Competing poorly outside your core is not the way to win
On Twitter today @paul_irish shared this infographic which illustrates why the legacy carriers can’t effectively compete with low-cost airlines.
The information on this picture is nothing you can’t learn from taking any business school class, but what is interesting is how something so obvious is not put to good use. I have felt for a long time that by trying to compete with the low cost airlines, the legacy airlines are “stuck in the middle” as Porter suggested. Today these companies are neither differentiated nor low cost.
Bailout after bailout the legacy airlines pursue the same failed strategies. They continue to cut costs at the expense of service and I have noticed in my travels that the low cost airlines continue to outperform. The same was true of the US automakers and we see where that led.
Instead of trying to compete on price, legacy airlines should look for ways to leverage their size and put up a good fight against low cost airlines. A “fly anywhere” for a month pass from American Airlines is surely better than one from JetBlue. How about giving passengers who have to go through hubs the flexibility to book their connecting flight on a different day? I think everyone would see the value in being able to take a detour for a few days in Chicago on their way to Indiana. This perk would win favor with passengers while only increasing airline costs marginally (for additional baggage handling, automated check-in, etc.).
When a company sees itself losing sales to someone following a different generic strategy it can’t defend itself by trying to compete using the competitor’s strategy. It needs to get better at their strategy when on the surface it appears they need to abandon it.
Could Target ever beat Walmart on price? Probably not. Instead it chooses to have reasonable prices and compete on differentiation tied to style and trendiness. Dell has been trying for a few years to compete with Apple on style and has not done any better. When Apple was faced with extinction in the 90s instead of trying to compete on price they chose to go after innovation which was their core and is why today they are the model every company tries to copy. If you look at the early 90s, you can argue that it was the CEOs who lost that focus at Apple which put it in the predicament in the first place.
So when someone is competing with you don’t blindly abandon your core strategy. Look for ways to leverage what you have because your competitor won’t be able to effectively counter a strategy foreign to them.
The problem with SKU proliferation
TechCrunch has a short post on the number of models of handsets Nokia and Sony Ericson have on their site.
Why Nokia and Sony Ericsson are failing
For reasons of market segmentation and distribution strategies electronics companies choose to spin new almost identical models of products which on some marketing plan may seem reasonable, but which in fact tend to confuse the customer and add operational overhead.
Whenever someone asks me about a laptop I can quickly tell them about all the Apple models, not only because I am a Mac user, but because remembering the permutations is incredibly simple. MacBook, MacBook Air, and MacBook Pro. It’s not hard to remember even for a person who tends to forget things, like me.
Look at companies like Toyota and Honda and you will find the same thing. Very simple, clearly differentiated models each targeting a specific segment of the market.
Large consumer manufacturers should take note and not create a new indistinguishable model just to sell a “different” TV at Costco. The iPod you can get at Costco and Walmart are in fact the same ones you get at Best Buy or at the Apple store. Simple for the company and simple for the consumer.
Everyone is so G*d D*mn unique
I have yet to find a company that feels that they are just like everyone else. In my career I have been fortunate to work in a variety of industries including Pharmaceutical, Manufacturing, Semiconductor, Entertainment, Standardized Testing, Software etc. Everyone always thinks they are unique. It’s probably a defense mechanism or an excuse as to why things are so poor in that particular company.
This morning I was watching a live Q&A with 37signals and David Heinemeier Hansson was talking about customizing their application to a specific industry vs. being generic. That’s when he inspired this post with the words that became it’s title.
DHH went on to say:
Everyone thinks they are this perfect little snowflake
What he said was that the things that work are those which work for everyone, like email. I couldn’t agree more. People think that just because some solution worked at one company it does not mean that it will work at theirs. What companies don’t see is that most of what they do is pretty generic. If you focus on the 5% that may be unique, your company will not progress because it will get stuck in never ending analysis.
At a company I once consulted for, they were developing a large piece of software for something I knew other companies were doing. I was not in a position to convince them that they should find an off-the-shelf solution, but I knew it was wasteful to try to build something internally especially if what they were building was not their core competency. Needless to say that company didn’t complete that project because when new management came in and saw the lack of progress, they quickly killed the project and set out to implement the generic off-the-shelf solution which was used at other companies.
If what you are doing is that much different from your competitors and you are not the leader of the pack, then you should seriously analyze what you are doing because your “uniqueness” may be your downfall.
Make an effort to learn what works at other companies even if they are in other industries. You will gain a tremendous amount. I’ve had clients who talk every acronym under the sun from LEAN and Six Sigma to PRINCE2 and RUP. In most cases what they were missing was not a unifying technique for improving their business. What they were missing was a change to their corporate culture which hindered progress. In the end these companies were not unique because of what they did, but because of how they were doing it. So stop thinking you are so special and work on actually getting things done and changing the complacent attitude which is what is really holding you back.
Apple embraces accessibility and helps everyone in the process
Most people don’t know that Macs are by default the most “off-the-shelf” accessible computers sold today. Every single Mac comes with accessibility features for the physical and motor skills, hearing, and vision impaired. This means that a blind person can walk into any Apple store and use any computer without installing any software. They can even carry all their settings on a USB drive so that their customization can travel with them. On Windows computers these features need to be purchased separately from third parties and as such lack the level of refinement and availability of the Apple solution.
Since 2002 Apple has been investing on accessibility on the Mac platform, but in the last year it has been taking steps to make it’s other products namely iTunes and iPods more accessible to the blind.
Today Apple demonstrated how a company can use accessibility to it’s advantage. By integrating Voice Over into the latest iPod shuffle not only did they make the product accessible to the blind, they made it accessible to everyone. Since the shuffle has no screen the product has always been marketed as one where the listener has little control of the listening experience, hence the Shuffle name. Now that the device has Voice Over a listener can select a specific play list allowing them to customize their experience to their current mood.
Making Macs accessible led to making iPod Nanos accessible. This work led to Voice Over in the new iPod Shuffles giving Apple another competitive advantage. A short sighted company would not invest in this feature for a product line where they already own the market. But at Apple this work will not be limited to the iPod line. I am sure this trend will continue at Apple because it makes sense. The iPod “experiment” is just baby steps.
Currently the iPhone is the least accessible device they make, but think of what text-to speech can do for Apple. Imagine your phone reading your RSS feeds and email while you drive to work or speaking the name of the caller so that you don’t need to take your eyes off the road? The iPods currently don’t have enough processing power to actually generate the speech real time, Apple actually does the work on the computer prior to loading the music on the device, hence the different voices depending on whether the iPod was synced on a PC or a MAc. However, the iPone’s CPU is a lot more capable and the next version will be even more so allowing Apple to explore these capabilities on the device.
Apple, unlike Amazon and the Author’s Guild, today demonstrated how a company can embrace accessibility and not only help those in need, but improve its product along the way.
Here is a video of the new iPod Shuffle in action. (Quicktime Required). More info can be found on the Shuffle page.
Bad Design will piss off your customers
Over at the Signals vs. Noise blog there is some great dialog about the poor American Airlines online reservations systems.
As a person who has done a lot of flying as part of my consulting work and as an Industrial Engineer, analyzing processes comes second nature to me. AA.com has always been my #1 worst site. Come to think of it, American Airlines in general has been at the top of my list for worst companies to deal with. The funny thing is that what is being discussed in the post above goes far beyond online reservations, it gets to the root of the real issues at American Airlines and the other major carriers in the US.
Their entire operation’s design sucks…
OK, maybe not all of it, but most of the customer facing ones. Here are examples of things I have encountered while flying AA and other major airlines in the US.
1. Booking online is a nightmare
Most of the websites are designed like it’s 1995 and no one has heard of web 2.0. You can’t do simple searches easily and God help you if you need to change a date once the search results are displayed.
2. Checking in feels like you arrived at a cattle call or you wait and wait…
Anyone who likes using the electronic check-in kiosks at the majors hasn’t flown Jet Blue or Southwest. I flew on United in November and not only did I have to enter my name and destination, I also had to enter the confirmation ID(I think that’s what it was). How about we just do the confirmation number like Jet Blue and output it with a bar code so I can just scan it? If I enter a confirmation number, don’t ask me where I am going, you should know that…
How about redesigning the checkin area so it is less intimidating for passengers? At LAX they actually have an employee at the front of the line whose whole job is to call out which kiosk is open. Ridiculous.
The funny thing is that if you are lucky enough to be a Platinum AAdvantage member as a was a few years ago, you can opt-out of electronic checkin and actually go up to a person. Only problem is that this process is actually slower. Two employees serving a line of about 10 customers takes over 45 minutes. I don’t know why this takes so long, but I sure hear a lot of typing when all I want to do is check into my flight.
3. Why don’t you take my bag?
So you go through the nightmare of checking in, now you get the privilege of waiting in another line. At American Airlines at LAX there is another place you have to take your bags so they can be x-rayed before they go on the plane.
It’s been seven years now since security measures were changed. Maybe it’s time to redesign this whole process?
Why is their design so bad?
I would guess that these airlines approach problem solving from the company’s point of view with little to no regard for their customers. They know they need to reduce costs, so they decide to work on an online reservation system for their customers and when customers don’t use it because it’s lousy, they will just impose surcharges to force them to use it. If they need to cut employees to reduce costs the can just install kiosks and give customers no option but to use them. Security procedures change? We can just add another process as an afterthought and never look back.
Herein lies the problem. No one is thinking “we can make this better.” They are not saying:
- “The internet is here to stay, how do we improve our site so customers WANT to book online”
- “Pre screening the bags is not going to change and electronic checkin is here to stay, maybe there is a way to redesign the terminal so the process is more efficient and less intimidating to our customers.”
- “If we are going to have a loyalty program, we have to make the experience for our most valuable customers exceptional”
I challenge the executives of the major US airlines to fly Southwest, Jet Blue, and travel internationally is I did to Singapore in November to see how much better the process can be for both the customers and the airlines.
If you design your product to meet and exceed your customer’s expectations, you will be able to command a higher price than your competition. On the other hand, if you approach every problem with a selfish attitude and not from the customer’s point of view, you end up like GM and the countless other companies who focused too much internally and too little on the customer.
Capitalizing on accessibility, the Authors Guild is out of touch
Today I read a post on TechCrunch about an op-ed piece on the New York Times by Roy Blount, Jr of the Authors Guild. Mr. Blount argues that the text-to-speech feature of the Kindle is infringing on his industry because even though Kindle owners pay to download the text version of a book, they do not pay for the audio rights. Typically audio rights are paid for audio versions of the book read aloud by humans. He goes on to say that computer voices are getting so good that they will eventually be indistinguishable from humans.
This all sounds to me like another industry fighting technology to maintain a monopolistic hold to try to extract profit for individuals at every opportunity. If a person purchases a printed book and later the audio version of that book, do they get some sort of refund for owning the same work twice? Why is the inverse so reasonable then? When I was at USC I was once told by a music executive that a music CD only gave you the right to listen to the music from that CD, not the right to transfer it to another device. In essence he was saying I should have to pay them multiple times for the same content. Why did this make sense to the guy? Because in the past this is what the industry has lived by. Get customers to build a library in one format and then purchase it again when a new format comes along, Vinyl -> cassette -> CD -> digital (end of the road). The issue here is a flawed business model which in the past was able to extract more profit from the release of new technology. I still remember how angry I was when I learned how much more CDs cost relative to cassettes. We never saw a price decrease for music CDs even though they were cheaper to produce.
The real issue with text-to-speech…
By adding text-to-speech Amazon is not “infringing” on the book industry. They are opening up a world of information to the blind and visually impaired. Newspapers and magazines can now be consumed by this segment of the population the same day they are available to sighted individuals. Mr. Blount points to the National Federation of the Blind taking offense to his stance, but they have every right. Where has the Author’s Guild been when the blind and visually impaired could not access newspapers? Did they make their professionally recorded audiobooks available to these individuals? Did they help the Library of Congress or Recordings for the Blind by allowing them to distribute their books on standard CD, DVDs or Downloads which could be played on an ipod? The short answer is no. From the Recordings for the Blind website:
RFB&D now offers AudioAccessSM, which enables downloading of audio textbooks from the Internet for playback on either a Windows computer or a Windows–compatible portable media player. RFB&D’s AudioPlus® digitally recorded textbooks are stored on CDs, which hold more than 40 hours each of recorded materials.
In order to play RFB&D digitally recorded textbooks, you will need to use specially adapted CD players or software
The National Library Service for the Blind has the following:
Books and magazines loaned free by the National Library Service for the Blind and Physically Handicapped, Library of Congress, are available in recorded format on audiocassette. Cassette recordings require specially designed playback equipment (see Part I), which is loaned free to eligible individuals and institutions. Special accessories (see Part II ) are also loaned free. Cassette machines play at either 15/16 inches per second (ips) or the commercial standard 1-7/8 ips.
The above 2 services basically say that if you are blind or visually impaired there is no simple way for you to read a book. You need special Windows only players, big cassette players, or special CD players to consume books. This industry does not have a vested interest in solving accessibility issues, but they are quick to denounce a tool that could help those who are most in need.
Anyone who has ever used text-to-speech know that it is not the fastest or most enjoyable way to read. Most people use the technology because of a need, not as a superior replacement for visually reading text.
Publishers should be helping the blind…
Instead of condemning Amazon for the text to speech technology in the Kindle, the industry should be complaining because Amazon didn’t go far enough. They should make the device more accessible by making menu navigation text enabled so that the blind could better use the device. Apple has been making great strives in this area by making OS X very accessible with technologies like Voice Over and making iPod menu speech enabled, but more can be done in this area.
What some companies miss is that accessibility isn’t just about helping people, it makes business sense. Text-to-speech does not take money out of author’s pockets, it adds to the bottom line because a whole new segment of the market can now purchase their content. This is synonymous to closed-captioning which makes TV shows accessible to the deaf thus increasing the number of people an ad can reach.
A new era…
Target is in the process of settling a case filed against them by the NFB with regards to Target’s formerly inaccessible website. Instead of capitalizing on a market segment which is in more need of online purchasing due to transportation limitations, Target locked those potential customers out.
The web and digital media is for the first time giving hope to millions of Americans which in the past could not get accessible books for pleasure or education. Today these individuals can’t get access to college books because they change so often it is impossible for organizations to keep up with transcription to Braille or audio. I would bet these individuals would pay for an accessible version of a text book were it available. The Author’s Guild should work on capitalizing on this market instead of trying to close the door for these individuals.
Just like TV executives will not be able to stop the progress of internet TV, the publishing industry will not be able to stop text-to-speech. It’s already on every Mac. Don’t fight progress, figure out how to capitalize on it.
Do executives ever try their services? (My experience trying to watch LOST online)
This past weekend when my wife and I sat down to catch up on ABC’s Lost we realized that our DVR had not been recording the show. It turns out that this had been going on for several weeks, but being parents of a 3 and a 4 year old, we had not noticed. In order to catch up I started to look at my options to watch the missed episodes legally.
Don’t Demand so much….
My cable company has an OnDemand feature which allows you to immediately watch a catalog of TV shows and movies. I had recently seen a new category called Primetime On Demand so I thought I would give that a shot. I was presented with content from the following stations:
- CBS
- FX
- NBC
- USA
Not only is this a pathetic channel listing, the content for each of those stations is laughable. Does anyone at Time Warner actually use this? It still amazes me that companies put up services which no one in their right mind would use. In my house OnDemand is a service my children benefit from, that’s it. They don’t mind watching the same show over and over again. I love to introduce my kids to my childhood cartoons and this service helps in that respect, but once we have seen the 4 episodes of The Jetsons which are available, I have to wait at least another month for the catalog to be refreshed.
I am so LOST…
So being the geek that I am I next turn to Boxee on my Mac. Boxee is a great tool which is trying to do for TV what Napster did for music. No, it is not about pirating TV shows, it is about bringing together a unified user experience so we don’t have to hunt for content at NBC.com, ABC.com, etc. Boxee merely presents the content already available on these websites in one place, ads and all. Unfortunately Boxee has to work around limitations and changes on the network’s websites for our benefit. Currently Boxee is working through some of these technical issues with abc.com, so once again i fail in my quest to watch this TV show. If the networks would just work with Boxee instead of against them, these problems would not exist. But have network executives ever tried Boxee?
Off to ABC.com (abc.go.com why are they still on this go.com thing?)
The worst user experience to hit internet TV has to be abc.go.com I had been to their site before and that is why I left it to the end. I must say since I had last visited they have at least improved the site so that you can get to the show page in a few clicks. The problem is the actual experience of watching the show. When you actually try to watch an ABC show, you go through the following:
- You select the show you want to watch, this launches another window with the area for the episode in the middle and the episodes on the right hand side. The problem with this is that you can only see the thumbnails of four episodes at a time, and they put up “enhanced” episodes, so you actually just see 2 episode choices.
- Once you make the episode selection an ad plays, no problem except for the fact that once the ad completes, you have to “click to continue.” This happens at every commercial break, and in my case I guess no ads were available so I got to just sit back and watch a counter countdown to 0 before I could click to continue.
- Once the show starts, you can make the player full screen however, when the commercial comes on, you are taken out of full screen mode back to the player window to see the add, and when you click to continue you are once again taken back to full screen mode. This has got to be the most disorienting and annoying part of the experience.
I have to think that this is a conspiracy by ABC to make people hate watching TV on the internet so much that they will not bother with it. Has anyone from ABC actually sat down and tried to use this horrible service? In my mind, if you are not even going to try to do something reasonably well, why try at all?
A great user experience…
If you haven’t tried hulu.com, you should. It is the closest we have come to a legal way to watch TV on the internet and the experience doesn’t suck. When you find the show you want to watch, all the episodes are clearly listed on the same page. When you start a show no pop ups are thrown at you. Ads are shown on the same player as the episode and you don’t need to leave full screen mode to see them. Best of all, when the ads end, the show just picks up where it left off, no clicking to continue, just like on TV. Wow, how amazing, it’s like rocket science I guess. Hulu even gets this right; if you just want to see what shows they have in their catalog, no problem, there is an alphabetical listing, (can you hear me Joost?)
Why does hulu work and OnDemand or abc.com don’t?
It is obvious to me that the people who developed hulu.com love TV. They actually see a future for instant tv over the internet and they have actually used their service. That’s it, it’s not magic. I am sure they “eat their own dog food” Have the ABC executives ever tried Hulu? I can’t believe they have given what they have on the ABC site. I think the CBS guys learned because their current site tv.com sucks a lot less than their previous attempts.
Even NBC which has a lot of content on Hulu still has news.msnbc.com which is probably the worst place to watch their nightly news. I guess the news division hasn’t been on Hulu, or they would just put their content there.
Trying to hold on to the past
Unfortunately, Hulu only has rights to some of the content from NBC and FOX and a few other stations. Want CBS content, go to tv.com. Want ABC, well, you go through that horrible nightmare of a site. Or do you? Well actually you don’t. You just have to go to bittorrent TV aggregation sites. There you can get all the stations in one place. Every show, even before they air on the West Coast. No commercials, no clicking to continue. Want 720p, no problem. While Hulu’s content is only available in the US, via bitorrent if you are outside the US, no problem. On bittorrent you can even find shows not available legally anywhere else. You can even get content from other countries and with some tools like RSS, new episodes will arrive automatically ready for you to watch just like your DVR, only better.
Have TV executives ever tried these bittorrent sites? Aparently not, because if they had, they would see how poor their services are compared to what’s already available. They are not benefitting by trying to lock content to the US. In this global market it would seem to me more productive to develop a business model that works globally and take advantage of emerging markets. Would Pepsi restrict sales of their drinks to the US only? No, that would be ridiculous. Why does this have to be different?
Lets bury our heads in the sand
When Napster happened, Music labels could have embraced the new distribution channel, but they were intent on protecting the $16.99 per CD they were accustomed to getting. Some artists were used to putting 2 or 3 good tracks per CD and still selling the entire album. Today iTunes has changed the game. Now people get to decide what is good and can pick and choose the 3 tracks they like. They also get to pay a much more reasonable price per track. Some would argue that even at $0.99 the price per song is too high, but at least Apple helped the music industry by giving them a fighting chance. Suing Napster out of existence and trying to lock up their content with DRM didn’t really solve anything. Embracing the changing landscape sooner could have put them in a much better position.
Globalization does not just affect hard goods…
Today we are all more connected than anyone in the history of man. This availability of information means that people in the US can learn of a great show in the UK like the IT Crowd, but unfortunately there is no legitimate outlet to consume the content. Will prohibition work this time? I am sure it won’t. Technology has sped past this road block and while content providers sit back trying to protect their content, I am sure someone is developing even better ways to get around these restrictions.
Carpe Diem..
If the industry is going to prevent their content from being freely distributed without commercials, they must get ahead of the curve. Give users a reason to access the content legitimately by partnering with Hulu, Boxee and others. At the very least if you MUST have total control try to make the experience on your site suck less. Please, this is not so hard.
The only way to learn is to do…
There is no substitute for first hand experience. If you are an executive making strategic decisions about your product or service, the first thing you need to do is use it. No Power Point can ever convey the experience your users go through when setting up and using what you sell. Once you experience your product, try your competition’s product. You don’t have to lift every idea from them, but a TV executive can never know how amazing bittorrent and usenet are until they have tried them.
When you don’t know your product or your competition first hand, it is very simple to pull the wool over your eyes and if you surround yourself with people who won’t bluntly state the realities of the market, you are bound to fail, it’s just a matter of time.
Results-only work environment (ROWE)
The guys over at 37Signals have a great post on how rogue Best Buy employees have been able to accomplish great things around the company. The article’s message is that you can accomplish great things by showing results instead of asking for permission.
In general the article is right on the mark, but keeping things under the radar can be tricky especially if your direct manager is opposed to the idea. Generally it is best to get a few allies. Find others within the company who share your vision and are willing to work with you to get things done.
When I worked as a Manufacturing Engineer and I had an idea I felt was viable, I allied with marketing. My direct supervisor was not a fan of the idea, but marketing loved it. By working with marketing I was able to create a proof of concept which we then sold to management.
So yes, go rogue and show results, but find allies.
If companies got politics out of the way and measured performance based on results, they would see productivity and employee satisfaction go through the roof.
Error recovery not failure avoidance (the core skill of innovators)
I saw the following speech by Pixar’s Randy Nelson on the qualities they look for in people they hire. Many of the areas he covers not only apply to his industry, but as he points out we can all apply them no matter what we do. One example Randy uses is how NASA selected austronauts for the mission to the moon. He said they looked for people who were good at error recovery not failure avoidance. I guess he would agree with this post. Enjoy.
Take away:
- Collaboration, accept every offer and make your partner look good by amplifying
- Depth, resilience and adaptability to master some area
- Breadth of experiences and interest in things
- Communication, translation for the listener
Rank Projects, don’t try to do it all
Today I read a blog post on CrunchGear about how Apple’s success is at least partly due to their streamlined product line. On a post at MacRumors, they discussed Tim Cook’s view of the Apple Philosophy. This quote stood out to me:
We believe in saying no to thousands of projects so that we can really focus on the few that are truly important and meaningful to us.
For years I have been touting this is an Apple strength, but this philosophy does not just have to apply to product development. It can be engrained into an organization in other ways.
I have seen organization try to tackle many initiatives simultaneously and they have either failed at most of them or they have done a poor job during implementation.
No matter what an organization is trying to do, it has to realize that resources are finite and that most people will not be able to adequately address multiple initiatives simultaneously.
Given those constraints, what can be done? Well, borrowing from Agile development and the Toyota Production System, the organization should list all the projects it wants to undertake and develop a set of objective criteria to rank these projects (Time / Resources Needed, Ease of Implementation, Cost, etc.). Once the projects are ranked, the top projects are selected,”pulled,” and the lower ranked projects are put on the back burner.
Not only does ranking help identify the truly important projects, but it helps people stay focused. Another advantage is that no one works on projects which are low priority and may get displaced by a hot new initiative. By continuously reviewing, adding, and modifying your project backlog, your organization will do a better job at implementation and the benefits will be realized sooner.