Attend my webinar on Corporate Design

On March 3rd, my colleague, Jeneanne Rae, and I will be co-hosting a webinar with the Design Management Institute (DMI).

Entitled "Corporate Design Functions: 2010 and Beyond", we will be answering three key questions:

1. What lessons did new corporate design functions learn in the past decade?
2. What challenges will corporate design functions face in the coming decade?
3. What best practices should corporate design functions consider going forward?
   

There is a small fee to attend, but I want to assure you that I make a grand total of $0 off the webinar. All fees go to DMI to cover the costs of the webinar, and they are a great organization. Hopefully, you can join me online; I am working on some very interesting content.

Introducing the iPad (it's not what you think it is)

Earlier today, Steve Jobs officially announced the iPad, a tablet device that looks like an iPhone with a large 9.7 inch screen. For pessimists, the iPad is just an amped up version of an iTouch that falls short of true laptop capabilities (like running multiple programs at the same time). For optimists, the iPad will revolutionalize the publishing industry in the same way that the iPod revolutionalized the music industry (introducing iBooks, the literary equivalent of iTunes).

What do I think?

1. Bad name!
   I'm not the first one to mention this, but there must be a substantial dearth of female engineers at Apple. Despite Apple's great branding efforts in the past, the choice of iPad as the product name (as opposed to iSlate or any more female-friendly options) really shows a lack of customer research. As a female CNBC anchor mentioned: I don't like it...it reminds me of feminine products!"
   
   
2. Slow Rate of Adoption
   The iPad doesn't appear to represent the technology leap or experience improvement that would encourage the level of immediate mass adoption which drove the iPhone's dramatic success. In addition, the price point ($499 to $829) is substantially higher than a subsidized iPhone. In all likelihood, consumers who have been on the fence about buying a second computer, such as a netbook, will probably be among those to purchase one first.
   
   
3. e-Reading Gamechanger?
   I believe that the iPad will emerge as a dominant e-Book option for those who haven't committed to a Kindle. With numerous apps to download, plus video, iTunes & true web capability, the iPad provides substantially more utility than an e-Reader. And unlike the music industry, the publishing industry is excited to provide digital content, with 5 of the 6 major publishing houses already onboard for iBooks. The problem: the unmet need of quality e-Book reading has been already solved.
   

In the end, Steve Jobs reminds me of James Cameron. Both gentleman seem to defy the odds and tremendous amounts of schadenfreude to produce truly impressive masterpieces. And if Cameron can generate an unprecedented level of success with Avatar, a movie that many critics and the public ridiculed before its release, then perhaps Jobs can transform book publishing too.

Google Nexus One: Big innovation or big bust?

Like many people, I’ve been closely monitoring the buzz around Google Nexus One (or the Google phone), which was released on January 5th. As an innovation consultant, I am excited about what Google is trying to do in the cell phone space. As a technology enthusiast, I like to see the “new new”. And as a Verizon phone user, I’ve been waiting for a good, non-Blackberry phone for a long time.

A few weeks after the release, here is what’s apparent about the good and the not so good with the Nexus One:

The Good

1) Great hardware/software solution
To make the best integrated solution possible, Google worked with HTC to produce a custom device. As a result, the Nexus One has a more attractive form factor than the Motorola Droid, as well as seamless inclusion of Google software, like Google Maps and Gmail.

2) Unique direct sales model
Unlike other phones, Nexus One can only be purchased on Google’s website. The wireless carriers (e.g. T-Mobile, Verizon) and the location of their brick & mortar stores are no longer a consideration in your phone purchase.

3) Transformative business model
Adding more salt to the wound, the Nexus One can be bought unlocked for $529. Whereas the wireless carriers want to lock consumers into their service by buying their subsidized phones, Google is seeking to break the device/carrier contract paradigm and give people true freedom of choice.

Imagine a world where you can own amazing phone service, without any limitation in phone options, and never sign up for a two year phone contract again…dare we say, Google is creating cell phone Nirvana?

The Not So Good

1) Bad customer service
With a normal cell phone, a customer can just call the wireless carrier or go to a store if something happens. But this is not an option for Nexus One. And with some early adopters facing spotty service coverage and defective screens—without a live service rep to speak with—the Nexus One has produced many service complaints.

2) Early termination fee
Just like the wireless carriers, Google also charges an early termination fee of $350. Although the fee has a softer name (Google prefers “equipment recovery fee”), there is no doubt that Google is pursuing the same tactics as their wireless coopetitors. Et tu, brute?

3) Not really new
Although “freedom of choice” is as American an ideal as apple pie, the practical reality is that Europeans already buy their phones unlocked. Consequently, Google’s business model play is not as novel as rumors had suggested (e.g. free phone in exchange for ads).

Will "great hardware + great software + grand ambitions = bad customer experience" result in the death knell of the Google phone? The verdict is still out. Undoubtedly, the folks at Google will do some quick fixes on the customer service front before their release for Verizon. But the reality hasn’t matched the hype so far, and Apple has some big news planned this week.

Recycling innovation

Twas the night before Christmas, the stockings were hung by the chimney with care, and I’m thinking about… all the boxes and gift wrap that will need to be recycled tomorrow!

I recently saw some old friends from my EPA days, and it got me thinking about what has been one of the more innovative recycling-based business models that has emerged in recent years: RecycleBank, a recycling-based membership rewards program.

Under RecycleBank, homeowners put out their recycling in designated containers. The containers are then weighed, and the homeowner gets 2.5 “RecycleBank Points” for each pound of material recycled (max of 450 points per month). Thanks to an RFID tag on the container, the points are posted immediately to a homeowner’s online account, and the RecycleBank Points are then redeemable at over 1500 retailers, including Whole Foods, Kmart, and Rite-Aid.

In terms of business model, RecycleBank derives revenues from sponsorships and advertising on its website and containers. Wikipedia suggests that RecycleBank also draws a transaction fee based on the contract between the hauler and the municipality, while a Newsweek article indicates that RecycleBank derives monies from municipal savings from waste being diverted from the landfill to the material recycling facility. The latter seems like a risky proposition, since recycling usually costs more than landfilling in many parts of the country.

According to the RecycleBank website, over 1 million people in 20 states participate in RecycleBank.

Some of the more appealing aspects of the RecycleBank business model include:

1. Strong behavioral incentives. One of the greatest challenges in environmental issues is encouraging behavior modification. The use of a rewards program—a proven business model in other industries (e.g. airlines, hotels)—is a great way to drive environmentally-conscious behavior modification.
   
   
2. Low CapEx. RecycleBanks owns very little equipment of their own. No trucks or recycling machines. The main piece of technology is the RFID chip.
   
   
3. Great control point. As I tell many of my clients, always think about the control point that locks-in consumers and locks out competitors. RecycleBank, which operates through the municipal contract for recycling, is probably the best possible control point for recycling.
   

Current investors in RecycleBank include Kleiner Perkins, which provided $30 million in 2008, as well as Coca-Cola.

Happy holidays!

The End of Cash?

Last week, Twitter Chairman and Co-Founder Jack Dorsey was on CNBC describing his latest project: Square.

Basically, Square is device-enabled service that uses an electronic "square" that is plugged into the bottom of a iPhone, enabling payment transactions through a card swipe. The customer then signs his/her name with a finger and gets an email receipt. The business model involves receiving a percentage of all transactions, and Square, which is a Khosla Venture, has already signed up the major credit card companies.

Other interesting hooks include a point system, which allows cardholders to collect rewards points (just like credit cards), as well as the ability for retailers to identify repeat customers. And for those who are a little more socially-conscious, Square allows the cardholder to donate 1 penny of each transaction to the charity of his or her choice.

Like many other companies, Square is another example of the continued evolution of online services evolving into mobile services. Imagine Paypal...without a computer!

There are many arguments on both sides regarding the end of cash as we know it. Certainly, the aggregate value of transactions that involve cash has decreased with credit cards, debits cards, and online transfers. But some would argue that there is always a need for cash, esp. in emerging economies.

I would argue that all large scale transactions have already gone away from cash, and the only value of cash is for micro-payments (tips, taxis, parking meters). But even these types of transactions have become more electronic in recent years, and with technologies like Square, we may be seeing the end of cash, save for the many "underground economy" transactions.

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P.S. Sorry, that it's been a little while since I posted...it's just been a really busy month!

Fractional Ownership: The Mercedes of Business Models

Last week, Daimler, the automaker of Mercedes Benz, Maybach, and Smart Car, launched the North American pilot of their new car2go business model in Austin, TX. car2go is a car-sharing service that allows users to rent a Smart car on demand without committing to a return time. Similar to Zipcar, car2go provides the following additional advantages:

• No reservations— see a car, swipe your card, and go!
• No time allotments—pay by the minute!
• No designated spots-- leave your car wherever you want!
  

car2go is a great example of a fractional ownership business model, where a number of customers share a single resource. In addition to autos, we see fractional ownership business models used in a variety of industries, including real estate (timeshares), aerospace (private jets), and staffing (temps).

Instead of forcing the customer into a make or buy, or even a buy or lease decision, sometimes the more intriguing option is to enable a shared usage model. Relative to other business models, fractional ownership:

1. Converts a product business into a service—Instead of being held captive in a low margin product industry, fractional ownership allows companies to shift products to a service business model, allowing for price premiums based on experience (not just functionality).
   
   
2. Enables a new customer segment—While more traditional business models focus on purchasing customers, fractional ownership allows companies to attract a new customer segment –“non-customers”—who otherwise could not afford the company’s product.
   
   
3. Reduces environmental impact—Rather than encouraging purchases of products and underlying raw material consumption, fractional ownership supports utility (e.g. buying uptime, not an engine). Environmentalists have been supporting the idea of product servicization for years.
   

Ever thought of making your business a fractional ownership business? If it’s good enough for Warren Buffett, who owns Netjets, maybe it's good enough for you!

Westin: Power of economic incentives in driving environmentally-conscious behavior

Yesterday, I checked in at the Westin Cincinnati and came across the sign above which describes a new "Green Choice" program: decline housekeeping, conserve natural resources, and get 500 Starwood Preferred Guest (SPG) points (or a $5 gift card)!

500 SPG points is quite a lot. In fact, a 2 night stay at the Westin Cincinnati typically yields 504 points for me. By declining housekeeping, I basically double the point value of my stay!

This is obviously an operations win for the Westin. Eliminating the need to clean another room reduces the overall expenses of running the hotel. Apparently, the cost of cleaning a room is approximately $5, based on the value of the gift card.

The "Green Choice" program also speaks to the power of economic incentives as a means of encouraging environmentally-conscious behavior. During my time at the EPA in the late 90's, I worked on a couple of great programs that leveraged economic incentives to encourage environmentally-friendly behavior by consumers and companies. It's good to see that forward-thinking firms, like Starwood Hotels, have found ways to adopt the model as well. The enviros of the world will make the "Green Choice" for environmental reasons, and the frequent business traveler will do it for a good reason too...free points!

And although the "Green Choice" program is not a true business model unto itself, the program does offer an interesting example to leverage in thinking about business opportunities: The Westin is paying you to NOT provide you a service! What would be the parallel in your industry?