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March 1, 2006

Smart mobs and Chinese consumers: the art of tuangou

How do you get a better price for a consumer good? Well, in China, you show up with a team of a dozen other shoppers and start shouting at the bewildered salesperson, “35% off!” In Chinese, the team haggling process is more formally known as tuangou (“team purchase”), and there’s even a Web site (51tuangou.com) that gathers together consumer buying power for a specific purchase in Shanghai. From the looks of the Chinese-language-only Web site, consumers can band together to buy anything from Queen-sized beds to kitchen cabinets to wedding dresses (!).

Unfortunately, I couldn’t find the link for the Wall Street Journal article by James T. Areddy (“Chinese Consumers Overwhelm Retailers With Team Tactics”), but here’s a brief snippet from the print version of the paper:

“Seller beware: some of China’s 1.3 billion consumers are angling for group discounts. Chinese shoppers have always been known as hard-nosed bargainers. Now, to the dismay of merchants, some have started shopping in teams to haggle for bigger markdowns.

The practice, called tuangou, or team purchase, began in Internet chat rooms, where like-minded consumers hatch plans to buy appliances, furnishings, food, even cars, in bulk. Next, they show up en masse at stores like Suzhou Zhongyi Kitchen Co. to demand discounts.”

February 28, 2006

Dear Economist: Replace the Big Mac Index with the iPod Index

For nearly 20 years, The Economist has taken its gentlemanly jab at American mass culture with the annual rollout of the Big Mac Index. In recent years, The Economist has even created the Tall Latte Index and the Coca-Cola Map to mock Americans and their non-British drinking habits. (Brits, you see, drink tea and not coffee) Granted, the creation of the Big Mac Index in September 1986 was a natural. It gave The Economist the perfect pretext to look down its British nose at those burger-munching, obese Americans while supposedly educating the masses about exchange rate theory. The logic behind “burgernomics” seemed to make sense: after all, McDonald’s has sold more than 1 billion burgers worldwide and is firmly entrenched in nearly every major town – not just in America, but in the world.

For years, the slogan “1 billion served” has been firmly associated with McDonald’s and the Big Mac. (McDonald’s served its 1 billionth burger in 1963, eight years after starting the franchise) Think one billion of anything, and the first thing you think of is burgers. Until now. Something very interesting happened last week – the iTunes Music Store just sold its 1 billionth song. Since the iTunes Music Store only opened for business in April 2003, that amounts to 11.2 downloads per second, 673 downloads per minute, 40,375 downloads per hour, 968,992 downloads per day and 6.78 million per week.

Those stunning sales figures,, of course, leads to the following suggestion: Instead of tabulating each year a Big Mac Index to measure Purchasing Power Parity (which, by the way, most economists now believe is slightly imperfect) why doesn’t The Economist create something that truly matters: the iPod Index. (NOTE: Purchasing Power Parity states that exchange rates should adjust to equalize the cost of a basket of goods and services, wherever it is bought around the world. In economics, after all, there is no such thing as a free lunch…) Similar to the Big Mac Index, the iPod Index would measure the cost (in local currency) of an iPod in various countries of the world. The near-ubiquitous iPod, then, would replace the near-ubiquitous burger as the real estimate of PPP (Purchasing Power Parity). After all, type in “one billion served” on Google, and the first two pages are dedicated to iPod-related stories.

The bottom line: instead of measuring PPP with burgers, Starbucks coffee and Coca-Cola, why not use a hip gadget like the iPod? Any other ideas of what a hypothetical iPod Index might look like?

To get you started, Mad Dog in the Fog has already scoured through Apple iTunes press releases from the past three years to develop some data points for iTunes sales:

“Apple recently announced 1 billion songs purchased on iTunes. I dug around the Apple press releases and tracked down some of the major iTunes milestones over the last few years. It’s amazing that there have been 500 million songs purchased since July 2005. That’s 500 million songs purchased in 7 months for an average of 71 million songs purchased per month!”

The result was a graph that looks like this:

The result was a graph that looks like this:

[iTunes graph: Mad Dog in the Fog]

February 20, 2006

How to manage a maverick: eight tips from the front lines

Over at Computerworld, Mary K. Pratt shares eight tips for dealing with mavericks in the workplace. Most “how-to” management pieces focus on how to make a workforce more innovative. What if, though, the very people who are “innovative” within your organization are also difficult to manage? Managing a maverick is different from managing other workers since mavericks are, by very definition, “nonconformists”:

“They’re passionate about their work; creative, curious and energetic; willing to take risks; unafraid to stand alone or fight for an unpopular position; evangelical in their passion for change; and at once insightful and annoying. Mavericks provide essential reality checks. Because they may refuse to follow a process they consider stupid, mavericks might be described as complainers, irritants and dissidents. But smart managers recognize their value. Mavericks help people think differently, and they do it by just showing up.”

With that in mind, here are eight tips on how to work with the mavericks within your organization:

(1) Engage them. Draw out their ideas, listen to their questions, and provide them with the information they need to fully understand initiatives rather than brushing them off.

(2) Coach them. Help mavericks learn to navigate office politics and present ideas in ways that are appropriate for the company’s culture.

(3) Enlist peers. Ask a colleague to do some peer mentoring.

(4) Work with their strengths. Give mavericks “their own place to play” – a role where their restlessness and skepticism can be channeled to good use, such as working on a team that’s dealing with an intractable problem.

(5) Give them space. Mavericks need challenges and the leeway to meet them.

(6) Beware of the Peter Principle. Mavericks often find that the demands of management don’t mesh with their style.

(7) Show respect. Don’t label mavericks as complainers or troublemakers. Don’t ignore them, either, by passing them over when making assignments to key committees and the like.

(8) Draw the line. Decide how much maverick behavior is too much.

Just a reminder that there’s less than a week to go before the Design 2.0 conference in New York City. The event, arranged by design supersite Core77, has assembled an all-star panel of design thinkers to discuss the intersection of design, innovation and strategy. What exactly is Design 2.0? Well, strategic designer Emily Chang has a great blog post describing the key elements of the Design 2.0 philosophy, which can be summarized by words such as intuitive, social, minimal, transparent, useful and fun. Google, of course, is one company that knowingly or unknowingly has embraced many of these Design 2.0 ideas. After all, the company’s search products are intuitive, social, minimal, useful and fun.

That’s why it’s interesting to see that one of the panelists at the Design 2.0 event will be Marissa Mayer of Google, who leads the product management efforts on the company’s primary search products. According to Emily Chang, the Design 2.0 minimalism embraced by Google is part of a larger trend on the Internet:

“Perhaps it’s the success of Google’s search page, or our collective reaction against the flashing banner ads and intrusive popups of the last decade, or the Jonathan Ives effect, but it’s as though web users, designers, and developers alike have all agreed to a new de facto standard of Mies van der Rohe’s “less is more.”

In the arts, minimalism can be defined as “reducing the concept or idea to its simplest form.” Minimalism strips away our concerns for the superfluous and let’s us focus on what’s important. It also let’s us imagine the possibilities by giving us the environmental freedom to feel in control and comfortable – a psychological state that makes it easy to explore and to create. Minimalism in design allows patterns to emerge because people are comfortable with the experience…

Natural. Expressive. It sounds simple, almost elementary, but how do you achieve an experience that’s both intuitive and exploratory to your audience, particularly when all of us have such subjective and unique perspectives? First, by focusing on designing experiences and then, by providing areas for people to express themselves.”

February 24, 2006

The rise of the cafe start-up

In a guest blog post over at GigaOm, Jackson West of SFist writes about the continued emergence of an Internet start-up culture in Wi-Fi-equipped cafes around San Francisco. (While Jackson puts an “indie” spin on the trend by specifically NOT mentioning Starbucks, the overwhelming anecdotal evidence here in New York City and other cities suggests that the corner Starbucks – no matter how unhip – is also a potential hotspot of entrepreneurial activity.) Rather than work alone in lofts or garages, Web 2.0 entrepreneurs would rather seek out social interaction in “third places” like Internet cafes:

“Forget Palo Alto garages – San Francisco coffee shops are where to get your startup off the ground. Internet cafes are emerging as an important place to get work done, hold meetings and network. Since writers, designers, developers and anyone else who can work from their laptop are going to show up, you can even recruit talent, publicize your project and even demo your product for potential users and investors.”

IFTF’s Future Now blog then picks up this strand of thought with a post called “Cafes, the New Garages?”:

I think this won’t come as news to many, but the notion that cafes can legitimately be thought of as business places (and not just to sell coffee, but to conduct a wide variety of businesses) has a lovely early modern quality about it At the same time, it reinforces a point that many smart writers about the relationship between the Internet and physical places have made: Web access (and especially wireless access) doesn’t make place irrelevant, it just changes the criteria people use for deciding which places they’re going to work in. In an interview we conducted a couple months ago, MIT professor William Mitchell explained how unwiring Internet access and other facilities was changing both the ways users think about workspace, and the opportunities architects have to design interesting spaces. [...]

The shift from garages to cafes reflects not a sense that you can completely do away with offices or meeting-spaces, but a shift in preference away from spaces that are privately owned and isolated, to ones that are more public, that provide services, and offer the potential for fruitful random encounters and social interactions.”

[NOTE: For anyone dropping by the San Francisco area, Jackson West also provides a short-list of the best Internet cafes for networking and meeting other like-minded individuals: "Any one of them will keep you fueled with caffeine, connected online and give you a chance to network with fellow travellers."]

February 9, 2006

Invasion of the alien idea snatchers

In its daily scan of interesting innovation stories, Innovation Weblog points to a blog post from Oren Harari, co-author of the book Jumping the Curve. In an essay called Team Up With Aliens, Harari points out that sometimes the best way to “out-innovate your competitors and delight your customers” is to look outside your industry and collaborate with outsiders (i.e. “aliens”):

“If you want to break from the pack, doesn’t it make sense to seek ideas and energies from outside the pack? One of the best ways to do that is to learn from people and organizations who have thrived outside your industry, particularly those who are doing things that would be considered unthinkable and insane in your industry.

If you want to improve assembly line conversion in your factories, for example, you could benchmark fellow manufacturers in your industry and get some marginally useful, conventional ideas. Or you could do what General Mills did a few years ago, which is send a number of its factory teams to NASCAR races to benchmark pit crews in action. The teams came back and ultimately reduced the time to switch an assembly line from 5 hours to 25 minutes.

If you run a cement company and want to show quantum improvement in speed and on-time delivery, you could visit fellow cement manufacturers and get a familiar lesson in accepted industry practices. Or you could do what Cemex, the most profitable cement company in the world, did a few years ago to turbo-charge speed and delivery . CEO Lorenzo Zambrano sent a number of teams to Houston, to figure out how Houston’s emergency 911 crews does it, and to Memphis, to figure out how how FedEx does it.”

January 26, 2006

Are librarians and educators a disruptive influence?

Looks like there’s a counter-revolt of sorts going on in the world of education, as librarians and educators – tired of being marginalized by technology (i.e. Google) – are fighting back. In Ohio, for example, librarians and educators are banding together to come up with a comprehensive strategy of disruptive innovation. The Disruptive Library Technology Jester has even posted an open letter to disruptive innovation guru Clayton Christensen in the hopes of sparking debate. The letter is noteworthy for another reason – it includes a generous helping of Internet jargon like “truly disruptive innovations” and “loosely coupled organizations.” The Disruptive Library Technology Jester is a young blog (established in December 2005), but it looks like there’s a lot of energy here. The tagline for the blog is “We’re Disrupted, We’re Libraries, and We’re Not Going to Take It Anymore…”

Then, over at The Shifted Librarian, there’s extensive commentary about an extreme makeover for libraries. There are a lot of interesting ideas here, including the notion from Omar Wasow (“Library 2.0″) that “technology hollows out real estate.” As an example, consider what ATMs did to bank branches. Does anybody actually go inside a bank anymore, unless they have to? The same thing, apparently, has happened to libraries. With Google available 24/7, does anybody actually go inside libraries anymore – unless they have to? The answer is: yes. But only if libraries focus on what has made them so important for hundreds of years: they are “temples of thought” and “public parks for the brain” that transform as much as educate.

[image: Libarian Action Figure via Flickr]

January 25, 2006

Innovation from Italy

Earlier this week, Italian journalist Emil Abirascid alerted me to an interesting new Italian innovation blog that covers a lot of ground: Innovazione. The logo for this Italian innovation blog is “idee, ricerca, tecnologie… il nuovo si fa strada.” I ran this through the Google (Italian -> English) translator and it came out as something like “Ideas, search, technologies… the new one makes road.” (Aargh! can’t anyone make a decent online language translation tool?) Anyway, there’s a recent post from IBM’s Irving Wladawsky-Berger about the Barcelona Supercomputing Center as well as a very diverse blogroll – links to design, fashion, cinema, journalism, science and religion in addition to technology.

[image: "Innovazione," by Umberto Santucci]