Off-site innovation labs and acquisitions are often an effective way of bringing in tech talent or capabilities that a company otherwise does not possess. These outposts – which often contain a mix of existing employees and outside hires – can be useful places for creating new competencies and fostering innovative ideas that might meet resistance back at headquarters. However, the gap between the outpost and the core can quickly become a breeding ground for tension and miscommunication. In many cases, the off-site team produces valuable output that either fails to meet the needs of the core or that fails to gain traction because of an ill-prepared landing zone back at the core. Over time, the innovation lab or acquisition may quickly fall victim to the traditional “out of sight, out of mind” perils. By talking to some of the world’s leading companies and exploring their experiences with off-site teams, New Markets has collected some first-hand strategies for successfully harnessing the value of such a unit.
How has Jeff Bezos built a company worth over $100 billion in one of the world's most competitive industries? While Amazon wins plaudits for its grasp of the user experience, on a strategic level the company keeps triumphing because it attacks competitors asmmetrically. The $199 Amazon Kindle Fire is a case in point. The formula underlying the Fire, as well as Amazon's other business model innovations, boils down to four components. Read about them in my post for Forbes.
This post was written by Stephen Wunker, author of Capturing New Markets: How Smart Companies Create Opportunities Other's Don't (McGraw-Hill, 2011)
Walgreens, the American drugstore giant, is a 110-year-old institution in a very well-established industry. But that hasn't stopped it from upending the competitive game by using under-exploited assets to create new markets. In doing so, it has built defenses around profitable core businesses while generating high-potential sources of growth. Read more in my Financial Times article (subscription required).
This post was written by Stephen Wunker, author of Capturing New Markets: How Smart Companies Create Opportunities Others Don't.
Faced with an existential threat, many companies simply freeze. The migration of media to digital formats has vanquished former industry titans in newspapers, video rentals, and more. Yet Barnes & Noble is fighting back boldly and strategically. Read more about its smart response at my Harvard Business Review post.
This post was written by Steve Wunker.
Long tail business models sell small quantities of a very large number of items. They are the antithesis of blockbuster business models, which sell large quantities of a few items. The idea, first popularized by the authors Clay Shirky and Chris Anderson, has been exemplified by the book retailing of Amazon.com. As an Amazon employee once stated, "We sold more books today that didn't sell at all yesterday than we sold today of all the books that did sell yesterday." (Amazon was never known for its pithy marketing).
This week, Amazon took its long tail strategy in a totally new direction, offering its Prime customers (those who pay a $79 annual fee for free 2-day shipping) a wide selection of streaming movies and television shows, for free. The move is a direct slap at Netflix, a company that started with a focus on renting hard-to-find, long tail DVDs but which has moved increasingly toward popular blockbusters as its video streaming operations ramp up. Amazon will not have nearly as many recent and popular releases in its free offer as Netflix, but for people who are open to Amazon's viewing suggestions it's hard to beat free.
"It's a different product. Expenses will outweigh revenue on the product for this time, and some dealers may not want to make the investment." This honest opinion, expressed by the President of the New Jersey Coalition of Automotive Retailers, sums up a key challenge that has been lost in the excitement around electric vehicles. Sales channels are essential to successfully creating new markets, yet they often lack motivation to push new offerings. Their influence can be neglected, but it is massive.
As often happens with new markets, the technology of electric vehicles (EVs) has received tremendous attention. Huge budgets are dedicated to improving battery capacity, charging times, and vehicle weight. The industry is focused on end users' demand, and estimates of their speed of adoption range vastly. In the midst of this hubbub, the comparatively dull endeavor of moving EVs through dealerships seems straightforward. It is not. Channels frequently squelch innovation due to their short-term orientation, focus on costs, inability to train customers, and adherence to traditional business models.
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