Category: Technology

Cost-to-serve

Cost-to-serve is defined as the total supply chain cost from origin to destination, it incorporates such factors as inventory stocking, packaging and re-packaging, shipping, and returns processing.

So explains Tim Laseter, Elliot Rabinovich, and Angela Huang in S+B. I’d say products that have poor cost-to-serve profiles, like shoes, just haven’t redesigned their businesses to take advantage of online opportunities. For example, if shoe return rates are poor for fit reasons, more consideration needs to be put into consistent fit. This was never necessary before because we always bought shoes in a place we could try them on. Consumers may show loyalty to a particular brand, style, and even model given the possible price and convenience advantages of ordering online. Shoe manufacturers may find advantages in not redesigning every model every season, making it easier for consumers to re-order a shoe that fits, and profiting both in lower development costs and higher loyalty rates.

An example of redesigning the business to take advantage of e-commerce is Design Within Reach, which has showrooms to market items that are hard to evaluate online, and an online store and paper catalog for everything else.

Hardware companies will learn to be software companies


In the past I’ve observed that as processor speed increases, software replaces dedicated hardware. For example, in music or video production programs like GarageBand and Final Cut Pro and a stock Macintosh can replace dedicated rack systems and DSP chips.

Now with Web 2.0-ish advances on the Internet, we can go further and say as bandwidth increases, remote applications replace locally installed applications.

Yamaha has developed a beautiful prototype of a device that “allows everyone to play music intuitively.” But the simplicity of the user interface begs the question of why isn’t it implemented in software (i.e. why can’t I get my hands on this now?). I know the obvious answers, and I appreciate a great hardware UI and portability, but believe we’ll only gain more utility from network-based software applications as people adopt them. It makes even more sense when you see someone make something that looks similar and is a lot of fun, like Ollie Rankin’s Ten or Eleven (imagine this on a tablet PC).

The wonderful world of concrete

If you’re in Washington D.C., do see the concrete exhibit at the National Building Museum, where you’ll learn that concrete does not have to be heavy, solid, opaque, flat, gray, or ugly. Quite the opposite.

The Innovate-Dominate Imperative

This essay by Ray Lane of Kleiner Perkins offers some useful models of the software industry that could easily apply to similar industries in a state of major transition.

This year, many software companies will be busy trying to convert their offerings from products into services. In fact, I would estimate that last year, software-as-a-service (SaaS) was the number one item on the agenda of 70 percent of software executives.

I’m here to tell you that this is a mistake.

…The enterprise software companies that move to innovate and dominate today will be the most successful companies five years from now.

software company size and innovation

We’re trying to underdo the competition…

…No one can really beat us on the low end. It’s just what you need, and nothing you don’t. You’re always going to have more people on the low end who just need a few things.”

I love that Jason Fried quote, he’s proving out the worse if better argument.

One benefit he didn’t cite was disintermediating IT departments. I’ve seen this happen: IT departments spend months deciding whether to offer a service, evaluating packages, and designing a scalable offering. Meanwhile, individuals and teams simply sign up for a web-based service and get their jobs done.

Amazon disintermediates the credit card companies

Why bother with micropayments when you can reach right into the bank account?

For anyone familiar with European banking, this is an obvious solution. My European friends pay all their bills directly using a standard electronic system and none of them have checkbooks. Checkbooks are an American anachronism.

Everyware

Adam GreenfieldMore from New Challenges… On Saturday night a sub-group — emboldened by a smuggled bottle of wine — sketched out a new manifesto for information architecture. Outward looking, devoid of definitions, accessible to the common person. On Sunday Mr. Greenfield parachutes in to advocate for what could be the impetus to the manifestis’ work: Everyware, a vision of ubiquitous computing with a set of principles guiding and urging designers to create responsibly the electronics of every place. Adam’s in-person plea created a sense of urgency for most of us to consider how to connect our skills with devices not yet invented, that we should invent. It was the perfect compliment to Dan Brown’s questioning of human vs. technology control of content.

More notes are on the wiki, and there’s photos.

Published
Categorized as Mobile

iTunes is so, so unfair

The music industry’s lack of innovation ability to even look at business differently is rather sad. Even after Apple showed how digital downloads could be made profitable, they’re pressuring Jobs to change his pricing model, complaining about his ingenuity…

A sore point for some music executives is the fact that Apple generates much more money selling iPod players than it does as a digital music retailer, leading to complaints that Mr. Jobs is profiting more from tracks downloaded to fill the 21 million iPods sold so far than are the labels that produced the recordings.

Andrew Lack, the chief executive of Sony BMG, discussed the state of the overall digital market at a media and technology conference three months ago and said that Mr. Jobs “has got two revenue streams: one from our music and one from the sale of his iPods.”

“I’ve got one revenue stream,” Mr. Lack said, joking that it would require a medical professional to locate. “It’s not pretty.”

No, it’s not. But why blame that on Jobs?

Race to the $100 Laptop

kids outside holding laptops over their heads

I’m seeing two different approaches to the $100 laptop. MIT is starting from scratch and — as you would guess — focusing on technology to simplify the current platform:

…we will get the fat out of the systems. Today’s laptops have become obese. Two-thirds of their software is used to manage the other third, which mostly does the same functions nine different ways.

Dell aims to get there by — as you would guess — pushing the limits of operational efficiency. Dell currently sells a laptop for $560 and a desktop for $299, so the $100 price point isn’t that far away.

In both cases, an organization is using a core competency to achieve a goal. But in both cases I wonder if the edge competencies are reversed. It seems the actual costs of Dell’s computers are pretty low and some ruthless efficiency in (MIT’s goal of) getting them distributed to children in developing countries is needed. On the other hand, we all suffer from needlessly complex laptops and MIT’s work should be championed by Dell.

Published
Categorized as Hardware

Linking to the New York Times website

I just discovered two techniques for increasing your online enjoyment of the lovely New York Times:

  1. From blogs, links can lead behind the pay wall by creating a weblog-safe link (thanks Jason)
  2. If you live here and have a library card, you can access the newspaper’s archives back to 2000 — as well as the WSJ, Washington Post, company data, and a whole lot more through the public library’s Novel system
Published
Categorized as Blogs

Programming language design

For some reason I’m fascinated by programming language design. One reason is that innovation can happen at the tools level, and the tools that fuel software are undeniably important.

In the hands of a great author, writing on this topic weaves together the technical, the social and the personal forces at work. One of my favorites is Worse is Better, an analogy that applies beyond programming languages. Another is Paul Graham and his work on Arc.

In The Periodic Table, Primo Levi tells a story that happened when he was working in a varnish factory. He was a chemist, and he was fascinated by the fact that the varnish recipe included a raw onion. What could it be for? No one knew; it was just part of the recipe. So he investigated, and eventually discovered that they had started throwing the onion in years ago to test the temperature of the varnish: if it was hot enough, the onion would fry.

We’re going to try not to include any onions in Arc

An exciting part about Graham’s work is that he starts by admitting Unix/C has won. Then he proceeds to set his goal even higher. This is the spirit of design, of always turning whatever situation you have now into something even better.

New: comments on this blog

Those of you reading this via RSS — 2 out of 3 of you — can now come to the site and post your comments. I became convinced that the emerging practice of applying design thinking to business should be a conversation to hasten progress, so I’ve opened up my blog to discussion. Hope to hear what you have to say.

Published
Categorized as Blogs

metacool is itself cool

Diego Rodriguez — instructor at Stanford’s d.school — has a blog called metacool that’s the product of an engineering + MBA educated brain, definitely worth a look.

For example, he discusses Nike’s Considered line of shoes:

Considered shoes generate 63% less waste in manufacturing than a typical Nike design.  The use of solvents has been cut by 80%.  And a stunning 37% less energy is required to create a pair of shoes. Is Considered a perfect example of green design?  No, but when was the last time anyone did anything to perfection?  I’m just happy to see a big, public company like Nike — with everything to lose, and not so much to gain — take a leadership role in trying to forge a new market space for environmentally friendly, socially relevant products.  This is a wonderful first step.

I think green products will soon hit a tipping point, making Nike’s gamble pay off big. More on this in a future post.