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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