The Napkin PC and Other Innovative Ideas

I came across the web site for a Microsoft-sponsored alternative computing form factor contest the other day, and I must say there were a few interesting ideas that might help people begin to see the future of computing.

The most interesting concept was coincidentally the winner of the contest, the Napkin PC.

If you follow the link above you'll see the artist conceptions and get a good sense of the vision. The gist is that some of the greatest advances in the world have been conceived on the lowly paper napkin in restaurants and coffee shops all over the world, so why not take the napkin high tech. Just don't try and wipe up spilled coffee with it.

The concept consists of a rack to contain and potentially recharge the OLED "napkins" and the styluses that go with them. These "napkins" provide a computing interface much like a tablet computer and can be pinned up on a board or connected together to make a larger display.

The concept is targeted squarely at the brainstorming, ideation, collaboration space and if the designer can ever manage to pull it off, I think it would be a welcome tool for organizations everywhere.

So what is your vision for the future of computing?

Are there other sites on this topic you think others would find interesting?
-- If so, please add a comment to this article with the URL

Battle for Mobile Dominance Escalates

Lest anyone thought that Apple and Google's latest assaults on Nokia's dominance in the mobile space would go unchallenged, news came out today that Nokia is acquiring the rest of Symbian that it did not already own.

This would be interesting news by itself, but Nokia, recognizing that its future as a handset manufacturer is at risk ratcheted up the competition at the same time.

How are they doing this?

By making the bold and correct move of making Symbian instantly the largest open source mobile platform through its transfer to an entity called the Symbian Foundation. Nokia really has no other choice but to make this move. RIM is evolving to become a more capable competitor, PALM and Motorola are both making their last ditch efforts to save themselves, Samsung and HTC continue to gather strength, Apple is opening up and poised to gain significant share, and Google has already launched an open source platform.

So who stands to lose the most as a result of Nokia's move?

Probably Google...

Google launched the android platform to try and ensure their search advertising dominance moves from the desktop/laptop world into the mobile world. Developers looking for an open source solution for their applications (corporate or otherwise) are more likely to choose a more robust and widely adopted OS like Symbian now that they have the choice.

And also Microsoft...

Windows Mobile has the advantage of trying to pair with Windows Live and Windows Vista, but with open source Symbian on one side and Apple on the other, Microsoft may end up stuck in the middle. Not quite as a elegant as the Apple offering, and more expensive and closed than the Symbian offering. Now of course Linux hasn't overtaken Windows in the PC market, but the mobile market is more of a green field and people are still defining their expectations of a mobile OS. Unfortunately this environment favors Symbian and Apple.

Which of those two will win the race, remains to be seen...

What do you think?

iPhone Pro Update

For those skeptics out there who doubt that Apple will launch an iPhone Pro sometime between October 2008 and January 2009 at Macworld, check out this BusinessWeek article. The synopsis is that the iPhone 3G is $53/unit cheaper to manufacture than the original iPhone according to analysts. This puts the cost to produce the iPhone 3G at $173 versus $226 for the original iPhone, and they go further to predict that iPhone 3G costs will fall to $148 in 2009. They go further to estimate that Apple is selling the iPhone 3G to Apple for $499, leaving Apple a huge $281 profit per unit (or about 56%).

This means there is plenty of room for Apple to drop the price of the iPhone 3G to AT&T when they are ready to launch the iPhone Pro, in order to support AT&T dropping the iPhone 3G 8GB to $99, $49 or even free.

Now that Apple has embraced the subsidy model and launched the AppStore, they have a lot to gain by getting to a free phone as soon as possible to boost their volume and increase their chance of winning the mobile application platform battle. Even if Apple doesn't win this battle and only continues on their current desktop/laptop share accumulation trajectory they stand to make big money through increased desktop and laptop sales.

Microsoft has good reason to be obsessed with Apple...

Mandatory Excellence

There has been a debate in the United States over the last several years around whether or not the government should institute a program of mandatory government service like other countries in the world.

In most countries this takes the form of military service, but some allow work in other government capacities to satisfy the obligation.

The United States does have mandatory government service, it's called jury duty but it probably amounts to only a number of days over the course of a lifetime. In addition the government has implemented schemes to help address acute shortages. AmeriCorps was founded to help alleviate the shortage of teachers in the inner cities by forgiving some or all of participants college loans.

But I have never heard anyone pitch mandatory government service as an opportunity to create competitive advantage.

Instead, governments engage in repeated wealth transfers to consulting companies for consulting projects that too often don't translate into sustainable results. What would happen if a government instead harnessed what citizens were truly good at for long enough to affect real accountable results in service to their country?

I write this not to advocate mandatory government service, but to call attention to the fact that countries and regions are going to increasingly compete in order to preserve their standard of living, and that those without a public sector innovation strategy will lose out to those who find a way to continuously become more efficient.

After all, every government must collect tax dollars to operate, but the more efficient a government can be, the fewer tax dollars it needs to collect in order to provide basic services. The lower the resulting tax rate the more profitable companies can be and the more likely they will remain in or be attracted to locate in that country.

As a result, governments should look at all possibilities of improving their efficiency through government innovation. Innovation, after all, is not only a necessary or desirable goal for businesses but for governments and individuals as well.

Could an innovative mandatory government service program be one way to achieve competitive advantage?

The Second Coming of the iPhone

To commemorate the launch of the second version of Apple's iPhone, I'd like to revisit my original iPhone article from one year ago. In that article I theorized why the iPhone would not succeed, at least not in its first incarnation, and why it would not be until its third version that it would be a runaway success.

So, one year on I still believe that it will be the third version that will cement the iPhone's position in the same way that the third version of the iPod led to the iPod becoming pervasive. The iPhone definitely has the potential to become as pervasive as the iPod, but it is still not ready.

When I look back at the specs I predicted would lead to ultimate success, Apple has only moved part of the way there with its second iPhone. If Apple is truly honest with people, this new iPhone really only serves to take the iPhone global (through the addition of 3G) and to enable more accurate location-enabled applications.

Those are really the only two new features of note on the phone. This new iPhone is really only a minor tweak, a repackaging of the existing iPhone so they can drop the price and have it better accepted globally, not the revolution that is truly necessary to finish the job of making the iPhone the number one mobile phone in the same that the iPod became the number one digital music player.

And what about the price drop?

Here is my theory on that. The price drop serves two purposes. The first is to hopefully increase sales outside of the USA where people looked at the original iPhone as an over-priced, under-powered toy (no 5MP video camera, no 3G, etc.). This offering fixes the 3G and price problems, but does not address the camera issue. This leads to the second purpose of the price drop. This "new" iPhone is to be the entry-level phone in a new expanded lineup that will come at Macworld in January, if not before. My leading thought is that the new iPhone Pro is likely to launch in October - just in time for the holiday shopping season.

The iPhone Pro will likely come with the specifications I listed in last year's article. Apple's strategy is brilliant really. By "launching" the low end phone before the high end phone, it is an easier sell, and in that October-January timeframe the carriers will be able to drop the price of the low end phone even more (to either $99 or even to FREE) and spread it even farther. The other reason to launch the low-end phone first is to give developers an incentive sooner to develop applications for the iPhone/iPod Touch platform sooner, which will serve to enhance the value of the iPhone Pro when it launches.

At the launch event for the iPhone Pro in October or January, Apple will be able to make a lot of noise about all of the applications that the new iPhone Pro will be able to take advantage of and they will be able to highlight a few new ones that take advantage of the capabilities unique to the iPhone Pro. The main new features of course will be a 5MP swivel video camera (or a front/rear facing camera combo) and a video iChat application for the iPhone Pro. This capability will then be introduced into a new low-end phone this time next year at the WWDC.


As a recap, here are the features that I predicted one year ago for the third version of the iPhone (noting those achieved), which I now believe will be the iPhone Pro that will launch in the October-January timeframe:

1. 5-megapixel swivel camera (or paired with a 2-megapixel screen-side video-enabled lens)
2. Video iChat capability (iChat AV)
3. Next generation Bluetooth
• DONE - I think - Bluetooth 2.0 + EDR
4. A slightly bigger screen (every millimeter counts) - if the bevel can be reduced
• UPDATE - Phone might get smaller instead
5. 16gb or 32gb of flash memory
6. Hopefully a faster 3G or WiMax network connection
• DONE with 2nd version
7. 802.11n WiFi
8. Faster processor with lower power needs
9. Improved battery life
10. Lower price - $299 or less
• 2nd version hit $199-299 - iPhone Pro will also be priced at $199-299 and v2 will drop in price to FREE-$99

So, who thinks I'm right?


Note: These are purely my opinions based on my understanding of technology and of strategy and are not based on any inside knowledge.

Decreasing Standard of Living, Increasing Profits

We are at an inflection point in the developed world, and the fate of your standard of living rests either in the your own hands (if you are an entrepreneur) or in the wisdom (or lack thereof) of a few key politicians.

The question is will the direction be up or down?

Economic factors in our newly globalized world dictate that individuals in lesser developed countries like China and India will experience rising wages and an increasing standard of living while individuals in the developed world experience flat or declining wages and standard of living in a race to the middle.

This began happening some time ago, but has been buried under a pile of easy credit.

Housing costs have increased, food and fuel prices are surging upwards along with commodity prices as demand grows faster than supply. Meanwhile, real wages are declining. Sounds like a depressing situation, right?

Well, all is not lost. If we can't avoid the inevitable decline in the developed world, then as individuals--and even as states and nation--we can seek to slow its decline or reverse the trend completely.

How do we do this?

As states and nations, we must invest in improving our ability to efficiently provide the basics, while at the same time reducing our demand for scarce commodities.

Our businesses must move from being product-led or even customer-led organizations to maintain their lead by transforming into innovation-led organizations that can move faster than competing organizations overseas with lower costs that seek to copy their innovations.

As individuals we can either go along for the ride as employees and hope that our government and business leaders make these adjustments faster than foreign competition, or help to lead the charge as entrepreneurs.

The entrepreneurs among us must recognize this new reality in the world and identify ways to profit from it. We must uncover the new or amplified business and consumer pains and the solutions to them. These truths will exist across the developed world and thus will scale for entrepreneurs or businesses bold enough to pursue them internationally.

What does this look like you might ask?

Well, one example would be satisfying the need for consumers to increasingly downgrade from restaurants to other types of less-expensive prepared foods when time is scarce. UK supermarkets like Tesco and their ready meals offer a great example that could be replicated in fast-paced American cities like New York, Seattle, and San Francisco.

Another would be exporting used American SUVs to take advantage of their rapid repreciation in the era of $4 gasoline to places that benefit from the weak dollar and/or lower fuel prices.

There are a million more ideas and innovations out there for people to find and put to work even as developed economies crest.

So are you going to let this new wave pummel you or are you going to find a way to ride it?

That answer is up to you...

Food Innovation - New Tastes using Old Methods

Ever notice how long food ingredient lists have gotten over the past thirty or forty years?


Distribution and logistics hurdles used to require that food was a local and fresh affair. Then television and new distribution and logistics capabilities enabled the creation of regional and then national grocery chains. This encouraged companies to make one centralized product in quantity for national distribution. The national distribution system lengthened the amount of time that products might spend in retailers' supply chains, and ingredient lists began to lengthen as a result. To make matters worse, as automobiles enabled larger stores outside the city center with larger selections, floor space turned less frequently and retailers increased the pressure for longer shelf lives on top of the longer supply chain survival time. That is why you need a degree in chemistry today to decipher the average food item ingredients list.

So now that our food has a wicked shelf life but no natural taste without loads of sugar, salt, fat, and "flavor enhancers", has a market been created for a new breed of food "innovators"?

The answer is a resounding yes!

The Newman's Own Example

An excerpt from Shameless Exploitation in Pursuit of the Common Good: The Madcap Business Adventure by the Truly Oddest Couple):

"It was a recipe like nothing they had ever seen before, nor had anyone else in the spaghetti sauce business. When Ralph Cantisano saw the recipe, he had serious doubts that a sauce with fresh components and no preservatives would have the necessary shelf life, the same doubts that we had encountered with our dressing and that we would face with all our natural products, primarily because no one had ever bottled fresh stuff before without fixing it with chemical preservatives"

Newman's Own succeeded in finding a way to bottle both their salad dressing and their spaghetti sauce without chemical preservatives, and have gone on to donate more than $200 million to charities.

The Chocolate Milk Example

Look at the ingredient list for Darigold "Old-Fashioned" Chocolate Milk:

Milk, Sugar, Corn Syrup, Nonfat Milk, Whey, Cocoa Processed with Alkali, Mono-and Diglycerides, Cellulose Gum, Carrageenan, Guar Gum, Locust Bean Gum, Vitamin D3.

Organic Valley Chocolate Milk is not much better:

Organic Grade A Reduced Fat Milk, Organic Sugar, Organic Dutch Cocoa, Salt, Carrageenan, Vitamin A Palmitate, Vitamin D3.


And then look at the ingredient list of Wilcox Old Fashioned Chocolate Milk (from a local Washington dairy):

Grade A Milk, Cream, Sugar, Cocoa

If you haven't tasted Wilcox Old Fashioned Chocolate Milk or Marks & Spencer's chocolate milk in the U.K., trust me, they are pure chocolate bliss.



The Conclusion

With improvements in the supply chain, distribution efficiency, inventory management, and just in time delivery, food companies and food retailers now have the opportunity to shift food consumption in the United States in innovative new directions away from mile long supply chains and nitrogen ripening chambers.

Luckily, increased shipping costs are bound to force more companies to explore distributed production (ala Coca Cola and Anheuser Busch) to reduce costs. At the same time, the local food and slow food movements are picking up steam. If grocery stores also begin updating their supplier requirements and their stores, then we may see a perfect food storm deliver fresher, tastier food to our shelves soon with fewer preservatives.

Imagine a grocery store with more frequent, efficient re-stocking and a produce section carrying smaller quantities of each item (reducing waste) that reside in constantly weighed bins, matched against boxes in the warehouse and boxes scanned as they are emptied into display stock, giving the store and regional distributors a real-time produce inventory. This real-time produce inventory would allow the stores to carry fresher, and hopefully naturally ripened (and thus tastier) produce with reduced waste.

Now for the bad news. Wilcox Old Fashioned Chocolate Milk is no longer available because the dairy tried to compete on price in their unflavored milk business, started losing money, and sold their milk business off to a competitor. The competitor has chosen to expand distribution of their pre-existing artificial chocolate milk instead of expanding distribution of Wilcox Old Fashioned. Thus consciously choosing to eschew a market willing to pay a premium for a better tasting, natural product.

Imagine my shock and horror...

So, to satisfy my own sweet tooth and to help raise even more money for charities, I will be calling the guys at Newman's Own to pitch them on the idea of producing a fresh and natural chocolate milk on a national scale via a consistent recipe and local dairies for maximum freshness.

What are your "new" food innovation ideas?

Announcing the Innovation Community

I am pleased to announce the launch of the new multi-author Innovation Community at http://innovationcommunity.ning.com

The Innovation Community provides:

1. A forum for people interested in driving business results and discussing innovation topics


2. Centralized access to the writings and videos of several visionaries:
   - Gary Hamel, Clayton Christensen, Geoffrey Moore, Michael Raynor, Braden Kelley, David Sable, Stephen Shapiro, and the minds of Ideo


3. Access to content from London Business School's Management Innovation Lab


4. A way for you to connect with other people interested in innovation


5. A place for you to share innovation content that others might enjoy

I encourage you to check it out and help make it your own.

Join the conversation at http://innovationcommunity.ning.com.

A Mobile Dining Innovation

          VS.          

OK, there aren't too many food concepts that I would call innovative, but here is one:

It's a business that is starting up here in Seattle called Skillet Street Food.

It's concept is that it retrofits Airstreams into working, mobile kitchens that serve "evolved cuisine" during breakfast and lunch at locations that change day-to-day. But not day-to-day in the you never know where it will be next sense. They have a calendar and tend to show up at the same spots once per week.

Now I know you may be thinking to yourself, a mobile kitchen, what's new about that?

You may also be thinking to yourself, that sounds strikingly familiar. You might be thinking that sounds just like a taco truck, or roach coach as some would say, well except for the "evolved cuisine" bit.

So what's innovative about that?

Well, it's this:

1. A taco truck has no story. Skillet Street is building its own myth, somewhat consciously, somewhat unconsciously (kind of like the Bacon Salt guys).


2. Like the Bacon Salt guys, they seem to love bacon, having created an eBay store to sell their Bacon Jam along with t-shirts and the like.


3. Whether they realize it or not, the genius in their implementation is that it crams most of the typical once a week customer revenue possible in a catchment area into a single day (times five locations), probably doubling the revenue they would earn from anchoring in a single location. At the same time they reduce burnout at each location - inspiring people instead to schedule the weekly visit in their calendar.

To see if there is there anything in this concept that you could adapt to your business, ask yourself questions like the following:

1. Do you have a compelling and interesting story that would make people like your company?


2. Are your products too available?


3. Do you give your customers something to look forward to?


4. What is your customer surprise and delight strategy?


5. What unorthodox ways can you think of for getting your products/services to customers?


6. Are there different customer "neighborhoods" you could make your products/services available to in order to increase its exposure (coffee by boat anyone)?

Check out the video below:

Innovative or not?

What do you think?

Why MyStarbucksIdea is a Bad Idea

Today we will examine Starbucks' open innovation attempt - MyStarbucksIdea.

You may have come across it already, but it is worth examining because it represents one of the largest open innovation efforts to date, and it is the first I have seen built on a customized salesforce.com platform.

Some might say it is just a fancy suggestion box and not an open innovation effort, but it really depends on how you define open innovation.

MyStarbucksIdea.com is open innovation at work, not a mere suggestion box because a suggestion box is a black hole. People submit their suggestion and never know:

1. If anybody even sees it
2. What the reaction was to it
3. What the outcome was
4. What other people might think of the idea
5. How other people might make the idea even better

Open innovation principles say that if a company allows people from outside the company to provide ideas that the innovation that comes as a result will be greater than if ideation is maintained as the sole domain of employees. MyStarbucksIdea.com embraces those principles and takes it one step further in that it allows a couple of key community features:

1. Anyone can submit an idea
2. Users can vote on different ideas to indicate the wisdom of the crowd
3. Anyone can build a discussion around an idea by commenting on it
• As a result their is an opportunity for ideas to be refined and become more compelling than first presented by the original submission
4. Each registered user has an "inbox" that let's them see when someone responds to their submission
5. Finally Starbucks pulls it all together with the "Ideas in Action" page to show what they are doing with the submissions

This kind of implementation has a few fatal flaws however:

1. Competitors can benefit at the same time and possibly beat Starbucks to the punch if they respond faster
2. Numerous duplicate submissions over time will make it difficult for users to build upon anything other than the newest or the most popular ideas (which will be difficult to measure given the duplicates)
3. A lot of the obvious wins will be picked off within the first few months

So should Starbucks keep or ditch MyStarbucksIdea?

To answer that question I must answer it with another question. What is the purpose of innovation?

The purpose of innovation in the corporate world is to increase revenue and/or decrease costs, while also increasing competitive separation. Any other purpose has the potential to increase costs and possibly even to put you further behind your competition.

Innovation in the government or non-profit sectors can support the secondary purpose of facilitating knowledge sharing that the corporate world cannot support.

MyStarbucksIdea is a great implementation for a government or non-profit, but terrible for a corporation.

Here is what Starbucks should do:

1. Starbucks should switch to a suggestion box format, with a closed community aspect to evolve ideas
   
• Inviting people who submit similar suggestions to a closed forum to discuss their idea
• Inviting top contributors or bloggers to iterate on an idea together privately
2. Starbucks should throw out innovation challenges instead of hosting an open idea forum
3. Starbucks should keep the IdeasInAction page to report back on implemented (and only implemented) suggestions and challenge results
4. Starbucks should offer brand experience prizes (or possibly cash) at whatever level is necessary to encourage submissions and participation (which might be zero initially and escalate over time) while also building brand affinity

Congratulations, Starbucks, this a good first attempt.

However, it falls short of the kind of long-term improvement in innovation capability that ultimately results in a more profitable market leader - that's what we work with organizations to create.

Targeting By The Seatback Of Your Pants

Flying to Hawaii a couple of weeks ago, I was remined of the phrase, "You may be talking but nobody is listening." Hawaiian Airlines had seen fit to pollute the cabin with an endless stream of untargeted advertising on the plane's set of televisions (no fancy seatback units here).

Now, at least on American Airlines the "advertising" mostly masquerades as entertainment (CBS sitcoms or clips of Letterman and 60 minutes) to try and loyalize the shows' base or to pull in new viewers, but it's still advertising. American Airlines has traditional advertising as well, but less than what I saw on Hawaiian Airlines.

Broadcast networks have at least some justification for spamming people over the airwaves (it's their only revenue source and they are only able to target based on dominant audience profiles). The availability of on-demand, seatback entertainment systems, leaves airlines with no excuse, and in fact every motivation as advertisers would willingly pay more for targeted impressions.

For targeting purposes, the airlines know who purchased the ticket (likely their age (senior/adult/child), phone number, e-mail, address, zip code, how much they paid, the credit card they paid with, etc.). About frequent fliers they will also know how frequently they fly, their home airport, and maybe even whether they are travelling on business and for which company. So it would definitely be possible to design a system to target advertising in-flight.

At its simplest, airlines could define the programming schedule as a mixture of content blocks and advertising blocks (interstitial advertising) and target the advertising by seat, using passenger data. Passenger data could be loaded up at the beginning of each flight by a gate agent using a USB key, smartcard, or other portable data storage device. Every seat could potentially receive a different combination of commercials during the flight.

Airlines wishing to avoid interstitial advertising could design a more complex system to support advertising that would appear during the programming (as banners, or whatever). Whichever way the airlines went, they have the opportunity to create a system that would likely attract the highest rates for video advertising on the planet to help them pay for the increasingly expensive fuel to fly the plane.

Now where did I put that ticket again?

P.S. I also thought it was interesting that Hawaiian Airlines has chosen to go "cash-free" and only accept debit and credit cards. I agree with offering it as an option, but I'm not sure I agree with abandoning cash. Why would you want to do anything to make it more difficult for people to give you their money?

Uncrossing the Wires - Can Clearwire be Fixed?

Clearwire is the first major WiMax broadband service offering. The company initially launched with fixed-line replacement broadband for people's homes or offices. This puts them into direct competition with cable and DSL providers. Let's look at the landscape to see how Clearwire stacks up:

Provider	Plan Name	Price	Speed	Term
Clearwire	ClearPremium Choice	$26.99	1.5 Mbps	2 yrs
Clearwire	ClearPremium Plus	$44.99	2.0 Mbps	2 yrs (3 mos. at $19.99)
Qwest	Faster	$44.99	1.5Mbps	2 yrs ($26.99 with home phone)
Qwest	Fastest	$54.99	7.0 Mbps	2 yrs ($36.99 with home phone)
Comcast	High Speed Internet	$52.95	6.0 Mbps	0 yrs ($42.95 with cable TV)

As you can see, Clearwire's service offerings are not necessarily any cheaper or faster. In fact, existing Qwest Local Phone and Comcast Cable TV subscribers can get 4x faster access for less money. So why would anyone go with Clearwire?

They are priced at parity with Qwest on their voice bundle:

Provider	Plan Name	Price	Speed	Term
Clearwire	Clearwire Voice Bundle	$71.98	1.5 Mbps	2 yrs (3 mos. at $24.98)
Qwest	Unlim LongDist Bundle	$71.98	1.5 Mbps	2 yrs

But what about mobility? Clearwire announced a PC card service recently that is $10 a month cheaper and slightly faster, but their coverage area is terrible in comparison to Sprint and soon to AT&T as well. Here is how the mobile plans compare:

Provider	Plan Name	Price	Speed	Term
Clearwire	PC Card Premium	$49.99	1.5 Mbps	2 yrs
AT&T	DataConnect	$59.99	1.4 Mbps	2 yrs (5 GB limit)
Sprint	Mobile Broadband	$59.99	1.4 Mbps	2 yrs

Clearwire also has a home/mobile bundle, but if you've got a mobile broadband PC card, what do you need home broadband for unless it is significantly faster (which Clearwire's isn't):

Provider	Plan Name	Price	Speed	Term
Clearwire	ClearPremium Plus w/ PC	$79.99	2.0 Mbps	2 yrs (1.5 Mbps mobile)

So why would anyone signup with Clearwire?

Frankly I'm not sure why someone would unless they have no other option. Clearwire has no clear advantage.

As an outsider looking in, if I were advising Clearwire, here is what I would do:

1. Abandon the home broadband market in metropolitan areas with good cable and DSL coverage
2. Focus on rural areas and smaller metropolitan areas with poor coverage where they may have a unique offer
3. In metropolitan areas, focus on the mobile broadband market and pushing the speed/pricing envelope
4. Focus on developing a WiMax signal booster that can be plugged into any AC or DC power source
5. Explore alternative pricing models, possibly including advertising-supported service (as an option)
6. Push the Sprint partnership through to expand the value of the combined Sprint/Clearwire WiMax offering
7. Could PC cards be used to somehow improve WiFi reception?
8. Support automatic switching to faster user-approved WiFi connection points when in range
9. Partner with local phone or cable companies to be their mobile broadband providers
10. Get Clearwire technology embedded in new laptops along with antennas that boost both WiMax and WiFi reception

The Trouble with Tully's

Running at "half-caff" in a caffeinated world.

In the first of a series of "From the Outside Looking In" articles I will give my take on how I would address challenges that different companies face.

For those of you not from Seattle or familiar with Tully's, it is a regional coffee chain based in Seattle. It probably has the distinction of being the second largest coffee chain in Seattle, although that doesn't really help it a whole lot.

Tully's has a big problem, or should I say a small problem. Tully's is too small to compete with Starbucks' buying power, but too big to be seen as a credible Starbucks alternative in the mind of those who refuse to patronize chains and instead favor local coffee houses. As a result Tully's struggles to differentiate themselves from their larger competitor, and continues to lose money.

Tully's has chosen to differentiate itself based on factors such as Free WiFi and Green Coffee. I don't mean green as in color, but instead that they only use 100% Certified Fair Trade Organic Espresso and a cup that is 100% compostable. They also carry tasty treats from Alki Bakery, and premium soft serve ice cream and ice cream shakes.

The trouble is that is where the differentiation stops. Walk into your average Tully's and unless someone told you, you might think you were in a Starbucks (only maybe slightly less nice). Tully's needs to do more to differentiate itself from the competition. If I were running Tully's here is what I would do:

Turn Tully's into a destination rather than just the closest coffee shop:

1. Install 802.11n and take steps to ensure its reliability


• Tully's has free WiFi already, but it's not very reliable and it's slow. Starbucks may charge, but their WiFi is faster and more reliable. If you're going to try and differentiate on a point, you have to delight customers not frustrate them.
  


2. Consider having a small conference room available for use in some locations
   


• Some smaller coffee shops use this to great success in driving hot beverage and food sales, but more importantly to drive loyalty


3. Don't sell any food unless you are going to sell best-in-class options


• Do a deal with Krispy Kreme to distribute their donuts, and not just for individual sale, but dozens and half-dozens as well


• Do a deal with Organics to Go or other compatible vendor for sandwiches


• Do a deal with an iconic bagel manufacturer


• Switch from Ghiradelli to Green & Blacks Organic as a chocolate supplier (hint of luxury) -- Godiva might make a good second choice


4. Focus on service, encouraging employees to make personal connections with customers and take small actions to loyalize customers


• Randomly select regular customers for free upsizing (Grande for the price of a Tall) or free upgrading (you've been chosen for a free flavor shot)


5. Look to eliminate queueing


• Touch 'n' Go Tully's Card embedded with Favorite Beverage (one-touch ordering and payment)


• SmartPhone application (see Starbucks blog entry from Feb2008)


• Phone ordering -- system recognizes phone number, favorite drink, and Tully's Card PIN


• Web ordering -- Cookie recognizes user, favorite drink, prompts for Tully's Card PIN (or allows customized orders)


• In-store kiosks for distributed ordering for people paying by credit card and Tully's card


6. Look to improve efficiency in other ways


• Introduce cup printing system (increase speed, reduce errors)


• Pass through toaster (we put the bread/bagel in and you take it out)


7. Space is King


• Not having access to Tully's Financials, a quick analysis of Starbucks financials as a proxy shows that on a revenue per square foot basis, food delivers 20%, whole beans 10%, and coffee-making equipment 5% the revenue per square foot of hot drinks. This space needs to be worked harder or freed up for other purposes.
  


• Eliminate hot foods


• 65% of all coffee is consumed during the breakfast hours
  


• Work the space more efficiently by working hard to create a second and maybe even a third spike


• Do a deal with Jamba Juice to expand revenue without subsantially increasing space requirements


8. Continuous Innovation is the key to continuous differentiation


• I would help implement necessary organizational and cultural changes to engage the entire workforce in the process of helping Tully's establish and maintain an industry leadership position based on differentiation

OK Tully's, so now I've given eight differentiating points you can focus on. Brilliant execution will get you to the IPO you so desperately seek. Do you have the courage to take some of these steps?

What do the rest of you think out there? Are these ideas full of hope or full of folly?

Sound off!

Hot Spots of the Valley

Curious where some of the big deals have gotten done in Silicon Valley?

For a bit of Friday fun, check out this video:



Of course you won't get a deal by just hanging out in these places, but if you slip your one-pager into the menus, who knows. ;-)

Second Unnovation Award Winner - HP and Costco

I'm in the middle of trying to buy an HP Pavillion dv6700t Special Edition. I tried to buy it from Costco because you can configure it at costco.com for about 10% less than buying through HP directly.

Days passed, the promised ship date passed and an e-mail arrived saying that the wireless mouse I had "ordered" was out of stock. I was told my shipment would arrive late with a wired mouse followed by a month later by my wireless mouse.

Wireless mouse I ordered? I didn't order a wireless mouse. Phone calls ensued.

It turns out that HP, convinced people will only buy a laptop if a free wireless mouse is involved, had decided one must be included with every laptop order before it can ship. So I called, and asked for the laptop to be shipped on time sans mouse - no dice. Apparently, HP laptops are built and shipped directly to the customer from China, so Costco is only able to place or cancel orders, never modify.

Then this week an e-mail arrives in my inbox from HP announcing a Presidents' Day sale including 25% off the very laptop I had ordered from Costco. So, I promptly place an order on shopping.hp.com (at a $260 savings), and called and cancelled my Costco order.

Imagine my surprise when 36 hours later I get an e-mail from Costco saying that my order had shipped (my order from January 23). When I cancelled my Costco order they said I would either get a shipping or a cancellation confirmation but they had no idea which one. Which brings me to my points:

1. In 2008 how can this happen?
2. How can a transaction that should be nearly instantaneous, still not be executed 36 hours later by an undisputed technology leader and seller of technology consulting services?

Financially this snafu won't effect me (I can get an immediate refund at my local Costco), but it will affect Costco and HP. Costco will lose money executing the return. HP will lose money executing the return and also lose $260 because of their delay that allowed me to re-order at a lower price.

All because of a "free" mouse.

Following the Line to Innovation - Mobile Applications

I came across a queue reduction application for the iPhone and iPod Touch yesterday that was intriguing. The application isn't quite finished or certified for use yet by Apple and Starbucks, but from what I gather it works something like this:

1. User comes in range of a Starbucks WiFi Hotspot
2. Application recognizes the Starbucks WiFi Hotspot or user initiates application
3. Application engages the user interface portion of the application
4. Application makes a connection
5. Application prompts user to order a Starbucks beverage
6. Application user interface facilitates the selection and transmission of the drink order (including a list of saved favorites to speed the process)
7. Application connects to the user's iTunes account
8. Application deducts funds from the user's iTunes account
9. Application creates a visual barcode with the information necessary to register payment
10. User places iPhone or iPod Touch with visual barcode under a reader at the pickup counter
11. User collects their beverage
    

The visual barcode (semacode) and scanner portion of the system could be made unnecessary (or relegated to backup system status), by instead transmitting a payment confirmation to Starbuck's on-site systems directly via the WiFi connection. In the backup scenario, the visual barcode would serve as an electronic receipt to show proof of payment in case the systems in the store doesn't receive the systematic payment immediately.

Imagine the convenience of getting a block or two from your favorite Starbucks, connecting, clicking 'The Usual' and proceeding directly to the drink pickup counter instead of waiting in line to order and pay.

Of course there is no reason why companies like McDonald's or Cinemark couldn't create similar applications to eliminate some of the queueing from our lives. If people could order this easily with their phones then businesses could reduce staffing or reallocate resources from order taking and payment processing to more value-added activities like preparing food or beverage orders.

Apps like this could be extended to the Web through the introduction of a store number field or store locator mini-application or pulldown at the beginning of the application sequence. This would allow you to order out of range of the in-store WiFi over your cellular network or from your home or office internet connection.

Less time spent waiting in lines?

Oh what a beautiful world.

Personal Innovation - Shine Your Star

I had a nice conversation with a friend from London today that I haven't spoken with in a while and we got onto the topic of careers. We started talking about my article on Personal Innovation and how in most professional occupations there are the stars and then there is everyone else.

We talked about how stars in certain professions might only be 5% better at something than their peers but get paid 5x to 50x more than the rest. There are certain professions like professional athletics where this is particularly true. But at the same time in many professions including lawyers, consulants, managers, speakers, even cooks and hair stylists, the stars are those who are best at marketing themselves. So if you really want to become a star, you have to hone the skills necessary to market yourself and/or your ideas.

If you read my article about The Commodity Marketplace for Employees you'll get a lot more background on this topic. Today I want to focus on a good point that my friend brought up. He had consciously tried to build up an 'aura' (or a "reputation for greatness") in his organization and had been somewhat successful in doing so. But after succeeding at building his 'aura', some coworkers who had previously been helpful in building it, suddenly stopped supporting him. Why did they do this? Well, they began to feel that his 'aura' had become stronger than their own, and a potential threat to their own career ambitions.

So, if you are really good at what you do, is building yourself into a star doomed to failure?

Definitely not!

This is one of the hazards of focusing your personal innovation efforts within your organization. While it is important to have a reputation for greatness within your organization of a certain level, it is more important to focus on expanding your reputation for greatness outside the organization and here is why:

1. To build a reputation for greatness within your organization you are dependent on your peers and managers saying flattering things about you and throwing their support behind your efforts, but at some point this support will likely decrease or cease
• The only exception is a company growing so fast that there is endless opportunity for all
• This is because people eventually become threatened and will not want to be seen as inferior


2. Building up a reputation for greatness within your organization really only helps you
• It might help your manager if he/she can show their bosses that they are a great developer of talent and deserve to move up to the next level
• It does not add value to the organization


3. Making yourself a star outside your organization increases the awareness of other companies to your promise and potential
• It also increases the profile of your organization as being a thought leader
• Upper management will eventually recognize this thought leadership benefit
1. Improved reputation
2. Free advertising
3. Free public relations

Let's face it, becoming an internal star will probably only get you a 3% annual raise instead of a 2% annual raise, and possibly on the fast track for promotions (but only until you become a little too threatening to the wrong person). If you truly are a star, begin preparing yourself mentally for the possibility that you may have to leave your current employer to be compensated appropriately, continue to execute brilliantly and start polishing your star.

If you do a good job building up your self-marketing skills and show that you do have something unique and valuable to say, then you will become of greater value to another organization than to your current one, and to a sufficient level where the other organization is willing to campaign to acquire you.

So, the following questions remain:

1. Are you really a star?
2. Are you committed to the hard work and learning necessary to shine your star?
3. Are you ready to leave your current employer when the time is right for a new opportunity or to create your own?

Well, are you?

Read more

Are you the tenth person who innovates?

"For every nine people who denounce innovation, only one will encourage it... For every nine people who do things the way they have always been done, only one will ever wonder if there is a better way. For every nine people who stand in line in front of a locked building, only one will ever come around and check the back door."

"Our progress as a species rests squarely on the shoulders of that tenth person. The nine are satisfied with things they are told are valuable. Person 10 determines for himself what has value."

- Za Rinpoche and Ashley Nebelsieck, in The Backdoor to Enlightenment

As I've said before, innovation is achieved when something becomes valuable to the customer, instead of merely useful. Are you standing in line with your competitors, or are you creating the real value that will help you achieve competitive separation?

Facebook will Rule the World

I was looking at blog publishing alternatives yesterday to see what new developments are available, and after a stop at Twitter that led me to Facebook, I had an epiphany. Facebook is going to rule the online world, and here is why:

Before the invention of the automobile, towns were built around town squares or high streets. Town squares were gathering places, often populated by churches. Italy has the piazza, Germany the platz. Clusters of stores and restaurants often were nearby. In the UK, these clusters of retail businesses are called a high street, in the United States they became known as main street. In the United States, main street is dead or dying, replaced by shopping malls, strip malls, and big box stores. The negative consequence of this is the loss of community as these stores have larger catchment areas and lack that neighborhood feel, resulting in further isolation of individuals from each other.

Building upon the increasing isolation of individuals from each other, people are at the same time becoming more mobile meaning that people are more and more likely to have friend networks that span hundreds or thousands of miles. More and more people are 'hanging out with their friends' online and Facebook is one of the places that this happens in spades. 'Online Community Sites', as they are now referred to, like Friendster, Bebo, MySpace have exploded.

The reason I say that Facebook is going to rule the world, is that relationships are more important to us as humans than anything else other than food, shelter, and clothing. In the early days of the Internet, there was very little community and it was characterized as a patchwork of "properties" spread around the globe, and the result was that the "portal" became very popular and people flocked to sites like Yahoo! and MSN, and search engines like Live.com and Google. In fact four of the top five Alexa-ranked sites are the four I just named. But things are about to change. Spots six through ten in the Alexa rankings are currently all occupied by community sites (MySpace, Facebook, Wikipedia, Hi5, and Orkut).

The Internet is becoming a lot more relationship-focused and Facebook is leading this enablement by treating their site more as a platform. It won't be long before people expect to be able to go to Facebook or their favorite community site and check their e-mail, browse their favorite news items and send text messages while still keeping track of what their friends are up to. These type of integrations will represent the next wave of innovations online. Instead of portals adding community as a feature, the innovation will come from a company like Facebook leading with relationships and then seamlessly integrating tasks and information into the community site in a way that allows people to customize these features to their needs.

My interaction with e-mail is already changing thanks to Facebook. I go onto Facebook to see what people are up to and a news item from one of my friends will trigger a contact, not through my Yahoo! account, but through Facebook. Yahoo! Mail can't provide this kind of contextual prompt. Google tries to achieve some level of this in GMail by showing you who is online for chatting integrated together in the mail window, but I don't know what people are up to. Nothing really sparks my curiosity or my likelihood to contact someone. Why is this important?

Money is allocated in the Internet economy based on the number of page views and the level of engagement. If people suddenly start initiating e-mails on Facebook or browsing classifieds or jobs on Facebook or who knows, maybe even news content, then the money moves with them. What happens if people suddenly stop typing in google.com or live.com directly into their browser and instead search off a widget in Facebook instead that drives revenue Facebook's way?

Facebook not only has the potential to move up the rankings tables, but the revenue tables as well. When you look at this way, Facebook was smart to turn down Yahoo!'s $1 Billion.

So what are the portal players and search engines up to?

Microsoft has Spaces on live.com and is invested in Facebook, Google has Orkut, and Yahoo!, well Yahoo! wanted Facebook but didn't get it and 360 is pretty lame. Now I'm no betting man or industry analyst but I would look for Yahoo! to do a deal in the next six months for a community site at an overinflated price. Facebook is about to overtake Yahoo! in the same way that Yahoo! overtook AltaVista. Now you see why I believe Facebook is going to rule the online world.

What do you think?

A Laptop Innovation We All Need

Intel and AMD are making processors faster, ATI and nVidia continue to accelerate graphics and video, while faster memory and buses underpin both. Meanwhile, hard disks are spinning a bit faster, but getting bigger at the same time. Maybe I am wrong, but it seems like hard disk access speed continues to be the bottleneck. So can our laptops really get much faster?

The answer is hopefully yes, and here is an idea that hopefully will make them faster and more reliable at the same time. Some of you may have heard of SSD (Solid State Disk), but probably only a handful of you have ever had your hands on a machine with one built-in. For those who don't know what an SSD is, it is a small capacity "disk" made of flash memory chips that retain information without power. By small capacity I mean that most current implementations are 32gb in size (small when compared to 250gb laptop hard drives). An SSD is useful for the following reasons:

1. Uses less power than a hard disk
2. Faster access than a hard disk
3. Can be used together with a hard disk

Because of these advantages, and SSD is an ideal place to store an operating system to speed boot time, improve responsiveness, and extend laptop battery life.

These features and benefits make an SSD very useful, but not necessarily very valuable (the price might be too high for many). Now I haven't seen how people are implementing SSD's in laptops, but I wanted to make my case for the solution that would make such a laptop very valuable to the mass market (thus creating a true innovation). It works like this:

1. SSD is upgradeable as memory prices per gigabyte drop
2. Laptop comes with the operating system installed on the SSD
3. Laptop comes with the operating system installed on the hard disk
4. Laptop comes with an application that allows you to choose which to boot from on startup
5. Laptop comes with a one-click application that does the following:
   
• Reformat and optimize the SSD
• Does a fresh install of the operating system onto the SSD
• Re-installs operating system level components of compliant applications
• Gives you a list of non-compliant applications and the option to remove them
  (these applications would have to be reinstalled manually to work properly)

Why would this be so much better than what we have now?

Well, one way to fix some of the worst computer problem is to do a low level format of the hard disk and re-install your operating system and applications. This would make it almost painless to do this, and would allow users to keep their computer in peak performance at all times instead of limping along until they have time to do a full backup and restore. I'm limping along waiting for that moment as we speak. This all seems perfectly doable, but I wonder whether laptop manufacturers will deliver dumb SSD's or something more intelligent, to move from useful to valuable, and reap the rewards from the true innovation.

What do you think?

Followup - The Future of Broadcast Television

I finally got my password to the beta program for hulu.com and I must say it is what I thought it would be, a site where you can watch advertising-supported Fox and NBC programming for free. This article is a followup on innovation article #75 of November 11, 2007. ABC.com has been doing this for some time, but this marks the first time that two competing networks have gotten together to share development costs on such a venture. The real question is not whether it will be successful or not, but how successful it might be.


The site sounds a near-certain death knell on iTunes future capacity to offer television content profitably. ABC already has their content for free online, and now NBC and Fox do as well. While some people may want to be able to watch content without commercials, I surely doubt that the size of that market segment are going to be large enough to make it worth the investment in servers and development cost, not to mention marketing and other costs. People that are that adamant about not having commercials, and are willing to pay for that privilege, will surely spring for the DVD instead.

From the networks perspective, surely they get more than a dollar or two in advertising revenue per view, so then it becomes a question of the number of views they get and whether that covers the operational costs. The great thing is that the development costs have already been covered by the broadcast division, so the content is ostensibly free to the online division (with the exception of any royalties they must pay).

This calls into question whether iTunes will really be able to ever succeed in video of any kind, including movies. It is in the networks best interests to host their own content or to host it via a platform that they control. By doing so they not only have the opportunity to increase their revenue, but also to cross-promote - to push people from show to show, or sell DVDs and other merchandise.

Finally, if people consume the content on a platform that they control, the networks have a better opportunity to loyalize consumers and even to elevate their interest to involved fan. If they can elevate their interest from casual viewer to involved fan, they may buy merchandise, but more importantly they are likely to then be worth more in terms of advertising revenue (repeat visits, links out to community sites, etc.).

Hulu.com isn't a revolutionary innovation, but it does bring a few new things to the party when it comes to advertising-supported premium content:

1. Ability to embed a program in any other site on the web
   
• Surprisingly without commercials
• Also allows you to resize the timebar to create a custom clip
2. First site to offer movies for free (advertising supported)
3. At the end of the video clip, it gives you either
   
• A link to the show's web site telling you when the show airs
• A link to Amazon Unbox where you can purchase an episode for $1.99
  
• Three formats (computer, TiVo, or portable device)
• Text saying that people can download or purchase a season (but no link)

Hulu does have the ability to revolutionize the industry in a way that YouTube never will, if they have the vision and the organizational capabilities...

Starting with two major networks' content available gives Hulu the chance to at least try to establish itself as a destination for more than Fox and NBC content, potentially stripping YouTube of its best user-generated and premium content at the same time. Hulu has the chance to establish itself as the platform for introducing all kinds of other advertising-supported premium content:

1. Television and Movie Back-catalogs
2. Foreign and independent content (movies, television and shorts)
3. Public television content
4. Music videos
5. Video podcasts
6. Audio podcasts
7. Audiobooks
8. Temporary promotional content (i.e. concert or other live entertainment teasers)
9. The opportunity to create a new style of infomercial

It will be interesting to see if Hulu seizes the opportunity to create an industry platform instead of just a nice little joint venture. It will also be interesting to see what the effect of Hulu and other premium content sites are on shared networks. I guess we will see.

Do you think Hulu will maintain a closed or open network?

Followup - Why Seattle Needs Double-Decker Buses

I wanted to followup on innovation article #23 of August 20, 2007 where I campaigned for double-decker buses in Seattle as a way to reduce traffic congestion and improve the speed and the trip of public transit riders.

I was surprised to see a double-decker public bus cruising through downtown Seattle the other day. It was a route 417 on its way to Mukilteo and it effortlessly cruised through a yellow light to get the last spot in the bus zone (one a bendy bus wouldn't have fit in).

I don't know if the regional transit bureau serving areas north of Seattle has more than one double-decker bus in their fleet or whether this is a test bus for a future purchase, but it sure looked better cruising through downtown Seattle than a bendy bus bouncing up and down. There is nothing quite like the view from the upper-deck of a double-decker bus as you cruise through a city. I hope this is the sign of more to come. Bendy buses may be a newer concept, but double-decker buses are a better one.

What do you think?

Followup - Following the Line to Innovation

I was hesitant this weekend when a man at Costco asked if he could scan my Costco card while I was standing in line, thinking that he was going to try and sell me on their executive card. I was pleasantly surprised when he then scanned my items with a portable scanner/computer and gave me a slip of paper to alert the cashier that he had done so.

It is a pretty simple system:

1. Scanner/Computer reads my Costco account number and creates a record