Whale Fact

Today's paper carried an Associated Press article that noted October 2007 account defaults are 18% higher than October 2006, an indication that the credit crunch started by the sub-prime mortgage mess is a gift that keeps on giving.

This statistic is just another validation for the fundamentals: Start small, build on your successes, don't leverage more than you can afford to lose.

The true Innovation success stories aren't about the people who got something for nothing, rather, they are about people who saw something that others didn't and then worked their tails off to make it happen.

Ripe for Innovation

Consider this from the 12/17/08 WSJ:

85% of everything sold in the pizza category is discounted in some way.

Domino's same-store sales growth at U.S. locations has been declining and the company's net income also has fallen. (This means that efficiencies haven't outpaced revenue growth)

Other large pizza chains also have been struggling to increase sales and profit.


The implications:
If you want to see what a commodity market looks like this is it. The only thing missing is the Friday night family reverse auction to see who gets to provide the pizza.

My guess is that they have taken out cost everywhere they could have. The market is played out given the traditional vectors and all that's left is the bloodletting of margin.

When this happens it means that the market is ripe for a change. How about make your own pizza's? Maybe a free pizza with your Netflix movie?

I Can Change the World

More proof about the power of the individual.

Every Memorial Day since 1997 Bubba Sorenson (see here) has repainted a large rock in rural Iowa to pay tribute to the service men and women of America. Thanks to the Internet, Bubba's tribute has effected millions (see here).

Things Continue to Change

If you don't change with the times. The times change you. - Marv Levy

If you watch closely enough it's possible to see the signs of how fast the world is changing. Exhibit A is the fact that Wu Yi, the vice premier of China, felt compelled to submit a quarter page essay to the Wall Street Journal yesterday espousing the safety of Chinese products. The question is, "Why bother?"

The answer of course has to do with the growing financial commitments between China and America. China needs the US to continue to buy product, to keep factories open, that provide jobs to the growing population. After experiencing the fickleness of US consumers (tainted pet food, lead paint toys) they understand that markets can evaporate overnight. Losing those markets puts a huge financial strain on the Chinese government that they would much rather avoid.

All this of course is a good thing. As Tom Freidman said, "No two countries with a McDonald's have every gone to war." The more that China and America need each other, the more likely that problems will be resolved peacefully. It is amazing how interconnected we are all becoming.

Whale Facts

When the flight deck of the USS Regan is in full operation it is capable of launching a plane every thirty seconds and landing a plane every minute.

When a plane is launched is goes from 0 to 165mph in two seconds.

When landing, right before catching the trip wire, the pilot must gun the engines in case the tailhook misses and they need to go around again.

(Image via regan.navy.mil)

Innovative Bathroom Key

Shoop: I remember you. Where ya been?
Jerome Watkins: Bathroom
Shoop: Six weeks?
Jerome Watkins: My zipper got stuck.

Link

All Sales Are Local

This picture is of a new Wal-Mart near Rochester, NY. The afghans depict the local high schools in the area.

By adding local flavor the store accomplishes two things. First, they are able to capture a couple more revenue dollars. Second, and much more important, they become part of the cultural fabric. By showing the local colors they are saying, "Hey we're part of you. We're not a Mega-Mass-Same-Stuff-In-Every-Store-Heartless-Corporation, we are you."

Being part of the community creates a place where people feel safe and connected so that when people decide where to shop they unconsciously think of the place that they like to go.

And, there is no way, that some corporate office in Austin, TX, is going to think of this.

Oh No Dell Didn't!

Kevin Kelly wrote in his book Out of Control that the more that we are connected the more important local knowledge becomes. To quote, “An outsider can muddle through an unfamiliar wilderness at some level, but to thrive or to survive a crisis, he’ll require local expertise.”

Apparently Dell is bent on proving Kevin wrong as they just announced that they will consolidate about $1.5 billion in global advertising and marketing with a single vendor. See here

But wait, there's more. To accomplish this feat the supplier, WPP group, will create a new agency of about 1,000 people in the next three to six months.

This is soundly wrong on not one, but two, levels. First, when it comes to centralization versus decentralization the 80/20 rule applies. The region gets they 80% (picking how it operates and who it targets) since they are the ones who are accountable for the profit and loss and they are the ones who are closest to the customer. The regions do have to operate in a global framework so they look like the same company that operates in the other regions. The company will sacrifice efficiency since they will have some redundant ad agencies, but it will be compensated by the fact that the outgoing message will resonate with the target audience since was put together by the people who know them best. It is ludicrous to think that someone in Austin, TX knows how to sell a computer to the French.

Secondly, putting 1,000 people to work in the next three to six months will have the same outcome as putting 15 monkeys in a room with some typewriters. I am not saying that the new agency will not produce some good output, I just don't think it probable that they will do it in this short a time frame. Think about office space alone. How long will it take to find suitable space, sign the lease, hire the moving company, order the furniture, and change the signs on the front door?

Business Preparation II

As a rule an entire business' do not have a singularly measurable event for which to prepare in the same way that a football team does. The breadth and complexity of business make it had to distill into a finite enough event to be meaningful.

But within the business there exist singular events, similar to game day, that groups can rehearse for off-line in preparation for the big day. An example of such an event would be a product launch.

When creating a new product the business gets to decide when to open the protective gates of development and introduce the product to the marketplace. By not having to react to an opponent the team can spend the necessary time preparing the necessary elements of success.

For product development part of the preparation is the evolution of the product itself; a process that requires a minimum of three iterations to perfect. Iteration one is the development of a bench-top model to prove the underlying physics behind the invention. Parts are made in whatever material and whatever process available to build the model. Iteration number two is the development of the product to the closest approximation possible without spending the tooling and equipment dollars. It is at this point that product reliability should be fully tested.

From here there is a choice to be made depending on the complexity of the product. If the product is relatively simple tooling and equipment may be purchased with the final step in the product evolution to cycle the entire value chain to create good product. If, however, the complexity is large enough, it may be prudent to tool up a small increment of production capacity as an intermediate learning step.

Following an iterative development progression provides a context that allows everyone to see where they are in the process and at the same time allows for organizational learning. Simple put, doing this enables better product launches.