Brand Consulting Disruption

I’ve been thinking quite a bit recently about the divergent nature of so many companies: one company finds itself under threat from completely unexpected quarters as those other companies diverge out of their established domains. (I prefer Gary Hamel’s word “domain” rather than industry because, as he points out, the boundaries are so blurry today that thinking in terms of industry or category is falsely comforting and limiting.) This one is a doosey: Zappos is going into the brand consulting business.

Adweek writes:

Over the past few years, executives from dozens of companies, including Southwest Airlines and Best Buy, as well as ordinary customers, have made the trek to see its operations up close. The tour has undeniable Zappos touches: each department has its own greeting, and in-house motivational guru Dr. Vik has visitors sit in a throne for a Polaroid snapshot.

Now the company hopes to turn the intense interest in its culture and approach to business into a moneymaker. This week, it plans to roll out Zappos Insights, a subscription video service that lets companies ask questions about the Zappos way and get answers from actual Zappos employees. It will charge $39.95 per month for subscriptions.

The Zappos Insights site is up, but is mostly locked down for subscribers. About the only thing I could find public is the reading list. Overall things look pretty sparse, and they don’t have much preview material so you can get a sense of what you’re paying $39.95 a month for, or how well their Zappos-centric experiences scale to other businesses. But if it’s like buying shoes from Zappos they’ll have a pretty flexible subscription policy so you can try it out without much risk.

Still, who would have thought that brand agencies would find themselves competing against a shoe retailer? Sure, Zappos advice is not going to be tailored in the same way, but heck it’s several zeroes cheaper and for the “Fortune One Million” size companies they are targeting, something adequate is better than nothing. And that’s the very definition of a disruptive play.

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Hat tip: Steve Portigal

Update on Monday, December 22 by Adam

Just saw that Joshua Michele Ross at O’Reilly has written about Zappos also offering a syndication of an end-to-end customer service system also:

I am fascinated by what I see as Zappos’ ongoing evolution from a simple, online retailer to a leading online innovator. A few months back I wrote about Zappos pioneering what I called “Experience Syndication” with their Powered by Zappos (PBZ) service. In brief, PBZ syndicates the end-to-end value of shopping with Zappos - from the online store experience to shipping, to returns, to the call center - everything. Clarks Shoes, Stuart Weitzman and many other online sites are providing a customer experience entirely syndicated by Zappos.

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Palm Treo Pro and Satisfying Needs

A few weeks ago I wrote an article about the new Palm Treo Pro, and I was fairly critical of the new smartphone. Why? Basically because I felt that it was good, but that “good” isn’t good enough in today’s dynamic smartphone market. To delve a bit more deeply into this I thought it might be interesting to use the Kano model as some people may not not familiar with this approach.

The model, named after its inventor, Professor Noriaki Kano, provides a simple way to think about how products meet or exceed customer needs, and differentiate themselves against the competition.

The model consists of two axes. On the vertical axis is degree of customer satisfaction. On the horizontal axis is how well the feature or capability was executed, from poorly done/not at all, to very well done.

Onto this we can plot three different types of needs — Excitement, Performance and Basic:

Performance needs: These are primarily quantitative things about technical performance (mpg, 0-60, hold-time on a customer service call), and are often easily articulated by customers and are top-of-mind. For the sake of simplicity this is averaged out to a 45 degree angle - in other words product performance and execution matches customer expectations in a linear manner in a chicken-egg cycle.

Basic needs: Expected features which customers take as a given (and are therefore usually unstated). Having them does not improve your position, but leaving them off results in harsh assesments. Even the best execution on basic needs leaves a “neutral” assessment by a customer. So basic needs have diminishing returns over time, and always stays at or below the horizontal axis.

Excitement needs: These are the “wow” factors that differentiate from the competition by achieving something that customers had never even thought of but which have obvious benefit. Presence of exciters is a big differentiator, but lack of them is not a disappointment as they are not expected. By definition, excitement needs start above the middle point. (If you were to put this in Maslow terms, excitement needs would be further up the pyramid, which in my book doesn’t really make them “needs”, but there you go.)

It’s Such a Fine Line Between Stupid and Clever

I wrote a post a couple of years ago riffing off the classic line from This is Spinal Tap - basically the idea being the it’s not always easy to tell when an idea is good or bad, and often the timing of it makes all the difference.

Kano posits the same thing: needs change over time - exciting becomes performance becomes basic.

When telephones first came out, people were ecstatic that they could talk with friends without leaving the house. It didn’t bother them that the phone was attached to the wall and they couldn’t stray more than a couple of feet from it. It just wasn’t necessary to have a cordless handset with a built-in answering machine. These things came along later as the technology matured. But if you tried to introduce a tethered handset now (outside of an office setting), forget it. (Though I have to admit we recently bought one for our house, for $9 from Radio Shack, because we wanted an emergency phone for earthquakes…)

In the case of the Treo Pro, my take is that it is delivering well on the Basic and Performance Needs. In other words, it checks all the right boxes for what a smartphone needs to do at this point in time. But what it lacks (except for perhaps current Treo users, who are happy it exists at all) are “wow” factors like the iPhone’s touchscreen and gorgeous UI, or Android’s promise of endless developers, or the much lower price of some other smartphones. It’s not bad on anything, it’s just not outstanding.

And because this is its position on day of release, the market context will just get worse for it over time. The smartphone market is at an inflection point right now of shifting from niche to mainstream, and lots of competitors are going to start piling on. This will result in a quickening pace of exciters shifting to performance and basic. It happened quickly in the cellphone market (just as Motorola how much luck it had keeping up after the initial success of Razr), and will happen at least as quickly in smartphones.

So the Treo Pro is a good phone for right now. But Palm needs to get its skates on, because the clock is ticking.