Sears Could Disrupt Throwaway Tech Culture

It's funny the timing of this article.  I was just talking with my wife about Sears and how it seems they have no future, it's only a matter of time before the Sears retail store as we know it will no longer exist.  Then to read a headline about Sears disrupting?  Heck ya I'm interested.

The company has launched a Seattle office, and recruited retail tech execs to help it get a handle on the data it has amassed from the 40,000+ daily service queries its Home Services group collects on washing machines, refrigerators, and other appliances. It turns out that the industry average is that about 1 out of every 4 customers don’t get their appliance woes fixed on the first visit. 

“Each truck carries about 400 parts, yet those annual service calls require something like 168,000 different parts,” explained Arun Arora, the group’s president. “We’d have to have our 7,000 certified technicians driving semis around to anticipate them.”

"Big data" has so many applications and to see Sears trying to disrupt in a way that doesn't make headlines is impressive.  This kind of disruption, even though on the surface looks like a cost-savings initiative, can revolutionize the service of appliances.  Why does that matter?  Because loyalty is the name of the game.  If they make the experience of owning a machine better, even when it is getting old and needs some new life breathed into it, they can increase their base of loyal active customers.  

The more customers that are active with a company the more they will make.  If Sears can increase the number of loyal customers by offering a superior customer experience of ownership, they can drive more sales in other areas.  It is the process of rebuilding trust with a brand.  If I knew buying an oven will have a longer shelf-life and the company where I was buying it can make that happen, then it makes where I buy more interesting.  

So many times in the retail space it comes down to price.  Everyone sells ovens and mostly from the same manufacturers, so there is very little to differentiate.  The easiest rode to differentiation is price.  The problem is when competing on price, the business can never win.  They are not cultivating loyal customers, in fact they are probably selling to the exact wrong customer.  If a customer is only going to choose on price, they are by definition not loyal customers.  If Sears can differentiate beyond price and experience in the stores, they can grow their loyal database.  That's a big win.   

How the U.S. Airline Industry Found Its Edge or Demise?

So what happened? The turnaround can’t be attributed to a bold, Da Vinci-esque initiative such as new carbon fiber aircraft, the pioneering of new markets or even low-cost innovation. Rather, it was the result of something far more modest: the slicing of airlines’ base offerings into customizable “options and extras.” The most famous of these options was checked-bag fees, but most of the recent innovations have focused on “upselling” passengers into an improved experience (e.g., selling fast-track boarding, lounge-access, extra leg room and others).  

This is one of the most interesting articles I have read from Harvard Business Review.  For one, I can't disagree more with the premise.  The premise of the article is that charging fees is a good thing for businesses.  Like many businesses in the "what have you done for me lately" quarterly earnings craze, the airlines have gone with the strategy of making bad profit.  

What's bad profit do you ask?  It's profit that erodes the long term profitability of the business.  Not all profit is created equal.  The airlines have sacrificed customer satisfaction and loyalty for short term profit.  The article argues it saved the industry and these are innovative.  I argue there is nothing innovative about this strategy.  It is lazy. 

As part of this shift, airlines realized that some people didn’t need everything that was included in the sale of a standard ticket; this opened the door to unbundling the “one size fits all” offer — and led to the introduction of fees for checked bags. Many business travelers never check a bag but historically subsidized the substantial cost for leisure travelers who did. Today, those who need the option pay for it. Many passengers grumbled, but the impact has been undeniably positive for the industry. Last year bag fees alone generated $3.6 billion in revenue in the U.S. Imagine where the industry would be without this?

What?  Unbundling?  They didn't unbundle, they added on fees.  If they were truly unbundling, that business traveler referenced above would start paying less for their ticket.  Instead, they kept prices the same or even raised them and tacked on these fees.  I can't comprehend this thought process. 

What really has saved the airline business?  From the outside looking in it seems they have become smarter about their routes.  They have cancelled many unnecessary flights, because most flights I go on are completely full.  That wasn't the case before, and it's not because the customers are excited about paying for baggage fees. 

The airlines seem to have become better at yielding their prices.  I don't know if it was a big practice in the past, but the airlines seem to be much more strategic about their pricing model.   

Articles like these make me wonder what we are learning about customer service.  These strategies allow for an upstart competitor to come in and take major share, think Southwest.  Southwest is growing faster than ever and that is because they don't nickel and dime their customers.  Maybe the other airlines should find their "true innovation". 

To Lead is to Decide

To Lead Is To Decide. Making change decisions is a cognitively and emotionally taxing activity that the average person will go to great lengths to avoid.

How true.  It is so easy to add on another initiative, but it is very hard to take one away.  In this day and age where so many companies are trying to make every dollar they can, it takes amazing restraint and leadership to forego money on the table for a strategy that is more sound for the long run.

But the one thing they all seem to have in common — the one thing that distinguishes them from ordinary people — is their willingness to decide when others could not.

Why Apple needs to innovate faster

ZDNet’s most recent Great Debate raised the question whether Apple needs to innovate more rapidly. The answer is a definite “yes” and here’s why.

I love when writers and analysts talk about other peoples businesses and come up with blanket statements like this.  What's even more amazing is to use the stock prices of two companies as your argument.   

Wall Street is the killer of innovation.  Innovation happens over time, you can't rush it.  It happens through iterations.  If Apple were to have hurried their innovation in the past they would have released the iPad first, which would have been a flop because it would have cost much more than it did when they introduced it.  Instead, they took their time and iterated and introduced the iPhone first, which allowed them to build up more buying leverage to reduce prices for the iPad. 

Apple will show us what their next innovation is and analysts and tech writers won't be the ones dictating the timetable. 

Creating Baselines

On Monday Apple introduced a brand new iOS, version 7. While it didn't change the basics of the operating system, it created a new starting point. I call this a baseline. The point in which things will be measured against. The standard if you will.

Baselines are very important to measure your business. I always want to come in to an organization, create a new baseline and innovate from that point. Once innovation has slowed and opportunities start to become scarce, a new baseline must be formed to build the next great iterations. Without the foundation, a house cannot be made.

Apple has created their new foundation on which to build upon. Some don't like it, some love it. In time it will be like second nature and we won't be able to remember when the interface wasn't like this. All companies eventually have to create new baselines, even ones as insanely successful as Apple. This should be embraced, because it takes courage to throw away and start new. The alternative is to slowly fade into mediocrity.

Manage Data with Organizational Structure

Article on who should manage data...​

most people management is actually done in the course of day-in, day-out work, by managers and employees. HR may very well define the semiannual performance review process, provide the needed forms, and make sure it is carried out. But performance assessment is completed by employees and managers.

This last point strikes at the heart of the federated model. Corporate HR sets policy; department HR may modify it in accordance with specific needs; and departments, managers, and employees carry out these policies. Most have a certain degree of latitude in how they do so.

 I am a big proponent of moving data management out of IT.  The HR model is exactly the model that works.  The business is closer to the data and very few IT department can handle the pace of the business when it comes to data management.  IT designs the network, builds the hardware and manages updates, while the business manages the ETL, data model and governance of the data.  

Compromising When Compromise Is Hard

Respect also allows good people to disagree — sometimes vigorously — without animosity. You may be heated in your argument, but you are not irritated with the other person. This is liberating. You can both channel your passion for the work into something constructive. Far from "abandoning your principles," you're both proceeding from a place of deepest conviction.

 A decent article about compromising.  I don't like the word myself.  I think too many times organizations embrace compromise which ends up being the worst of both worlds.  

The quote above is what I believe great organizations do.  Once the organization trusts each other, vigorous debates, on the verge of argument, creates greatness.  Too often compromise is both sides giving up their principles until they meet in the middle.  That doesn't lead to greatness.  Greatness happens when two sides incorporate the best parts of their ideas to crete something that is far superior than meeting in the middle.  The best products I have been involved in have came from trusted partners "going at it" until we came out with something great.  

With The Apple V. Samsung Verdict, Innovation Wins →

...the more important point is that both parties are now incentivized to behave differently. One can even argue that they're now predisposed to innovate like they've never done before.

​I agree completely.  It would be a shame if the smartphone race turned into the refrigerator, or dare I say television industry, when you go into a store and every television and refrigerator look exactly the same.  Smartphones should all be distinct, at least in the operating system.  This way we don't end up with 2 choices where 1 dominates, like Windows vs Mac.   

Apple--which isn't evil no matter how some may think--may press on with its smartphone and tablet UI innovation in an effort to truly distinguish the look and feel of its products in an ever-busier market, conscious that Samsung is nipping at its heels. iOS is getting a little long in the tooth, and now may be the perfect time to spend company time transforming it into the next generation of smartphone OS's.

I sure hope this happens.  If the verdict changes the copying behavior of its competitors, Apple is in a great position to reinvent the greatest invention of our time.  Here's to innovation.

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