Monthly Archives: October 2012

What Sandy can teach us about risk management

If you live in the United States, and especially on the East Coast, you are all well aware of what is being called Frankenstorm – aka Hurricane Sandy. Which is expected to make land fall sometime Monday. The storm has already left a wake of fatalities and destruction, and for that it is already a tragic reminder of Mother Nature’s power. Now that it is taking aim at the East Coast of the United States, including cities such as New York, Washington DC, Philadelphia and other large eastern seaboard metropolises the risk of catastrophic damages has elevated.

 

Not sure I will be taking off anytime soon

 

Of course I am always looking for lesson we can take, what can we learn from events such as this. One lesson for me is the poor response by certain businesses to what is a clear demand signal and should be part of any risk management strategy. We have been warned about the potential for this storm for at least 5 days. Yet in some areas the response has been woefully inadequate. One area in particular – air travel. Okay I realize this is annoying me personally as I was suppose to go to San Francisco for a series of meetings. I am hoping that by some miracle I get on a flight Tuesday now…but most likely I will have to cram a week’s worth of meetings into a half day Wednesday and an all day marathon Thursday (As my colleague Chris Smith says “not third world problems” I realize). However what I am realizing and having a bit of a difficult time dealing with is the lack of preparedness on the part of the airlines. USAir in particular since that is who I was flying.

I realize that canceling an entire day of flights out of their hubs, especially Philadelphia, might be taxing on their systems. Yet, once again, this is something they should have planned for a week ago. The signal, similar to a demand signal, has been clear as day since meteorologist started waxing about the coming of Frankenstorm. The path was always projected to do some level of damage to the East Coast. Any airline and transportation hub, one would think, would have some contingency plans for such an event. Yes I realize that USAir was sending out messages that one could rebook without paying the change fees…but I only found this out via Twitter. Hmmm, maybe an email or a call would have been appropriate as well. Now today, they started cancelling flights, but I feel they started doing so late in the game. By this time their phone systems have been overwhelmed. Yet when I call, instead of telling me to hold it just tells me that “our systems are overwhelmed so call back later.” Uh okay. Why not do this, when you know you are going to have a major event, bring in more resources to handle your calls. Better yet, have an automated system that tells you – if you want to wait on hold for 3 hours, please do so, otherwise call back. Finally, how about this. Allow folks to rebook via your web site. I realize that this might add some complexity with regards to those online and on a phone call to rebook, but I am sure there is a way of handling this. Run some model that tells you how many seats to allocate for online rebooking and how many via phone. Or better yet…shape the demand. Push online rebookings to certain flights and do the same with those calling in.

I am sure the airlines have run some risk assessments for these exact scenarios…or have they?

They could learn something from this. Most would be thrilled by getting a signal 5 days in advanced, give them time to get things in order. But once again the airlines failed to deliver. I mean if I can go to Costco today and still be able to purchase plenty of bottled water and batteries then they knew how to prepare for this storm…granted the selection of sliced bread was slightly meager.

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Apple throws the guantlet down with new iPad…get ready to rumble!

As many of us are still digesting the new iPhone as well as being bombarded by a deluge of advertisements both for the iPhone and against the iPhone (feels very political!), Apple rolled out a new iPad. The mini iPad.

So what to make of this new iPad…one that I doubt would have ever been rolled out had Jobs still been alive. A couple of observations:

To me the whole strategy for this product was to go after the smaller and less expensive tablet market. Unfortunately the price of the device might have added a level of difficulty. The price, $329, is much higher than I thought it would be. Much more expense than the devices that it is suppose to compete with – the Kindle, Nook, Galaxy and Nexus. These are all priced more than $100 cheaper than the iPad mini. I am not sure if this is going to be sustainable for Apple. At this price point are they really a viable option for that market?

From what I can tell the form factor is just a smaller version of the iPad – no surprise there. So nothing in that makes it more appealing than the other tablets of that size.

The reality is, tablets are great devices because they are really just blank canvasses that allow access to content. They have to be portable, light, durable, have a good UI and have access to content you would want to carry around with you. For most I would argue the deciding factor is a combination of price, size and what content is accessible. If Apple is looking to attract clients of the other smaller tablets to come over to the iPad mini, I think the high price point will be a barrier too high. Is Apple looking to appeal to their install base with another shiny Apple device? Maybe. But that risks cannibalizing sales of the regular iPad.

It feels like Apple is riding two horses at the same time. That is never a good recipe for success. If Apple really wanted to go after the install base of Amazon and Google, then price appropriately. If Apple just wants Apple aficionados to added one more Apple device to their roster, I am not sure that will generate enough revenue.

As Rick Leighman said: “They just think they can slap an Apple logo on anything and people will buy it.”

That might no longer be true…

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Filed under Current Events, Tablet

iPad mini – smart move or sign of Apple coming back to the pack?

“So they made the iPhone bigger and are shrinking the iPad…” 

Apple is set to unveil its newest device. Well not really “new” since it is a different version of their iPad tablet. Now speculation is rife on what the price point will be for the iPad mini – the $199 price range that will put it in direct competition with the likes of the Kindle Fire, the Nook and the Nexus 7 or a higher price point around $250? That price would put it higher than the aforementioned tablets but lower than its big brother full sized iPad. Question remains…does this matter? What I mean is, does the release of a new iPad indicate a decline in the once all powerful Apple? I am not saying Apple is about to go by the way of RIM, but has Apple lost areas to innovate?

Think about it. When the iPad came out it created, or really jump started, a dormant space – the tablet. The iPhone and more importantly the app store, revolutionized the smartphone. Take the idea of using your phone for calls and emails to a whole new level. The iPod was the first truly user friendly MP3 player. The iPad mini…what is at the core of this roll out? One could argue that Apple is moving down stream and putting out a fighting brand to take on their rivals in the smaller tablet market. But that would be a me-too move, something that Apple has avoided doing for many years. Apple has created the market, not been a follower.

The introduction of the iPad mini might prove to be a wise business move, allow Apple to get into the game in a space that Amazon has quietly taken to be its own. However it could also be an indication of what is to come from Apple – a company run more like Mitt Romney – focused on market analysis, finding margin, taking market share from others. Not like an Obama styled company – built on vision and looking beyond the horizon. Time will tell if Cook and the rest of Apple can find new places to create a market. Or if the passing of Jobs will prove to be the tipping point for Apple.

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Filed under Current Events, Smart Phone, Tablet, Technology

How the mighty have fallen – can it get worse for RIM?

I read an interesting articleabout the downturn of a once powerful brand – Blackberry.  A product that once commanded 50% of the smartphone market is now less than 5% of that market. In only three years…what a precipitous drop. It has even been called out

Back when the Blackberry was “cool”

as not cool enough for companies like Yahoo!

The article points out the one area that is at the crux of why RIM lost its fastball – innovation. The lack of innovation when it came to creating and developing apps was the downfall for the once powerful icon. I can speak from experience. Yes I was once a Blackberry loyalist. When it was about fast email and a full qwerty key board, the Blackberry had few rivals. But that market shifted. Emailing is only a fraction of what we use our phones for these days. It is not even about web browsing, it is all about having access, via apps, to a number of functions. Whether it is to find a restaurant through Yelp, or reading the news via Zite, posting on Facebook, or reading the latest Tweets or fighting a zombie invasion through horticulture our phones have become a conduit to a cyber smorgasbord of tools. While this was happening, RIM continued to cling to their email servers and qwerty keyboards.

Unfortunately I am not sure that RIM will be able to recover from this position. Question becomes how will this story end? Will someone come and buy the Canadian company? Will they go out of business? Or will they somehow reinvent themselves and emerge from the ashes…much like another iconic tech company that was in the computer business and now is the consumer electronic darling – Apple.

This story is not over, but I am not sure RIM has a Steve Jobs type leader to get them out of this tailspin. If the following video is any indication, I am not hopeful for RIM and their future –

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Filed under Current Events, Technology, Wireless

How we buy our groceries – we have the power they have the supply chain headache!

This weekend I read an interesting piece in Boston.com – it was all about the shifting behaviors we have when it comes to buying our food. Click here for article. The basic theme of the piece was that we no longer simply go to one grocery store, but rather selectively shop at many different locations. While the days of the butcher, baker and candle stick maker have gone by the way of the dinosaur, we are becoming trained once again to seek specialization within what are suppose to be large distributors. Distributors that were suppose to be one stop shops.

As consumers this is has put the power and control back in our wallets. We can go to a Whole Food Market for some specialty meats, then hit Costco to buy our toilet paper in bulk and finish at Giant Eagle to get some staples like bread and ketchup. Could we just do this all at one store? Sure. But we like the choice. For retailers and CPG companies this has added a layer of complexity when it comes to pricing, packaging and distribution.

I can drop a bulk pallet at Costco, but need to break that bulk when I deliver to Kroger or Giant Eagle. If I run a promotion at Shaws, but my consumer gets that item at Costco will I be cannibalizing a sale? From the CPG stand point, they need to know across all these channels what is happening, what is creating lift and can they draw patterns? For the retailer, they must be aware of how their consumers are shopping at their store. Is the consumer coming on a regular basis just to get milk and bread? Or do I need a fuel perks type program to gain loyalty?

Add to this equation the massive influx of consumer and manufacturing data and you have a daunting task for both retail and CPG supply chains to manage this process. An exciting time for us as consumers, an opportunity for retail and CPG.

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Filed under Consumer Product Goods, IT, Retail, Supply Chain