I recently got an oil change at one of those quick-change places– you know, the ones that smell like burnt coffee? It got me thinking– this is a market that will exist for the foreseeable future. It’s also a commodity market– they all compete on price and there’s little product/service differentiation. It’s also a bit of a confusopoly. But does it have to be? Continue reading “Change the oil change business”
I predict failure (compared to revenue from previous versions): Rock Band 3 uses “real” guitar and keyboard.
Guitar Hero worked because it was just hard enough to appeal to everyone who always wished they’d learned guitar, as well as all the people who already knew how to play guitar (but not video games). They found the sweet spot that captured gamers and non-gamers.
Rock Band 3 is only going to appeal to hard-core gamers who also happen to be able to play a real instrument. See I Fight Dragons (love them, btw).
Classic case of an incumbent riding a decaying product line all the way to the grave. They’re so focused on trying to recapture their glory days, they’re blind to opportunities on the periphery.
What could the guitar-game companies have done instead? Two ideas, based on the strategy of exploiting second-order effects:
- Capitalize on the growth in mobile apps and tie it back to your core (console games): an iOS and/or Android app that uses WiFi to act as a controller for existing games.
- Capitalize on the trend of all-things-social, and keep people coming back with game mechanics: Something like Garageband that makes it easy to create/record/share your own music, but with some strong gaming elements (e.g. submit songs for peer rating, prizes for highest-rated). Garageband with some social gaming elements.
The Internet changes everything. Also: water is wet, and Conan O’Brien is ridiculously tall. Seriously, if you haven’t realized that yet, just go back to living in your cave. If your product can be turned into ones and zeroes, your existing business model doesn’t work anymore. Your strategy probably relies on scarcity of physical goods.
Scarcity can still be a viable strategy, but only if you refocus on things that can actually be kept scarce. Here are three ways to use scarcity as a strategy in a digital world:
- Trust: what’s more scarce than trust? Ok, yes: good music put out by major record labels is pretty scarce. Other than that? Not much.
- Customer service: if I can get your particular combination of ones and zeroes cheaper some places, and completely free other places, why should I fork over my money to you? Because I know you’ll take care of me.
- Expertise: give away the “product” but charge for service– think Red Hat. Linux? Never mind, you cave-dweller. Red Hat distributes a version of the open-source operating system, Linux, for free. They make money by charging customers for service– e.g. setup, maintenance, trouble-shooting, etc.
Along the same lines, just digitizing existing stuff leaves your customers wanting more, and your competitors with an opportunity. When you redefine your unit of value– what you charge for– be prepared for the accompanying change in what the market expects, and how customers consume your product.
Suggested reading: Change This – Better Than Free
Ping is Apple’s social network built on top of iTunes. iTunes, of course, is the biggest music store in the universe. Kindle for the Web is Amazon’s latest addition to their market-dominating eBook reader line. Amazon sells lots of books.
Both Ping and Kindle Web app exist to sell more product to more people, but Apple and Amazon have very different strategies.
With Ping, Apple stayed with their typical walled-garden strategy: keep people here, don’t make it easy to share outside of iTunes. It’s too distracting out there.
Kindle Web: keep people here, but bring more in by making it easy to share what I’m reading with Twitter & Facebook friends.
Both Ping and Kindle Web app are bound to evolve. But Amazon got much closer to awesomeness right out of the gate.
Think about your strategies. Are you making it easy for your customers to tell their friends about you online? Or are you so worried that your customers will get distracted by a competitor that you make it hard to share
I read “The Secret Sauce: Growing a Company by Word of Mouth” over on Brains On Fire and it got me thinking about the idea of “strategy” more generally.
Strategy is a military word. It’s the “art of a general.” The idea is to design a plan of action which results in one army taking a particular territory by defeating the opposing army. Divide. Conquer. Now, don’t get me wrong. I’m not knocking our armed services. At all. I just think it’s odd that we take that warfighting schema into the boardrooms and cubicles of corporate America. We segment, we target, and we capture market share.
Our commercial system is built on tearing things down.
But, what if instead of being generals, we were farmers?
Farming is hard work. And farmers fight too– scarecrows, pesticides, weeding. But they fight to nurture and protect, not to divide & conquer. What would a business built around the ideas of growth & nurturing look like? How would its customers react? In the Brains On Fire post linked above, @chrissandoval says that USAA generates so much positive word of mouth by loving their customers, and showing it every time. That’s pretty cool.
Now, there’s an unexpectedly pleasant bit of irony: a company founded by active duty military officers as an example of how to focus on growth & nurturing. Pardon me while I mix metaphors, but maybe it’s like kids playing cops-and-robbers– guns, chases, epic battles. Have you ever seen a real police officer say “Bang! Hey, no fair! I SHOT you!” They’ve seen the real thing. Maybe it took a group of people with World War I in recent history– the real uses of dividing & conquering– to understand the value of nurturing & growing. “Generals” who became farmers.
What other companies are out there are Farmers?
I answered the question “How Would You Improve ‘Green’ Brand Recognition?” on LinkedIn last month. EcoSeed put my answer, along with a plethora of other great ideas, in their September issue. Here are three steps to improve “green” brand recognition:
- Make sure your client has a solid communication strategy and a truly compelling story. Otherwise, it doesn’t matter what tools you use. This is a big one. Don’t skip it.
- Start a blog with compelling content about green initiatives in general, and some specific examples of what your client is doing to be greener. Use pictures and video whenever possible to supplement the text. Caution: DON’T just write about the green initiatives/products/services; instead, write about how the green initiatives/product/services impact the reader’s life.
- Start a twitter account (see http://twitter.com/greenopolis as a great example). But before you start tweeting out links to your blog, do some searches for people who need help with green initiatives… and help them. @reply to them with some helpful links. Don’t get caught up worrying about how many people are following you; instead, try to cultivate an highly engaged following (quality vs. quantity).
What would you do? What did I leave out?
I recently read a blog post “Newspapers And Thinking The Unthinkable” from Clay Shirky. Not sure I’m adding anything new, but here’s how I digested his thoughts.
How do we save newspapers?! We don’t.
Ok… how do we save Journalism?! We don’t.
Did we save scribes after the printing press was invented? Nope.
Now that I’ve thoroughly pissed off all you journalist-types…
The way I see it, the rise of the publishing industry was based on three premises:
- People want information: news, entertainment, education.
- It takes a lot of time/money/effort to get information to people: printing presses are expensive. So are foreign correspondents. And sports writers.
- Economies of scale, FTW!
Premise one is still valid. Premise two? Nope. Premise three? Still valid, but who cares? Premise two is a big ol’ number two. Creating and distributing information is so easy, my 4 year old son can do it by accident.
No. Seriously. I set up an old laptop and put shortcuts on the desktop for Chrome, Paint, and Notepad. In Chrome, I added PBS Kids and Starfall to the fancy little visual bookmarks/new tab page. Yes, he has to ask to use the computer, and yes we limit the time. And yes! we monitor him, which is why I have this enthralling anecdote. The little dude is big on writing his name– usually with Notepad, sometimes with Paint… sometimes with real paint. On the wall. Anyway. One time, like any good, curious, experimenting kid, he opened Chrome and typed his name instead of clicking one of the visual bookmarks. He hit enter to start a new line, only it didn’t start a new line, obviously. It searched the interwebz for his name. 14,000,000 results. Don’t worry, nothing bad came up on the first page. But that’s a lot of content, and he found it by accident.
So, if we don’t pay professionals to report the news, there will be an unprecedented amount of terrible, worthless, idiotic reporting (and movies, music, and books) brought to us by amateurs! Yep. Just like sacred texts were no longer painstakingly (and beautifully!!) copied by hand after the printing press made it easier to translate things into common languages so that (gasp!) amateurs could interact with the text. That was a long sentence. Sorry. I’m an amateur. Anyway, society adapted. Think about what happened in the two centuries after the printing press was invented: first, the Reformation destroyed the Catholic Church’s monopoly on information. That paved the way for the Enlightenment. Which paved the way for shopping malls, SUVs and Time Magazine
But who pays the people that pay the professionals that report the news? Subscribers and Advertisers. Well, not so much anymore. Google and Craigslist already stole the advertising cash cow. So what about subscriptions? Not gonna work. At least, not like before. See, we amateurs used to put our limited resources in after the fact: we paid to subscribe. Now, we’re putting our limited resources in right up front: we’re creating the content. We’re subsidizing on the front end.
Oh. One more thing/geek/parent tip: I’ve turned PBS Kids and Starfall into “Application Shortcuts” in Chrome now, so no more address/search bar fun for the offspring.
You come up to a group of people and ask “which way to Athens?” All but one point to the left. One solitary soul points to the right. Why does it matter? The one pointing to the right is the only one who’s actually been to Athens.
This is of course, a very common, very bad argument against “crowdsourcing.” The argument is constructed such that the masses are uneducated, and only the enlightened can truly provide any real value. See, on this series of tubes we call the Internet, you can find a group of people who just happen to be an expert on anything. As a shiny and related side note, you can also find about a bazillion more groups of people claiming to be experts, who are, in fact, friggin idiots.
The problem with the Interwebs and crowdsoursing, though, is how to you find those bona fide experts. Well, some adventurous souls in the education industry are taking a shot. Einztein, which will start beta testing later this year, looks like they’re trying to create a filter for the plethora of free online courses & materials… and the filter will be experts in the field. Pretty cool. I signed up to be part of the beta. It’ll be interesting to see how this all works… or if it works.
But I think they’re on the right track. Crowdsourcing is great, as long as you can find the right crowd.
“We believe there is a real value to this product and as consumers experience it, they will agree.”-Time, Inc. spokesperson defending the Time magazine iPad app
Dear Time, Inc.-
Maybe you’re right. But who cares what you think is valuable? Honestly. You come off sounding like a (bad) used car salesman.
If the experience with your iPad app is basically the same as the print version, but you’ve cut out all that physical print & disrto cost, and you charge the same price for both? Well, you obviously think we’re a bunch of morons. If you add value to the digital product, we’ll gladly pay the same price as the paper mag. Otherwise, pass at least some of the savings on to we customers. Without us, you’ve got nothing.
P.S. you do produce some pretty awesome content. Just get your head on straight for digital pricing.
Record labels’ marketing strategies used to make sense. Specifically, sending “promo” records to influential radio DJs. It made sense to give away the product to these taste-makers: they gave the record some air time, listeners bought the records, went to the shows, and bought the merch.
What the labels missed when Napster (then Bittorrent) happened was that everyone can be as influential as a major DJ now.
So, here’s 1 simple thing to fix the music industry: give the digital music away. Give it away so listeners will go to the shows, buy the merch. Hell, if you make it special enough, people will still buy a physical album.
Give away the downloads. It’s the best marketing they could ever ask for.