Marketing Innovation

The Vanilla Paradox: Crossing the Blue Ocean to Mass Market Success

Do you have an innovative product in a mature market?  That isn’t an oxymoron -- most innovations are improvements on existing products or services, and need to be differentiated from what is currently available.  Otherwise, they risk becoming, as a former IBM colleague put it, “just another flavor of vanilla”.

So, how do you go about avoiding the Vanilla Paradox^TM?  I believe that the answer lies in combining the lessons in Geoffrey Moore’s “Crossing the Chasm”/“Inside the Tornado” books with the ideas in W. Chan Kim and Renée Mauborgne’s “Blue Ocean Strategy”.

The main lesson from Moore is that to penetrate the mass market (aka “cross the chasm”), you should identify a niche, or market segment, and provide a “whole product” to it.  A “whole product” is defined as “the minimum set of product and services necessary to ensure that the target customer will achieve his or her compelling reason to buy”.  (Click on the image to see a larger version.)

In other words, a complete solution to a real problem.

That may appear to be obvious, but the key words are “complete” and “real”.  In many innovations, the entrepreneur will offer a new capability, but not a solution.  The customer must still perform some integration-type work to make the innovation into a success.  (These customers are the “early adopters” on the other side of the chasm.)  The “whole product” concept is key.

The other challenge is the “real” problem.  If you have improved an existing product or service, whether it is a light bulb, trailer hitch, asthma inhaler, or invoicing service (etc.), there are a great number of existing customers who are perfectly content to stick with the status quo.

What you want to do is make these customers think differently about the product or service in a way that makes them predisposed to consider buying your innovation.  The message from “Blue Ocean Strategy” is that you need to reinvent the “value curve”.  The objective is to create a “blue ocean” (i.e. uncontested market space) vs. a “red ocean” (a hyper-competitive market space).

The value curve is the relative weight that customers assign to various factors in the purchase decision. Very often price is the most important factor in the value curve, but there are usually others.  

Let’s take ice cream.  Store brands will win on price, but Häagen-Dazs, Edy’s and other premium brands have differentiated based on purity of flavor, fat content, texture, and so on.  And that’s just for vanilla! Ben & Jerry’s has all sorts of funky names for their flavors and a mystique that customers buy into as part of the brand.

Chan and Mauborgne show that the innovator has four strategy options in reshaping the value curve (click on the image to see a larger version of the chart):

• REDUCE certain factors below the industry standard
• CREATE new factors that the industry does not offer
• RAISE certain factors above the industry standard, and
• ELIMINATE certain factors altogether.

Sometimes, the best way to do this is “create” a new way of looking at the product or service -- ask customers to think about their product usage in a new way.  Are they wasting time using existing products?  Is there a safety problem with the current way of doing things?  Is there a new capability that your innovation would enable?  If so, bring that to your customers attention, and you know have a “complete solution” to a “real problem”.  

And you’ve crossed the blue ocean! 

Opportunity for Innovation -- the North Carolina DMV

My son and I just had the experience that is uniquely the DMV -- a one hour, fifty minute long wait to renew our licenses, which took precisely 3 minutes.   

Let’s start with the facility: There were three active stations (out of eleven total). Based on counting ceiling tiles, the room was 30’ wide by 88’ long. There are 40 gray chairs and eight green chairs. The chairs were filled, and there was a line that averaged 20 people long pretty much the entire time we were there.  When we arrived, we were given ticket numbers A202 and A203, and a pictographic list of all the road signs in use in North Carolina. (The only requirements for license renewal is that you pass an eye exam, and can correctly identify 12 road signs, four of them by shape only.) An overhead sign said that the examiners were currently on ticket A170. I was worried that if I memorized all the signs too early, I’d forget them by the time my ticket was called.

We were told that we were to stand in line until a spot opened up in the gray chairs, and then we were required to take that seat. We could not sit in the green chairs. As we moved toward the front of the line, we noticed that there were also B-series and C-series tickets. So the simple assumption that we had only 32 people ahead of us was optimistic. My son got a seat in the front, and I got a seat in the back.

There were two video screens hanging from the ceiling at the front of the group of gray chairs, hanging directly over the green chairs, in fact. (The green chairs are where you went to sit after passing the test but before getting your picture made.) The video screens displayed an 11-minute long clip that had weather, local traffic maps, a message that drunk driving was bad, an ad for a law firm that specialized in license suspension and revocation cases, another ad for a firm that made duplicate keys, and an odd assortment of factoids, including that African elephants only have four teeth with which to chew their food, that the Sahara Desert is roughly the size of the continental US, or Europe, and that Eva Longoria and her husband went out to dinner on Monday night. The thing about elephant teeth was particularly intriguing, since there would presumably be two on each side, one top and one bottom, meaning that each tooth would have to be about the size of a cinder block.

We waited for forty minutes, wondering about elephant teeth, and also wondering why anyone would care whether or not Eva Longoria and her husband went out to dinner, texting back and forth as the numbers changed up on the overhead screen. 

“Only 27 more to go”, I texted when A175 went up.  

“Only?”, he texted back.

Suddenly, the lady who was tending the line and handing out tickets made an announcement. “The average wait time is 62 minutes. This is a first come, first serve department. The A tickets are the express tickets, and the B and C tickets will have to wait longer.”  

Thank goodness the A-tickets were express. However, just when we thought things couldn’t get any worse, a baby started to scream. At least the air conditioning worked, and it struck me then: There is a huge opportunity for innovation here!

We waited one hour and fifty minutes to go through a three minute process. That isn’t efficient. How could this be improved? How about a kiosk that asked multiple choice questions, had a camera, and a credit card swipe? I could even conceive that this could be done at home, over the internet, if there weren’t concerns that people would get help with the test. (Not that giving you a sheet with all the answers on it while you waited indicated that they were really plumbing the depths of your knowledge with this test.)

I texted this to my son, who responded that if we sped this up, we would be depriving people of the soul-crushing “experience” we were having.  Good point.

Anyway, I started a conversation with the fellow on my left, Kenneth, an older man who was passing the time reading the DMV handbook. I asked him if he thought that automation with a kiosk would be a good solution. He said yes, and there were probably a lot of ways to improve the overall situation as well. The lady on my other side said that she thought it would be a great idea to have an ATM nearby, especially since the DMV only takes cash and check. Vending machines would be a nice idea, and we thought video poker games would help pass the time, and both of these ideas would inevitably lead to more revenue for the state.

Not surprisingly, I am not the first person to think this way. Working on my Droid, I found a 2004 article by Lisa Kerner of kioskmarketplace.com identified many places that kiosk can be used for “line busting”, including the Nevada DMV:

The Nevada Department of Transportation uses kiosks for self-service license renewals, shortening wait time from one hour down to 15 minutes, reported Karla Guarino, marketing director for KIOSK InformationSystems. As in this example, a line-busting kiosk often serves as form, pen and clerk.

According to Guarino, lines at the Nevada DOT are reduced by as much as 30 percent, and have led to improved customer service. This can be attributed to the fact that while kiosks shorten lines, they also offer a consistent customer experience. A kiosk is never in a bad mood and, in retail environments, it doesn’t forget to suggest additional merchandise. Guarino added that kiosks often lead to significant increases in new product and promotional item sales.

While I’m not sure what sort of “new product and promotional items” are for sale at the Nevada DMV offices (perhaps “I ♥ the DMV” hats and T-shirts), the fact that the kiosks were successful is instructive. California and Connecticut are reportedly considering kiosks as well.

It costs $32 to renew a license, so I would think that the state would want to get as many $32 fees processed per hour (let’s call them “inventory turns”.) My count showed that there were 60 people waiting at any given point in my nearly two hours there, so there was about $2000 out there waiting to be collected. With 10 kiosks, the 60 people could have been done in 30 minutes total. If we assume that the 60 people arrived evenly over the two hours, then that is one person every two minutes. We'd only need about four kiosks to assure there should be no waiting under those circumstances.

Maybe we should just turn the whole thing into a drive through operation!

P.S.  I shook hands with Kenneth after finishing up, and said, “I’ve enjoyed the time we spent together!” He laughed, and said something very interesting: “It is strange the kind of bond people form in situations like this!”   I wonder if he thought that a session at the DMV was some sort of hostage situation!

The New Sharpie Liquid Pencil: A Temporary Marker!

I saw a press release the other day about a new invention from Sharpie, the Newell Rubbermaid brand of markers.  They announced the imminent arrival of a “Liquid Pencil” -- a writing instrument that uses a capsule of liquid graphite to provide the feel of a gel pen with the erasability of a pencil.  I described it to my 19-year old daughter, and she said, “Cool!  A pen for people who make mistakes!”

As an innovator and student of innovation, I am constantly amazed at what people come up with.  I’ve worked with a wide range of innovative products and services in my career, and some of the most intriguing are those in mature industries (trailer hitches, for instance).   The Liquid Pencil seems to be another.

I would have loved to be around when the inventor said, “Y’know, I think we need a better pencil.  One that writes like a gel pen but can still be erased.”  What sort of reaction did he or she get?  Especially from management?    

Even better, once the idea gained traction, it would have been great to be part of the team coming up with the marketing -- the value proposition.  Here’s a quote from Sally Grimes, VP of Marketing for the Markers, Highlighters, Art and Organization global business unit (there’s a mouthful!) in the press release:   “It solves the No. 1 consumer dissatisfaction with mechanical pencils -- breaking leads -- while also giving users the added confidence of stronger, darker lines that stand the test of time, plus the ability to erase and edit as they go.”  A pen for people who make mistakes, indeed!

An interesting aspect to this product (from a marketing perspective) is the break with what has long been one of Sharpie’s key product attributes: permanence.  The press release notes this:  “The Sharpie Liquid Pencil joins the Sharpie Pen as the brand further expands from permanent markers into near-neighbor categories.” 

I think that this is smart.  Growth in the marker category itself has already shown Sharpie to be an innovator.  They’ve got a huge color palette, retractable markers, a wide range of tip sizes, mini-Sharpies, industrial products, highlighters, and recently, pens.  (Really, they are just really, really fine point Sharpies, but you can use them as a pen for writing notes, etc.,  and put them in your pocket -- neither of which you would really do with a regular Sharpie.) 

This move into an adjacent, “near-neighbor” category is a great way to grow.  You build off of established relevance and credibility, and add new function to existing customers while attracting all-new customers.  In an earlier post, I talk about a way to innovate by “questioning your constraints, but knowing your boundaries”.   In this case, the team at Sharpie questioned the constraint of “permanent pens”, but knew that (at this point in time), they are in the writing instrument business (their boundary).

I’m a bit of a nut about writing instruments -- I’ve got lots of pens, pencils, and fountain pens -- and can’t wait to try out this Sharpie Liquid Pencil.  It’ll be available in September, 2010 and will carry a price tag of $1.99.  Let me what you think when you get your hands on one.