February 19, 2009
I spend most of my days thinking about the “innovation bell curve.” The concept is simple, yet profound.
Budget brands will continue to prosper as mid-market consumers move left to save money.
Although premium brands may suffer slightly, there will still be strong demand for high-end products and services.
It is the middle of the bell curve, the “mid-market brands” that are getting squished as consumers move toward greater value and premium brands reposition themselves (a bit more) toward the mid-market customer.
I’ve been thinking about this model as it relates to my career – giving speeches about innovation
On the right-hand side of this model are the “celebrity” speakers. These individuals include Harvard Business School Professors (e.g., Clayton Christensen), former CEOs of big companies (e.g., Jack Welch), and major best-selling authors (e.g., Seth Godin). These individuals charge MUCH more than I do. But they are also a draw. For large events, having one of the speakers on the platform will get butts in seats.
On the left-hand side of this model are the “vendor” speakers. These individuals work for large companies who view speaking as great marketing. These speakers are often not only free, sometimes they even pay sponsorship dollars to be on the platform. VPs of Innovation for large consulting firms or presidents of innovation software vendors fall into this category. They have something to sell the audience.
Where does this leave me? It certainly leaves me rethinking my business model. Then again, I am always rethinking my business model.
I am continuing to put more energy into books and products like Innovation Personality Poker®. These move me towards the left-hand side of the model. You can take me home for a fraction of the cost of one of my speeches.
I am also staying focused on the corporate market (rather than large conferences) because there is still great demand here. With group sizes of 50 – 300, celebrity speakers are prohibitively expensive. And given the small event size, the marketing opportunity is not as great for vendor speakers. My business continues to boom in this area.
Finally, I am shooting the pilot for my TV show in April. If all goes well, I may be able to re-position myself in the right-hand side of the chart – a celebrity speaker. But of course, time will tell.
Where are you positioned? Who is squishing you out of business? How can you reposition yourself?
P.S. In a previous blog entry, when discussing the innovation bell curve, I talked about the wisdom of Mr. Miyagi in the Karate Kid. He talks about those in the middle getting “squished like grape.” I thought you might like to see the YouTube video…
February 10, 2009
It was just announced that Starbucks is now selling a coffee and breakfast for under $4. It’s true. According to CNN You can get a 12-ounce coffee with a breakfast sandwich or roll or a 12-ounce latte with either oatmeal or a coffee cake.
According to CNN, “the move may be…targeted to drawing back business lost to more cost efficient retailers like McDonald’s and Dunkin’ Donuts.”
This is another examples of the “squeeze” of the players in the middle of the bell curve. If you are not familiar with it, read my articles on the bell curve of innovation. Dunkin’ Donuts (DD) is a great example of a coffee shop budget brand. As they expanded their offerings, they started to compete (at least in terms of coffee quality) with Starbucks. Although some think of Starbucks as a premium coffee, most real coffee snobs (and I know quite a few of them) turn their noses up at Starbucks. It has always been in the middle of the bell curve. In the past, the middle of the bell curve was a great place to be. No longer.
Last week I did a speech for the beverage division of a large food company. This division is largely comprised of “make at home” coffee products, including instant coffee. Business is booming. They now have easy to use coffee, espresso, and latte machines. These products represent an emerging “budget” entry. For a relatively low cost, these machines produce a high quality, single hot drink with little effort. There are no messy powders (uses simple capsules), no grinding, no cleanup. Accessibility at its best.
I realize that Starbucks is more than coffee, it is an experience. Unfortunately, today, people are less likely to pay for these experiences if other alternatives exist.
Are your products/services getting “squished?” Can you make them more affordable? More accessible? This may be the key to survival in this market.
February 2, 2009
In a previous blog entry, I discussed why the middle of the innovation bell curve is a dangerous place. I even quoted The Karate Kid’s Mr. Miyagi who said, “Walk on road. Walk right side, safe. Walk left side, safe. Walk middle, sooner or later [makes squish gesture] get the squish, just like grape.”
This prompted a question from Gareth Garvey, a great English innovator based in Copenhagen. He asked, “What happens as the products in the middle get squashed? Are we talking about a narrower road where we need to walk even closer to the edge to survive/succeed or is the middle ground recreated by new entrants?”
Great question. From my perspective, the middle ground is constantly shifting and getting recreated by new entrants.
Although using computers as an example is hackneyed, it does allow us to see the shifting dynamics in a short period of time. Regardless, these concepts apply to all innovations. Here are the dynamics…
The right-hand side of the bell curve is constantly shifting further to the right. That is, investments in innovation help premium product become better, faster, and higher quality. PCs now have the computing power of computers that once took up an entire room. There will always be a need for high end computers, whether it is for business, science, or gaming.
The left-hand side of the bell curve constantly moves too. I wrote before about netbooks that cost about $300. These computers will continue to increase in power squeezing out current mainstream computers.
Here’s the wrinkle…It was just announced that India has developed a computer that costs $20. Of course these have significantly reduced processing power, but will serve the needs of a larger audience. As these $20 computers increase in power over time, they will squeeze out the netbooks.
Mobile phones also need to be taken into consideration.
Right now, mobile phones have their own bell curve. Low cost simple function phones on the left (which have greater capabilities than the high-end phones just a few years ago). And the iPhones and Blackberrys of the world on the right.
What’s interesting is to see how these high-end phones can leap from the right-side of the mobile technology curve to the left-side of the computer curve.
iPhones and Blackberrys have basic computing functions now. But soon they too will become more powerful. I assume that in the near future they will also have the ability to display on larger screens – either through projection capabilities, expandable screens (like on the Jetsons), plug in monitors, or low cost wearable goggles. The data entry abilities will also improve. When this happens, and as costs drop, mobile phones will move formally into the left-hand side of the bell curve for computer innovations.
The curves are always shifting in many directions. What is a premium product today will become old quite quickly. What is considered budget will improve over time and become mainstream, eventually to be squeezed out by a new low-end entrant. What was on one curve (e.g., mobile phones) can shift to another curve (e.g., computers).
The key is to choose which side of the fence you are on. Premium or Budget. High-end or mass-market. Sophisticated or up-and-coming. Just try to avoid getting squished…
I will continue to address the “bell curve of innovation” in future entries.
December 26, 2008
Many of my recent posts discuss “Innovation and the Bell Curve.”
One quick comment on this idea. I often say that the left-hand side of the bell curve is about affordability and accessibility. But sometimes it is just about accessibility – for a premium price.
Two quick examples come to mind.
The Nintendo Wii is one of the best examples. Here, instead of creating higher quality graphics that would appeal to the advanced gamer (the right-hand side of the bell curve), they created graphics and interfaces that would appeal to people ages 8 and 80 alike. That’s accessibility (left-hand side of the bell curve). They must be doing something right. According to Engadget, 1.7 million Wii units were sold last week, when only 500 thousand XBox 360s and 240 thousand PlayStation 3s were sold. And of course there are all of the Wii add-ons.
Another example comes from the Financial Times. This is the best business and finance newspaper in the world. In addition to the paper, they offer many advanced services that would appeal to only those in financial institutions (right-side of curve). But they also offer their Lex subscription service for mobiles. This boils down all of the most important news into bite sized nuggets (and it is one of the most popular sections on the print edition). For people suffering from information overload (like me) this provides greater accessibility to the topics that matter most (left-side of curve). The cost to deliver this service is close to nothing (it’s all digital), yet the price to the consumer is more than the price of a print paper subscription.
Sometimes being more accessible (simpler) can lead to greater value and hence greater returns for you.
December 22, 2008
In the Karate Kid, Mr. Miyagi once told his student Daniel, “Walk on road. Walk right side, safe. Walk left side, safe. Walk middle, sooner or later [makes squish gesture] get the squish, just like grape.”
to listen to Miyagi, press play
This fits nicely with my perspectives on innovating in tough times. In my previous blog entries on how to make your products/services more affordable and accessible, I discuss why the middle of the bell curve is a dangerous place to be in these economic times.
I was just speaking with a client of mine and we had the same conversation.
His Fortune 50 company offers a commodity item, but is considered to be a premium brand. They are never first to cut the price of their items (and they rarely cut prices), but they typically lead the charge in price increases. Their brand is associated with high quality and high performance. They are often focused on the right-hand side of the bell curve. They have been doing exceptionally well.
Their competitors fall into two categories.
Some are white label, low price producers. Budget brands. They provide a lower quality product that appeals to those with the least to spend. These companies are in the left-hand side of the bell curve. They seem to be doing particularly well now that people are looking for bargains.
Other competitors are in the middle of the bell curve. They provide good product at a good price. How are they going? These companies are being “squished” by the low cost providers on one side and the premium brands on the other. They are struggling. My client wonders how many of these companies will survive.
The middle of the bell curve is a dangerous place to be these days. If you aren’t careful, you might just get squished like a grape.