it would appear that Amazon and Instacart are very different companies with very different capabilities. Instead of looking at just the narrow definition of Instacart, you need to understand that it is part of a system and when looked at as part of a system becomes a direct competitor to Amazon. Look around your competitive landscape and see if this way of looking at competitors reveals any new insights for you.
The two examples in this podcast demonstrate how innovation can power business models and systems that can enable a company to become very competitive, especially with giants. Compared to Instacart, Amazon is a giant and yet Instacart looks like it has an interesting opportunity to be a successful competitor. Its biggest challenge may be that the Instacart brand is largely unknown to consumers, although its retail partners are well known. It’s an interesting competitive environment where it is too early to tell winners from losers.
In part two of this series will take a close look at unexpected competitors for the NFL and GoPro.
This podcast is part two of a deep dive into the subject of creativity, which is so tightly linked to innovation. In this podcast, I take a look at the 10 characteristics most commonly associated with highly creative people. These insights are drawn from one of my favorite authors on creativity who has written a couple of books I highly recommend if you want to dive deeper into the topic. The first book is titled Flow and the second, which is the basis of this podcast, is titled Creativity, Flow in the Psychology of Discovery and Invention. I would give you the author’s name but I am hard-pressed to pronounce it, especially since last name has 16 letters in it. Just search on Amazon for either of these two titles and you will get the author’s name.
Introducing the 10 points the author states in referring to the qualities of a creative person, “these qualities are present in all of us, but usually we are trained to develop only one poll of the dialectic. We might grow up cultivating the aggressive, competitive side of our nature, and disdain or repress the nurturant, cooperative side. A creative individual is more likely to be both aggressive and cooperative, either at the same time or different times, depending on the situation. Having a complex personality means being able to express the full range of traits that are potentially present in the human repertoire but usually atrophy because we think that one or the other pole is good, whereas the other extreme is bad.” So let’s start by looking at the 10 qualities the author identifies.
“First, creative individuals have a great deal of physical energy, but they are also often quiet and at rest.”
I often say in inventing sessions that creativity and inventing are heavy lifting. It requires a lot of high-level, continuous energy in a group situation.
One of my main responsibilities in facilitating a session is to be in touch with the energy in the room. I stay in touch with the ebbs and flows of energy and have exercises that can re-energize the group that has taken a dip.
Second, creative individuals tend to be smart, yet also naïve at the same time.
This is a great trait that I’ve seen many times. I admire the trait so much that I have cultivated it within myself. In earlier podcasts, I talked about how I thought I was pretty smart only to discover how ignorant I really was. The naïve aspect opens us up to unexpected and new thinking. As such, this is a critical creative quality.
Third, a third paradoxical trait refers to the related combination of playfulness and discipline, or responsibility and irresponsibility.
Unencumbered playfulness can lead to chaos and frustration. Discipline alone can quickly stifle creativity. A mixture of both is a lot of fun and very productive.
Fourth, creative individuals alternate between imagination and fantasy at one end, and a rooted sense of reality at the other.
In the creative sessions that I facilitate, the front end of the sessions dives deeply into imagination and fantasy. We’re looking to creatively imagine possibilities. We specifically rule out judgment and evaluation of all ideas at this stage.
Later in the session, we always get a sense of the wisdom in the room relative to all of the ideas that have been produced so far. We put each idea on its own flipchart page and put it on the wall. We give people colored dots – maybe 10 – and asked them to vote for their favorite ideas by putting the dots on the pages. After the voting process, we ask people why they voted the way they did. It is a light evaluation step that helps us connect the possibilities and fantasies to real world necessities.
Fifth, creative people seem to harbor opposite tendencies on the continuum between extroversion and introversion. Creative individuals seem to express both traits at the same time.
I have observed this trait many times in creative sessions. At one moment a person can be an extrovert in full bloom – loud, expressive with their hands, and having fun. And a moment later, I can see the same person in quiet reflection or intensely listening to another person. In the most successful creative sessions, you need both of these aspects.
Sixth, creative individuals are remarkably humble and proud at the same time.
The most creative people I have experienced can be proud of what they know one moment and truly humbled by the knowledge of another person the next moment. In a way this is a reverse of the curse of the expert – a very positive behavior.
Seventh, creative individuals cannot be stereotyped as strongly masculine or strongly feminine. The author refers to this as “psychological androgyny” which is “a person’s ability to be at the same time aggressive and nurturant, sensitive and rigid, dominant and submissive, regardless of gender.”
In a highly productive creative session, you can see many individuals manifesting both traits at different times during the day. They can be strong. bold thinking leaders one moment and be very in touch with the sensitive emotions involved with an idea later in the day.
Eight, the author states, “it is difficult to see how a person can be creative without being both traditional and conservative and at the same time rebellious and iconoclastic.”
This is another example of being able to balance personality trait opposites. In creative sessions it helps to have an appreciation of traditional values and methods while rebelling against them in an effort to find an even better way of doing things.
Ninth, most creative people are very passionate about their work, yet they can be extremely objective about it as well.
One of the aspects of the heavy lifting associated with creativity and innovation is that passion can often make easy work of this heavy lifting. So, on one hand it is a critical part of a successful innovation session. In the spirit of playing with possibilities, while one person can be passionate about an idea one moment, it is also very helpful if they can in a later moment tap into the objectivity necessary to ground the idea in the current reality, at least to some degree.
10th, the openness and sensitivity of creative individuals often exposes them to suffering and pain yet also a great deal of enjoyment. The suffering is easy to understand. A famous writer once said, “Inventors have a low threshold of pain. Things bother them.”
Pain can often be a motivation for seeking a better way. This is one reason why in the field of customer research, it is important to go beyond just the written reports to an anthropological research approach where you are with people experiencing the pain and the dissatisfaction with existing options.
On the other hand, the joy of having that moment where the solution to the pain is discovered is one of the highest highs people often experience.
This completes our very quick run through of the 10 qualities of highly creative people. How can you use this to help your innovation programs?
First, almost all of the 10 factors involve a balancing of opposites, for example aggressiveness with collaboration. Take a look at yourself. On any of these 10 factors you probably have a strong side of the opposites. Is there an opportunity for you to take a more balanced approach? It does not mean diminishing a current strong point, but adding another dimension to how you interact in a creative session.
Second, go back and review these 10 factors and you will find it’s all about different qualities of energy that are brought to the creative task. Develop those energies in yourself. Through observation learn from others in the session about different kinds of energies that seem to make a big and positive difference. Can you learn from them? Can you add to your portfolio of creative skills?
Again, I have barely scratched the surface of creativity. The two books mentioned at the top of the podcast are worth a deep dive if you are interested in learning more. In a future podcast I may share more information from both of these books since creativity is such an important part of innovation process.
So much of innovation involves creativity, so it’s no surprise that this podcast series takes a deep dive into creativity. Over the years, I’ve studied the topic with deep interest. One of my top two or three authors on the topic has written a couple of books I highly recommend if you want to dive deeper into the topic. The first book is titled Flow and the second, which is the basis of this podcast, is titled Creativity, Flow in the Psychology of Discovery and Invention. I would give you the author’s name but I am hard-pressed to pronounce it, especially since last name has 16 letters in it. Just search on Amazon for either of these two titles and you will get the author’s name.
In this podcast I will share some of the authors key points plus any additional comments I feel are appropriate to innovation. Part one addresses some general characteristics about creativity and part two addresses the 10 personal characteristics that tend to be associated with creative people.
In chapter 1, the author states, “creativity is a central source of meaning in our lives.” Even those of you listening to this podcast that may not consider yourselves creative, can understand this if you connect with the broader meaning of creativity. Creativity at its simplest is coming up with new ways of doing or thinking about the world as it exists now. It’s the ability to see new possibilities and see things clearer and/or differently.
Creativity is not only a source of meaning but it’s also a special life experience. The author states, “creativity is so fascinating in that when we are involved in it, we feel that we are living more fully than during the rest of life.” Wow, did this quote strike home for me. Creative moments, even fairly small ones, are highs, exhilaration, excitement, and a very positive experiences.
Sometimes we think of creativity as isolated to a personal experience and do not understand the broader context in which it happens. The author very helpfully states, “creativity results from the interaction of a system composed of three elements: a culture that contains symbolic rules, a person who brings novelty into the symbolic domain, and a field of experts who recognize and validate the innovation. All three are necessary for a creative idea, product, or discovery to take place.”
Put another way, creativity does not happen in a vacuum. It happens in a culture that can be as broad as the world culture ranging down to the culture in an enterprise or a team within the enterprise. As you know from previous podcasts, culture embodies the values and beliefs that form behavior. I have referred to culture as similar to the hidden code in software that defines what the software will do and how it does it. Creativity also happens in a field of expertise. It is very difficult to be creative in an area that you know nothing about. To be clear, it’s not impossible, but deeper and more practical forms of creativity are most likely to happen when the individual and/or individuals have some level of expertise in the area where they focus their creativity.
To illustrate this point, the author states, “Edison’s or Einstein’s discoveries would be inconceivable without the prior knowledge, without the intellectual and social network that stimulated their thinking, and without the social mechanisms that recognized and spread the inovations. To say that the theory of relativity was created by Einstein is like saying that it is the spark that is responsible for the fire. The spark is necessary, but without air and tinder there would be no flame.”
The author adds, “a musician must learn the musical tradition, the notation system, the way instruments are played before she can think of writing a new song; before an inventor can improve on airplane design he has to learn physics, aerodynamics, and why birds don’t fall out of the sky.”
In describing a creative person, the author states, “creative people are neither single-minded, specialized, nor selfish. Indeed, they seem to be the opposite: they love to make connections with adjacent areas of knowledge. They tend to be – in principle – caring and sensitive. Yet the demands of their role inevitably push them toward specialization and selfishness. Of the many paradoxes of creativity, this is perhaps the most difficult to avoid.”
The author makes some important points that I want to relate to some of the previous podcasts.
Creative people love to make connections especially to adjacent areas of knowledge, as the author stated. In the quantum idea generating process, you know that we bring into a creative session extensive expert diversity. One of the critical elements in selecting the right expertise is to make sure that the expertise is relevant but does not duplicate the expertise of others in the session. We are specifically looking for people who have similar expertise so they can understand the context of their fellow experts. Because they have an understanding of each other, when the creative process starts, they have the ability to make connections. Sometimes these connections appear as something as simple as “we could put these two things together.” Other times, the connections become more complex, but no less fascinating. You have heard me say in the past a phrase that I believe strongly in a part of the creative process I call “playing with possibilities.” It is this process where people experiment with a variety of connections in an attempt to creatively solve the task at hand.
The author also states the paradox of creative people who can be unselfish one moment and selfish the next moment. You may recall from the podcast called “curse of the expert” that I talked about experts who feel a strong need to be right in order to protect their position and image as an expert. This is one of the manifestations of selfishness – wanting to be the person developing an idea and taking credit for an idea. In a creative session, I want people to be engaged; I want them to take ownership of the process and the outcome. There is a sometimes delicate balance of collaboration and ownership. When done right, both can exist at the same time.
The author makes the point that creativity is an exceptionally broad term that can benefit from some creative sub elements. He points to three different types of creativity.
The first he refers to as, “widespread in ordinary conversation, refers to persons who express unusual thoughts, who are interesting and stimulating – in short, two people who appear to be unusually bright. A brilliant conversationalist, a person with varied interests and a quick mind, may be called creative in this sense.”
The second form he refers to as, “people who experience the world in novel and original ways. These are individuals whose perceptions are fresh, whose judgments are insightful, who may make important discoveries that only they know about. I refer to such people as personally creative.”
The third type of creativity he refers to as, “individuals who, like Leonardo, Edison, Picasso, or Einstein who have changed our culture in some important respect. They are the creative ones without qualifications. Because their achievements are by definition public, it is easier to write about them.”
As remarkable as the people in the third group are, there is a bit of a paradox as you look at their broader lives. The author states, “the accomplishments of a Michelangelo, a Beethoven, a Picasso, or an Einstein are awesome in their respective fields – but their private lives, their everyday ideas and actions, would seldom warrant another thought were it not that there specialized accomplishments that made everything they said or did of interest.”
The author nicely reminds me that creativity does not happen in the vacuum of a specific moment or situation. There’s a complex context in which creativity happens. If we understand this, we can use it to our advantage when we purposefully engage in the creative process.
While there are not specific step-by-step processes revealed in this podcast about creativity, I am attempting to create a deeper and broader understanding of creativity. By demystifying creativity to an extent, we better understand that it’s not just a random happening. I’ve only touched on a few of the points that can be understood relative to creativity. I strongly recommend the two books mentioned at the beginning of this podcast if you want to dive deeper into creativity. Also, the next podcast takes a look at the 10 personal characteristics most commonly associated with very creative people.
This is a new type of podcast. In these occasional podcasts, I research a current trend – this time the restaurant home delivery business. From this research, I then apply the criteria of Merwyn technology – benefit, reason to believe, and dramatic difference – to the customer propositions of two innovators in restaurant home delivery.
To be clear, what I share in this podcast is my opinion based on these criteria. I have evaluated some available information and research, but acknowledge that there is even more to know that might change the evaluation.
An analyst of innovative new businesses that could be worth $1 billion or more, identified 50 firms with this potential. Seven of these were in the online delivery of food, especially restaurant food, business. These are businesses where you can use a smart phone or tablet app to order your food and have it delivered to your home. There are and have been several companies that have tried this over the years. And to be clear, companies like Pizza Hut and Dominoes have been in the home delivery of food business for many years and they both have apps that can make this process easier. The new companies are expanding beyond pizza alone to include a wider range of restaurant options where people can use an app to order food and have it delivered to their home.
Let’s take a look at two of these companies and I will start with postmates.com.
They were founded by three people living in the San Francisco market in 2011.
Based on the financing they received in 2015, the company is valued at more than $400 million.
They are currently in major metro markets in 18 states plus the District of Columbia.
How it describes itself: Postmates is transforming the way local goods move around a city by enabling anyone to get any product delivered in under one hour. Postmates’ revolutionary urban logistics & on-demand delivery platform connects customers with local couriers, who purchase and deliver goods from any restaurant or store in a city.
Mission: Postmates’ mission is to become the on-demand delivery infrastructure for every major city in the world.
Their ultimate goal is to charge customers around one dollar for deliveries of food and other goods in high density ZIP Codes. They now typically charge $5-$20 per delivery depending on the turnaround time and complexity of the order. To get to the one dollar delivery will require having a delivery person pick up multiple orders from a location and deliver them to nearby destinations – for example, pizza to a college dorm during football games.
In Phoenix for example, some of the restaurants that you can order from are pizza places, Whataburger, Starbucks, chipotle, KFC, McDonald’s, Taco Bell, whole food markets, and many specialty restaurants.
Then there is doordash.com. This is another one of those businesses created in 2013 in a dorm at Stanford and started in San Francisco where there are nearly 20 companies competing in their business or similar to it.
On their homepage they say that the first delivery costs only one dollar with no minimum order size. They also say that they deliver from restaurants like the California pizza kitchen and the cheesecake factory.
They are in Phoenix, Arlington – Virginia, Boston, Manhattan, Washington DC, Minneapolis, Houston, Dallas, and California.
Their website says that they try to deliver an order in about 45 minutes.
Typically you use their android or Apple app to order.
It appears that the prices are at best the same price you would pay for a food item at the restaurant. Since the restaurant pays doordash a commission, there may be instances where you pay higher prices than the menu price in the restaurant.
The company positions itself as a tech and logistics company that is starting in the food industry. Their system is a data-driven software-based platform that includes a self learning dispatch system, a capacity algorithm, and smart technology around preparation time. Longer-term this may be a key differentiating point for them and what is a very crowded business segment. If they can build a strong foundation on the food industry and expand to a variety of smaller businesses it could be a distinguishing factor that produces competitive advantages for them.
They currently charge a flat fee of seven dollars for delivery which increases to $12 for an order over $100.
Let me switch gears and talk about these business propositions from the perspective of their benefits, reasons to believe, and dramatic differences.
I start by talking about their benefits.
First is their convenience benefit. In my corporate career I worked on many, many product categories and always did a deep dive into the research on those products. I was always struck by how the need for convenience always seemed to be in the top three needs for most of these product categories. Now the meaning of convenience obviously changes significantly from product category to product category. Nonetheless, it does say that customers who have very busy lives are always interested in something that makes it easier for whatever category they are interested in.
Having said that, clearly the convenience benefit is very important in the propositions of these two companies and others like it. Instead of having to drive to a restaurant and sometimes stand in line to get a table, all you have to do is use an app to order your food which is delivered to your home or workplace.
Now the question becomes how convenient are these delivery companies? Some suggest setting of expectation of 45 minutes. Some customer feedback I have read via twitter on these companies suggest that an hours wait is not unusual. How convenient is this really? If you order food when you’re hungry, as most people do, and then have to wait an hour is this really a good solution? I’m guessing it’s probably not for many or some people.
I now will talk about the food quality benefit. You order from a restaurant because you hope to get better food than you could make it home. In virtually every situation I can think of, the food quality delivered to your home is lower than if you were in the actual restaurant having the food served to you. The food travels in a foam or plastic container of some sort. It cools down and changes character during the probably 10 – 20 minute drive to your home. This entire process would seem to lower food quality to a degree.
I will now talk about the price benefit. Certainly you will need to pay a delivery fee and a tip on top of the delivered price. There are some indications that since restaurants need to pay the delivery companies a commission that they might actually charge higher prices for delivery orders versus orders placed in the restaurant. Net, you will probably pay about $10 or more for an order to be delivered to your home than what it would cost at the restaurant.
Bottom line: wait times after ordering of about 45 minutes, lower food quality than you would get in the restaurant itself, and paying more for the lower quality food. Different consumers will balance out the benefits versus the negatives differently. I suspect that there is probably a market for this, but there will be consumers that are unwilling to get the negatives with the benefits. Many companies for at least a decade have tried to be successful in this business, and to date most have not been any better than modestly successful.
Let me briefly talk about the reasons to believe the claimed benefits of these companies.
If you have previously tried companies like this before, this will significantly influence your belief in the proposition they make.
If you already order from companies like Pizza Hut and Dominoes that sell far more products than just pizza, you have a baseline to begin evaluation of this delivery method. The caveat may be that pizza quality travels better than maybe some other meals, but that is something you may be willing to explore.
If you read twitter comments and other sources of current customer comments, you will find a real mix of feedback. Some people are very pleased and others are very displeased.
Net, it is not a slam dunk that people will believe that this is a good option when they want to have other than home prepared food.
Lastly, let me briefly talk dramatic difference.
There is not much dramatically different in the benefits these companies offer. Yes, they offer the ability to get home delivered food from more than restaurants than those primarily selling pizza. On the other hand, there have been and currently are several if not many companies delivering this benefit.
Doordash may have a difference with their software that can significantly improve delivery efficiency and therefore time and food quality. That remains to be seen.
Lastly, many, many people are getting into the rapid delivery of products ordered online. Just take a look at what Amazon is doing.
Net, the differences of the current companies appear to be relatively modest at best.
This podcast is not meant to be a definitive assessment of these companies or the industry that they compete in. Rather the primary purpose of this podcast has been to demonstrate to a small degree how you can use the principles of Merwyn technology to evaluate a business.
This is a process that I think you can use to evaluate your own business. If you can be objective, there can be significant benefits to doing this.
In this podcast I interview a good friend, Rich Boone. We have known each other since my years at the Gallo Winery, where he was in charge of global research the company. Prior to that he learned his research craft that Procter & Gamble, the company that I’m also very familiar with and very respectful of. Since leaving Gallo, he has done research for major United States and international clients.
For this interview I asked Rich to talk about research from the perspective of innovation and research methods that could help virtually any business.
Let’s get started.
Here are some points from my interview with Rich that I think can immediately help virtually every listener of this podcast.
