Saturday, January 12, 2008

Ideas that changed the rules of the game

Exhibit A: Apple's iPhone [Fred Vogelstein in Wired]:

... For decades, wireless carriers have treated manufacturers like serfs, using access to their networks as leverage to dictate what phones will get made, how much they will cost, and what features will be available on them. Handsets were viewed largely as cheap, disposable lures, massively subsidized to snare subscribers and lock them into using the carriers' proprietary services. But the iPhone upsets that balance of power. Carriers are learning that the right phone — even a pricey one — can win customers and bring in revenue. Now, in the pursuit of an Apple-like contract, every manufacturer is racing to create a phone that consumers will love, instead of one that the carriers approve of. ...

Exhibit B: Ikea [Tim Harford in Financial Times]:

... Ikea keeps its costs and prices low by enlisting its customers – their time, their cars, their ambitions as interior designers, and their inflated ideas of their carpentry skills.

The management experts Rafael Ramirez and Richard Normann pointed this out in the Harvard Business Review back in 1993. Ikea, they argued, was a success because it enabled “value co-production”. This infelicitous term partly refers to offering consumers a discount to build their own furniture. But it means much more: Ikea recruited its customers to the idea that they could not only put up shelves but they could design their own stylish living spaces, equipping them with tape measures and printing almost 200 million catalogues that also serve as design manuals.

Exhibit C: Google [Ken Auletta in New Yorker]:

In its 2004 annual report, Google, amending its basic corporate strategy, officially signalled its intent to be more than a search engine. The company announced that seventy per cent of its efforts would continue to be directed to its “core” mission, “our web search engine and our advertising network.” Another twenty per cent of its energies would be devoted to “adjacent areas such as Gmail”—the free e-mail accounts available to just about anyone who wants one—and the range of software that falls under the heading of “apps.” Finally, the report said, “the remaining 10 per cent is saved for anything else, giving us the freedom to innovate.” To other media companies, this sounded suspiciously like declaring, “We are in the search business, but we might be in your business.” Last spring, Google bested Microsoft, Yahoo, and the enormous advertising-marketing firm WPP to buy DoubleClick, the online advertising and marketing company. DoubleClick claims up to twelve billion daily transactions. Even without it, Google has amassed one of the world’s largest databases—a resource that has helped in altering its mission. “We are in the advertising business,” Eric Schmidt, Google’s C.E.O., told me not long ago.


  1. Raj said...

    I thought, after your last post, you would add

    Exhibit D : Tata Nano.


  2. Abi said...

    Raj: Ummm, no!

    While I agree that there's a lot of hope -- and hype -- riding on Tata Nano, I will wait until it proves itself as a rule-changing innovation.

  3. Anonymous said...

    The challenge now is to get that factory ready. !!!!