jerryking + upstarts   11

Why big companies squander good ideas
August 6, 2018 | | Financial Times | Tim Harford

.....Organisations from newspapers to oil majors to computing giants have persistently struggled to embrace new technological opportunities, or recognise new technological threats, even when the threats are mortal or the opportunities are golden. Why do some ideas slip out of the grasp of incumbents, then thrive in the hands of upstarts?.....“Disruption describes what happens when firms fail because they keep making the kinds of choices that made them successful,” says Joshua Gans, an economist at the Rotman School of Management in Toronto and author of The Disruption Dilemma. Successful organisations stick to their once-triumphant strategies, even as the world changes around them. More horses! More forage!

Why does this happen? Easily the most famous explanation comes from Clayton Christensen of Harvard Business School. Christensen’s 1997 book, The Innovator’s Dilemma, told a compelling story about how new technologies creep up from below: they are flawed or under-developed at first, so do not appeal to existing customers. Holiday snappers do not want to buy digital cameras the size of a shoebox and the price of a car.

However, Christensen explains, these technologies do find customers: people with unusual needs previously unserved by the incumbent players. The new technology gets better and, one day, the incumbent wakes up to discover that an upstart challenger has several years’ head start — and once-loyal customers have jumped ship.
............Within academia, Rebecca Henderson’s ideas about architectural innovation are widely cited, and she is one of only two academics at Harvard Business School to hold the rank of university professor. The casual observer of business theories, however, is far more likely to have heard of Clayton Christensen, one of the most famous management gurus on the planet.

That may be because Christensen has a single clear theory of how disruption happens — and a solution, too: disrupt yourself before you are disrupted by someone else. That elegance is something we tend to find appealing.

The reality of disruption is less elegant — and harder to solve. Kodak’s position may well have been impossible, no matter what managers had done. If so, the most profitable response would have been to vanish gracefully.

“There are multiple points of failure,” says Henderson. “There’s the problem of reorganisation. There’s the question of whether the new idea will be profitable. There are cognitive filters. There is more than one kind of denial. To navigate successfully through, an incumbent organisation has to overcome every one of these obstacles.”

......Henderson added that the innovators — like Fuller — are often difficult people. “The people who bug large organisations to do new things are socially awkward, slightly fanatical and politically often hopelessly naive.” Another point of failure......The message of Henderson’s work with Kim Clark and others is that when companies or institutions are faced with an organisationally disruptive innovation, there is no simple solution. There may be no solution at all. “I’m sorry it’s not more management guru-ish,” she tells me, laughing. “But anybody who’s really any good at this will tell you that this is hard.”
Apple  blitzkrieg  disruption  ideas  IBM  innovation  iPod  missed_opportunities  hard_work  Rotman  Steve_Jobs  theory  Tim_Harford  upstarts  large_companies  WWI  Xerox  Walkman  Clayton_Christensen  organizational_change  organizational_structure  MPOF  militaries  digital_cameras 
september 2018 by jerryking
Welcome to the New Convenience Store - WSJ
By Jane Black
April 25, 2018

“People will come in and say this isn’t a convenience store,” said Lisa Sedlar, the founder of Green Zebra Grocery. “And I say, ‘Of course it is.’ We are redefining what it means to be a convenience store in America.”

Several trends are driving change, according to research firm the Hartman Group. In the era of fast-casual restaurants, customers of all ages aren’t willing to sacrifice good taste or a pleasant experience for fast and easy. And despite claims of being time-starved, they don’t seem interested in a one-stop shop. Primary shoppers report making more frequent trips to buy food at a range of outlets, from traditional grocery stores to specialty shops: The average number of grocery trips made per purchaser, per month jumped nearly 30% between 2014 and 2017. Finally, snacks—the raison d’être of convenience stores—are supplanting meals. Of all “eating occasions,” 50% are now snacks.
convenience_stores  fast-casual  grocery  one-stop_shop  retailers  small_spaces  snacks  time-strapped  trends  upstarts  urban 
april 2018 by jerryking
Big brands lose pricing power in battle for consumers
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Anna Nicolaou in New York and Scheherazade Daneshkhu in London 2 HOURS AGO

The product manufacturers are being squeezed by the big retailers — notably, Amazon and Walmart, which together sell $600bn worth of goods a year. Walmart has long put pressure on suppliers to cut prices. Amazon’s rise has exacerbated the “deflationary impact”, Société Générale says, creating a “much tougher environment in the US”. After Amazon bought Whole Foods in June, the price war grew more intense in groceries, pushing prices to historic lows that punished producers. 

Brand loyalty has suffered in the process. Equipped with the tools to compare prices online instantly, and bombarded with more choices, shoppers are growing more likely to opt for cheaper and discounted products — particularly in categories such laundry detergent and shampoo. To keep their spots on store shelves, brands are having to accept lower prices......Former Amazon employees say the company’s algorithms scan prices across competitors in real time, automatically adjusting its own so it can offer the lowest price. While most big brands have wholesale agreements with Amazon, third-party sellers are prolific on the site, complicating price control further. A 34oz bottle of P&G’s Pantene Pro-V Shampoo & Conditioner was listed by 10 different sellers — nine of them third parties — on the shopping site.

Amazon’s dominance makes it difficult for brands to abandon the platform, or try to sell directly on their own websites. “You have 200m customers on Amazon. If you walk away, there’s 200m people who are going to just buy from your competitors,” says James Thomson, a former Amazon manager who consults brands. “You’re probably not going to win.”

“This is a pretty dire situation,” he adds. “If brands are worried about meeting quarterly targets, they can’t afford to lose Amazon sales.”

Still, “the retailers have nothing to gain by pushing [consumer products makers] into bankruptcy”,
......Consumer goods companies have responded to the pricing pressures by aggressively cutting costs, led by the “zero-based budgeting” model of 3G Capital,
large_companies  Fortune_500  brands  CPG  pricing  price_wars  shareholder_activism  Amazon  P&G  Nestlé  win_backs  price-cutting  Nelson_Peltz  shifting_tastes  Colgate-Palmolive  upstarts  Unilever  zero-based_budgeting  3G_Capital  e-commerce  Mondelez  Big_Food 
february 2018 by jerryking
Self-Storage Startups Offer Pickup and Delivery - WSJ
By Peter Grant
June 20, 2017

A handful of startups such as Clutter Inc. and MakeSpace Labs Inc. are using the latest in logistics and web technology to offer what they claim is a more efficient and user-friendly way for people to store furniture, keepsakes, sports equipment and other stuff that has been clogging up their basements and attics.

They work differently from the 40,000 or so traditional self-storage facilities that basically offer garages or sheds for customers to fill up as they please. The new competitors pick up and deliver items instead of forcing customers to schlep items to their facilities like the incumbent firms do. The upstarts also photograph what they store, and customers can view their items online and ask for some or all of them back with a click.....Executives at the big self-storage companies, like Public Storage , CubeSmart and Extra Space Storage Inc., say they aren’t worried. They say the startups’ costs of transportation and handling will be so high they won’t be able to price their service competitively.......Ms. Durkay predicted that the big companies will respond if the startups become more competitive. “To the extent that we have a…revolution in the way people are using storage facilities, the management teams may be able to pivot and modify their strategies.”

Mr. Rosen, of MakeSpace, said he isn’t surprised Public Storage failed at what he and others are trying to do. “They’re a real-estate business,” he said. “What do they know about logistics?”......Executives at the startups say they can keep prices low partly by locating facilities in cheaper spaces far away from customers. Traditional facilities generally are just a few miles away from customers’ homes, and this can drive up costs in high-price real-estate markets like New York and San Francisco.

Moving and handling items clearly drives up prices......“It would become cloud storage for your things,” said Brendan Wallace, co-founder of Fifth Wall.
storage  self-storage  logistics  messiness  hoarding  decluttering  urban  upstarts  Second_Closet  subscriptions  physical_assets  artifacts  home-delivery 
june 2017 by jerryking
From Diaper to Soda Makers, Big Brands Feel the Pinch of a Consumer Pullback - WSJ
By Sharon Terlep, Jennifer Maloney and Annie Gasparro
April 26, 2017

Some blamed the weak start of the year on higher gas prices, bad weather and other external factors, while other executives pointed to shifting consumer tastes. Analysts say some big brands, such as Gillette and Yoplait, are losing ground to upstarts. Overall purchases of consumer packaged goods in the U.S. declined 2.5% in unit terms in the first quarter, according to Nielsen.....consumers are cutting back purchases, aggressively seeking deals and drawing down supplies at home. At the same time, he said, a growing affinity for beards has played a big part in driving down razor sales, which contributed to a 6% organic sales decline for P&G’s grooming unit....PepsiCo, like big food rivals Kraft Heinz Co. and Nestlé, is struggling as consumers shift away from diet sodas and processed foods to fresher and healthier options. It has launched new products, such as a premium bottled water brand, to adjust to the shift.....For food and nonfood staples, big brands are struggling more than the overall industry. The 20 largest consumer packaged goods companies last year had flat sales while smaller ones posted sales growth of 2.4%, according to Nielsen.

Wal-Mart Stores Inc., meantime, has been reducing inventories and slashing prices as it fights to compete with Amazon.com Inc. and European discounters moving into the U.S. Those cuts are eating into its own profit and, in turn, leading the world’s biggest retailer to put pressure on its vendors.........The dynamics are driving tough choices for companies as they are forced to decide between reducing prices and ceding market share. PepsiCo and Coca-Cola Co. have been shrinking packages and raising prices.
brands  hard_choices  large_companies  volatility  P&G  Gillette  Yoplait  CPG  PepsiCo  healthy_lifestyles  Kraft_Heinz  Nestlé  Wal-Mart  Coca-Cola  price-cutting  price_hikes  Fortune_500  upstarts  supply_chain_squeeze  shifting_tastes  Amazon  Big_Food 
april 2017 by jerryking
Five Studios’ Mission: Winning the Distribution Rights to James Bond -
APRIL 20, 2017 | The New York Times | By BROOKS BARNES.

On Tuesday, for instance, leaders at Sony spent an hour making their case. Kazuo Hirai, the chief executive, helped give the pitch, which emphasized the studio’s deep knowledge of Bond and its ideas for expanding the franchise’s reach. In true Hollywood fashion, Sony gave its presentation inside a sound stage on a recreated set from “Dr. No,” which was released in the United States in 1963 by United Artists and laid the foundation for the entire series.

Also vying for the Bond deal — even though it pays surprisingly little — are Warner Bros., Universal Pictures, 20th Century Fox and Annapurna, an ambitious upstart financed and led by the Oracle heiress Megan Ellison. (Not competing for the business are Paramount, which has been struggling and recently hired a new chairman, and Walt Disney Studios, which has been on a box office hot streak by focusing on its own family film labels.) .....The eagerness to land Bond underscores the continuing strength of the series but also the realities of the modern movie business. As competition for leisure time increases, studios have focused more intently on global blockbusters, and those are in short supply. In some ways, the Bond series was the first to go after a worldwide audience....Under its previous agreement, Sony paid 50 percent of the production costs for “Spectre” — which totaled some $250 million after accounting for government incentives — but received only 25 percent of certain profits, once costs were recouped. Sony also shouldered tens of millions of dollars in marketing and had to give MGM a piece of the profit from non-Bond films Sony had in its own pipeline, including “22 Jump Street.”...Why, then, do studios want to distribute Bond so badly? Bragging rights, mostly. Having a Bond movie on the schedule guarantees at least one hit in a business where there is almost no sure thing.

Bond is gargantuan: The 25 movies have taken in nearly $6 billion at the North American box office, after adjusting for inflation, according to Box Office Mojo. The series has generated billions more in overseas ticket sales, home entertainment revenue, television reruns, marketing partnerships (Omega watches, Aston Martin cars, Gillette razors) and video games.
Hollywood  films  movies  pitches  ideas  idea_generation  studios  blockbusters  product_pipelines  Sony  marketing  upstarts 
april 2017 by jerryking
Holman Jenkins: What the Taxi Wars Teach - WSJ
Aug. 19, 2014 | WSJ | Holman Jenkins.

"wasn't the arrival of ride-sharing apps supposed to obliterate the traditional taxi industry? It turns out the new operators have been expanding the pie more than gobbling it up, creating new rides where taxi service was scarce (such as New York's outer boroughs), luring users out of private cars and off buses, and enabling trips that previously wouldn't have been taken at all.

In Chicago, taxi medallions appear to have stopped trading amid current uncertainty but are likely to end up holding much of their value. The traditional conspicuously yellow taxi (as in New York) that can be summoned with the raise of a hand is likely to find that its highly regulated niche survives even as new options proliferate. Value still adheres to the old medallions not least because of the untapped scope for efficiency improvement, ignored till now.

America is an interesting place, a society ruled by organized interest groups where nonetheless new things can happen. It's true that taxi operators have used regulation and litigation to slow the newcomers and force compromise with regulatory edicts on insurance coverage, vehicle age and driver training.

Laws exist and can't just be ignored. Organized interests like taxicab companies have every incentive to make noise about everything, demanding concessions.

Yet despite certain tropes about our dysfunctional political system, politicians also have every incentive to avoid maximalist positions on behalf of constituents, seeking to expand the groups they can make happy."
Holman_Jenkins  taxis  Uber  Lyft  medallions  mobile_applications  lobbying  ride_sharing  constituencies  interest_groups  upstarts  politicians 
august 2014 by jerryking
Upstarts Target U.K. Banking Ranks - WSJ.com
FEBRUARY 22, 2010 | Wall Street Journal | by PAUL SONNE And SARA SCHAEFER MUñOZ
United_Kingdom  banking  upstarts  Tesco  Virgin 
february 2010 by jerryking

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