Business models: a question of honour?

There's a story in Purple Cow that caught my eye about two restaurants. The first, Brock's Restaurant in Stamford, Connecticut, has a sign up above their salad bar: "Sorry - No Sharing". There is an explanation that this rule is necessary so that the restaurant can continue to provide good value. In other words "please help us protect our profit margins".

Compare this to the wine policy at a restaurant called Frontiere. The owner puts an open bottle of wine on every table. At the end of the meal you tell the waiter how many glasses you have drunk. An honour system.

The brilliance of this idea is that two glasses of wine pay for the whole bottle at wholesale price.

Isn't the salad bar just like the media business? In this case the sign might read "Don't share music" or "Don't photocopy books". The underlying message is the same: "please help us protect our profit margins".

What if we were more like Frontiere? What if there was an honour system?

In journal publishing that is exactly what does happen. Journal articles have no DRM. Fair use allows for copying and sharing of articles. Publishers trust librarians to honour fair use. Librarian respect that trust. Articles are shared widely and everyone benefits.

Freeware has a similar business model. Download for free but make a contribution if you use it and like it. You might find it surprising but many people do.

So what might an honour system for books look like?

Suppose we make books available online by chapter. The student pays for one chapter but has access to all. If they download more we ask them to tell us and pay.

Just as in the wine example, pricing will be key. I'm certain that the low price for a single chapter will attract a larger number of customers. I doubt it would be enough to protect the margins. The success of the model will likely depend on how many customers pay for a second or third chapter. The other thing to remember is that the printed book will of course still sell although likely in smaller numbers. And they would be other derivative versions, such as the complete eBook, or the eBook as part of a collection or library, and for a textbook an online course.

I'm sure this sounds like a crazy idea to you. Maybe it wouldn't work. But maybe it just might. In any event, I would love to see someone experiment with new business models like this for books. I think everyone would benefit.

Book Review: Purple Cow by Seth Godin

Something remarkable is worth talking about. Worth noticing. Exceptional. New. Interesting. This is a remarkable book for all those reasons. It is written with marketeers in mind but I think the insights are relevant to anyone involved in innovative product development. The book is a passionate plea to us all to think differently about our markets. And to think about marketing from the moment we begin to design a product or service. In fact marketing is design

The underlying theme of Seth's book is that the old ways of marketing are dead. He does a great job of explaining why. For example: "The sad truth is that whatever you make, most people cannot buy your product. Either they don't have the money, or they don't have the time, or they don't want it. The world has changed, there are far more choices and less and less time to sort them out."

Seth continues: "No-one is going to eagerly adapt to your product. The vast majority of customers are happy. Sold on what they have got. Not looking for a replacement, and anyway they don't like adapting to anything new."

These are humbling insights. It is all too easy to become caught up in your own success story when you are building products. You need the positive momentum to keep you going, to keep you excited. So it is a shock to discover that at the launch that the world isn't waiting eagerly for the stuff you have worked so hard on.

So what can you do?

Be remarkable. Create something that is worth noticing and that people talk about. Ideas that spread are more likely to succeed than those that don't. It is not about gimmicks. Not about creating remarkable blurb. Not about making a product attractive after it has been designed. It is about designing the product to be remarkable from the start. Products that are worth talking about will get talked about.

The book is stuffed full of examples of remarkable products and services to help you understand what Seth means by this. My favourites are: the Dutch Boy paint cans that are designed with easy opening lids and carrying handles to make the painting process easier. Tracey the publicist who chose to focus on the narrowest possible niche (plastic surgeons) and to become the world's best publicist in that niche. The Four Seasons in Manhattan that knows that personal attention can make people feel special.

This is not a perfect book. As always Seth can be by turns insightful and annoying. He has a self-confessed tendency to hyperbole and some of the case studies are a bit flaky. Overall though this is a great book and I thoroughly recommend it.

Oh yes and the title of the book? Well it's simple. If you were driving along in the countryside and you saw a cow that was purple instead of the usual brown or black and white ones, that would be remarkable wouldn't it? You'd probably tell someone about it when you arrived home: "hey you'll never guess what I saw - a purple cow!" That's what customers say about remarkable products.


#Twitternovels version of this review: Don't be boring. Playing safe is risky. You must be remarkable - you must be a Purple Cow

Purple Cow by Seth Godin

How close to the wind are your ideas?

I learnt how to sail with a wonderful instructor named Bert van Elderen. Over the years since then, I have realized that one of the things he taught me has relevance beyond sailing. Let me explain why.

As you probably know it is not possible to sail directly into the wind. You can however sail at an angle to the wind that allows you to make ground upwind. This is why yachts often sail in a zig-zag pattern. To make the most ground upwind you need to sail at the smallest angle possible to the direction the wind is coming from. This is called sailing close to the wind or close-hauled. You have to be careful not to sail too close to the wind, otherwise the sails start flapping and you lose speed. The trick is to learn how to sail as close to the wind as possible.

One day I was with Bert in a dinghy learning just that. Every few minutes he would ask me if I could "luff up", in other words sail closer to the wind. Sometimes I discovered that I could and sometimes I discovered that I was already sailing as close to the wind as possible. After a while I was pretty confident that I knew what I was doing, and yet Bert continued to ask the same question, again and again.

Finally, slightly annoyed, I asked him "why do you keep on asking that?, am I not doing it right?"

"Simple", he said, "It is a question with no wrong answer! If you are sailing as close to the wind as possible then the answer is no and you keep to your course; if the answer is yes, then you have fallen off the wind and you need to luff up a bit". What he was of course teaching me is that the conditions change all the time and that I should ask this question of myself all the time to make sure that I am sailing as close to the wind as possible.

I think this simple question applies to many things in life. For instance, it is the basis for retrospective reviews. "Could I have done that better?" is a question with no wrong answer. Either the answer is no, you did the best you possibly could, or the answer is yes, here's what I can do better next time. Either way you learn something. It is the key question to ask if you are interested in systemic change.

Jeff Honious reminded me last week that it applies to innovation as well. You should always be asking yourself the question "is this idea remarkable enough" or "can I improve on this idea?". These again are questions with no wrong answers. If the answer is "yes" then great we continue with the idea as planned. If the answer is "no" or "maybe not", then we need to do some work on the idea to make it better. Just like the wind, conditions around the idea change all the time. Asking these questions every day will help keep your ideas close to the wind.

Why good enough is no longer good enough

I am re-reading Seth Godin's book, Purple Cow. The book is a plea for being remarkable and for having remarkable ideas. Seth's argument is that in a crowded market, only those companies that stand out will survive. It is no longer enough to copy someone else's remarkable idea. Playing safe is too risky.

One of the many insights for me in this terrific book is that the opposite of remarkable is "very good" or "good enough". Not "bad" or "mediocre" as you might expect.

I think most companies are pretty good at weeding out the bad and the mediocre ideas during development. Concept testing and prototyping help us do this at low cost. I wonder how many companies are as good at sorting out the good enough from the remarkable?

Here is a scenario you might recognize. You talk to customers and get some remarkable insights. You turn these into remarkable concepts and remarkable prototypes. The customer feedback is great, you realize you are testing things that no-one else has ever done before. Wow! Then comes the business case review and the CFO says: "great idea, I love it, but could you do it for less maybe?....I mean does it have to be so fantastic - good enough is good enough right?". This sounds very reasonable doesn't it? The kind of thing CFO's say all the time. Has it happened to you?

I suspect this is how remarkable ideas are dumbed down into good enough ideas, and why many of these ideas disappoint upon launch into the crowded marketplace of today. There are plenty of products competing for our customers' attention, why should they even look at something that is unremarkable?

Good enough is WORSE than bad or mediocre. We can recognize the bad or mediocre and we have learnt to kill it early. The problem is that good enough fools us into thinking we are on the right track. Good enough keeps us investing in something that will never excite our customers. Ever.

The secret I think is to keep the remarkable ideas alive during the development process. You have to understand what it is that is remarkable about the idea you are developing or the concept you are testing. When challenged to do it more cheaply, as inevitably you will be, you have to work out how to keep that remarkable part alive. If that is not possible, it is better to stop than to proceed.

Here's two examples of what I mean:

Some years ago a couple of guys working at Mars thought it might be cool if you could print personalized messages on M&M's. Printing on tiny saucer-shaped, hard gum-covered chocolates without melting the chocolate or crushing the M&M and producing readable text proved to be technically very tricky. The easy thing to do, the good enough solution, would have been to personalize the packaging instead i.e. deliver M&M's in bags with your personalized message on the outside. Other companies do this. It's not that difficult. But no - the team at Mars stuck to their remarkable idea. It took them five years to figure out how to print on M&M's and how to do it in a cost-effective way. The result is My M&M's and an entirely new business unit: MarsDirect Inc. Today you can upload your own message and even photo's for printing onto M&M's. It is a huge success with around 2000 orders a day and many very happy customers. When you look at one of their printed M&M's you cannot fail to be impressed and ask yourself "how on earth do they do that?". It is remarkable. You can read more about it here.

ScienceDirect is another example. The original idea of providing desktop access to scientific, technical and medical articles was remarkable in 1993 when we first started experimenting with what would become Elsevier's web delivery system for scholarly information, ScienceDirect. This might seem strange to you now in today's world but remember that the world wide web didn't exist until Tim Berners-Lee proposed it in 1989 and only a handful of websites were live in 1993. Just as in the M&M example, the key problem to solve was the production. How could we take whatever format authors chose to send their articles to us in and turn it into something we could display online? And how to do it in a cost-effective way? Our computer-aided production process was the innovation that made this remarkable idea possible. There were many "good enough" moments in the 5 years it took to develop but the team stayed true to that original, remarkable idea of desktop access to articles.

As Seth Godin writes: "transform your business by being remarkable". Good enough is no longer good enough.