Tag Archives: disruptive

Low Volume and Custom Made – Opportunities

I’ve mentioned 3D printing before as an example of enabling technology. Tools that used to cost tens of thousands of dollars are now in reach of anyone with sufficient interest and from prices of less than a thousand dollars.

That’s a huge change. What fewer people pick up on is that such a change shifts what’s possible in the market, and essentially changes the rules. Things that were essentially impossible before are suddenly doable. Big companies won’t pick that up as their cost structure demands big clients. But for a correctly structured startup, it’s exactly the kind of thing you want!

A Dutch/American company called Shapeways appears to “get it” and has stepped into this market. The BBC has done an item on it (see video below) featuring a custom made shoe with an iPhone holder. The exact product is perhaps a bit tacky to some, but it makes the underlying point quite well and the guy who explains it notes exactly what it’s about. There isn’t a huge market for many of these things, but that’s fine. People often think only in terms of scaling up, and they’re missing the opportunities of essentially scaling things down. At high volumes, you can’t serve the individual.

So, it’s an enabler. When you have an idea, you can now get one or two items made – even when done commercially, with this technology that can be economical. It’s printed (additive) or cut (subtractive), rather than moulded – configuring a production line for a moulded product is expensive and the moulds themselves are actually also very costly (so it’s uneconomical for small production runs). But none of that matters with 3D printing.

3D printing is a disruptive technology in both commonly known senses:

  1. it provides a “good enough” cheaper manufacturing solution for people and companies who are already producing. Existing production methods have essentially overshot the needs of that part of the market, so their pricing is relatively high in that market segment.
  2. Things that were previously not viable now are, and that opens whole new markets. Typically clients find products, not the other way round – so it’s very important to observe and match the need, rather than come up with some static idea of what you think the market needs and go out and try to sell that. Even if you get the product right, you don’t know what the market is yet. Market research really won’t help you.

It’s good to see that Shapeways and companies like Makerbot Industries (there are many more) are exploring these new opportunities. And if you’re interested, check it out – there is plenty of space for more on the local level. These companies do things quite big, but it can also be done on a very small scale. I’m still waiting for a local “copyshop” offering a 3D printing service. That’s where it’s going – but if the local copyshops and printers don’t get it, someone else can pick it up. It could be you.

This stuff can be done with minimal investment, part online, low volume, low cost per item, quick local delivery, opportunities for assistance with design, and so on. The software tools and online resources are available, just check out OpenSCAD and Thingiverse.

If you start something like this and specifically aim local and small, the big existing companies cannot compete with you: they would not be able to do what you do at a sane price. They might not even notice you at first. If they do, they’ll laugh and dismiss – your “small fry” activity is just not of interest to them. That’s a good thing. But you can do good business and also grow.

Think about it… take the initiative. And if you do need some help developing your strategy, we’re here.

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Enabling Innovations: human-machine interfacing

Recently, a few really interesting products have seen the light of day and they appear to indicate a pattern in a particular space, in this case medical sensor/measuring/visualisation equipment in the medical space. But the market disruption caused by these products is much broader than that.

Late 2010 David Albert introduced a cheap ECG system using simple sensors built in to a shell around an iPhone. He originally presented the system via a video which got an awful lot of attention really fast. One article I spotted about it was Your Heartbeat on an iPhone but as it wasn’t an actually available product yet (for either development or general use) I thought I’d better wait and see whether this stuff actually got to market. A year and a half later the system is not yet available for use with humans (no FDA approval so far), but there is a $199 model for use in veterinary environments (AliveCor Vet). I presume that apart from the FDA approval it’s actually identical ;-)

This morning, I received a Neurosky MineWave (EEG sensor) headset in the post. See the Brain Interfacing – Finally post on my personal blog for some initial fun with it. For $150 you now get the basis capabilities of EEG at home. And not only that, you can build new applications and uses using the input stream, including controlling devices and games.

Both of these products are examples of enabling innovations. We all know that the price of things comes down over time, but what we often don’t realise is that at certain points, because of key components also becoming much cheaper, smaller, lighter, etc, things that were previously restricted to hospitals, laboratories and other expensive and specialised environments suddenly become available to “the masses”. I’m not saying that everybody will be using these things, nor that specialised expertise in the area is now obsolete – but for many simple tasks these tools are absolutely sufficient and thus a real enabler. It fundamentally changes the market (that previously only contained expensive equipment for a very limited audience). If companies in this realm don’t realise this (or reckon that because it used to be medical and sophisticated specialised equipment their market won’t change at all), they’re going to be sadly sorry really quickly.

In addition to people with simple needs no longer needing a referral to a facility with the expensive gear (low end disruption: in this case, the issue can be handled directly by a doctor without referral), new things become possible (new market disruption: in this case, at home with self-monitoring – and completely new uses of the technology). As always, I see the latter as a much more interesting space as that’s where the true innovation tends to happen. Low-end disruption is still relevant, however, as it directly affects the existing players in the market and it’s just interesting to watch whether and how companies handle this. Generally they don’t handle it, or much too late and then very badly, but I’m always willing to be surprised!

If you have more information on the adoption of these particular products, or other enabling innovations you’ve spotted, please do write in.

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Disruptive Tablets

The current market of tablet computers provides an ideal demonstration of how not to compete. That is, unless you have lots of money to spend on marketing and such – but nevertheless, it’s going to hurt your bottom line.

Fundamentally, the other vendors vendors are chasing Apple. First iPad, now iPad2. Is that a winner? I think not. Research has shown clearly that when coming up against a successful incumbent, simply offering a similar product at a lower price is not going to displace the incumbent. It’s just a costly bloody battle (or as aptly named in Blue Ocean Strategy [W. Chan Kim and Renee Mauborgne, Harvard Business School press], a Red Ocean).

And of course in case of Apple, providing a better product is a tricky proposition – Apple is very good at what it does – mind you this is talking about relevant user experience, not strictly technical merit (see also Working Back From Client Experience to Technology).

In a nutshell, providing a better product at a lower price does not really differentiate. You’re still operating in the same market as the incumbent, and they have the home ground advantage. So what you want to do is not directly compete with the incumbent, yet take advantage of the existing market exposure.

What does this mean? Clearly, tablet computing is a hot topic! You can make use of that, but not actually aim for typical iPad clients as they are well served by Apple through its funky stores, advertising and user advocacy. Leave them be. You need to differentiate, preferably in a disruptive way, and thus end up in a different market.

Analyse what makes iPad: brand, slick hardware, easy use, applications, price. Those are its defining features, and if you were to rank them visually, it’s all high up on the scale. High brand awareness, lots of applications, and high price. Ok, so that’s clear: we now have a better idea (and visual image) of where Apple positions its iPad. I’ve made up the value curve of a viable potential disruptor, which typically looks very different from the incumbent(s) and generally achieves its goal by vastly reducing or even completely removing some aspects. For good measure I also put in two other tablets (HP Touchpad and Samsung Galaxy Tab). Let’s look at the visual (I created the graph using OpenOffice with a mere few clicks):

Let’s first review the other competitors, before moving on to the disruptor:

  • First of all, the HP Touchpad is now dead since HP dropped WebOS (but you can run Android or regular Linux on it, no jailbreak required).
  • HP Touchpad has very good hardware (comes at a price), WebOS has decent usability and while the WebOS’ appstore is significant, it’s not as big as Apple’s.
  • Samsung Galaxy Tab has a similar profile, uses Android (which is not as slick as iOS – depending on whom you ask) which has plenty of apps available.

How did I make up the disruptor? I just followed some logical steps and the rest follows from there:

  • obviously your brand is not known.
  • your hardware won’t be super fancy (probably a Chinese OEM);
  • consequently the ease of use won’t be quite as high (Android is cheap and available);
  • since you don’t have a huge app store (don’t even go there, other bigger ones have failed) you essentially have only the apps you stick on it yourself; if you do use Android, you have apps available (which is why I didn’t rate it as 0). However, with lower hardware specs fewer will be useful/practical/relevant.
  • your pricing is now simply a consequence of the other aspects. You can also work it the other way round and aim to produce a product for say half price, and in this case I’d guess the picture would end up looking fairly similar anyway. It appears that in this product, any aspect you tweak directly affects one of more others.

Naturally we can debate details, but you’ll probably broadly agree with my quick assessment and the fact that some minor tweaks in the numbers won’t make the picture look significantly different. If products have a similar curve, they tend to be in the same space and thus compete for the same customers. Samsung clearly positioned itself just slightly below Apple’s pricing for essentially a very similar product. HP did the same, and then gave up (possibly a wise move, for this particular product – good though it is: I have one, which bought in the runout sale but only because it was so cheap). But both the Samsung and HP curve still look very similar to Apple. The disruptor’s curve is distinct. If a big brand were to produce my disruptive product, its curve would still look very different to iPad with most aspects well below – below is not bad, it means it’s different!

The Disruptive Tablet is not going to get bought by the typical iPad user. But so what? We know lots of people are ogling the technology, and iPads are really expensive. So what other group of people would you aim for? Well that’s a very tricky question and my honest answer is that you won’t know beforehand, no amount of market research is going to help (so save that money). Markets tend to find products, not the other way round. And since we’re not aiming for iPad customers directly, we’re essentially aiming for non-consumers e.g. people who would currently not otherwise consider buying a tablet at this stage.

If you are familiar with a potential market (say industrial logistics, or early childhood education) you could develop (or acquire) a few specific apps and aim for that market. Some suitable Android apps might already be available for your prospective market, and thus we’ve created something magical: an enabler. Enabling technology makes a type of product available to a new realm of users. Think of how 3.5″ hard disks enabled sanely portable computers (Toshiba was first there), and how compact flash memory cards enabled digital photograph (Canon IXUS/PowerShot, and many others). A cheap tablet does not need to have lots of apps, it merely needs the right apps needed by the specific market – chances are these won’t be general consumers because they’d look for more choice.

Your tablet would probably not make a mobile connection but only have wifi. Forget about Bluetooth. If you use inductive charging (the HP Touchpad actually does that but only with a separate display dock) you don’t even need a usb plug – now that may appear trivial, but a sturdy mechanical connector is expensive and when used in either industrial or kiddie environments, it’s a hindrance. So get rid of it altogether. For industrial use speakers won’t be necessary, but a camera on the back could be useful for barcode scanning and other applications. For kiddie user, both camera and speakers are probably required but again that depends.

Making technology appear simple is hard! As you see, stripping features others now regard as essential assets can actually be a good thing – whereas most people think in terms of adding things, actually focusing the other way: removing things, this suddenly makes the product viable for new markets, and at a lower cost. Apart from now scoring high in the simplicity aspect (something the others would have to put a lot of work in to with their user interface), the simplicity also enables the ruggedness asset: you have fewer connectors and buttons (for a good ruggedness-test of a tablet, I’d toss some sugary liquid over it, and drop it on the floor – this mimics both industrial and kiddie environments!). How about no physical buttons? Example: The HTC Incredible S phone doesn’t have buttons on the front, it merely uses the bottom end of its touch screen for 4 buttons. It makes the phone simpler and reduces the number of mechanical bits that can break. Good!

Fewer bits to power means batterylife is extended. Also good! Portability is affected by screen size and overall weight (screen+battery). While Apple and Samsung will bring out bigger screens, that’s a seriously downside for portability and ruggedness… so they’re drifting further  away from your market: nice! (again, this is typical)

Considering the high price of the iPad, even half-price may not be sufficiently cheap to reach some markets. A $100 tablet would have special potential. Obviously some people in the new market will have bought an iPad in the past – it might do the job but it’s overspecced and (for the job) overpriced. Don’t worry about that, it’s actually a typical feature of a disruptive market. When looking at replacing or extending, your offer will make much more sense. Essentially you will have the market to yourself (Blue Ocean), while also taking some of the low-end clients away from iPad and similar offerings. That’s makes it extra fun!

The product will have a limited lifetime, as prices overall come down. So be it. Enjoy it while you can and be smart about it. Work on other things. Generally, disruptors tend to “float upward” by chasing “higher value clients” (sales people on commission tend to cause that) and adding features. You may indeed want to add some features as your clients become more sophisticated in their own needs and the tech becomes even cheaper. But resist the temptation to equal the others’ features! Remember that “Upward” is where the nasty Red Ocean lies, it’s not a winner at all. Stay where you are and do it well. Go sideways – find other similar markets that are still untapped. Use the acquired expertise to do something completely different again, and start a new separate business for that.

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