On Customization

Thoughtful and considerable piece on product personalization.  Psychology at some level,  but also linking direct specific need to function as well as a statement of value.    Customer as co-creators is an interesting way of thinking about it.

The Psychology Behind Custom Product Purchases   By Liraz Margalit in CMSWire

Ecommerce firms are discovering the value of online product customization and the additional revenue potential it can generate. Over the last few years, product customization has burgeoned in the online space, as consumers look to buy a plethora of mass-customized goods from suits to handbags and shoes, from bicycles to personal computers. Deloitte found one in five consumers who expressed an interest in personalized products are willing to pay a 20% premium.

Today, many popular brands rest their entire business strategy on their ability to customize. The Nike By You website (formerly known as NikeID), for example, offers customers the ability to customize their shoes. They can pick the color of the bottom and top of their new shoes, the pattern and shoelace color, and even have an inspirational message sewn into the tongue of the shoes and the option to share their designs online.

According to Brand Channel, Nike By You has seen its online business triple since 2004.

What's the Attraction of Customization?

Customization is part of a broader trend that shifts brands' perspectives from viewing customers as recipients of value to co-creators of value. Rather than being passive, the customer is now becoming a part of the “product development” process.    ... ' 

Procter Thinking More Channels

My former employer talks products, packaging, supply chain, channel selection and design.  Quite a broad set of considerations for a relatively typical kind of CPG product.  Of course, direct to consumer experiments have been experimented with by Procter and other large CPG's for some time.

E-commerce forces CPG brands to think differently
by George Anderson in Retailwire with expert opinion.

Consumer packaged goods companies have always had to adapt their businesses to meet the needs of retail customers as new and growing channels of distribution (dollar stores, warehouse clubs, etc.) emerge. This is certainly the case over the past 20+ years as brands have been challenged in previously unforeseen ways by the development of digital commerce.

CPG giant Procter & Gamble is a clear case. The brand manufacturer is among the first to dip its toes into the direct-to-consumer space while also working with new customers (Amazon.com) and established ones (Walmart) on a variety of fronts. One example of this is P&G’s Tide Eco-Box, an ultra-concentrated liquid detergent contained in a cardboard box designed to be shipped to consumers’ homes. The detergent is currently listed for sale on Amazon, but not on the Target or Walmart sites.  (more details as to design at the site).... "

Wal-Mart has a Toy Lab

In a completely different domain, we asked the same question:  How can we get consumers to feel they are very involved with us,  are our special customer?   Special testers of product and experience?   Here the more recent concept of the 'unboxing video' is being used.   Plus some aspects of humor and scripted interaction.   Nice idea.

Can online unboxing videos turn Walmart into ‘America’s Best Toy Shop?’
 This article was written jointly by Tom Ryan and Matthew Stern. In Retailwire,

Walmart this holiday introduced an online shop, The Walmart Toy Lab, that invites kids to become a “Walmart toy tester” and play with 20 top trending toys from their computer or tablet.

“Like stepping into an interactive unboxing video, The Walmart Toy Lab lets kids take on the role of an official Walmart Toy Tester,” wrote Walmart in a statement.

Unboxing and toy feature videos have shown to be a huge draw for toy-shopping kids. Earlier this year, Walmart partnered with pre-teen YouTube star Ryan of RyansToyReviews, who in 2016 made a whopping $11 million off his unboxing videos.

The Toy Lab rollout comes a few months after Walmart’s announcement that it was branding itself as “America’s Best Toy Shop” with expanded toy aisles and assortments in its stores, an improved toy demoing experience in-store and exclusive toy-related content online.

At the Walmart Toy Lab microsite, an interactive video first introduces the game’s host, Burt, who guides kids through the toy-testing steps. Using a “Funtroller,” kids select toys to test and can choose to take a closer look, try their main features and watch other children play with them. Kids can also click the “Don’t Push” button and see Burt enter a dream sequence, hang upside down or otherwise face an “unexpected surprise.”  ... "

Experience is the New Product

Experience Is the New Product; Here's How to Manage It
Organize around customer episodes, improving them through Agile teams.

By Gerard du Toit, Jens Engelhardt, Phil Sager and Karsten Fruechtl in Bain.

More companies now emphasize the entire experience surrounding a product or service. But how do they improve the experience, or fix a broken one?

For many, the key unit of management has become the customer "episode," and the core method is Agile. An episode consists of all the activities involved to successfully fulfill a customer's need.
While most Agile to date has focused on software development, improving an episode requires coordinating every factor that affects it, including product features, policies, processes, channels and technology.

Therefore, the team that owns an individual episode should comprise members from all the relevant functions. ....  "

Measuring Innovation

Includes video.  Standards of measurement are always useful.

Taking the measure of innovation   By Guttorm Aase, Erik Roth, and Sri Swaminathan

Don’t overlook the insight that two simple metrics can yield about the effectiveness of your R&D spending.

You’ve probably heard the old joke about the two economists who saw $20 on the sidewalk. “Look,” exclaimed the first economist, “a $20 bill!” “It can’t be,” the other economist answered. “If it were a $20 bill, someone would have already picked it up.”

We were reminded of this story when we began to notice a pair of innovation metrics that seemed so intuitive that we assumed they must have been conspicuously applied and rejected before. So far, however, we’ve found no indication of widespread use—and a reasonable amount of evidence suggesting that, at least for most industries, the measurements work.

R&D conversion metrics for innovation performance

We call these indicators R&D conversion metrics: R&D-to-product (RDP) conversion and new-products-to-margin (NPM) conversion. Their core components—gross margin, R&D, and sales from new products—are not new, but combining them can reveal fresh insight on the relative innovation performance of business units, within an organization and relative to external peers (Exhibit 1). The first metric, RDP, is computed by taking the ratio of R&D spend (as a percentage of sales) to sales from new products. This allows organizations to track the efficacy with which R&D dollars translate into new-product sales. The second metric, NPM, takes the ratio of gross margin percentage to sales from new products, which provides an indication of the contribution that new-product sales make to margin uplift.  .... "

Modeling Product Cannibilization with Bayesian Nets

Currently investigating further applications for the use of Bayesian nets.

Another interesting example of the use of Bayesian networks, here  to model Product cannibalization, under conditions of uncertainty. 

Stefan Conrady, Managing Partner at Bayesia USA & Singapore: Bayesian Networks for Research, Analytics, and Reasoning

Quantifying Product Cannibalization with Bayesian Networks
The example uses new car model introduction as an example, and interestingly compares it to modern machine learning techniques using pattern recognition.

Here is the latest installment of our popular BayesiaLab webinar series.   .... "

Product Management Competencies

Nicely done.   Take it beyond to process management understanding and competencies. And their interaction with Products.

Product Management Is Key to Digital Business Success
by Deacon D.K. Wan   in Gartner

A growing number of firms are finding that establishing product management competencies is the most critical element in implementing product-line management, and its adoption is growing rapidly.

Do you know how Product manager help works with the circle and orchestrate stakeholders to deliver better outcomes? See this note to learn how to find the right people for the job, whether they are located in the business or in IT, for better outcomes in your Digital Business Success.  .... " 

Product and Experience are King

Interesting positioning.   Of course depends on the category of product that we are talking about, and what kind of experience exists today in their Moments of Truth  (MOT) ...  (Market, Choose, Use) for given demographics of demand.  I like the points being made.   Continuing to think in terms of this.

Product is No Longer King  by Robert Hetu   in the Gartner Blog

The old saying “product is king” is no longer true for retail. Experience is king, and product is a critical component of experience, but consumers increasingly determine the value provided by the associated experience. This is seen by the transition toward click and collect, home delivery, auto-replenishment, in-store entertainment and the growing use of subscription services.
Gillette has lost U.S. market share for six straight years. Its share of the men’s-razors business fell to 54% in 2016, down from 59% in 2015 and more than 70% in 2010 (http://www.foxbusiness.com/markets/2017/04/04/gillette-bleeding-market-share-cuts-prices-razors.html).  This was driven by low cost subscription services Dollar Shave Club, Harry’s Razors, and others.

Cost plays an important role in this shift, and quality remains a key element, but experience is a major driver and was a well known problem in the industry.  I recall having a discussion back in the 1990’s with someone from one of the major blade manufacturers.  At that time it was explained to me that men used the first 3 razors from a 4-pack in rather short order.  They however tended to use the 4th razor longer than the combined usage time from the first three.  The problem they faced was how to get men to use the 4th razor for a similar time span and then to purchase the next 4-pack, representing a huge sales opportunity.  They never solved the problem. .... " 

Empathy and Product Design

Have followed this site for some time, follow along. 

Empathy and the Art of Product Design
By Vignesh Ramesh in UXMatters.

Solving extraordinary problems and creating customer-centric products and services that people want and need is a valuable skill that requires a unique blend of fact-based expertise and creativity.

Product design is more than a series of simple steps or a mechanical process for solving a problem. In fact, when done well, product design is something of a mystery. Solving extraordinary problems and creating customer-centric products and services that people want and need is a valuable skill that requires a unique blend of fact-based expertise and creativity.  ... " 

Engaging with Customers on Facebook

We looked at ways to connect effectively to customers to do product development.  How should it be done?

Does Engaging with Customers on Facebook Lead to Better Product Ideas?    By Irene Bertschek, Reinhold Kesler

Feedback on social media can serve as a valuable source of information for companies, helping them to improve and develop products and services. Examples include Gillette, which launched the very first product for assisted shaving based on feedback inferred from social media, and Tesla, which improved the company’s app based in part on CEO Elon Musk’s reading a customer’s complaints on Twitter. At end of 2016, Airbnb CEO Brian Chesky asked on Twitter what the company could launch in 2017.

Anecdotes aside, does this user feedback actually help create better products? In our study, we analyze the role that Facebook plays in the innovation process. For our analysis, we used data from nearly 3,000 German manufacturing and service firms from a 2015 survey by the Centre for European Economic Research. In contrast to studies focusing on large listed companies, our data set includes a large share of small and medium-size enterprises reflecting what’s typical in the German economy. With this data, we set out to study how important social media is for smaller firms. ... " 

Addressing the Analogy Gap

Reminiscent of using humans as a peripheral, here determining high level relationships, then having the deep learning sort out the lower level patterns.  Points to Mechanical Turk, which we used this way.  At what point are the results general?  The comment about scale is key.  Also the mapping involved, very useful for generalizing and testing.

Crowdsourcing may have just helped close the "analogy gap" for computers    It's vexed computer scientists for decades, but a huge roadblock for true AI is falling    By Greg Nichols for Robotics

Researchers at Carnegie Mellon University (CMU) and the Hebrew University of Jerusalem in Israel have used crowdsourcing to teach computers to generate analogies so they can mine datasets to address new challenges by repurposing old concepts. "After decades of attempts, this is the first time that anyone has gained traction computationally on the analogy problem at scale," says CMU professor Aniket Kittur. The researchers hired participants via Amazon Mechanical Turk, tasking them to look through products on an innovation website and find analogous products from the same source. The participants noted which words caused them to link disparate products, mapping each pathway. Computers with deep-learning algorithms used these insights to analyze additional product descriptions and find new analogies. The researchers say this strategy can be used to customize computer programs to identify analogies between patent applications and literature on global problems.  ... " 

In Pursuit of Creativity

Via HBS.   Full research paper at the link:

In Pursuit of Everyday Creativity    by Teresa M. Amabile

OVERVIEW — This paper describes the most compelling research trends around creativity and innovation. It suggests that 1) creative behavior of ordinary individuals is likely to become more important to the development of products and services, and 2) future studies should focus on such creative behavior—and related psychological states and environmental contexts—as it happens.

AUTHOR ABSTRACT
Creativity researchers have long paid careful attention to individual creativity, beginning with studies of well-known geniuses, and expanding to personality, biographical, cognitive, and social-psychological studies of individual creative behavior. Little is known, however, about the everyday psychological experience and associated creative behavior in the life and work of ordinary individuals. Yet evidence is mounting that such individuals can be responsible for important instances of creativity and innovation in the world: open innovation, user innovation, and citizen innovation. Research into this phenomenon could do much to advance the study and practice of creativity. .... "

Human Centered Design

Been a while since I have taken a look at the concept.  I like it, but I have seen accurate measurement ignored when design thinking was invoked.   Interesting view from O'Reilly.

 What is design thinking?

Human-centered design and the challenges of complex problem-solving.
By Jonathan Follett

" ... Design thinking is an abductive approach to complex problem solving that leverages the designer’s empathetic mindset in order to understand people’s unarticulated needs and identify opportunities for solutions. This is a human-centered innovation process that can be applied to a wide range of challenges: design thinking can be used to create everything from products and services to business models and processes. .... " 

New Products for a CPG Giant

I no longer work for consumer product CPG Giant Procter & Gamble.    I did analytics and competitive analysis innovation work for them for years.  I still have quite a few readers there,  I still own some of their stock,  so this post is particularly aimed at them.    Your global competitors are doing some interesting things to develop new product ideas.   See the article linked to below:

Lysol owner and Indiegogo team up to find the next... Lysol
Crowdfund a new health product and you might be discovered by a major chemical company. ... " 

Why Marketers Fail in Product Innovation

In Knowledge@Wharton:

Why Marketers Often Miss the Mark in Product Innovations

Why do most new products fail? According to Clayton Christensen, the author of Competing Against Luck: The Story of Innovation and Customer Choice, it’s because companies focus on a product’s features instead of the job the customer wants it do to. In this piece, Knowledge@Wharton reviews the book’s assertions and highlights how they were put to practical use in various industries.

In 2008, Chris Anderson (then the editor of Wired magazine) wrote a provocative article called “The End of Theory.” Anderson insisted that the era of Big Data had rendered the scientific method — developing a hypothetical model first, and then testing it with data — increasingly obsolete. Google and other companies were generating a “data deluge” that could no longer be contained or explained by models, by theory. “With enough data, the numbers speak for themselves,” Anderson wrote. “We can stop looking for models.” ... " 

Getting Aboard the Food Truck Revolution

In Retailwire.  Here this talks about the Food Truck Concept in retail in particular.  A useful conversation.  But taking it further, should CPG and other companies look at this as well?   Building  word of mouth driven channels of quality and personalized product directly to the consumer.

How will Innovation Save P&G?

In the Enquirer:  I worked in the innovation space there for a number of years.  Good article on what's up publicly, mostly in product as opposed to operational innovation.  Nothing very surprising, but worth it for CPG and P&G watchers.

CPG Supply Chains

An element of cost and capability that cannot be ignored.  Do you know the processes in play? Architecture should be frequently re-examined.

Rising costs, complexities of supply chain are top concern for CPG companies 
Increased product portfolios and online shopping formats have contributed to a decline in customer service and rising freight costs for manufacturers, according to a survey from GMA and Boston Consulting Group. "Traditional best practices are no longer sufficient," said Peter Dawe, a Boston Consulting Group partner and a co-author of the report. "Today's challenges require greater strategic partnership between the supply chain and the business as a whole. And when that happens, the supply chain can actually enable enterprise growth ...  " 

Some Consumers Can Predict Product Failures

In RetailWire: " ... While brands and retailers continually try to link themselves to trendsetters, a new university study has identified a unique subset of consumers — "Harbingers of Failure" — for their ability to predict product failures.

The study from Northwestern University and the Massachusetts Institute of Technology identified these customers either through past purchases of products that failed — such as Diet Crystal Pepsi or Frito Lay Lemonade — or past purchases of existing products that few other customers buy. ... " 

Launching Products

Useful rules for launching products.  Brenden Mulligan provides insight.  ".... In this exclusive interview, Mulligan shares five rules for startups releasing new products. A well-designed launch includes everything from messaging to metrics and press relations to marketing hooks. Every launch is a leap, but Mulligan’s tips will give your products the best lift. .... "