July 1, 2010

57) Google Image Labeler

危 wēi  danger

Google owes much of its success to its phenomenal search algorithm, invented by Larry Page and Sergey Brin while they were attending Stanford University as Ph.D. candidates.

Broadly, Google search works in three distinct parts:

  • Googlebot, a web crawler finds and fetches web pages.
  • An indexer sorts every word on every page and stores the resulting index of words in a huge database.
  • The query processor compares your search query to the index and uses the algorithm to recommend documents that it considers most relevant.

Google harnesses a distributed network of thousands of computers to parallel process this information.   This approach has proven incredibly effective, with perhaps one major exception: image search.  Image search is less reliable because the indexer mines pages for words and therefore only labels images based on their context (and most images on the web are untagged).  Many companies have tried to build software to interpret images but it’s tough to do  – that’s why identifying unclear letters remains one of the last ways of evidencing that we are in fact human, not machine.

Proof you’re [sort of] smarter than machine:

Although there is clear value in being able to search for images accurately, even Google couldn’t afford to have people complete the labour-intensive task of tagging images one by one.

机 jī opportunity

Google asked a different question  - how can we have consumers do this for free?  Answer: make it a game.  Google licensed ESP gaming technology, originally conceived by Luis von Ahn of Carnegie Mellon University and launched Google Image Labeler in 2006 as a beta.

In the game users are paired with another and they compete in tagging images.  The game is great fun: some users reportedly play over 40 hours a week.  The game has enabled the company to ensure that its keywords are matched to correct images, building an accurate database for Google Image Search.

Gaming has great potential for good, other recent examples include Matchin (helping build a database of the web’s most attractive pictures) and Solarstormwatch (helping astronomers spot explosions on the Sun to give astronauts an early warning if dangerous solar radiation is headed their way)

How About…

  • Developing a game to harness consumer power economically?
  • Applying gaming ideas & principles to your existing offer?

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Here’s a screenshot from the game:

April 6, 2010

45) Netflix

危 wēi  danger

Video stores emerged in the 1980s and enjoyed explosive growth over the next decade. None is better known than Blockbuster, which opened its first store in 1985 in Texas and subsequently grew to 9,000 stores in 25 countries worldwide.  Blockbuster was highly innovative, driving its rapid growth through franchising (at its peak opening one store every seventeen hours).  It also improved on the traditional model of buying new video releases for a large flat fee by negotiating revenue sharing arrangements with the film owners, enabling it to access new releases at low fixed cost.  Blockbuster’s dominance led to its sale to Viacom for a price of $8.4 billion

机 jī opportunity

Surely Blockbuster’s scale, negotiating power, brand recognition and prime real estate made entry into the film rental market a guaranteed failure.  Not if Blockbuster’s ‘strengths’ could be turned into weaknesses – which is exactly what Netflix’s model did when it entered the market in 1997.  Netflix turned Blockbuster’s expensive retail channels into its Achilles heal by distributing via the internet.  Netflix also leveraged the strengths of the internet to improve the consumer experience – offering tailored recommendations, greater movie choice (at lower cost because of centralized stocking) and greater flexibility.  Netlflix even smooths demand by inviting its customers to create a list of films they want to watch and Netflix chooses the order in which they receive them.  Netflix owns more than 55 million discs and, on average, ships 1.9 million DVDs to customers each day.   In stark contrast Blockbuster Inc has spiralling losses and is more more than $1m in debt – forcing it to announce that its European arm was being put up for sale last month.

How About…

  • When looking at disruptive business opportunities start with the incumbents’ P&Ls – where do they spend the most money?
  • When disrupting these high cost aspects of the incumbents’ business models exploring how the new approach can improve the customer experience above and beyond cost?

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March 15, 2010

44) Zara

危 wēi  danger

The $300-billion fashion industry has always struck me as a tough industry to disrupt – after all it’s dominated by global fashion houses that have enjoyed a near monopoly on trend-setting – trends that they drive through expensive fashion shows and enormous marketing campaigns.  The industry is highly seasonal (conveniently improving the fashion houses’ product turnover) and consumers have grown to accept that they have to wait 6 months or so to buy the clothes that they see on the catwalk (the time it takes the incumbents to organize manufacturing through third parties).

机 jī opportunity

Zara’s contrarian approach has turned this model on its head – instead of investing in setting trends (for many years it had a zero advertising policy) it is almost entirely reactive and focuses on keeping its costs low.  Its whole model is geared around speed to market and low cost experimentation – for example unlike other large fashion houses, Zara owns all of its designing, manufacturing and retailing operations – enabling it to retail product that it designed less than 2 weeks earlier. It relies on its frontline employees to feedback on emerging trends, and use PDAs to feedback instantly on the success of its new lines (which are initially made only in medium size to limit investment).  Stock is made to order and can be replenished within 36 hours in any store in the EU.  Zara’s pioneering approach, often described as ‘fast fashion’, has helped it overtake GAP to become the largest fashion retailer in the world – in part driven by the fact that its rapid stock turnover leads its patrons to visit its stores 17 times a year versus the industry standard of 4 visits.  Zara rightly is changing the industry and scaring the traditional firms - Louis Vuitton fashion director Daniel Piette described Zara as “possibly the most innovative and devastating retailer in the world”…

How About…

  • Harnessing your front-line staff to feedback consumer responses and set strategy?
  • Question the status-quo in industries that are structured in a way that detract from the consumer experience?

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March 8, 2010

43) Dr John’s Spinbrush

spinbrush logo

危 wēi  danger

John Osher is a serial entrepreneur.  After successfully selling his Spin Pop invention, a lollipop with a battery-operated handle that twirled in the eater’s mouth, he wondered where else he might apply the technology.  He hit on the idea of developing an affordable electric toothbrush. To succeed, the product had to cost only a few dollars more than a conventional toothbrush and had to have a long-lasting battery, to meet this target Osher set about designing up from 80 cents (while everybody else was trying to design down from $79). The finished design, the Spinbrush, was highly popular in early trials.  However, with no marketing budget and a product that was so different to anything else on the market would consumers actually give the product a go?

机 jī opportunity

In the book Diffusion of Innovations (1962), Everett Rogers defines several intrinsic characteristics of innovations that influence an individual’s decision to adopt or reject.

1)    relative advantage – how improved an innovation is over the alternatives (including any previous generations)

2)    compatibility – how easily the innovation is assimilated into an individual’s life

3)    complexity – how easy it is to use

4)    trialability – how easily an innovation may be experimented with as it is being adopted

5)    observability – how visible the innovation is to others

Osher’s experience had taught him that a great product alone wouldn’t guarantee adoption, he understood that trialability and observability were important too.  Accordingly, he launched the SpinBrush at $4.99 – $5.99 in 1999 with a patented “Try Me” feature that allowed consumers to turn the brush on in-store, stimulating fast in-store trial.  This low cost approach maximised ‘observability’, ‘trialability’ and demonstrated the low ‘complexity’ in the product thereby reducing the need for consumer advertising.  The strategy worked and within its first year SpinBrush accounted for 10% of toothbrush sales in the US.  Osher’s company was sold to P&G two years later for $475m and by 2002 the SpinBrush was the best-selling electric toothbrush in the US.  With P&G’s marketing and distribution muscle the product’s annual sales grew to more than $200 million in less than twenty-four months.

how about…

  • Designing for all of Rogers’ characteristics when launching new products and services – relative advantage, compatibility, complexity, trialability and observability ?

—

February 25, 2010

40) Philips

危 wēi  danger

Philips was founded in Holland in 1891 by Gerard Philips, a maternal cousin of Karl Marx.  Over the following century Philips grew to be one of the largest electronic firms in the world, in 2007 its sales were €26.79 billion.  In 1999 Philips built a High Tech Campus at its Head Office in Eindhoven as the company’s central research and development (R&D) facility, in its peak employing 1500 people.  However, after the tech bubble burst in 2000 the associated costs were tough for the company to justify – but Philips still needed to retain a stream of intellectual property to drive future growth.

机 jī opportunity

Philips’ solution was to invite other companies and their R&D teams to lease space on the campus, building a new revenue stream for Philips and thereby helping reduce the cost of the site.  The offer of space on the high-tech site and the potential to collaborate with Philips on R&D initiatives was compelling – there are now 15 companies on campus, including IBM and NXP, employing in total 7,000 people.  The campus has become so successful that it has won funding from the Dutch government to continue its growth as an innovation hub, with no company benefitting more than Philips.

How About…

  • Partnering with companies to turn costs to revenues?
  • Co-locating with strategic partners to lower R&D costs and improve results through collaboration?

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Principle source Harvard Business Review, Dec 2009, ‘Spotlight on Innovation’

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