Category » Innovation « @ Weiner Edrich Brown

The Growth of Self-Secondary Markets

Communities used to meet in town squares to buy, sell and swap goods. For a while, that model all but disappeared, but thanks to a host of new social networks and other web platforms, people can now trade, swap, rent or barter goods, skills, services or expertise with considerable ease.

Shift from owning to renting has been a common topic in the news.  In fact, Rachel Botsman’s book  ”What’s Mine is Yours: The Rise of Collaborative Consumption” presents a compelling case for 21st century sharing.  Check out her video from the recent TED conference:

To some, this may look like the purse-tightening aftershocks of the economic recession – for financial reasons, renting something often makes more sense than buying it.  But what we are seeing emerge is a more fluid approach towards ownership, and a dramatic shift in consumption habits.  In fact, purchasing products altogether – regardless of price and/or size – is losing some of its allure.

But it’s not just about changing our consumption habits; it’s also about a widespread value shift. A shift from valuing possessions to valuing usage.  A shift from valuing ownership to valuing access. There is also the social aspect.  By sharing our things, we are exhibiting a sense of sociability. In an era when families are scattered around the country and people may not know the people down the street, sharing things – even with online strangers – allows people to make meaningful connections.

As is the case with collaborative consumption, we here at WEB like giving new concepts new names…and therefore creating our own vocabulary.  In the interest of this revamped concept, we are referring to it as “self-secondary markets” because of how the end-consumer is shifting — in fact, the consumer itself, rather than then company or brand, is the one creating the secondary market.

There is tremendous activity in this space right now.  Here are a few examples:

  • RelayRides helps car owners rent their vehicles to other people.  It’s similar to Zipcar, but without the fleet;
  • The Ritz Carlton’s Loan-A-Lab program provides guests a yellow Labrador to “borrow” for hiking and other types of excursions;
  • Peer-to-peer money-lending through Zopa.com allows people to completely sidestep the banks.  The default rate is also less than 1%.

The growth of self-secondary markets represents a new and potentially highly lucrative value-add for companies and organizations looking to expand and redefine traditional ways of conducting business.  In a time of collaborative consumption and growing competition, access to the consumers may well be the most valuable asset to a business.

Cashless Utopia

Last night, Jared and I (Erica) had the pleasure of attending PayPal’s Cashless Utopia Event at the Chelsea Art Center.  PayPal’s aim is to usher us in to this utopia by establishing itself as the standard mechanism by which we pay for everything – online, on mobile devices, and even in the physical world. For PayPal, the difference between online and offline, in many ways, is starting to disappear.  PayPal’s apps for Apple’s mobile devices and for Android allow users to find merchants that accept PayPal, and then pay for their purchases electronically.

At this great event, we were able to tour PayPal’s 7 “passport destinations.”  Here are a few of the highlights:

  • Mobile: PayPal’s Bump technology enables iPhone users to bump their phones together to exchange cash.  iConcessionStand is a new app that lets you order food and beverages from concession vendors, such as those found at a sports stadium, and pay using PayPal.
  • Student Account:  This allows teens to shop in stores and online with PayPal, while their parents can monitor all account activity and transfer money to them.
  • Travel: Bill Me Later is a convenient and secure payment method which allows users to defer payment for your purchases for up to 6 months.  The Mail A Postcard app allows you to turn a picture into a real postcard.  The cost of the postcard and the stamp is deducted automatically from your PayPal account.
  • Home & Lifestyle: PayPal has teamed up with P&G to provide a way to search for great deals online and shop on your mobile using PayPal.

Some important charities were also represented: Save the Children, Donors Choose and the ASPCA.

I encourage everyone to check out PayPal’s blog to learn more about their cool initiatives.

Redefining the Shopping Experience

As technology has advanced, so has the experience of shopping.  New distribution channels have provided new opportunities for consumers.  People no longer shop only in stores, out of catalogs and from websites.  Thanks to virtual reality, people can now shop in an entirely new dimension, and it is helping enhance the experience by making it more personal and realistic.  At the same time, avatars are also beginning to populate the virtual landscape and are becoming powerful economic consumers.

If most people today were to walk into a typical clothing store, what would they find?  They would find the fitting rooms to be little closets in the back, with no technology in the service of the customer.  This is largely because the store designers themselves are stuck in the world they knew before new distribution channels became popular.  But things are beginning to change.

A couple years ago, we saw Accenture come out with the Online Wardrobe, a smart closet which uses sensors, tagging and tracking technologies to keep track of the clothing you already own, and helps you buy coordinating items, either online or in physical stores. This way a new way of connecting the real/physical and virtual worlds.

I recently came across a fantastic video that Adam Gordon posted on his  blog The Future Cafe that changes the way we look at the concept of the retail fitting room:

An extraordinary revolution is taking place on the front end of retailing.  Now, time and digital technology are combining to alter the entire pre-purchase and purchase process.  The payment process is also being revolutionized.  People can “bump” their mobiles and transfer money, and swipe their mobiles and purchase products.  Social media and networks pass along recommendations and tweet product experience and preferences.  Advertising avenues and messaging are multiplying rapidly, and and the disintermediation of traditional channels is rampant.

However, as technology rapidly advances, it will be increasingly important to pay particular attention to the experience of the purchase (and not just the technology), since it is the experience, after all, that seems to generate the long-term satisfaction.

Sensory Overload

This is a test for all of you…Which sense is most closely tied to memory?  The answer? Smell.  A smell can bring on a flood of memories, influence people’s moods and even affect their work performance. Because the olfactory bulb is part of the brain’s limbic system, an area so closely associated with memory and feeling, smell can call up memories and powerful responses almost instantaneously.

Marketers and advertisers are catching onto this.  A number of brands and social initiatives are now experimenting with sensory memory, looking to wield their own indelible stamp on consumers’ subconscious.  Here are some examples:

Meaty Billboards: Salisbury, N.C.-based Bloom grocery stores made history by erecting the first-ever scent-emitting billboard which sprays a charbroiled smell over a highway via a giant fan.  The billboard features a giant fork-stabbed bite, and emits a charcoal- and black pepper-scented oil to passing cars.

Toothsome Greeting Cards: American Greetings is introducing a new Tasties collection. Each card contains a dissolvable flavor strip that corresponds to the occasion it marks. A birthday card emblazoned with an image of a cupcake tastes like vanilla. Other reported flavors include “donut” and “margarita.”

Fresh Air Fund Fragrances: MacArthur Genius Grant recipient Majora Carter, founder and executive director of community organization Sustainable South Bronx, together with French perfumers Bruno Jovanovic and Pascal Gaurin, Carter created L’Eau Verte du Bronx du Sud (“Green Water of the South Bronx”), a scent containing essences of rain, grass and citrus fruit, with which to infuse the common areas inside an entire low-income apartment complex in the South Bronx. Carter believes that the Sister Thomas Apartments, located a little too close for comfort to a sewage treatment plant and a trash transfer station, will benefit tremendously from a real breath of fresh air.

Scenting an entire building is the latest ambition in a growing business that has, for years, gone unnoticed by most consumers.  There are now ~20 companies worldwide specializing in ambient scent-marketing and dispersion technology. Industry executives value the business at roughly between $80 million and $100 million.

According to a recent article in Business Week:

Scent branding is becoming just as prevalent in retail. Researchers believe that ambient scenting allows consumers to make a deeper brand connection, and data has led many other non-scent-related companies to join the fray. Recently, Gaurin helped create a fragrance for Samsung’s stores, which has been cited throughout the industry as a milestone in scent as design. He claims the research showed that not only did customers spend an average of 20 to 30 percent more time mingling among the electronics, but they also identified the scent—and by extension, the brand—with characteristics such as innovation and excellence. Credit Suisse, De Beers, and Sony have all been experimenting with ambient scenting in their retail spaces, too.

And starting this fall, you can even get a master’s degree in scent design at Parsons New School for Design in New York. As part of a “Scent as Design” seminar, organizers enlisted luminaries from various fields to collaborate with fragrance experts.

Design Space: Urbanization & Vertical Living…With a Twist

In previous posts, we talked about the eight distinct growth areas of the emerging Metaspace economy. One of these growth areas is design space (See our past blog post about design space here). We continue to scan interesting sites and blogs for emerging design applications that fit with not only the growing design imperative…but also with important marketplace trends.

Currently, and for the first time in history, more than half the world’s population lives in cities. This is a tremendous milestone with myriad long-term consequences. Urban planning, civil engineering, and architecture are among the disciplines that will be most profoundly impacted by the urbanization explosion. As the world becomes more urban, it inherently becomes more “vertical.” We often talk about the bourgeoning development of vertical farming as a future engine of both economic and environmental sustainability in dense urban centers. However, intriguing new design applications are also emerging that could one day redefine what it means to “live” vertically.

The longstanding norm of linear apartments stacked perfectly on top of one another in linear structures may soon be complemented by an entirely new paradigm. Those who desire urban living, but lament the forfeiture of many of the benefits of suburban/rural living may soon enjoy “stacked houses”. Could these types of designs ever take hold in a major urban metropolis? Surely, they would command a premium — not just for square footage, but also for cost of construction. However, this is a great example of cutting-edge engineering with an eye toward both the current design imperative and the global trend toward “vertical.”

A Garden for the Future

In response to skyrocketing food prices, more and more people – both at home and at work – are growing their own food.  As a result, sales of vegetable plants and fruit producing trees and shrubs have jumped.  In the United States, spending on vegetable plants rose 21 percent to $58 per household in 2008, and spending on herbs gained 45 percent to $32 . And according to a National Gardening Association survey done in conjunction with Harris, 41 million Americans grew fruits and vegetables in 2009. That’s about 13 percent more than the year before.

Food swapping, in which people barter food for other edibles they don’t have in their own respective pantries, is also gaining in popularity. In London, an annual event called The Great Food Swap attracts hundreds of people looking to exchange their homemade goods. Events such as these also foster a unique sense of community.

But what was once thought of as a backyard pastime, is now gaining in popularity in corporate office backyards, too. As companies have less to spend on raises and health benefits, a fashionable new perk is emerging: the organic corporate vegetable garden. Carved from rolling green office park turf or tucked into containers on rooftops and converted smoking areas, these corporate plots of dirt spring from growing attention to sustainability and a rising interest in gardening. But they also reflect an economy that calls for creative ways to build workers’ morale and health.

For instance, Google, Yahoo and Sunset magazine have all started organic gardens.  But the trend has also caught on at more-traditional companies, too, such as PepsiCo. At the headquarters for the Kohl’s department stores near Milwaukee, the organic gardens provide vegetables for a local food bank and a place for children at the company child care center to play.  Aveda offers on-site massage and organic cafeteria food at its headquarters, and employees can take home fresh produce.

Embedded in all of this is a general concern about food.   Whether related to climate change, water pressures, population growth, changed eating habits, blights, diversion of arable land to production of alternative commodities for uses other than food, mismanagement of resources, waste, alterations of nature or pollution, the pressures on food are mounting, the prices are rising, and the concerns are escalating.

For any organization, there are a number of starting points for discussion and accountability:
•    In what ways do we (our practices, products, services or members) contribute to food waste, and how can that be addressed and combated?
•    In what ways are we encouraging infrastructure development that allows for more efficient and effective delivery of food to those in need?
•    In what ways are we contributing to research and development, and financial accounting and capital deployment, that support the production of food?
•    In what ways are we encouraging people to eat more moderately and reduce their demands for food?
•    In what ways are we encouraging indigenous populations to steward their lands and food resources in more effective ways?

The Emerging “Metaspace” Economy: Design Space

We here at WEB often talk to our clients and conference attendees about the “Evolution of Economies” — a critical understanding of how economies have historically layered on top of each other, while the societies underlying them replace one another. It’s a complex issue to be sure, and one that is way too comprehensive to cover in one blog post. That being said, as we discuss the Evolution of Economies, we talk about how we have entered into (and are continuing to enter into) the emerging “Metaspace” Economy. The Metaspace Economy has sprung upon us at unprecedented speed, as economies are replacing one another at faster rates than ever before. Indeed the pace of change with respect to everything (especially technology) is unlike anything we’ve ever seen.

Within the emerging Metaspace Economy, we have identified 8 distinct “growth areas” for business. They are all conceived within the framework of “space.” And one critical growth area that we talk to many of our clients about is “Design Space,” especially as it pertains to the organizational functions of innovation and product development. The purpose of this post is simply to introduce the concept into the vernacular of our blog, and to set the stage for frequent posts about interesting developments, articles and blogs that we see in the area of Design Space.

A great site for keeping tabs on novel applications that not only adhere to, but expand upon, this new design imperative is The Cool Hunter. The site is broken out into a variety of categories, but “design” is a good place to start for anyone looking to find something novel. While perusing the site, we saw an article about these great portable, modular designs for mini hotel rooms or “sleep boxes.” These have have actually already begun to appear in airports and other locations around the world. Kitschy and unnecessary, or innovative and adherent to both the design imperative and an emerging market need? We know that people are facing time pressures and multitasking more than ever before. You decide…but fascinating nonetheless. More to come…

Transposition of East & West

Last summer, WEB authored an important working paper called The Transposition of East & West. Based on some relevant recent happenings, now is a great time to revisit the theme.

Issue Summary:

Currently,  we are seeing a two-way transposition of not only traditional Western values, traits, and characteristics on Eastern cultures (via “Westernization,” or “Americanization”) – but traditionally Eastern values, traits, and characteristics on Western cultures to an extent perhaps unforeseen in recent times. This bilateral shift is happening in profound ways. Indeed, not only is the world’s economic influence shifting, but core values – as they pertain to civil liberties, religion, education, and technology – are also in flux. Eastern cultures traditionally perceived as more conservative are opening up, while Western cultures traditionally viewed as more progressive are becoming more restrictive.

Putting a macro-lens on the economic portion of this theme, a 2008 report by the National Intelligence Council states among several relative certainties that between now and 2025, the unprecedented shift in relative wealth and economic power from West to East will continue. The report also states that the U.S. will remain the most powerful country in the world, but will be less dominant.

Recent Developments:

Updating this paper, we see that even the core Western tenet that is freedom of expression has been somewhat turned on its head with some important recent developments:

Consider Some Implications…

Implications of this theme are manifold. For example, in our original paper we discussed how many of the world’s largest consumer goods firms have begun adopting the process of “trickle-up innovation.” This entails creating entry-level goods for emerging markets and then repackaging them quickly and cheaply for sale in rich nations, where customers are increasingly hungry for bargains. While this concept is not all that new, it should be reemphasized in the context of this theme. Will execs at global companies fight to retain the more ingrained status quo, or will they embrace trickle-up innovation strategies?

Companies and organizations that operate globally will now have to navigate a new landscape when managing cultural norms within the global workforce, with global professionals, and among the global consumer market. Norms, values, and expectations have shifted. The terms “free market,” “civil liberties,” “innovation” and “gender equality” will be among the many that will no longer conjure up stereotypes of governments, populations, corporations or regions. East/West mixes of management, policymakers, board directors, committee members and marketers, designers and product developers will become extremely beneficial if any significant-sized entity wants to remain nimble and viable as it navigates through this transposition.

“Effreshency”: Random Promotion & the Peter Principle?

In our last post, we defined and explored “effreshency” — a new organizational paradigm that WEB has identified moving into the future. A refresher formula:

Efficient + Effective + Innovative + Adaptable + Inclusive + Accountable = Effreshent

Another  fascinating recent development in this area…

Random Promotion & the “Peter PrinciplePsychologist Laurence Peter posited the “Peter Principle:” people in a workplace are promoted until they reach their  maximum level of incompetence. Italian Scientists have now discovered that this might be avoided by the rather counterintuitive idea of promoting people at random. While only theoretical, sometimes it takes a novel approach like this to affect real organizational change.

One blogger offers an insightful take on this issue here, discussing (among other things) how randomized algorithms can sometimes mitigate the undesirable effects of deterministic models.

Another blogger evaluates the profound implications that a newly-conceived structure borne out of this type of research would have on an organization and its employees. What if “promotions” were no longer the ultimate end goal?

Is this a truly “effreshent” approach for the future, or unrealistic and ill-conceived? Whatever the response to that question, it’s clear that we always have to maintain an objective lens when assessing the validity of this kind of research. Findings obtained within a controlled research environment may or may not translate into practical application within an organizational context. We will keep you abreast of any updates on this and related topics going forward…

“Effreshency”: Employment Guarantee or Tuition Refund?

In the context of today’s rapid technological and economic change, organizations around the world are faced with daunting challenges. Traditional thinking is no longer optimizing results, and an entirely new model is emerging – one that we at WEB call “effreshency.” Effreshency refers to the implementation of new and “fresh” strategies that improve upon and revolutionize traditional thinking about six distinct areas of organizational performance that are often viewed separately. Effreshency breaks tradition in all of these six areas simultaneously, and moving forward it will increasingly be the recipe for a sustainable, profitable and competitive organization. The equation for this new model can be expressed as follows:

Efficient + Effective + Innovative + Adaptable + Inclusive + Accountable = Effreshent

A  fascinating recent development…

Job Guarantee…or Tuition ReimbursementA community college in Michigan has started offering potential applicants money-back guarantees, in an effort to increase enrollment. Beginning in May, people who take six-week courses in certain subjects will be guaranteed a job within a year – or else they will be refunded their tuition. This is certainly an unorthodox idea, particularly for a school in Lansing, Michigan – where unemployment is at 11.7%. The guarantee will apply to the four most in-demand technical jobs in the area: call-center specialists, pharmacy technicians, quality inspectors and computer machinists.

If successful, this approach will conceivably touch upon each of the six variables in the above effreshency equation. Most notably, the school is taking a fresh approach toward accountability — plus it is showing clear adaptability in the face of a challenging enrollment environment.

Is this a truly “effreshent” approach for the future, or unrealistic and ill-conceived? The figures on exponentially increasing tuition costs in the U.S. are staggering. Additionally, the debt burden on the average student, coupled with difficulties in job placement, can be crippling. Is this new model set to catch fire as the wave of the future in higher education, or is it a quirky strategy doomed to fail? It remains difficult to envision top-ranked and prestigious universities ever being forced to implement this sort of strategy, but perhaps community colleges will serve as a beta test. Regardless of the outcome, there’s little argument as to the marketing buzz being generated here.