Tag Archives: The Procter & Gamble Company

About 1480 days ago Internet and Online Business

Lessons from Web 2.0: Fast Track Innovation Process

Over the last few years, Web 2.0 has evolved to become not only a design paradigm, but also a development methodology that has become synonymous with innovation. Web 2.0 companies are able to innovate rapidly for four simple reasons: Low cost of innovation. You don’t need a bucketful of cash to prototype a Web 2.0 product or launch a Web 2.0 company.  Costs of computing and storage have fallen dramatically, and services like cloud computing virtually eliminate the need for heavy IT infrastructure, reducing fixed costs. Case in point: Y-Combinator, a seed fund that invests an average of just $15,000 per venture, has helped many young companies get their start.  Y-Combinator success stories include Reddit (acquired by Conde Nast) and Zenter (acquired by Google). Rapid bite-sized improvements instead of massive launches. The software that powers the Web services can be updated constantly, because it’s delivered over the Web. As a result, Web 2.0 companies often upgrade their services every day or every week, launching new features and fixing bugs. Ease of “measuring” user interactions with the service. Web services have the advantage that user interaction with the site or the service can be measured in a very precise manner. It’s easy to record the time spent by an average user on the site, the number of page views they saw, the trail of clicks and pages that helped them complete their task, and a lot of other such data. Because everything can be measured, Web companies have developed a philosophy of testing and measuring a lot more and guessing a lot less. Before any feature is launched to the entire audience of a site, it’s often tested on a small portion of the user base. An open innovation model. Web 2.0 companies have realized that some of their most innovative ideas might not come from within the company. Using Web-service application programming interfaces (APIs), they have exposed some of their most precious data to outside developers who can build innovative applications. Real-time search, one of the most used applications on Twitter, was developed by a company called Summize, using Twitter’s API. Twitter later acquired Summize. Taken together, all these methods are geared towards a new model of innovation — one that emphasizes rapid experimentation and serendipitous discovery. Since every idea is cheap and quick to try out with real users, and the results are easily measurable, Web 2.0 companies get to road test several ideas without spending excessive amounts of time trying to prioritize between them. Similarly, by allowing outside developers to use the company’s data to create applications without any restrictions, Web 2.0 companies are in effect launching hundreds of experiments simultaneously. This throws the traditional model of product development and innovation on its head. In the old days, companies performed exhaustive (and costly!) analysis to determine which one or two ideas would be most likely to succeed, and then invested accordingly. The Web 2.0 model makes it possible to experiment with a lot of ideas, without investing a lot of upfront cash or forcing assumptions about which idea will deliver the biggest upside. This new model is great for a world in which consumer preferences are difficult to predict and change rapidly. While your business might not have the same natural advantages as a Web 2.0 company, with a little bit of redesign of your processes, you could use elements of the same philosophy to fast-track your innovation. Here are some tips to get you started: Lower your cost of new product development. Be on the lookout for opportunities to reduce your costs of new product development. Using technology for knowledge management and outsourcing to low cost countries are among some of the ideas that innovative companies use. For example, in the electronics industry, Original Design Manufacturers (ODM) companies based in low cost countries like China have emerged as choice partners for prototyping and launching new designs. Create experiments that lead to continuous bite-sized improvements.If any aspect of your offering is a service, you can keep innovating by adding small features or by improving the workflow. In order to do that, you need to build a test-bed for trying out lots of experimental ideas. A few years ago, Stefan Thomke, a professor at Harvard Business School, published an insightful study detailing how Bank of America turned its branches into “Service Development Laboratories.” For instance, Thomke talks about an experiment designed to solve the problem that users perceived their wait times to be longer than the actual time. In order to remove the perception, the experiment involved testing user perception when televisions were installed over teller booths and comparing that with a standard branch without televisions. By measuring the improvement in customer satisfaction ratings with the television, the team was able to develop a case for wider rollout to some of the bigger branches of BofA. This is a great example of an experimental setup that leads to constant improvement in the quality of service. Measure everything and create feedback loops. You should aim to find opportunities for measuring user interaction with your product or service directly at the point of interaction, without relying on “marketing surveys.” Harrah’s is a great example of a company that invested in business intelligence solutions around its loyalty program, and made all of its marketing efforts highly data driven. Whenever a customer conducts a transaction using their Harrah’s card, the information is transmitted to a database, and used in a variety of ways to target the customer. The success of marketing campaigns is also measured using this data, and the campaigns are optimized accordingly. Soon after the program was launched a few years ago, its success made Harrah’s the most profitable company in its sector. Open up the innovation process to others and plug in with the ecosystem.  In his book Wikinomics, Don Tapscott talks about how Goldcorp Inc., a struggling Toronto-based gold mine, opened up its sensitive geological data to the public to help the company get accurate estimates of the location of gold in its mines in Red Lake, Ontario. Within weeks, solutions poured in from all kinds of unexpected quarters, and identified more than 110 targets, half of them not previously identified by the company, with 80 percent of the new targets yielding substantial amounts of gold. In another example, Proctor & Gamble has developed a program called “Connect and Develop” with a goal of having 50 percent of its new products come from outside the company’s labs. The program also opens up access to P&G’s innovation assets. On the other hand, if you can’t find good ways of exposing your own data, you could instead think of using the data and APIs exposed by others — for example, Pure Digital, the manufacturers of the Flip Video Cameras, used YouTube’s APIs to make it easy to upload videos directly into YouTube, and in the process out-innovated the competition. It’s clear through all these examples that the new model of innovation is for everyone, and not just Web 2.0 companies. Find applications for these ideas in your business, and use them to change the world for the better. Vijay Chittoor is the director of product panagement at Kosmix, an exploration engine that offers a 360 degree view of any topic on the Web.  A former McKinsey consultant, Vijay is a graduate of Harvard Business School and the Indian Institute of Technology, Bombay.  He shares his thoughts on technology at his blog..

About 4888 days ago E-Commerce

Upstarts: Convenience Cuisine

What’s Cooking On-line? If you’re not sure where your next meal is coming from, you might try the Internet The Web’s next killer app? Think arugula. A host of entrepreneurs are convinced that, just as the on-line arena has changed the way we communicate, shop, and invest, it will change the way we seek sustenance as well. “People have to eat three times a day, but even on the brink of the new millennium, nobody has found a way to get more free time,” remarks David Hodess, the 37-year-old CEO and cofounder of Cooking.com, one of the new players catering to today’s time-starved — and just plain starved — consumers. Along with former Disney Store executive Hodess, refugees from Microsoft and PepsiCo, as well as such high-profile venture capitalists as John Doerr, are staking their money and their good names on new sites that promise to point and click consumers to their next meal. What to have for dinner tonight? The next five nights? That dinner party you’ve scheduled for Saturday? Both Hodess’s Cooking.com, in Santa Monica, Calif., and another on-line start-up, Tavolo, in San Rafael, Calif., offer thousands of gourmet products and wares that can help answer those questions. Each site is financed with $50 million in seed funds and is as much an information resource as a culinary E-tailer. Click on either site’s weekly menu planner for week-at-a-glance menu suggestions, with printer-friendly recipes. In addition, both sites offer various foodie bells and whistles. Tavolo’s site (www.tavolo.com) has features that convert recipes from standard to metric measurements, tailor recipes to the number of people being served, and create a shopping list based on your weekly menu. Cooking.com has an on-line glossary for boning up on the history of cognac or determining the precise definition of a zapotilla. But customizable recipes and on-line glossaries are just the marketing bait. What these sites really want to do is sell you stuff. “Providing a free recipe certainly has value for the consumer,” says Ken Cassar, an electronic-commerce analyst with Jupiter Communications, an Internet consulting company in New York City. “But it’s also a great opportunity to sell mortars and pestles.” As Tavolo founder and CEO Kevin Applebaum is fond of noting, with $55 billion in total sales (both on-line and on terra firma), the market for cooking products and gourmet foods represents a huge category. The leading national retailer of cooking supplies — Williams-Sonoma — has a market share of less than 1%. But Applebaum, who honed his marketing skills at PepsiCo and Procter & Gamble, also knows he’s not alone in spotting cooking sites’ potential. Numerous national retailers, from Macy’s to the aforementioned Williams-Sonoma, are also chasing the ever-expanding on-line opportunity. So is the ubiquitous Martha Stewart, whose Web site, launched in 1997, is in the process of receiving a $25-million tune-up, courtesy of new investor Kleiner Perkins and its general partner, John Doerr. The real challenge for all the gourmet sites, says another Jupiter Communications analyst, Michael May, will be to get the people who purchase gourmet food and wares on-line to go from buying gifts to buying for themselves. The majority of the $200 million in on-line sales of small appliances and gourmet-food items last year occurred during the fourth quarter, for holiday gifts, notes May. Arugula-artichoke-with-roasted-garlic pesto pasta sauce may make for a terrific gift, but it isn’t what people are buying for their own dinner tables — at least not tonight. Cyberconsumption Food and kitchen supplies may not be the biggest on-line shopping category at the moment (books currently hold that honor), but according to Jupiter Communications, they’re where the growth will be between now and 2003. Odds are, Peapod and its ilk will eventually outpace their Amazonian counterparts. Projected on-line consumer spending, by category 1999 2003 % change (in billions) Groceries $0.2 $7.5 3,650% Housewares $0.1 $1.5 1,400% Specialty gifts* $0.1 $1.0 900% Music $0.3 $2.6 766% Apparel $0.8 $6.7 738% Videos $0.2 $1.1 450% Toys $0.3 $1.6 433% Electronics $0.4 $2.1 425% Flowers $0.2 $0.8 300% Books $1.3 $4.9 278% *Gourmet food makes up a significant percentage of this category. Source: Online Consumer Spending Forecast, Jupiter Communications, September 1999. Party of 10? Click Here Sure, much of the on-line cooking sector caters to aspiring chefs. But what if you and the kitchen aren’t on speaking terms? And you happen to like it that way? Take heart. A crop of new sites seek to gratify the pantry-phobic as well. Feel like takeout tonight? San Francisco-based Food.com offers on-line ordering — and, more important, local delivery — from more than 13,000 restaurants nationwide. Feeding your face is merely a matter of entering your zip code and navigating menu offerings. Since restaurants are notoriously low-tech, the company’s server in Seattle translates on-line orders into a fax or a phone call, which is then sent to participating eateries, a service for which Food.com reaps a $400 setup fee, a $50-a-month retainer, and 5% of each order. For those who’d rather dine out, at least two new companies offer on-line reservations. Both foodline.com, in New York City, and OpenTable.com, in San Francisco, are attempting to replace the traditional phone-and-paper-based restaurant-reservation system with a Web-based one. They charge participating restaurants about $200 a month in service and transaction fees (and in OpenTable.com’s case, a $1,000 setup fee). Currently serving a handful of cities, both plan to be nationwide and to ultimately link their service directly into the restaurants’ individual point-of-sale systems. They also hope to personalize the diner’s experience. “Imagine being able to remember that Mr. Jones is allergic to shellfish or sending a promotional E-mail to your top 100 August diners,” rhapsodizes former lawyer Paul Lightfoot, Foodline.com’s 29-year-old CEO. CookExpress.com, launched in January 1999, offers an on-line option that’s between cooking from scratch and dining out: a gourmet, ready-to-cook meal sent to your home by FedEx. Founder Darby Williams, 46 — another Microsoft escapee — calls CookExpress.com a “smarter way to cook.” Three-part meals (for example, roasted salmon with herb-caper sauce, potato-olive salad, and baby arugula), each requiring less than 30 minutes to fix, are delivered to your door (currently just in the Bay Area, where CookExpress.com is based) or by overnight delivery nationwide. Prices range from $8 to $15 per serving, plus a single $4.95 local delivery charge or a shipping cost of $12.95 to $16.95 (based on the number of meals). Yeah, but is the stuff fresh? To mollify those squeamish about the idea of filet mignon that arrived through a delivery service (albeit packed in high-tech gelatin ice), the company has devised a system of labeling each package with color-coded dots that change color if the food hasn’t remained chilled. The packaging also indicates how long the food inside should stay fresh (usually two days). Williams boasts that the company has the potential to be a billion-dollar enterprise within five years. He plans to expand the CookExpress.com same-day service into at least 30 U.S. markets as well as another 6 to 8 markets outside the United States — each worth $25 million in his estimation. He also hopes to add a retail component to his distribution. The logistical complexity of such an undertaking actually appeals to Williams, although, he readily concedes, “had I been in the food business before, I probably never would have done this.” Child in the Wild Julia Child is cooking. So who better to ask about the marriage of virtual and victual reality? And, surprise! She’s all for it, having become Web-friendly and computer-adept herself during her many years of bringing haute cuisine to the masses. Contributing writer Alessandra Bianchi caught up with the culinary grande dame at her home in Cambridge, Mass. Inc.: Do computers and cooking mix? Child: They certainly do. It’s marvelous what computers can do for you when you’re cooking. In fact, A La Carte Communications, the producer of my new television series with Jacques Pepin, has a site, Alacartetv.com, and it has everything on there! You can get TV schedules, cookbooks, even précis of our upcoming shows. Inc.: Do you use a computer in your work? Child: Yes, I have had a computer since they first came out. I use it for writing. I used to do my books in longhand, but word processing is so much easier, for a clear copy and for cleaning up. Recently, I started using the Web to find books — cookbooks from London, for example — and it was a snap. It’s tremendously useful for getting products, too. By clicking on www.fromages.com, you can get real French cheese directly from France, even though you’re a person and not a company! Inc.: But would a serious chef log on to the Web for advice, recipes, and menu planning? Child: Perhaps not now. But eventually, quite possibly. Now it’s fairly primitive, and a good chef would already have a recipe in his or her own library. The cooking information on the Web isn’t always complete or easy to find. For example, if you look up fava beans on a search engine, you don’t get much. But the Web sites are particularly good for beginners. One thing the sites haven’t entirely worked out is how you pay for the research you do. Eventually, it will be wonderful. Inc.: What do you think the development of cooking Web sites says about our culture? Child: I think it shows we’re a progressive culture embracing new ideas. It’s incredible, really. Of course, it helps to know what you’re looking for. But what’s happening on the Web is marvelous for cooking.