Check out this webcast/interview I’ve done for arvetica (the company I work for) on how (traditional) companies can learn about innovation from the computer & video game industry.
Nicolas highlights three major practices/processes which are common in the game industry and lead to innovation:
Check out the webcast/video on arvetica’s blog!
I’ve been silent for a while because I explored Second Life….For those who don’t know what it is: it’s a parallel virtual world that you can dive into in the form of an avatar (see wikipedia definition). Today, for example, I was at the virtual World Economic Forum WEF to listen to EasyJet founder.
Various businesses have established a presence there, such as IBM, Adidas, Reuters, Toyota (see video below for the Scion that was launched in Second Life) etc.
Because it’s quite a hot phenomena we are organizing a short free presentation at arvetica on March 1, 2007 to discuss what companies may get out of Second Life. Register if you’re in Geneva. We are also hosting a workshop at the LIFT conference on February 7 in the afternoon. However, most important: I will later announce a 2-day immersion workshop at arvetica where business people and marketers can really look into the potential of Second Life. Contact me if you want more info or pre-reserve for the limited seats…
As many of you know, the video gaming market is a multi-billion dollar business. Video consoles, which is a big chunk of that market, are currently dominated by two giants: Sony with its Playstation (PS1&2 and soon PS3) and Microsoft with its Xbox (Xbox and Xbox360). Nintendo, however, a distant third actor is raising eyebrows with its recent introduction of the Wii. This is particularly interesting from a strategy point of view because it’s a wonderful example of a so-called blue ocean strategy (a concept introduced by Kim & Mauborgne which I mentioned here and here). The graphic below (done with the following Blue Ocean Excel template) illustrates Nintendo’s Wii strategy and is almost self-explanatory…
The graphic illustrates the attributes of Sony’s, Microsoft’s and Nintendo’s latest consoles. What does it show? Jeremy Fain from the Tech IT Easy blog puts it nicely:
Wii doesn’t intend to be a best-of-breed videogame console. Nintendo is trying to bring non core gamers back to gaming [..] with the Wii. Wii won’t equal video game but Wii aims at meaning fun. Nintendo focuses on the consumer’s feeling rather than its product. (-> read post…)
The attributes in the graphic show that Nintendo is competing on completely different terms than Sony and Microsoft. The Wii is cheap, has no Hard Disk, no DVD, no Dolby 5.1, weak connectivity, comparatively low processor speed, but blows minds away with its innovative motion control stick (check out the demo video below). The stick integrates the movements of a player directly into the video game (think tennis, golf, sword fights, …). With this feature Nintendo opens up the console world to a completely new public of untapped non-gamers…
All of the above describes nothing else than the characteristics of a blue ocean strategy:
These two characteristics defy the conventional wisdom that you should either go for cost leadership or differentiation but not for both (remember Michael Porter…). In Kim & Mauborgne’s terms this means that while Microsoft’s Xbox and Sony’s PS3 are fighting each other fiercly in a red ocean (i.e. the existing market), Nintendo’s Wii is calmly sailing in the blue ocean it created for itself (i.e. a new market)… By the way, Switzerland is not innocent as to the creation of this blue ocean: An Italy-based division of STMicroelectronics, which is headquartered in Geneva, Switzerland, has put forward to Nintendo the integration of motion sensors into their consoles.
Finally, if your unfamiliar with Nintendo Wii’s (amazing) motion control, check out this video:
Disclosure: I haven’t thoroughly assessed the detailed product specs of the three consoles. Gamers might want to correct my graphic 
I’ve scaled down on reading blogs recently, but I still follow some blogs and people in the blogosphere… Here a selection of the ones I like most:
It’s a great source to understand where IBM is heading – interesting material. I’d love to have a chat with him.It’s quite funny that I tried to convince a number of other friends to start blogging last year (‘06)… Actually the motivation was a bit egoistic: It’s the most convenient way for me to follow their latest innovative thinking. Some have actually followed my advice, like Gerry Schnyder who is currently in London working on his PhD about comparative corporate governance.
At arvetica we also set-up a new blog (which is actually our company website!!) and I’ll be writing there more and more in the future…
(disclosure: I don’t know the real source of the above image which represents the blogosphere… Sorry if it’s breach to anyone’s Intellectual Property Rights (IPRs))
Yesterday freelance writer Clint Witchalls interviewed me on business models. The chat was quite fun and Clint asked some good questions. Among many other things we came across the following topics:
A last thing I believe is terribly important to understand, but which we haven’t discussed in the interview, is the difficulty to classify certain business models among an industry sector. In which industry would you say does Apple’s iPod/iTunes initiative operate? Should we classify Apple’s business model in the hardware industry, software industry, music industry or even design industry?
What is disturbing is not so much the fact that we can’t classify their business model, but that analysts and consultants still largely use methods referring to “industry”, while the concept is becoming outdated… Michael Porter’s five forces model is such an example. I predict that in the future we will see more and more business models that will be impossible to be classified in specific industries. This means that methods of industry analysis will be of less and less value.
Today’s FT ran an interesting article about Alfa Romeo, the Italian carmaker. The story makes a nice showcase for outlining how important it is to align the different building blocks of one’s business model.
Alfa’s cars have a very distinctive style and are known for their high-quality workmanship. However, as the FT article points out, Alfa has a tarnished reputation for distribution and customer care. The former, car perception, is high-end while the latter, car and distribution, has been handled carelessly. Both are completely unaligned. It is as if Alfa Romeo thought it’s sufficient to through a nice car model on to the market and success will follow by its own. However, JDPower, a consumer ratings group, has helped Alfa understand that their existing and potential customers had a huge problem with customer care and the way the cars were sold. For example, some dealers
sold the luxury cars alongside cheaper brands, with vehicles crowded into small spaces
and
Potential customers’ expectation of the brand was that it was like Audi or BMW, but it was being sold alongside volume brands
This is clearly a case of unaligned business model building blocks… In my language of describing business models this means that “distribution channel” and “customer relation” are not aligned with the “value proposition” and the “target customers” (as outlined in the slides below). The open question is if Alfa’s managers were unable to understand this or if they were simply sluggish in the execution.
However, today the company is serious about its strategy execution. As the FT outlines, this reorientation is part of a broader turnaround at Fiat, the Italian industrial group that owns Alfa. The initiative has been led by Sergio Marchionne, Fiat’s CEO since ‘04 (by the way, Marchionne is very well known to Swiss business as a turn-around manager…).
Alfa is now taking care about its distribution channel design and is, for instance, reviewing all its UK car dealers to assure a high-end distribution style. They’ve hired SGS, a Swiss auditing company (formerly turned-around by Marchionne) to improve compliance with the required quality and in case necessary replace existing car dealers with new ones.
An example of this new channel design is Alfa’s collaboration with HR Owen, an upscale chain, whose other brands include Bentley, Rolls-Royce and Ferrari…
