Apple iPod Business Model Canvas

This week’s assignment was to do a business model canvas on the Apple iPod.  Of course with my advanced age (or just not being cool) I had to ask my son exactly what an iPod did.  Obviously, I’m not listed in the customer segment of the business model canvas.

Of course, my son knew everything about the iPod and with his help we quickly filled in the business model canvas below.  He knew everything you could do with it, where to get music downloads, what they should cost and how to interface with our PC.  Most importantly he very much recognized the Apple brand name (kudos to Apple marketing).  He new what he was using was (at the time) the latest technology and good quality.

My concern with the current state of the business model canvas is that competition in this area is high and with iPod getting most of their revenues from unit sales the tend line is on the downward slope.  I’m sure that both Apple and several competitors are filling this void in the portable music market with newer products.  What we are seeing today is that the iPod is in the end of the maturity stage of its product life cycle.

Chris

“Strategy and the Internet” by Michael Porter

I think the first thing to keep in mind when reading the article is that Mr. Porter wrote the article in March of 2001 around the time of the Dot.com crash.  He also writes it in response to criticism that his Five Forces analysis is obsolete with the advance of the internet.  Today, 2011, we do not really see why critics even tried to dispute Porter’s Five Forces model.  This is because the market has equalized after the growth and bursting of the Dot.com bubble. 

At the height of the Dot.com era we saw a lot of companies do anything to say that they have a presence on the internet.  Web sites were giving away product to get their foot in the consumer’s door.  Executives were reporting significant revenue growth, but in some cases negative impacts to the bottom line. 

What I like about Porter’s article is that he proves that his original model still works.  On page 5 of the article it shows how the original Five Forces are affected by the internet.  The forces that stand out to me are the lowering of the barriers to entry, the shifting of bargaining power to the customer and the increased threat of substitutions because of the expansion of the market by the internet.

Clearly the advent of the internet has empowered the consumer.  They can instantly check prices, look at reviews of the product by other consumers, search other brands and even look online for other items that could be substitutions.  All without leaving the comfort of their home.  It allows them to efficiently shop saving gas money and time without having to drive all over town comparing prices.

ETR 500 Blog for 9/19/11

As I am going through ETR500 I realize some of the creative things in the past that I’ve seen and never really considered it a business idea.  Most were inventions born out of creativity and necessity.

The main idea that comes to mind was my grandfather’s reverse loader tractor design from the family farm.  What he did was take an old John Deere tractor and reversed the entire engine and transmission on the frame.  The thing to keep in mind was that back then(1970’s) you could still get tractors that were two wheel drive with much smaller front wheels that would steer the tractor only.  The problem with small front wheels is that with a front scoop loader there was a lot of weight on them which was not good for the tractor and made loading chores take longer than you wanted.  Also, the turn radius was never good for tight places like the insides of barns or feed lots.

What my grandfather was able to do was to reverse the engine and transmission on the tractor frame making the back(where the larger drive wheels are) the front.  This allowed more weight in the bucket which was now over the larger axle of the tractor.  Now with the smaller steering axle the back of the tractor he was able to have a tractor with a much smaller turning radius for the tough to get to places on the farm.  He was able to shorten his daily chores by 2 hours a day.

In the end, my grandfather made about 4 of these loaders for the local farmers.  Basically it was the front runner to the skid steer loader you see made by companies like Bobcat today.  He never did patient the idea.  I never remember him wanting to.  He was really just looking for a way to solve a problem on the farm and make his day easier.

ETR 500 Week 4 Blog

Post Office

It’s rare these days of online bill paying and email that I even get to the post office.  It’s even rarer that we put innovation in with a sentence that includes the USPS considering the dire economic condition that it is in.  Of course, since I don’t buy stamps that much I had to use three stamps of different amounts to get to the 44 cents that is required.  I then purchased a book of the ‘forever stamps’.  Now I know that the ‘forever stamps’ are nothing new, but they are innovative(especially for the Post Office).

In the past you could always buy the 1 or 2 cents stamps to make up the difference when postage rates increased.  But in reality it cost the USPS the same to make a 44 cent as a 1 cent stamp so at some price point(and I never could find it on the internet) the USPS looses money when it has to buy low priced stamps.  The ‘forever stamp’ at least it’s loosing money, but is really getting customers to buy a discounted price in advance.

Triz40.com

My thoughts on the www.triz40.com web site are mixed.  I like when someone has gathered good ideas and best practices in one location.  Is this the end all of ideas, no.

Personally, I really enjoy going to new vendors and manufacturers to see how they make things, what processes they have in places, what methods do they use, etc.  I take away what I see and maybe some day will use it or some variation of it.  It’s the CASE method of learning.  Copy And Steal Everything!

One of the easiest kaizen events I did was a copy of how a sister plant made boom sections.  I was at this plant with our Fabrication Plant Manager when I first saw this method.  I never did understand why he never did duplicate the process.  I finally did it 5 years later.  Needless to say that manager is no longer with the company.

Triz40 is really just a check list of what to try in different situations.  It’s a collection of best practices.  I think the difficulty it overcomes is using known technology in different applications that we normally would not consider.  One of the more creative guys here at work solved one of our difficulties in handling long tubes by basically copying a straw dispenser like what you would see at any fast food restaurant. 

Unfortunately, Triz tells us something about our society and how we train our future engineers.  We’ve moved away from simple, creative ideas to having to sort through a data base of ideas.  Are we teaching creativity or are we teaching how to search the internet?

ETR 500 Week 3 Blog - Darwin and the Demon

In my MBA program there have really only been a few things that I’ve taken note of so I never forget.  Most of the items have been around organizational change and how to get a larger, very stagnant organization to improve or adapt to the market.  This week I noted a comment from Geoffrey A. Moore in the article “Darwin and the Demon”.  Moore’s comment that stood out was “To overcome inertia, management must introduce new types of innovation while deconstructing old processes and organizations.”

Being a lean manufacturing person for the last 9 years I’ve done dozens of kaizen events where we created new process, new standard work and better/more efficient ways of doing things.  But once I left the group the changes all but disappeared in some cases and I never could figure out why.  Most of the time I just felt is was the managers of the area not wanting to sustain the improvements or they didn’t want to ‘upset’ their team by making them change even though it was for the betterment of the company.

I reality what I did not do was deconstruct the old process.  It was too easy to have the old system/process still available to use and go back to.  If I had ‘burned the bridge’ to how things used to be I would have had a better chance had sustaining the improvements that had been developed during the kaizen event.  Moore goes on to state “The most common mistake executive teams make when they seek to introduce change is leaving legacy structures untouched.”  I guess if executives do it then I really don’t feel too bad.

Chris

Week 2 Blog - Creative Abrasion and Divergent Pairs

I feel that both my past and especially my current employer would greatly benefit from the implementation of divergent pairs or creative abrasion.  What I see with my current employer is the same thought process that existed here in the 1980’s: this is the way we have always done it.  What this has lead to is the same problems still exist today and unfortunately they have become the norm.  They are accepted as fact, as part of the situation and there is nothing we can do about it. 

Basically, it has pulled us into what is known as the comfortable clone syndrome (http://www.businessweek.com/careers/content/sep2007/ca20070913_359965.htm, retrieved on 9/1/11).   I believe this is more prevalent in engineering organizations where introverted managers who are very technically smart don’t have the leadership and people skills to deal with conflict or disagreements.  This in turns drives them to hire ‘like minded’ people unintentionally inhibiting innovation within the organization.

The current discussion among a small group of us has recently been around the concept of diversity of thought.  This is very similar to the idea of creative abrasion and the intent is to bring new ideas into an old organization.  Like creative abrasion the inclusion of diversity of though will fill in the lack of skills within the organization making optimal use of the organization’s collective talent. 

The difficulty that we see is getting the organization to open up to the different ideas.  This requires that people change, take risks and in some cases put their egos aside.  I would really love to see how Mr. Hirshberg employed divergent pairs and opened up each individual to the ideas of the other.  What training did he provide the pair?  At what point did he interject in the process if it was not working?  What guidance did he give to the groups?  Did any of the pairs come to fisticuffs?