Thursday, June 15, 2006

Disruptive innovation-IV

46. There are 3 levels of architecture where a job is concerned viz. What is the fundamental job or problem the customer is facing? This includes its functional, emotional and social dimensions. What are the experiences in purchase and use, which if all provided, would sum up to nailing the job perfectly ? What are the products’ attributes, technologies, features, etc. that are needed to provide the necessary experiences ?

47. Any company’s products get hired for 3 to 4 jobs. We need to catch customers right after they hired a product. We don’t ask ‘why’. We understand and write a case about the situation. We need to ask what the customer hired or did when in that same situation but didn’t hire your product. We then need to do research on what else is the product hired to do as well as find out what were the situations in which one made do with nothing. Understanding customers without understanding the jobs which arise for them, will give one a wrong direction.

48. By understanding jobs we find for example that most people take photoprints and look at them just once. They like to put them in an album but seldom look at them. From this perspective the use of a digital camera is mainly restricted to the click and attach facility. What is the use of trying to get the customer to do editing which he/she is not interested in. A Purpose brand is not built through advertising. It is built around the jobs it is hired to do. If one has a job to do and the brand pops up in one’s mind then one will go out and hire it.

49. The following steps need to be adopted :
  • Design a product that does a job well.
  • Create this brand that uniquely links the product to the job.
  • Trust that brand for that purpose.
  • Whenever that job space comes up the customer will hire that brand and talk about it.
  • Only then can advertising help to build it.

50. Sawzall helps to drill a hole in the wall. It is a brand built around this specific job. It’s share is more than 80%. Similarly Holehawg is another brand built around a product which is a right angle drill for plumbers. It’s share is again more than 80%. Both brands belong to Milwaukee. All the rest of Milwaukee’s brands have less than 10% share. Purpose brands create value. Corporate endorser brands do not create value. Similarly Sony has Walkman and Playstation which are huge Purpose brands while the other Sony brands have a much lesser share.

51. Usually companies have a proprietary end to end architecture. They are integrated. When the modular architecture takes off the coin flips. If Apple opens up its architecture then iTunes will be in every iPod no matter who manufactures it just like Intel. Components become more important.

52. Automobiles today struggle to sustain a premium through differentiation on some dimensions. If one looks at jobs which need to be done by cars then one can come up with the following possibilities viz. a gift to a loved one of the family which then necessitates creation of a package of experiences for that car. Or one can say that my car is my office. There are 20 mn. people who need to work out of their car. The car can then become a Purpose brand. Customers will then be willing to pay a premium for the job the car is being hired for. In the automobile market one cannot have the attitude of one size fits all.

53. Every brand today that is valuable started as a Purpose Brand. One can develop other product forms to do the same jobs or develop brands for different jobs.

54. Crest Fluoride is a disruptive technology because it prevents cavities. The advertising is associated with that job. If Crest is extended to other product forms like mouth rinse then the consumer gets confused. Because J&J also has mouth rinse. When P&G did that with Crest and applied it to many jobs it transformed it to an Endorser brand. P&G lost its leadership. The hotel chain J.W.Marriott created a hotel chain for conferences and company meetings. When there were other jobs like if one is just interested in a clean and inexpensive room then J.W. Marriott created another brand ‘Courtyard’. ‘Residence’ is another brand which is meant for the job of catering to those who get transferred. In this way one lessens the confusion.

55. If you hire the product to do the job but it doesn’t do it then you will lose trust in it. If consumers don’t hire it for the wrong reason they will not lose trust in it.

56. The dilemma is that one can’t prioritize low margin and high margin at the same time. Echo is a small low end car of Toyota. But it is sold through the same channel as other cars. One can therefore not prioritize ‘Echo’ because of the other bigger cars having bigger margins. When one is dealing with bigger margins one cannot prioritize smaller margin products. One needs to grow faster to sustain the stock market. The bigger one gets one can’t prioritize emerging markets. Drugs coming out of R&D will be evaluated by Pfizer in terms of how much will they contribute to the growth of its current base of $5bn. revenues.

57. When looking at disruptive innovations one needs to ask the following questions viz. Do they have the Resources ? Will they have the right Processes? A process which is good at one thing may not be good at other things. Will the profit model (Business Model) allow them to prioritize medium range/low range products?

58. For organic fibers, some years ago one needed to go to Dupont to find a molecule. One engaged in unstructured and exploratory exercises. But as others came into the field patterns emerged. One now didn’t feel the need to be an expert. When Quantum theory began to be used they found that they could predict properties even before the molecule was developed. So reverse engineering was indulged in.

59. Original problem solving was embedded in the experts. And there was a lot of experimentation. But gradually patterns emerged which were recognized. One now knew how the world worked and created a set of rules.

60. When it’s a new business one doesn’t know the right assumptions. In 93% of the cases one finds that the strategy that leads to success is different from what the initial strategy was.


Blogger Aji said...

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1:54 AM  

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