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The iWatch – is this the next disruptive innovation from Apple?

February 20, 2013 Leave a comment

Apple has developed a reputation for creating new markets that didn’t exist previously. The iPod was not the first mp3 player but it created a mass market. The iPhone launched the SmartPhone era – showing BlackBerry the potential of an Internet enabled phone, in a way that has almost killed BlackBerry’s manufacturer, RIM. The iPad was the next innovation – but since then nothing at all except rumours. The rumours include an Apple TV that would shake up the television industry, and an Apple watch – the iWatch. The AppleTV was said to be the next big innovation – and was briefly mentioned in Steve Job’s biography, where apparently Apple had something that would really shake up the TV industry. Nevertheless, the rumours relating to this have died down – and the iWatch is the latest rumour target.

One idea on the iWatch

My first thoughts on seeing images of the rumoured iWatch were why?

Why would anybody want something like this on their wrist when there were so many beautiful products from Citizen, Seiko, and higher-upmarket, Rolex & Patek Phillipe, among many others. It didn’t even have the look of the Swatch watch.

I also couldn’t see it as a replacement for a SmartPhone – as it’s too small to do all the current functions expected of phones that seem to be getting bigger, not smaller. So I personally dismissed the iWatch as just rumour, or a sign that Apple had lost its mojo, if it turned out to be true.

Nevertheless, the rumours have become pervasive – and so I’m sure that they are either a smokescreen or reflect something real.

I started to think about it.  The watch market can be divided up into a number of sectors. One sector views watches as a form of jewellery – and this is the market Rolex, Patek Phillipe follow. To an extent it is also the market that Citizen and Seiko chase too – although their watches also emphasise functionality, with the Seiko Solar and the Citizen Ecodrive watches that don’t need batteries or winding. Further downmarket, Swatch tries to be a fashion item. However all have a basic raison d’être – to tell the time. I couldn’t see an Apple watch easily replacing the jewellery element (or at least not initially). I doubt it will be a solar product – and so (again initially) it won’t replace Seiko or Citizen. It could compete with Swatch, but from previous Apple history would be much more expensive and so bring little to the pie.

The next question is who wears watches today – and that gave the clue to why I think the iWatch is real. Most watch-wearers are Generation X or older.  Millennials / Digital Natives don’t wear watches. They use their SmartPhones to tell the time. That’s the clue – and the target. A SmartWatch – especially if it could interact with existing devices – makes a lot of sense, as it could provide a more compact device to supplement their iPhone, iPod and iPad or even replace them for around the house, workplace or college dorm. I think that contrarians that say such a device won’t work are falling for the mistake I think I made, by not thinking about how people tell the time today. The potential problems revolve around the other expected features. Will it also be a phone? A music player? A portable sat-nav device? How would these work ergonomically?

Assuming that the iWatch is real and not a smokescreen for something else, the argument that it won’t be attractive fails when you see some of the suggested design concepts. Some are very attractive and wearable as both a fashion item and even as jewellery. The potential objections to functionality are also less if the iWatch were to interact with other devices.  The problem here is that there may be an expectation that the interaction is with another Apple device – which would mean that the iWatch would not be a stand-alone product. This limits its potential considerably. What about linking to Android phones – that have overtaken the iPhone in overall market share – or a Windows computer? If this were to be allowed then I think the iWatch would be another Apple success story.

If this is the case, then it does something else. The onset of quartz watches in the 1980s was highly disruptive to the Swiss watch industry. Initially the Swiss industry dismissed such timepieces as cheap and nasty, but in classical disruptive innovation style, they soon overtook mechanical watches to become the dominant format. The rise of quartz watches caused serious damage to Switzerland’s watch industry – until it recognised the threat, and created products such as the Swatch. An Apple iWatch that succeeds promises to be equally disruptive – and overtime, most of us may end up wearing such products.

The impact of disruptive innovation – on PCs and on Retail

January 17, 2013 11 comments

Two recent items highlight the impact of disruptive innovations on industries. The first is a presentation from the Business Insider called the The Death of PC. The second is an article looking at Amazon and mentioning its March 2012 purchase of Kiva Systems.

Since 2009, the PC market has hardly grown. In the same period, Smartphone & Tablet sales boomed. Many tasks that used to be done on PCs are now done on these newer devices: email, web-searching, social media, and more. This has had a massive impact on the traditional PC market and its suppliers such as Intel and Microsoft. Whereas Apple’s and Samsung’s share prices have grown substantially, Dell & HP have been static or fallen. The introduction of both Smartphones and Tablets illustrate how disruptive these technologies are to the traditional PC industry – although as the The Death of PC presentation shows, things are actually more complicated. This is typical for a disruptive innovation – especially in the earlier stages.

Disruptive innovations do not always kill the products and industries they replace. What they do is change them radically. Smartphones haven’t killed the camera industry. They have, however transformed it so that DSLR and higher-end / special function cameras are now the main products sold. The cheap mass-market snapshot camera has gone – who needs one, when a Smartphone does everything that they could do, and much more. Disruptive innovations also mean that companies that fail to adapt quickly enough disappear. Kodak’s filing for Chapter 11 bankruptcy is an example of this. Kodak and photography were synonymous – but the company failed to anticipate how digital camera usage would change the way people process photographs.

In the case of the PC market, so far it’s only the home PC that’s dying. The PC in the workplace is doing fine – and that’s because the type of task it is used for is different. It’s hard to work on a spreadsheet, or a complex graphic or even a long report using a Tablet and almost impossible on a Smartphone. These aren’t tasks that the home computer was used for. So Tablets haven’t changed the work PC – only the home PC market. However expectations have changed – and this has led to newer devices and cloud computing which promises to be as disruptive for the traditional hard-disk based PC and so the PC as we knew it last century is gone or going. It’s not yet dead – just changed.

Amazon’s purchase of Kiva Systems in another example of a disruptive innovation. Amazon itself has shown how disruptive e-commerce is to traditional retailing. The high-street and even the out-of-town retail outlets struggle to compete with Amazon on price. However they can still compete on service: if you want something on the same day, then such outlets beat Amazon, even if the price is higher. Further, Amazon’s warehouse distribution system could be copied and many of the larger retailers now offer online options. Currently both use human labour to select and package products for delivery – and this represents a significant proportion of retail costs. The Kiva Systems purchase promises to change all this. Kiva Systems manufactures robots and the software used to control them. The robots are designed for use in warehouses for accessing goods. They remove the need for a human being to go to the relevant shelf and remove a product for sending to a customer – instead a machine does this. Eventually such systems are likely to completely automate the distribution process – meaning that Amazon’s labour costs will fall dramatically.

Any retailer that still depends on human labour in their warehouses or retailing is likely to find it even harder competing with Amazon’s prices. Such retailers should start thinking now on how they could compete. Options include looking at ways of improving service or focusing on narrow niches requiring in-person expertise. Waiting and hoping that some shining knight on a white charger will come and rescue them is not an option. There will be no shining knight because, however much retailers may wish it was, true life is not a fairy story.

[After writing this post, Michel Bernaiche, Program Development Director of AurowaWDC and current Chairman of the SCIP board, pointed out this news story to me – highlighting how robots are impacting not just retailing but many other business areas – from hospitals & surgery to legal research. CBS News Video on Impact of Robotics in Industry]

Why six-sigma, just-in-time and lean manufacturing are dangerous!

December 10, 2012 17 comments

Six sigma is a great idea: make sure that your product or service is as close to perfect as possible with almost zero (3.4 in a million) faults. So is just-in-time (JIT) and lean manufacturing. All involve tight control on business processes and require businesses to focus on efficiency. You can’t have a JIT manufacturing process without being highly efficient in controlling all aspects of your supply chain.

The problem is that when circumstances change it can be difficult to adapt the processes quickly enough. When the change is disruptive then it’s likely to lead to business failure. Casey Haksins and Peter Sims describe this in a Harvard Business Review blog post: The Most Efficient Die Early.

The authors correctly point out that business must also expect the unexpected and plan to absorb it and cope with it. The problem is that pursuing greater and greater efficiency goes against this need for flexibility to change. Instead there needs to be a balance. Look for efficiency but not at the cost of losing flexibility. Success requires both.

Business Plans & the Year of the Dragon

January 23, 2012 1 comment

Water Dragon tiles

2012 is the Chinese year of the water dragon. One guide on what to expect for this year states that water dragons are equipped to step back and re-evaluate situations. They make smart decisions, but only if they do adequate research. Typically dragons are innovative, enterprising and flexible.

These skills are all essential for business planning and the start of the year is always a good time to consider plans for the rest of the year.

Business planning is an often-overlooked part of running a business – especially with small businesses. The cri-de-coeur “We are too busy to waste time on planning” may sound sensible, especially when recession beckons and every sale is required. However this is also a plan – in the sense that “failure to plan is planning to fail”.

My thoughts on business planning were aroused following a meeting with Jane Khedair of Business Plan Services. BPS has a network of advisors throughout the UK and English-Speaking world, who are trained at helping small businesses produce sensible business plans that should help guide them through the predicted rocky times ahead.

Business planning is a bit like going on a journey. You have a starting point, and a desired end-point with a range of routes to take you from the start to the finish. The key first stage in a business plan, of course, is to know exactly where you currently are – and that is where AWARE fits in. Our aim is to help clients understand their markets, competitors and general industry – looking at customers, suppliers, partners, competitors and the overall business environment.

The next stage is knowing where you want to end up – your objectives. That gives a target on which to work – developing approaches that should allow these objectives to be fulfilled. These become your strategies.

Setting objectives and strategies are a bit like route planning. There are multiple ways of travelling between London and Shanghai, China – and selecting  one will depend on the circumstances. Is speed essential, or is cost the key factor? In this example, the objective of travelling to China from a starting point at London should also include expected arrival time, for example.

You may also want to visualise the journey and even think about what you’ll do once you’ve arrived. Business objectives should also be quantifiable, with a target and deadline for when this should be achieved. In addition, it’s always a good idea to think about what the next steps should be once the target has been reached.

The travel options become the strategies. If the aim is to get to China within a day then going by plane may be the only strategy. Conversely if the aim is to see multiple locations on the way, then travelling overland would probably be a better strategy.

Photo by Colleen Curnutte, taken in Shanghai, China.

Welcome to Shanghai

The problem however is knowing when you’ve arrived, and your progress – so you also need to monitor these. In the London-Shanghai example, this may be as simple as noticing miles travelled, and spotting a “Welcome to Shanghai, China” sign on arrival. Effective business plans also set in place signposts so that progress can be monitored. It’s also important to have a contingency in place for if things go wrong – an accident on route, that would cause major delays.

Planning the right route for a journey is essential if you are to get to your destination on time and at a reasonable cost. Business planning should do the same. The difference is that there are no dragons chasing you on a journey, but there are in business – and failing to think about how to beat them may mean that they will win out against you.

Wishing you a great year of the water dragon, 2012. 萬事如意

Telling stories – fairy tales, case-studies & scenarios….

April 14, 2011 5 comments

Telling Stories - At the ICI/Atelis competitive intelligence conference that took place last week (April 6-7, 2011) in Bad Nauheim, Germany there was a panel discussion on story-telling as a method of reporting intelligence. At about the same time, the Association of Independent Information Professionals (AIIP) held their 25th annual conference in Vancouver, Washington in the USA. Mary-Ellen Bates described how stories can help information professionals market themselves by showing how their skills can solve client problems. The fact that both conferences looked at story-telling shows how businesses are adopting the technique as a way of addressing complex issues.

Story telling is an ancient art-form that might seem strange as a business tool. However, often stories will be an excellent approach for solving business questions as they allow people to look at a situation objectively, remove themselves from the scene and take an outside view. The trick is to tell the right story, catching the imagination and making people think. During the ICI / Atelis conference I suggested a framework for when different story styles can be used.

The first story type is the “fairy-tale” – the “Once Upon a Time in a Kingdom Far Away” type of story. Fairy-tales are possibly the most abstract example of a story that can be applicable to business. The danger is that they can be seen as childish and far-removed from real-world business realities. In fact, they can be a powerful way of highlighting deep-seated organisational problems, as management refusal to see such problems can be illustrated with stories. Such stories can help managers recognise their own situation, and so identify the problems and think of possible solutions.

Consider a company where the CEO or other senior management refuse to see that their business has changed.  Often such management grew up in the industry and believe that they know it inside out. Accepting that things have changed is anathema to them. A standard comment given by such managers when asked why things are done in a particular way is “We’ve always done it that way“. Essentially such management suffers from corporate denial – or what Ben Gilad called a business taboo in his book “Business Blindspots“.

Telling such managers a fairy-tale story can help them see the problem (assuming that you can arrange a session they will be willing to attend).

Once upon a time, in a far-away country there was a king who loved to sing. He loved to sing so much that he made laws that all his people were to learn his favourite songs.

Every Sunday, the people were to gather in the town squares and village greens and sing the songs the king loved.  The people were happy as they also loved the music and they prided themselves as being the most musical people in the world.

One day, a travelling minstrel sailed into the the kingdom from across the sea – singing a new song. Soon, children started to sing this new song, followed by their parents, and word reached the king that the people were no longer singing the king’s songs but were singing something different.

The king flew into a rage, and put the minstrel into a deep and dark dungeon. However this didn’t stop the minstrel singing – and soon the guards started to sing the new song. The king then made laws saying the new song lacked harmony, was discordant, and that anybody caught singing it would be severely punished.

Gradually the people became unhappier. They liked the new song and wanted to sing it along with the old songs. Instead they stopped singing – and the king got angrier and angrier that his songs were no longer being sung. He tried to force people to sing, but they just sang out-of-tune. He made new laws that said they had to sing on Sundays and Mondays, but found that lots of people said they’d lost their voices from singing so much and so couldn’t sing on Sundays or Mondays. And so the king also got unhappier as he no longer heard his songs being sung as in the past….

The basic lesson for a story such as this is to accept and embrace change – rejecting change is likely to be self-defeating. There are many companies and industries that fail in this – the music industry being a classic example, that lost out by refusing to recognise the impact of music downloading, Napster, iTunes and peer-to-peer file sharing. A fairy-story can help highlight the problems – although the solution will need to come from full discussion and management acceptance.

The second story-type is the traditional case-study. Case studies should be used where the organisation knows the problem, but not the solution. Finding the solution directly is difficult as management is too close to the situation. The case-study serves as a way of examining the problem dispassionately, by looking at a parallel situation involving a company or organisation, from another industry, or market. The aim is to analyse the problem and work out appropriate strategies to solve the problem and apply them to the real situation. The key for a case-study is to find one that matches the organisation’s problems. There is a vast bank of case-studies for a range of industries, topics and problems at the Case Study Clearing House.

A third story-type are future scenarios, generally generated as part of a scenario-planning exercise. Such stories attempt to answer “what if” questions by looking at external factors and their correlations and impacts, and then considering how these could play out in the future. It is essential that such scenarios are internally consistent and that there is a clear line of development from the current situation to the future scenario. This can then allow for strategies to be put in place that take into account what could happen. Such strategies need to be adaptable to changing situations and allow for organisations to prepare for any eventuality.

As a reporting approach, telling stories is one way of putting across ideas that stimulate the imagination, and so can help organisations develop strategies that lead to success. There is a common theme to all three story types: problem identification, its acceptance and the need for strategies to cope with change. They differ in their perspective on the world. The fairy-tale approach looks at understanding problems and overcoming blindspots that relate to the past imposing on the present; case studies look at solving present problems; scenarios are aimed at preparing organisations for the future.

9% of 11-year old boys can’t read! So what?

December 17, 2010 1 comment

You can tell that news is sparse on the ground – unlike the snow. The newspapers have already done a blanket coverage on the snow and how the UK again skidded to a halt, so they can’t do that one again. Instead, the press is trumpeting on about how terrible it is that 9% of boys can’t read properly when they leave primary school.

Apparently BBC Radio 4 asked the Department of Education for the number of children who failed to reach level 2 reading age, the standard expected for seven-year olds, and found out that around 18000 boys aged 11 had a reading age of seven or less. This was in contrast to other statistics that have shown a steady rise in standards – with children achieving the expected minimum level 4 having gone up from 49% of children to 81% in the last 15 years.

Seemingly, even worse, in some areas – for example Nottingham – 15% of boys failed to get past the level 2 reading level.

The problem with all this isn’t the statistic but the lack of context. When reporting information (whether for competitive intelligence, general business or marketing research, or whatever) it is essential to include the context. A figure on its own is meaningless. In fact, those figures for Nottingham could be brilliant – if five years ago, 30% of boys had failed to get past the level 2 reading level. It would mean that the numbers of children failing had halved. Conversely if the number had gone up from 5% then this would be a massive indictment against the teaching profession who were failing to motivate and educate their pupils.

In fact, the original story from the BBC does give some context.

In 1995, the proportion of 11-year-olds getting Level 2 or below in English – the standard expected of a seven-year-old – was 7%. In 2010, it had fallen only to 5%.

The figures show the problem is worse for boys. Overall in England, 9% of them – about 18,000 – achieved a maximum of level 2 in reading.

This shows that in fact, performance has improved overall, with underachievers falling from 7% in 1995 to 5% of all children now. However without a longer-term trend it is impossible to put much value into the statistics – especially as other research reported by the BBC looking at seven year olds showed that children with special educational needs, and from deprived homes (meaning that they were entitled to free school meals), were the worst performers. A third (33.6%) of seven years olds on free school meals failed to reach the requisite level 2 in writing and 29.3% failed to reach this level for reading. In contrast, the children who did not receive free school meals did much better – only 12.1% failed to reach the required level for reading, and 15.5% for writing.

I’m actually surprised that some mathematically-challenged journalist hasn’t picked up on these figures and claimed that providing free school meals results in children under-performing at school. In reality, all the figures show is that such children have barriers to learning that schools have to try to overcome. This may be because the children are under-stimulated at home (and so start at a lower level than their peers), come from homes where English is not spoken by the parents or are of lower intelligence overall. (In fact, intelligence tends to fall on a normal curve. If 10% of children outperform – and have a reading age 3 years ahead of the norm, you can expect that a further 10% will have a reading age 3 years less than the norm).

The lesson from such statistics and reporting is simple: before publishing statistics in the press or in a business report provide a context.

This context can be temporal – looking at how figures change over time. In the case of the school statistics, they appear to have improved over the years for both the low and average achievers – a testament to the teaching profession. Context can also be seen when comparisons are made – as in the comparison between children on free school meals versus those not entitled to this benefit.

Strategic decisions based on figures should only be made when context is included. Without it, the figures mean nothing, and should be left to melt away, like snow.

Sharing ideas, creativity and intelligence

November 3, 2010 4 comments

I was recently pointed to a great YouTube video from Steven Johnson on where good ideas come from:

A key point that Johnson makes is that many creative ideas often take years to develop and depend on the input of other people. It is only through the sharing of partial ideas and hunches that fully fledged creativity can happen.

This is also important for competitive intelligence. Some managers view competitive intelligence as a “cloak & dagger” type process that needs to be enshrined in secrecy. They view it as of strategic importance and accordingly not for their corporation’s rank and file.

I believe that they are wrong! Competitive Intelligence IS strategically important but all employees need to be involved in the process. What often happens is that one employee will hear some information that by itself seems meaningless. It is only when combined with information from several others that a coherent picture emerges, turning disparate data pieces into important intelligence. Management needs to encourage such information sharing throughout the organisation – and only through such cooperation will the CI information gathering process be 100% effective. The role of the CI personnel then becomes that of coordination and facilitation – putting together the jigsaw of pieces gathered throughout the organisation and building a picture that management can safely use to make strategic decisions. Failure to do this can mean that several jigsaw pieces are liable to be missed or found too late – and so decision-making will suffer and the chances of making a wrong decision increase.

There is a story told by Sheila Wright of DeMontfort University. I’ve slightly adjusted it – partly to protect the innocent (and guilty) – apologies, Sheila.

Baked Beans TinApparently a number of years ago, there was a senior managers’ meeting at a food canning factory. Six months earlier, the factory had installed new machinery for wrapping the cans in plastic. Plastic wrap allowed them to reduce pallet sizes, and so ship products at a lower cost. Unfortunately the factory was having problems.  Too often the plastic was tearing – and not doing the job of keeping the cans immobile on the pallet. This meant that cans got damaged and costs got higher than anticipated.

As is common in senior management meetings, lunch and coffee is delivered during the meeting. A junior staff member was bringing in the coffee when he overheard his bosses talking about the plastic wrap problem.

Er hmm….. can I interrupt…. I know what the problem is and how to fix it….I thought that you already knew the answer to the problem….” he said, to the incredulous stares of his bosses. The junior staff member then explained that he played football every Sunday and was friends with an operations manager who worked for a rival company. Apparently this competitor had installed similar machinery and come across the same problem. A few Sundays before, the operations manager had come to the football game in an ebullient mood. “We’ve fixed it” he’d explained. “All it needed was to recalibrate the machinery to take into account our cans and the plastic wrap we were using. It took us months to work out, but we’ve done it“.

By not encouraging the sharing of information, the canning company had compounded their problems. Nobody knew that this staff member had friends in a rival company or that this competitor had also been having problems with their packaging – and had solved it. There was no process to communicate the information – that would have helped and saved time and money. Essentially, information flowed down but there were no processes to allow it to flow up or be networked within the organisation.

Effective competitive intelligence builds systems that encourages the flow of information throughout the company – up, down and sideways. Of course there does need to be a respect for secrecy – and some conclusions should be kept secret. Business, strategy, and product development plans and so on do need to be protected.  However this should not be at the cost of failing to encourage all staff to contribute to the overall intelligence process and provide any information they come across – whether obviously relevant, or seemingly irrelevant or unimportant. There needs to be a balance between secrecy and openness. Anything else is a flawed system – that deserves to be canned!

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