Example of cool design

As regular readers of this blog will note, I have often talked about the importance of design as a competitive edge. In that vein, I have to pass along this example of cool design (from GizMag – the magazine devoted to new gizmos — a great read for everyone like me who really is an engineering geek at heart).

Outdoor solar workstation:

If you are having trouble getting out of the office, maybe it’s time to get the office out. This funky, eco-friendly workspace by Mathias Schnyder is designed to be a calming haven where office dwellers or uni students can escape to the great outdoors.
The modular workstation comes equipped with a solar cell in the roof that can generate enough energy to power a notebook via an electric socket in the center of the table. The seating comprises different movable segments so people can sit next to each other or across from each other if they need privacy. Additionally, the seating design means users can reduce exposure to wind and sun.
Its materials and form mean this workstation would sit well in a city park (where it might be mistaken for playground equipment), office lawn or on a college campus – any urban outdoor setting really. No details yet on whether the design will see a commercial release, but any concept that combines fresh air, productivity and green energy deserves applause.

The perfect workspace for the I-Cubed Economy worker? One downside to all this, however. As the story relates, it is not yet in commercial release.

Branding and the bashlash of the backlash

For those of you who don’t live 24/7 in the blogsphere, you may have missed the latest flare up in reputation management — Rachael Ray’s scarf. Here is a summary of the controversy from the NewYork Times:

On May 7, Dunkin’ Donuts began running an ad on its Web site and others, featuring the celebrity chef Rachael Ray holding a cup of the company’s iced coffee while wearing a black-and-white fringed scarf. In the ad, which was shot in a studio, she is shown standing in front of trees with pink blossoms and a building with a distinctive spire.
On May 23, the conservative blog Little Green Footballs posted an item that likened Ms. Ray’s scarf to the type typically worn by Muslim extremists. The blog said that the ads “casually promote the symbol of Palestinian terrorism and the intifada, the keffiyeh, via Rachael Ray.”
Later that day, the conservative blogger Michelle Malkin chimed in, likening the scarf to a keffiyeh and calling it “jihadi chic.” Then the story, as they say on the Internet, went totally viral.

Dunkin’ pulled the ad. But the controversy continued. As the story relates:

From there, a backlash to the backlash started to take hold.
An item about the controversy had more than 2,300 votes and 830 comments on Digg, a news aggregation site. A YouTube video, “Rachael Ray Is a Terrorist,” poked fun at the situation, with the narrator saying, “Yes, because when I look at Rachael Ray I think 9/11.” That video drew more than 2,300 comments, and a related story on The Huffington Post had more than 1,200 comments.

Sometimes the most trivial things – like a scarf – can trigger strong emotions. In this interconnected virtual world, emotions can travel faster than facts. Think of all those “urban myth” stories that pop up in your email inbox. Many times they are circulated and accepted because they strike some emotional response — a warning of some fear, something cute we want to share.
For Dunkin’ the controversy may be a net gain, in the form of a huge amount of free advertising. And it is not clear that the advertising was negative. There appear to be more folks outraged with the conservative’s attempt to blow this up into some fear-mongering political statement. As Bob Parson, the head of GoDaddy.com, was quoted in the story, “You need to find and do something that is a bit edgy, that is polarizing, that provides some water-cooler conversation.”
I’m not sure I agree with that — there is already too much polarization in our society. But, I will have to think about it over my cup of Dunkin’ coffee.

Unleashing IP — in a new business model

Here is a great quote from an article in the Booz & Company (formerly Booz-Allen) magazine Strategy+Business (registration required) — Uncaptured Fortunes in Intellectual Property

It’s the subtle little secret of the corporate revenue stream. Executives now recognize that intellectual property (IP) makes up the bulk of an organization’s wealth, and most chief executives will glibly claim that IP is the key to competitive advantage. Yet most CEOs pay no attention to leveraging or drawing income from those assets. How can they? Few even know what IP their company owns.
To be fair, companies have gotten wise to the sometimes significant revenues that can be gained through patent and technology licensing. In fact, by most estimates, annual revenues for such licensing have exploded from US$15 billion to $110 billion worldwide over the last 15 years. For many companies, however, that’s the easy part; the real challenge is to make their intellectual property serve the business, not be the business — that is, to benefit from valuable IP at the business unit level, where corporate strategy intersects with customers and markets. Unfortunately, very little historical knowledge or experience is available to guide executives in generating commercial advantage from what is in reality an entirely new class of assets. (emphasis added).

Ain’t that the truth. The author, David Kline of Rembrandts in the Attic fame, makes an important point I heard a number of other places as well: IP tends to be the purview of the legal department. As such, it is all about locking up the ideas, rather than exploiting them.
But that need not always be the case. Kline gives a case example where GE was able to exploit a remote turbine servicing technology by creating a new business model:

It devised an entirely new business model for its remote technology, one that leased it to customers while simultaneously licensing to them the associated IP and service procedures. GE would retain ownership of the hardware, blocking encroachment by competitors and enjoying significant licensing revenue. Moreover, GE would also retain rights to customer data from this system, which would enable the company to leverage everything it learned from operating and servicing 300 gas turbines globally to build a “predictive intelligence” platform for delivering service and supply chain improvements to the utilities. This vital intellectual asset was a key differentiator for GE that no competitor could match.
Finally, because the technology would be protected by license, GE could share proprietary knowledge about turbine operation with the utilities, allowing them to make their own adjustments to the equipment to boost performance and stability.

What I find so fascinating about this example is only in part that it utilized IP. The real fascination is the business model that fused manufacturing and services. If US companies are going to survive in the I-Cubed Economy, this type of fusion needs to become the norm — not the rare case study.

Brand reputation and micro management

One of the holy grails of brand reputation management has always been consistency of the product. You want the McDonalds hamburger in one store to taste the same as in other stores. Some local variations are allowed (I remember how McDonalds french fries tasted different in Thailand because they used different cooking oil).
But, as a recent Washington Post story on gas prices points out, that can lead to a tight reign rein on local stores:

Jerry Daggle owns five Exxon stations in Northern Virginia, and even though they have different competitive conditions and prices, “Exxon magically lets me make about 8 cents a gallon” at each one, he said.
He said micromanaging extends to the snacks sold at Exxon’s On the Run convenience stores. The company uses a “planogram” to show dealers where to put candy bars and soda. “If I want to put Coke on a different shelf, I have to get special permission,” Daggle said. Recently he was reprimanded for selling mulch on the perimeter of his award-winning Gainesville station; the mulch, though popular in the neighborhood, wasn’t an approved product.

This micromanagement wouldn’t be such an issue in the old days of the Industrial Age. In fact, it was de rigueur. In the I-Cubed Economy of customization (‘just-in-time; just-for-me”), it can be a major problem. At the very least, it can mean lost opportunities by allowing hot selling products — like mulch in Gainesville. As worst, it can mean retail failure as the product mix doesn’t match the local demand characteristics.
The trick is how to simultaneously maintain the basic characteristics and quality of a product which underlie the brand’s reputation and embrace local variations. Notice that I did not say “balance” these two objectives. They should not be seen as opposites to be traded-off. Years (and years) ago, this was described by Peters and Waterman (In Search of Excellence) as “simultaneous loose-tight.” Maybe companies need to resurrect that concept for the I-Cubed Economy.
PS – for a nice take on the continued relevance of In Search of Excellence, see “In search of …?” by Mike Johnson (head of Futurework Forum).

Debating globalization and competitiveness

Yesterday there were two events on globalization and competitiveness:
• a hearing in the House Science Committee on American Decline or Renewal? – Globalizing Jobs and Technology; and,
• the Commerce Department’s 2008 National Summit on American Competitiveness.
Both addressed similar issues from different perspectives — and very different perspectives on the issue of trade agreements. But, from my attempt to listen to the two webcasts simultaneously, it appeared that they both agreed that we need to raise the profile of the competitiveness issue in the national debate. They both also talked about the need for an overall policy on competitiveness (something that we don’t have now). I wish, however, the business leaders at the competitiveness summit would have stopped treating the trade issue as simply a PR problem and gotten to the real issues. By the way, my eyebrows went up when the Commerce Secretary said we have a “big budget” for trade adjustment assistance. Our worker adjustment system is woefully inadequate and underfunded.
More materials (including the archived webcasts) are available at links noted above.

New NAS report on Innovation in Global Industries

The National Academies (the National Academy of Science, National Academy of Engineering and the Institute of Medicine) has a new report out — Innovation in Global Industries: U.S. Firms Competing in a New World (Collected Studies):

The debate over offshoring of production, transfer of technological capabilities, and potential loss of U.S. competitiveness is a long-running one. Prevailing thinking is that the world is flat that is, innovative capacity is spreading uniformly; as new centers of manufacturing emerge, research and development and new product development follow.
Innovation in Global Industries challenges this thinking. The book, a collection of individually authored studies, examines in detail structural changes in the innovation process in 10 service as well as manufacturing industries: personal computers; semiconductors; flat-panel displays; software; lighting; biotechnology; pharmaceuticals; financial services; logistics; and venture capital. There is no doubt that overall there has been an acceleration in global sourcing of innovation and an emergence of new locations of research capacity and advanced technical skills, but the patterns are highly variable. Many industries and some firms in nearly all industries retain leading-edge capacity in the United States. However, the book concludes that is no reason for complacency about the future outlook. Innovation deserves more emphasis in firm performance measures and more sustained support in public policy.

The internet sales tax

Lee Gomes’s “Portals” column in today’s Wall Street Journal takes on the issue of Internet sales taxes — but not the way you might think:

Now, chances are you’ve ordered a tax-free book or two from Amazon, and enjoyed the experience. No one likes paying taxes. But this particular tax break is an especially pernicious one.
For starters, by giving online businesses a permanent advantage over their bricks-and-mortar competitors, it helps those who need it least — huge, profitable e-commerce companies — at the expense of often-struggling local retailers.
In addition, the tax policy is regressive. It disproportionately benefits the upscale citizens most likely to shop online. Worst of all, as commerce increasingly moves online, state and local governments are being deprived of the sales-tax revenues they rely on to run schools, build roads, pay police and firefighters, and do all the other things they’re supposed to do.

By the way, Gomes is specifically taking aim at Amazon’s challenges to new Texas and New York State laws requiring them to collect the sales tax.
The second point in his argument is one I have made before as well — not collecting sales tax on Internet purchases is a tax subsidy for e-commerce. It is not a “technology” neutral policy — but a very clear technology subsidy (imagine if some one suggested that anyone who drives a car to pick up a purchase should be exempt from sales tax on those purchases).
I think the last point in this argument is the most telling. We can easily get in to a tax competition as a race to the bottom (which is what the anti-tax, anti-government folks would love us to do). Simply eliminating the sales tax might be a great idea (it is a relatively retrogressive tax). But without some other form of revenue, local government services are in danger. As Gomes states:

Many Web users surely will be annoyed by a tax. It’s common to see the Internet as a refuge from the quotidian annoyances of the real world, among them death and taxes. But cyberspace is grounded in the real world, as are schools and parks and streets. If you doubt that, the next time your house is on fire, try calling Jeff Bezos.

Well said.