Marketing Innovation

Seven Core Articles on Strategy

Here are seven core articles that explain key principles that, in my opinion, people concerned with strategy should be familiar with:

• “Marketing Myopia,” Theodore Levitt, Harvard Business Review, July-August 1960
• “How Competitive Forces Shape Strategy,” Michael Porter, Harvard Business Review, March-April 1979
• “The Core Competence of the Corporation,” C.K. Prahalad and Gary Hamel, Harvard Business Review, May-June 1990
• “Meeting the Challenge of Disruptive Change’”, Clayton Christensen and Michael Overdorf, Harvard Business Review, March-April 2000
• “The Era of Open Innovation,” Henry W. Chesbrough, MIT Sloan Management Review, Spring 2003
• “Blue Ocean Strategy,” W. Chan Kim and Renee Mauborgne, Harvard Business Review, October 2004
• “The Big Idea:  The New M&A Playbook,” Clayton Christensen, Richard Alton, Curtis Rising, and Andrew Waldeck, Harvard Business Review, March 2011

 

Innovation: Make the NASCAR Sprint Cup Chase a real playoff

The format of the Chase to the Sprint Cup (NASCAR) and the FedEx Cup (PGA Tour) both bother me because they are billed as a "playoff," when they are, in fact, nothing of the sort.  

In order to have a playoff, you need to have at least two leagues/divisions/conferences/etc.  Neither sport has that. Just singling out the top performers during the regular season and making them the only ones who can win does not a playoff make.

Those two programs are not, in my mind, marketing innovations.

The upcoming IndyCar Racing League (IRL) race at Texas June 11 gave me an idea, though.  Instead of one long 550 km race, they are running two back-to-back 275 km races.  These are both full-field affairs, with the running order in the first race determined by traditional qualifying procedures (fastest lap starts first), and the second race starting positions determined by the finishing order in the first race (could be highest finish first, or invert the field).

Pretty cool.  More action for the fans.

My idea For NASCAR takes it quite a bit further.

Let's organize the Sprint Cup drivers into two leagues -- let's call them the American and National leagues, just for convenience.

Before the season starts, the drivers are assigned to each league based on the prior season's point finish. Drivers who finished in an odd numbered position (1,3,5, etc.) would go into the American League, and the even-numbered finishers go into the National League.  There would be 25 (or more) drivers in each league, with pretty good parity between the leagues.

The first 26 races of the season would be run as two league races -- half field events.  Instead of the Goody's Fast Relief 500, as at Martinsville last weekend, there'd be the Goody's Fast Relief American 250, and the Goody's Fast Relief National 250. Points would be awarded according to the current system.

It would be great for fans, because they get more meaningful action each weekend.  NASCAR would have a great opportunity to stage some sort of event between the races -- a “halftime show,” if you will.  The networks would love it.

After 26 races, only the top 12 to 15 drivers from each league go into the Chase -- that's the 24 to 30 top drivers, which would make for great racing. The Chase races would all be full length affairs, designed to test the durability and talent of the teams competing.  And the Chase would be a true playoff between drivers from two leagues.  There would be a champion driver and a champion league.  Drivers might cooperate on track more to prevent a rival league’s driver from advancing -- it would add a new dimension to race strategy.

The drivers who didn’t make the cut end their season there.  No “start-and-park” teams in the Chase, no wasting money driving laps that don’t mean anything. 

Races would be both shorter and more exciting. There would be lower costs associated with fielding a team for 26 short races, which might bring more sponsors into the sport.  Sponsor deals could be worked for the “regular season” and then again for the playoffs.  Much more flexibility.

NASCAR fans tune in more during the summer than the fall -- the NFL is pretty stiff competition.  For a team owner running outside the top 10 or 12, the Chase is currently a huge money drain.  With my proposed playoff system, there is more excitement for the fans and a better ROI for the owners and sponsors.

With a total of 50 cars each weekend, there's more opportunity for owners and drivers to compete at the Cup level -- and more opportunity for sponsors.

That strikes me as a marketing innovation!

 

Borders Failure is Symptomatic of Publishing

We've been following the misfortunes of Borders Books in my class for the last six weeks, and the recent Chapter 11 filing and store closure announcements seem like a pause on the path to a complete disappearance.

The press has cited two strategic failures on Border's part -- outsourcing their eCommerce strategy to Amazon for many years, and completely missing the rise of the eBook.  

While they are certainly significant errors, in reality Borders is just a channel for publishers. Publishers share some (most?) of the blame.

I read a lot of books, and most of them share two characteristics. They're in black and white, and they're static.  

Authors write; editors edit; printers print; distributors distribute; and bookstores hold inventory until customers come in and buy.

But what in this whole value chain is really important to the paying customers? How are customer wants and needs changing?

I've recently been reading a few books on my Kindle (well, the Kindle app on my iPad, to be honest), and also subscribing to the first few issues of the online only "newspaper", The Daily.  The comparisons are stark.

"Jet Age" is a good book.  But I'd like the electronic version of it to have hyperlinks, color photographs, and video.  The links would enable the reader to drill down deeper into topics; learn more background; read alternative points of view that might otherwise distract from the story the author is telling.  Videos could illustrate things that would either be tedious to describe, or go completely unsaid.

Bill Bryson's book "At Home" would be enhanced (in my opinion) with more pictures, floor plans, and video and audio files of the things that he so eloquently describes. Let me be clear -- there is no way that I would want him to not write.  His style is to engaging, entertaining, informative, and just plain fun to do without.  It is the book format itself that confines him.

Cookbooks, heck, any "how to" or "DIY" book could offer how-to videos instead of step-by-step instructions.  

Instruction manuals can become interactive.  Nature guides can present video and audio to supplement descriptions.  All this would be searchable, perhaps by voice command.

In short, books are behind the times.  I value well crafted words, but I want more.  I want to have the ability to take excerpts from a book and bring them into PowerPoint, or this blog, to use in teaching or in commentary.  I'd like to be able to instantly share excepts from books with clients or colleagues.  In Adrian Slywotsky's "Value Migration" model, books and their publishers are in the Value Outflow stage, and eBooks (and eNewspapers, like The Daily) are in the Value Inflow.

Does this create potential copyright issues?  Perhaps.  But it also creates new opportunities for content creators to use new media with new methods. It upends the traditional business model and enables new ones to come into being.

Perhaps the books of the future are more like "apps" -- there is no reason to keep the same structure of sequential chapters if the medium is more flexible. Games, apps, books, magazines -- all are transforming in real-time.

Borders is but the canary in the coal mine for traditional publishers and authors -- it will be interesting to see what the "information transfer" industry (aka publishing) brings next.

What the Market REALLY Wants

The market doesn't want innovation, it wants results.

Dan and Chip Heath in the November, 2010 issue of "Fast Company" magazine (page 84) put it very succinctly:  

You've heard the old saying "If you invent a better mousetrap, the world will beat a path to your door."  Don't bet on it.  The world's felt need isn't for a better mousetrap.  It's for a dead mouse.

Excellent advice for innovators -- focus on the result, not the process.

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! 

Chevy Volt: Running on Empty (Even After a Full Charge)?

With all the news about GM these days, I'm intrigued by the near-constant use of the forthcoming Chevy Volt (pictured to the left) electric vehicle as a proof-point of the continued viability of the firm.  Of particular interest me, from a marketing innovation standpoint, is the promotion of the 40 mile battery range before needing the gas engine (a 1.3 liter, three cylinder model that keeps the electric motor running, but does not recharge the batteries).  It seems like GM trots out that range with pride every time the need to bolster their innovation cred arises.  (Which appears to be frequently.)  To boil it down to unflattering simplicity, it is like putting a gas-powered generator on the back of a golf cart, and using that to power the vehicle once the batteries are dead.

I am intrigued by the premise of an electric car.  However, it seems that the chemistry of energy storage is giving gasoline a bit of a leg up on the Lithium-Ion cell.  For under five bucks, you can buy enough stored energy (yes, gas) to push around just about any current vehicle for forty miles.  Heck, you can do that for under two bucks for some vehicles!

But I digress.  In addition to the Chevy Volt, there is another electric car out there, and it is a true electric car (no gas motor).  It is the Tesla Roadster (pictured below).  Here is a little comparison of the two vehicles:

                            Tesla                Volt
Price                    $109,000     $40,000-ish
Power (HP)               248              150
Recharge time        3.5 hrs         3.5 hrs
Battery weight        992 lbs.        375 lbs.
0 - 60 mph             <4 secs          8-9 secs
Battery rating         53 kWh         16 kWh
Range (miles)            244               40

What this table doesn't include is company image, or the brand.  (It also doesn't include sales projections, because I can't find any for the Volt.  The Tesla is a low production vehicle, in the 1,000 - 2,000 range, but is sold out with a waiting list for 2009.) 

Strategically, GM could have chosen to roll out this car as a high-performance, technology-laden marvel with a stunning design, perhaps under the Cadillac brand.  Instead, they chose to roll it out as an everyday kind of car, under the Chevy label.  And it looks like a Camry.  Or Accord.  Or Malibu.  Not distinctive, in other words.

Also strategically, they chose to highlight the 40 mile battery range.  I don't know about this.  When my car gets to the point when there is only 40 miles of range left, which is well after the little yellow light comes on, I panic.  My trip computer -- which tells me how many miles I have remaining in the tank -- stops making predictions when 50 miles remain.  It just blinks instead. 

If for some reason I drive home with that little range, I don't sleep well if I have anywhere to go the next day.  I hope that there is enough gas to get the nearest station.  Buying a car where that kind of range is when the electricity tank is full doesn't seem inspiring.  I wonder what kind of ad campaign will support this "feature".  ("Don't worry, you've still got gas"?)

Contrast this with the Roadster:  244 miles.  It looks like Tesla put in two-and-a-half times more batteries (measured by the pound), got three times the energy and six times the range, and threw away the gas engine.  I realize there might be more to it than that, but that's what jumps out at me.  Why didn't GM make that decision? 

Look at that table again.  Yeah, the Tesla is expensive, but it will come down.  It'll probably be like the iPhone -- really expensive at first, but then coming down to pretty expensive, and then perhaps to expensive.  Like a Corvette.  Funny I should mention that car -- it has performance specs very similar to the Tesla, but it does so motivated by a 7 liter, 436 horsepower V8 engine getting (a surprising) 20-ish mpg (Z51 model, around $60,000).  And there is another model (the ZR-1) that uses various enhancement technology to achieve slightly better specs at a price of about $110,000.  So GM (even Chevy) knows how to play at these price and performance levels.  Presumably, Tesla is profitable at this price, what with it being the only product the company sells.

It seems like a great management team, presented with a technology like this and a company with the resources of GM, would do this:  Start with a high performance technology, and let it find it's way into more pedestrian vehicles.  Start with something to really crow about -- an all-electric vehicle with eye-popping performance, drop-dead looks, and let the halo spread over the rest of the company.  Or they could get on private jets and go ask the federal government for a bailout.

Update 12/10/08:  The editorial cartoonist Pat Oliphant apparently agrees with me that the professed 40-mile range is somewhat underwhelming:

Innovation in the Newspaper Business? New Thinking is Needed.

Today’s local paper brought news of yet another cutback in the size of its staff and itself.  The company is contending with “one of the worst advertising slumps in its history”, citing particular pressures in real estate, employment and automotive advertising.  It is the third such cut in the last five months.

The number of full time staff will be reduced, and the paper itself will run 10 fewer pages per week.

This is sad, but it looks like it is headed into an irreversible spiral down. 

1.  Ad revenue slows
2.  Reduce staff
3.  Shrink size of paper
4.  Readership declines
5.  Repeat as long as possible

Or is it irreversible?  Let's see if innovation can play a role.

This cutback highlights a risk with an increasingly popular form of business model:  the ad-supported subsidy.  Any business that depends solely on revenue from advertising dollars works for only the advertisers.  You do not work for the people you call your “customers” or “users”.  Your true customers are the people that pay you.

Newspapers have a hybrid business model, with subscribers (readers) and advertisers both paying.  It seems like the subscription basically covers the cost of distribution, and ad dollars pay to produce news and editorial content.  This is necessary -- people simply won’t pay enough for a subscription to foot the bill to profitably produce a daily paper.

There’s a two things about ad dollars:  there’s only so much of them; and they only go where they can be shown to work.  If advertising revenue is decreasing, it is a function of one, the other, or both of these factors.

The first factor means that you will need to compete for ad spending.  The second factor is how you will compete.  You will need to show that your customer will do better by spending money with you than with all the zillions (and growing) of other places that their ad money can be spent.

There are a couple reasons why money is spent on advertising.  First is to build awareness.  The second (particularly in the employment and classified advertising) is to generate action (apply for a job; call and buy the item).

Advertisers presumably want to know that the audience to which they are pitching their wares is likely to buy those wares.  They want to know that they are reaching a sizable number of those people per dollar spent.  So the question is how to recruit and retain a sizable, loyal audience of people who have a preference of deciding to buy things based on ads in the paper?

The traditional way is to have enough content that people find essential to their existence that they will read the paper cover to cover, and linger on the ads to see which businesses offer what they need to buy at that time.  This isn’t very targeted, and relies on a host of assumptions about subscribers’ buying habits.

However...the number of people who depend on a daily newspaper is shrinking, and those people are older.  Older people are not as susceptible to advertising (if, in fact, anyone still is), but they have more disposable income than the young. (An aside:  The only reason that I can fathom that the 18-34 year old male demographic is regarded as the most desirable for advertisers is that 18-34 year old males spend money like drunken monkeys.  By the time they turn 34, they have either run out of money; gotten married and have to answer for their financial indiscretions (personal experience speaking); they have already bought everything worth buying; or they simply grow up.)

How do we make this model work with the constraints of a smaller, ad-resistant readership?  The answer is to produce something of value to that readership, and perhaps others.

This is about innovation.   Businesses must innovate and separate themselves from their competitors.  There are not a great many inspiring stories of businesses cost-cutting their way to growth and success.

What is it that papers are good at?  I think that it is in editing, printing, and distributing.  Putting stuff into the printing press, and distributing what comes out of it. 

Content typically comes from the reporting staff, augmented with national and international wire services.  The staff is typically focused on local information and opinion.

Is there an opportunity for innovation here?  Is there a way for low-cost (or even free) content generation?  How about giving subscribers a free website and/or blog in return for the right to harvest what they put on those websites and blogs?  Use the editorial and management skills to build a daily report of the most compelling and newsworthy sources.  Use technology to search, sort, and harvest content from the blogs and websites, and organize it into these new editions.  Print that and distribute it.  

It would be easier to target advertising on the blogs/websites themselves than in a traditional paper.  Or, better yet, publish several editions, aimed at different audiences.   For instance:  a political edition, a business edition, a lifestyle edition, a technology edition, and so on.  Advertisers might just like to see such targeting. People might even subscribe to several of these editions, instead of one.  (I subscribe to two dailys, plus another dozen or so magazines.)  The operating principle is called “mass customization”.

Perhaps the days of a single flagship daily per city are gone.  In their place, though, the same organization that stood behind that single flagship daily could be producing multiple, focused, dailies.  (Or biweeklies, or.....)    Maintain a solid, consistent editorial policy, and stay a force in government and open, civil, discourse.

Who knows?  It could just work!

The End of the 4 P's of Marketing -- and How to Get Them Back

I’m in the market for a new digital camera, and I’ve been doing research for months about which one to buy.  In the course of that research, I’ve noticed that the price band for any given model is very narrow -- across all “places” where the camera is available.  The Internet is my primary source of information about price -- Amazon, J and R Photo, B and H Photo -- but as I branch out into mass merchandisers like Best Buy, Circuit City, and even the office superstores and department stores, I’ve noticed that they all offer a given model at essentially the same price.

So two of the four “P’s” -- price and place -- have been removed from the marketer’s arsenal as levers of differentiation.   Price has found its floor below which no firm will go, and it is available everywhere.  What to do?  

The answer to which the business world turns seems to be to spend money on a third “P” -- promotion.  Advertising is not only a method of promotion, it has become the source of entire business models. 

This is not sustainable. 

The amount of advertising that the average buyer is subjected to -- across all media -- makes the incremental impact of any single ad microscopic.  (If there is any impact at all.)  In short, you can’t promote your way to differentiation, either.  What’s left?

The fourth “P”:  product.  The product (or service) itself is the one lever that a company can use to differentiate itself.  The way to accomplish that is through innovation -- continuing to improve your offering through new features that benefit your customers (current and future). 

Going down this path is a commitment to a new way of doing business.  Once on this path, you can’t get off.  Anything you introduce will be copied, and become the basis of competition for everyone.  You must stay out ahead of the pack.  Innovation must become -- and stay -- part of the DNA of your organization.

The good news is that innovative products that offer new features that benefit your customers reignite the ability of the other three P’s to be marketing levers.  Innovative products have less competition than commodities, so you can offer them in unique places.  You can price in a premium for that innovation (or perhaps you have lowered costs, so you can offer more at a given price point.)  You can promote a difference (or, even better, have other people -- influencers -- promote it for you!)

The erosion of the three P’s seems to point to an inescapable conclusion:  innovation is imperative.  Keeping your “eye” on innovation can bring the four “P’s” back into play.

Disruptive Innovations Require Education and Outreach

Are the Speedo LZR swimsuit and nanotechnology swimming upstream against the current of public opinion?

Yesterday, my local paper, the Raleigh (NC) News and Observer had two items that were seemingly totally unrelated, but struck me as significant for people marketing innovative products or technologies. 

In the first item, guest sportswriter Scott Fowler, of the Charlotte Observer, laments the incursion of the technology that makes the Speedo LZR suit such a hit. For those that are unfamiliar with it, the LZR is a technological tour de force, utilizing amazing technology to compress a swimmer into a hydrodynamic bullet.  It is totally legal and meets all the sanctioning body's regulations.  It includes new seam sealing technology and new materials that repel water.  It's been tested at NASA.  The most controversial aspect is that the polyurethane panels take body parts that the rest of the fashion world tries to accentuate and squeezes them away.   An article in Fast Company magazine describes this "form drag" as being largely caused by breasts and buttocks, so this suit strives to smooth them out.  All this technology has resulted in over 40 world records since the suit was introduced.  The swimming world has been so moved that the Italian swim coach called wearing the suit the equivalent of "technological doping".  Mr. Fowler doesn't agree with that statement but says that the rate at which records are being broken "cheapens" the records themselves, and concludes with "I still don't like it".  Not a resounding endorsement.

The other article, titled "Tiny Tech, Unknown Risks" is about unknown hazards that may (or may not) be posed by nanotechnology.  It mentions that David Berube, an NCSU professor of communications, has received a National Science Foundation grant of $1.4 million to study how to communicate nanotech risks.  Not benefits; risks.  The article states that Dr. Berube believes in the potential of nanotechnology, but that the "public, in general, has no idea what is happening", creating the opportunity for a backlash of public opinion against the technology in the event of a negative event caused by an unknown (or worse, known but undisclosed) facet of the technology. 

Both of these subjects -- revolutionary swimwear and revolutionary materials science -- are disruptive innovations.  The swimsuit has improved human performance in arguably one of the most elemental sporting events.  Nanotechnology has created revolutionary new products in everything from fabric to pharmaceuticals.  The products are well accepted -- who doesn't like stain resistant clothes?

But these two articles point out a risk with innovation -- that those who are not adopters of the technology can become critics.  And their ranks can swell quickly. 

Disruptive innovations, in particular, require the market to be educated before it will buy.  While most effort is being spent educating the market, it is important that there are people totally distant from the purchase decision who must also be educated -- the influencers.  Who are they?  It can be tough to say.  Sometimes there are prominent media personalities who can be approached.  There might be consumer advocacy groups that would appreciate an early, honest conversation.  Outreach is suggested; being in a "react" mode means damage control at best.  And outreach  must be forthright -- "marketing" is a bad word to many such people.  They perceive that marketing is often a coverup (particularly if they decide that you are trying to "spin" them.)

The LZR has been swiftly adopted by the people who matter most, competitive swimmers.  No rules have been broken, and the records will fall.  All sports have enhancements to the equipment that make old records obsolete (golf might be the poster sport for this phenomenon) and there will always be people who liked things better the way they were.  (Note:  the suit goes on sale to the public later this year.  You can pre-order now at the Speedo website.)

Nanotech is at a critical juncture.  It will not disappear, but, like genetically modified food, and food irradiation, market acceptance could be well below its potential if the public decides that nanotech is dangerous.

Perhaps there should be an effort by some organization or organizations to fund a grant on how to educate the public about the benefits of nanotechnology, before the other side has too big a head start.

Take the cork out of corkscrew

Imagine a premium product synonymous with the good life.  A product with a romantic image, where using the product has its own little ceremony, complete with a satisfying sound. The product has been around for millenia, and figures prominently in religious ceremonies.  It is produced and used around the world.  Its price ranges from $2 to $2000 a unit. 

The product is wine, and it is in the throes of a major image crisis.  Wine bottles have been sealed with cork for ages, giving rise to the "ceremony" and "satisfying sound" mentioned above.  But there's a problem -- there isn't enough good cork left.  There has been no end of innovation applied to the problem, most of which is akin to rearranging the chairs on the deck of the Titanic.  The one true solution, however, requires more innovation in marketing than most of the industry can handle. 

Cork is taken from the bark of the Cork Oak tree.  This can only be done once every decade or so per tree.  It is a very good material for sealing wine bottles.  It is light in weight; its highly elastic and stays that way, thus ensuring a good seal for a long time; it isn't very dense, which means it is fairly easy to extract; and it is slightly permeable to gases, which helps the best wines age slowly.  All in all, quite a good stopper material, which is why it has been a stopper material since the Phoenicians sailed the seas.

The problem is that the supply of good cork is dwindling quickly.  This is leading to a rise in the number of so-called "corked" bottles, where a harmless but incredibly stinky compound contaminates the cork and thus the wine.  Estimates of 10% to 15% of cork sealed wine bottles are affected in this way.

Wine is not inexpensive or quick to produce.  It requires a substantial investment of time and money, and, in spite of the fact that the inventory is sloshing around in tanks and/or barrels, it isn't a liquid investment until it is put into bottles and sold.  Understandably, producers don't like to take a 10% to 15% yield hit well after the product has been sent through the distribution channel and purchased by the end user.  So they have been seeking alternatives to corks made from a single piece of bark.

The industry responded with some incremental innovations.  The picture shows some of the results.  The top right cork is the traditional cork - a single plug.  The top left is a natural cork made up of lots of little pieces of cork smushed together -- sort of like particle board.  I guess you could call it particle cork.  This was a natural evolution of the product, and actually quite efficient.  There are lots of leftover particles of cork, so forming them into a bottle stopper was a no-brainer. 

The problem with it is that the pieces don't hold together all that well, so when you push the corkscrew in, you get lots of little cork pieces floating around in your chardonnay.  This is one problem.   The other problem is that particle cork doesn't have the same structural integrity that single-plug cork has, and this leads to the dreaded "corkscrew tearout" phenomenon.  This happens when the corkscrew is screwed in, and instead of pulling the entire cork out of the bottle, it tears a hole right out of the center.  This is a bigger problem than having little pieces of particle cork bobbing around in your glass because the wine is still securely in the bottle.

The next incremental solution is seen in the center cork, shown lengthwise.  The middle is made up of particle cork, but the top and bottom are made from good cork -- sort of solid cork caps on a particle cork plug.  This holds the particles out of the wine and prevents (ok, minimizes) cork tear-out.  It is, however, expensive.

Naturally, someone thought to apply technology to the problem.   The lower right stopper is a purely synthetic plug made from a plastic material.  The lower left cork is also synthetic, but with a thin outer wall that slides a bit better, aiding extraction.  (The pure synthetic ones occasionally take a lot of force to remove.)  One of the leading producers is nomacorc, located near here in Zebulon, North Carolina.

In a refreshingly forthright description of their product, the nomacorc home page tells us that "A nomacorc^® is a foamed co-extruded still wine closure based on a highly elastic chemically inert polymer formulation."  No marketing BS there! 

And marketing is really what is required for this industry, because the solution is not a better stopper, it is the screw cap.  Yes, the screw cap.  Talk about a disruptive innovation!  Boone's Farm to the rescue! 

The screw cap is finding its way onto bottles of quality wine from around the world.  (OK, it will be a cold day on Mercury when we see a screw top on Chateau Latour, but as the picture shows, they are getting to be more and more prominent.)  It makes sense. 

The closure is inexpensive.  It seals the wine in and allows it to be stored in any orientation, including upright where the label is in full view.  (Wine is traditionally stored on its side to keep the cork wet and expanded tightly against the bottle.)  Having the label in view is key to sales, since with over 1800 producers in the US alone, consumers are pretty darn mystified by words and descriptions and tend to buy based on the graphics.

Most importantly, it always works.  There is no loss due to bad screw tops.  There is no problem with screwtop tearout from the corkscrew.  There is no corkscrew!

The problem is one of image.  Wine has a mystique, much of it built around the age-old problem of getting the cork out of the bottle.  It has always been a tricky business, and one to which much innovative thinking has been applied on its own.  A little digression into cork removal technology may be instructive. 

Cork extraction is a wonderful illustration of how simple machines work.  Simply trying to pull the cork out on its own requires a fair amount of strength, and often body poses that are not, shall we say, genteel.   The bottle must be held firmly in place, and if one is to accomplish the feat by one's self, one puts the bottle between one's feet or knees, or under one's arm, and pulls determinedly until the cork gives up and pops out.  Sometimes wine comes along with the cork, and sometimes one grunts during extraction, or (worse) says naughty things, all of which take the romance out of the occasion.

The waiter's corkscrew, probably the best known and widely used type, applies leverage to the situation, and allows the edge of the bottle to serve as a fulcrum for what the scientists call a "second class lever".  This is a huge help, and allows the cork (assuming it is sound) to be extracted smoothly, even elegantly, with a gentle "pop". 

In a restaurant, the cork is offered to the person who ordered the wine, who is supposed to sniff it to see if the wine is "corked".  If it smells like a wet cork, it is fine.  If it smells like a wet dog, it is not, and you should send it back.  This is the problem we described at the start of this post -- 10% to 15% of wine smells like Fido.   

With a screwtop, "cracking open a bottle" takes on a whole new meaning, since opening one sounds like shelling a pecan.  This is not a good image.  There is no cork to smell.  Just twist and pour. 

It is difficult to associate the finer things in life with something that is used to seal up 2 liter bottles of diet Mountain Dew.   So far, the wine industry has addressed the incursion of the screw top by ignoring it from a promotional point of view.  Personally, I think this is a bad move.  When nature hands you a lemon, make lemonade.  Celebrate the virtues of the screw top!

If you've ever been on a picnic that involved a traditionally sealed bottle of wine, but forgot to bring the extraction device of your choice, you can immediately identify with the inherent superiority of the screw cap.  While a cork can be forced into the bottle, or chiseled out with a knife or a key, it is decidedly hard work, and not a positive contribution to the picnic.  (What's the most innovative way that you've removed a cork?)

I can see an ad with this very theme -- a couple is outdoors, on a picnic with a nice wine, at sunset, and they are not in bathtubs like in those Cialis commercials.  No corkscrew?  No problem!  The evening ends well because of the screw top.

A tagline is more problematic.  "Screw Tops:  Not Just for Boone's Farm Anymore" lacks a certain something, as does "From Jugs to Bottles".

It is interesting to watch the collision between the practical and the elegant.  The wine industry derives much of its profit margin from image -- is a $50 bottle of wine really worth five times more than a $10 bottle of wine?  Probably not by any objective standard.  But how to maintain that image (and margin) with a screw top in the picture.  If you want to extend this argument further, bottles are really not the best way to ship, store, and serve wine.  ("Best" being viewed in the practical sense here.)  The bag-in-a-box method is quite superior to bottles, but if you think that marketing screwtops on Bordeaux is a challenge, try pushing a 1982 Chateau Haut Brion in a three liter box!

For my part, I'll be watching the evolution of wine marketing with interest, and will keep up to date with my research.  I'll keep you posted.

Cheers!

[For  more information about the whole serving process, go here.  Amazon has a whole pile of "cork extractors" for sale.  My personal favorite, even though I've never tried it, injects pressurized gas into the bottle, forcing the cork out.  It is not called the "Wine Bomb", although that would be cool.  And if you really have a lot of spare time, one website I came across in researching this post, corkscrewnet, has a frightening amount of information about corkscrews.]