Dell does a Lexus (sort of)

It took a lot of confidence and guts for Toyota to offer a completely new name for its luxury line of cars, Lexus, all those years ago. In retrospect, it is easy to see that it was a wise decision, and one based firmly on good branding theory.

There's a lot of news circulating around the Net on Dell's latest strategic decision to enter the "luxury" market for PCs and notebooks. As far as I can tell, this "new brand" is called Dell XPS.

What do you think of that for a new brand name?

You'd think that Dell would have the guts to come up with something a bit bolder than that. I doubt that wealthy consumers will want this product considering the name still contains elements of a low-cost PC brand, Dell.

It's a bit like trying to convince the affluent that the "Wal-Mart XYZ" boutique is a luxury store.

Innovation and the future

A belief that consumption changes the consumer suggests that there will always be opportunities for the entrepreneur. Joseph Schumpeter (1942) put it this way:

" . . . wants automatically expand and new wants emerge or are created, satiety becomes a flying goal, particularly if we include leisure among comsumers goods." (p. 131)

Satiety becomes a flying goal. I tend to agree with that and I think most people would. But, at the same time, the fact that capitalism's successes cause people to rationalize life, there is a tendency to avoid entrepreneurial pursuits and stick with the familiar. This tendency is particularly true when couples (or individuals) do not have any children. For Schumpeter, children (i.e. "establishing a transgenerational dynasty" [1934]) were a key driving force for the entreprenuer.

So we could have a situation where we have plenty of new "wants," but fewer entrepreneurs around creating new businesses to satisfy these wants.

There is an interesting broadcast from the BBC on how schools are trying to "teach entrepreneurship" at an earlier age in the United Kingdom. This is quite an interesting broadcast/podcast. Real Player is required to listen.

Sticker innovation

High-impact innovation often occurs behind the scenes, and not by this lot. The Financial Times has a fairly lengthy article on Dell, a low-cost PC retailer. The article mentions how Dell's production line is being held up by the application of the "Intel Inside" and "Windows" stickers. The article states that Dell is in talks to eliminate the stickers all together. As my dad would say, "Fine trick if you can manage it." The problem for Dell of course is the fact that many customers care what type of sub components are in the PC and not having those stickers visible on the product could affect sales, especially in the short term.

Dell may have to keep the stickers and settle for cutting costs in their application. And how can they do that? And who should they ask?

I'd be getting some ideas from the people that are near the "sticker action" in the factories first. And these factories could be in any number of countries, which makes it even better for generating ideas.

On the topic of branding individual sub components, Hon-Hai, a Taiwanese contract manufacturer, has started doing this with its Foxconn brand. You can see some Foxconn-branded components in these pictures of the Apple Nano, an MP3 player.

Money

Q: What's the function of money?

A: A store of value.

There's a great piece in yesterday's Taipei Times about how mobile phones are changing the economic landscape in Africa. When people are motivated to innovate, there can be some truly amazing developments! This type of bottom-up innovation from the people on the ground makes a fool out of the so-called aid agencies and government institutions.

One of the best parts of this article is the part on how people are paying for goods with phone credits.

Channel innovation

Time and time again, examples of channel innovation appear in the press. Here's a short article about Acer, a Taiwanese electronics manufacturer, and their channel activities in India.

On the subject of channels, the other night I saw an interview with Bob Igor, CEO of Disney. He was discussing Disney's plans in China, in particular, how they would tackle the issue of pirated DVDs in China. He proceeded to explain that half of the problem is caused by simply not having the originals available on the streets in the first place at a reasonable price. He added that rather than trying to put and end to pirating, the company would attempt to lessen its negative impact by making it much easier to buy the originals. In China, this means getting the product out there on the streets -- not just in difficult-to-get-to Western-styled malls.

Jail for founders of peer-to-peer file sharing Web site

The music industry has been hard hit by the emergence of file-sharing technology. Only now are music labels embracing the MP3 medium and allowing listeners to pay for "legal" downloads. (I believe that many people who previously used "illegal" peer-to-peer sites only did so because there was no other way for them to get a song through the Internet channel.)

The founders of Kuro, a Web site that allows its members to share files online for a fixed monthly fee, were sentenced the other day to jail terms.

You can read more about this HERE.

This case rekindles the old debate over who is responsible for copyright violations. Is it the users of the technology or is it the creator of the technology?

The Taiwan courts obviously believe that the technology providers are at least partly to blame.

Help yourself!

So you're in an expensive five-star hotel and the hotel has those coat hangers without the hook. You know the ones: they are designed so that if you were ever to steal one, you would be unable to hang them on anything.

These coat hangers are an industry standard -- and reluctantly accepted by hotel guests. Imagine, though, if the hotel was to apply a bit of innovation to the hanger issue. Get rid of these hookless hangers and replace them with real hangers and a sign that says: "Coat hangers, $5 each. Help yourself."

[The hangers would be added to your bill like the drinks from the bar fridge]

PS. I read about this story in the Harvard Business Review magazine a while ago. I think it's a good example of how we can apply the innovation process to every part of a business.

Innovation types

Many business books attempt to describe innovation by type and degree. In terms of type, you will often see product, process, service, and business model. Recently, however, there is a tendency to break these types into smaller and smaller elements. There is an interesting article in Businessweek. In this piece, Doblin, an innovation consultant, suggests that there are "at least 10 types" of innovation. So there are more? What are they? I guess what they really mean here is that there are as many "types" of innovation as there are parts of a business. This also suggests that there are more people involved in innovation than just the guys in R&D -- this is especially true for services.

Makes me think of an article I read about marketing: "as marketing becomes more important, marketing departments are getting smaller."

Overshooting

The idea of a product's features overshooting users' ability to utilize those features is not that new. You just have to look at 100+mph cars sitting in 30mph traffic jams to see this in action. Another example is the huge hi-fi stereo system in a small apartment.

The following article discusses some research carried out by MORI, a market and public opinion research agency.

"The panellists warned that the consumer technology industry must place ease of use and design at the forefront of product development to achieve market potential. They blamed a competitive vendor culture for “feature over-kill” on products and recommended instead that vendors focus on technology basics in order to satisfy the real requirements of customers."

There's a lot to be said for making things simple. Rather than accepting this as the way to go, though, manufacturers are stuffing more features into ever-smaller devices, and making them even harder to use.

Sure, there are some people that want more and more features, but there are a hell of a lot of people who don't give a monkey's about that extra "performance."

Schumpeter

I've been getting a bit of comment spam, so today's post is actually a test to see if there is any pattern to the way these things appear on the blog.

That aside, one of my favourite quotes from Joseph Schumpeter's book Capitalism, Socialism and Democracy is this one:

"The true pacemakers of socialism were not the intellectuals or agitators who preached it, but the Vanderbilts, Carnegies and Rockefellers."

– Joseph Schumpeter (1934, p. 134)

Too sticky

There are many products available here in Taiwan that originated in English-speaking countries. This is a photo of the back of a can of crack filler from B&Q, a DIY store. As you can see, if you can't read Chinese, you have to pick the label off with your nails to get at the English. Why don't they use labels that peel off without leaving a sticky paper residue?

So there's an idea (from a customer); you tell the guy at the store about your idea (he now owns the idea); I wonder what happens after that?