New Venture Creation 2009

What to know how you can protect yourself against piracy? Check out this article: http://chinabusinessreview.com/public/0903/ong.html

In short, it basically talks about tackling intellectual property rights in China.

Here are the suggested methods:
1. establish internal controls to identify and protect IPR
2. factor IPR issues into their exchanges with suppliers and customers
3. register IPR to take advantage of PRC legal protections
4. conduct surveillance and due diligence to uncover infringement

Most of the time, when we think about expressing ourselves, we will think about how I feel or what is the point that I am trying to bring across. However, we often fail to think about, what benefit other people when they listen to us. According to Dale Carnegie’s ‘How to Win Friends and Influence People’, one of the ways to influence and attract other people’s attention is when you start to think in the perspective of the other person. The best way to attract one’s attention is when you can give them benefit for listening to you. Similarly, Professor Emma Qiu from Fudan University said the same in how to make a good pitch.

Caulfield Brian, Forbes.com 04/02/09 18:00:05 GMT

BURLINGAME, Calif - First, the music stores died. Then the video stores. Now a cloud is shadowing the outskirts of the gaming industry. The Web is lurking. There's no telling exactly how this will play out, but there will be blood.

The most ominous sign isn't the debut of a new online gaming service, OnLive, which promises to dispense with the need for consoles or game discs entirely (see "Will OnLive Kill The Game Console?"). Or even that Apple, fresh from displacing the local music store with iTunes, is pumping games directly to iPhone and iPod touch users via its App Store. No, the biggest sign of a change is Nintendo's DSi.

With more than 50 million Wiis consoles sold and 100 million variations of the Nintendo DS out there, Nintendo defines the gaming mainstream. And the Kyoto, Japan-based gaming giant is pushing hard into Web space with its latest gaming gizmo, the DSi. Set to go on sale in the U.S. April 5, the dinky clamshell-shaped gaming gizmo looks a lot like its predecessor. The biggest difference? A built-in wi-fi connection that will allow users to download games directly from Nintendo.

The move could solve one of Nintendo's biggest headaches, said Masato Kuwahara, project leader for Nintendo's DSi hardware group at the Game Developer's Conference in San Francisco in March. After a big debut week, sales of a new game quickly fall to average just 3% of their first week's total. Sales of online games, however, tail off more slowly. That's in part because the game store is always open and always accessible, but also because there's no market for used game cartridges.

Nintendo is now headed in the same direction as the rest of the industry: toward digital distribution of games, and perhaps even toward an industry where many games are hosted on servers rather than only on gaming consoles, handheld gadgets and PCs.

That "future" will arrive in the Winter of 2009 if Palo Alto, Calif.-based OnLive gets its way. The online gaming service, built by entrepreneur Steve Perlman, promises to place games on powerful servers, streaming them to card-deck-sized consoles and low-end PCs. The only question: "Will it be responsive enough? To a game player, that's all that matters," says Ralph Koster, co-founder and president of Metaplace, a service that will allow users to build their own online virtual worlds.

If Perlman can make the lag time between a gamer's command and the screen action imperceptible, he'll solve a host of problems that have plagued the gaming industry. It's tougher to pirate a game, for starters, if there's no physical disk to play it on. Setting up matches with friends also becomes far easier. Gamers wouldn't have to spend more than $2,000 on hardware just to run a demanding title like "Crysis." And Perlman is promising gaming publishers a fatter cut of the revenues, cutting out middlemen like Amazon.com and videogame retailers.

"As Internet console gaming grows in popularity, packaged goods sales and used game sales are expected to suffer," Wedbush Morgan analyst Michael Pachter wrote in a note to investors titled "The Beginning Of The End." "We do not see an immediate threat to the GameStop business model, but believe that this service could ultimately cause GameStop sales to decline in the future."

Even if hosting games on servers fails to take off, however, digital distribution of videogames is moving to the mainstream. Since Apple launched the App Store eight months ago, iPhone and iPod touch users have downloaded more than 800 million applications. Roughly one-fourth are games, and competitors, like those building phones based on Google's Android, are scrambling to catch up.

Qualcomm-based start-up Zeebo, meanwhile, plans to take that model to the game console (see "Why Zeebo Game Console Makes Sense"). The San Diego company is building its console around Qualcomm's mobile communications processors. Because games are distributed wirelessly, there's less opportunity for piracy. Better still, because software developers have already built plenty of games for mobile phones using Qualcomm's technology, Zeebo will be able to tap into a deep developer community.

Will it work? It's hard to tell. The only thing for certain, at this point, is that videogame stores' days are numbered.

Looks like this is the up and coming new disruptive technology for the gaming industry. You guys think that it will succeed? What do you think are the strategies for other gaming industry big players, like Sony?

We learnt about Blue Ocean Strategy and Disruptive Innovation, which we often link them to technology based products/services. Here's an interesting article which brings in the coffee industry and how blue ocean strategy is created not once, but twice-with Starbucks and Nestle. And how at the end of the day, it's all about constant innovation that keeps you on track.


So the next time you drink your coffee, do think about it.

Lessons from service innovation in the coffee wars

Is coffee a drink? Or is it a service? The answer may seem obvious: coffee is a black powder onto which you pour hot water, or consume from a vending machine at the office, and is known to be mildly addictive; it comes in tins or vacuum packs and is supplied by a small number of international food companies. So it is clearly a product. And yet, an understanding of what else customers want when they consume coffee has led to a revolution in the coffee business. Reaching a similar level of understanding about customer needs and the transformative power of service innovation may yet revolutionise the business you are in.

The rise of Starbucks as a ‘game changer’ in the consumption of coffee is a well documented story and a favourite of business schools over the last decade. INSEAD’s Chan Kim, explains how the founders of Starbucks were the first to comprehend the full ‘value map’ of what the customer wanted from their ‘coffee experience’. By positioning a new business (upmarket coffee with superior service) where nobody else was competing, Starbucks created a new market segment (what Kim refers to as a “Blue Ocean”) and captured very profitable margins for itself. Innovating the product was only part of the story: Starbucks offered its customers a convenient and relaxing moment on their way to the office. Accompanying every cup of Caffè Latte was an even more significant recipe: service innovation.

The product management teams of Nestlé, based in Vevey Switzerland, had spent the 1980’s looking at coffee in a very different way. Sales of the market leading ‘Nescafé’ were stalling, and some significant coffee markets, such as Italy, refused to drink instant coffee despite decades of marketing investment. The Nescafé mentality was pure ‘Red Ocean’, as Professor Kim would tell us: a focus on how to promote a product through existing channels while attacking the competition head on. After decades of the instant coffee wars, nobody was thinking about service innovation before the Starbucks wave crashed onto the global retailing scene.

And yet, a possible answer to the challenge of Starbucks had already been invented within another division of the giant Swiss company. In 1976 Nestec, Nestlé’s development centre, patented a form of capsule containing freshly ground coffee and a pressurized process for coffee extraction. It took ten years before anybody got round to marketing it, at first to the slightly quirky Japanese and Swiss markets. Another ten years would go by before the ‘Nespresso’ concept was adequately worked out for other markets.

Since 1996 sales of Nespresso have more than tripled: it is now a very high margin billion Euro business. (Source of graph, Nestlé Investor Group Meeting, Decemer 1st 2006).

The product had not changed significantly since its invention, so what explains how Nestlé was finally able to turn Nespresso into a business that has enjoyed almost explosive growth? Superior marketing, and the support of George Clooney for sure, but more importantly a distribution and service concept in line with the up market positioning of the product. Over this latter period, the company opened boutique stores in key city centre locations around the world to sell machines, capsules and accessories to the high end consumer. Just as significantly, the company embraced the Internet, selling next day delivery of coffee capsules direct to members of the ‘Nespresso Club’ (who now number over 2.5 million).

The business of selling coffee has changed radically over the last ten years, driven by these new service concepts. Is the innovation over? It is not hard to find competitors for Starbucks and Nespresso, and each of them is adding their own form of innovation. McDonalds is now Germany’s leading coffee retail chain with over 500 ‘McCafé’ outlets around the country, and similar number elsewhere in Europe, which offer cappuccino and espresso with pastries adapted to the local market. Philips and Sara Lee set up a joint venture in 2001 to build the Senseo ‘coffee pod’ system. Senseo claims to fit in yet another new market space (somewhat different from Nespresso) a mass market proposition which Philips calls ‘café crema’. With more than 4 billion pods and 10 million machines sold since the launch of Senseo, it is clear that this ‘Blue Ocean’ is very wide as well as deep.

These businesses (with the exception of Starbucks which over-extended itself during the boom years) are showing particular resilience during the downturn. Both Nestlé and McDonalds were rare in producing 2008 results which exceeded analyst expectations. Maybe there is something about providing a unique and innovative customer experience, which keeps them coming even when times are tough.

How is the metaphor of innovation in coffee retail relevant to you in your business? Firstly there’s the story of Blue Ocean strategy: considering where no one else is adequately responding to customer needs and building an effective product and service position. Secondly, there is a lesson to be learned from companies who sell very physical products (food and burgers) but nevertheless consider service innovation to be absolutely essential to their continued success. Gerhard Berssenbrügge, CEO of Nespresso (quoted in Management Today in June 2006) "In real estate, it's location, location, location; here, it's innovation, innovation, innovation, on all fronts."

Extract from EFQM

When writing a business plan, what is one important question you should ask yourself?

It ought to be “what is my business model?”

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So, what is a Business Model?

It is in fact...

...the method of doing business by which a company can generate revenue.

According to Henry Chesbrough and Richard S. Rosenbloom, in the “The Role of the Business Model in Capturing Value from Innovation”, below are the 6 basic elements of a business model:

1) Articulate the value proposition - the value created to users by using the product

2) Identify the market segment - to whom and for what purpose is the product useful; specify how revenue is generated by the firm.

3) Define the value chain - the sequence of activities and information required to allow a company to design, produce, market, deliver and support its product or service.

4) Estimate the cost structure and profit potential - using the value chain and value proposition identified.

5) Describe the position of the firm with the value network - link suppliers, customers, complementors and competitors.

6) Formulate the competitive strategy - how will you gain and hold your competitive advantage over competitors or potential new entrants.

What does the above 6 sound to all of you?

Sounds like market research and 4Ps !

And more importantly we are not to forget the competitive strategy in which we are using to make sure we stand out to achieve sustainability.

Business Models and Strategy

It is important to note that completing a business model does not constitute strategic planning.

Strategic planning factors in the one thing a business model doesn't; competition.

What is strategy?

According to the Collins English Dictionary, strategy is "a particular long-term plan for success".

Competitive strategy is about being different and the goal for a corporate strategy is to find a position in the industry where the company is unique and can defend itself against market forces. To do this the company must choose a set of activities that can deliver a unique mix of value.

Let us now explore how market forces can influence our strategies.

As such, it is important to understand what the Porter's 5 forces are and make use of such knowledge to help us strategize:

Please read about Porter’s 5 forces here: http://www.quickmba.com/strategy/porter.shtml or refer to older post for a very detailed description/explanation of what the 5 forces are.

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Once you assess how the market forces are affecting competition in your industry and their underlying causes, you can identify the underlying strength and weaknesses of your company, determine where it stands against each force and then determine a plan of action.

Plans of action may include:

Positioning the company - match your strengths and weaknesses to the company's industry, build defenses against competitive forces or find a position in the industry where forces are the weakest. You need to know your company's capabilities and the causes of the competitive forces

Influencing the balance - take the offensive, for example innovative marketing can raise brand identification or differentiate the product.

Exploiting industry change - an evolution of an industry can bring changes in competition. For example, in an industry life-cycle growth rates change and/or product differentiation declines; anticipate shifts in the factors underlying these forces and respond to them.

All in all, having a UNIQUE strategy applicable to your industry is essential to seeing your business idea go from fruition to reality.

Good luck!

Now that you understand the four innovation styles,

Introducing… COMPASS!

The Compass technique is basically a simple ideation guideline that incorporates the four innovation styles- Visioning, Exploring, Experimenting, Modifying.

The diagram below is a simple illustration of the COMPASS technique.

	Visioning	Exploring	Experimenting	Modifying
General	What ideas could give us an ideal future?	What ideas could start with new assumptions?	What ideas could combine different elements?	What ideas could we adapt or modify to what we've done?
Emotion-based Ideas	What would excite us?	What would surprise us?	What would amuse us?	What would satisfy us?
Getting Ideas from Customers	What could meet the long-term goals and strategy?	What could revolutionize the way things are done?	What could be tested to see how it works under trial circumstances?	What could be added to what is already in place?
New Products or Services	What ideas represent the ideal wishes of our customers?	What ideas would break the rules of "conventional wisdom" about our industry?	What ideas have the right mix of features?	What ideas would extend our current offerings?
Organizational Change Processes	What could produce the best possible "world-class" organization?	What could shake up (or "unfreeze") the organization to allow a new way of doing things?	What could give us the best synergy among our units and capabilities?	What could preserve the best of the status quo and still move us forward?
Quality Process Improvement	What could give us the ultimate process?	What could we do if we started from scratch?	What could combine the best features of many processes?	What could improve on the current process?
Strategic Planning	How can we be ideally positioned in our industry?	How can we rewrite the rules of competition or invent new industries?	How can we synthesize different capabilities, markets, technologies, and partnerships? What can we combine to form a new solution?	How can we build upon our core strengths and competencies?

Why use Compass as a guideline for IG?? Because it helps you to...

• Generate a more comprehensive as well as creative set of ideas
• Depersonalize interpersonal conflict and build more synergistic work teams with diverse people
• Present your creative ideas and innovations more effectively
• Lead better creativity sessions
• Implement changes more effectively