Kickstarter.com Lowers Barriers to Entry for Startups

If you haven't heard of kickstarter.com, it a website that allows individuals to get crowd funding for ideas that they would like to pursue, but lack the money to do so.  Recently a kickstarter project was funded with $4.4 million dollars in preorders.

http://news.yahoo.com/multimillion-dollar-pebble-watch-kickerstarter-really-grows-185456553.html

Kickstarter is a game changer and I would like to briefly discuss how it will affect strategy for major corporations.  Now anyone can come up with an idea, do a little bit of leg work to get drawings or renderings of their concept and make a video and post their idea online the next day.  The idea can be funded in less than 2 months and backers can add suggestions of changes they would like to see in order to make the product better.  So how can a corporation compete?  Corporations typically take years doing R&D and Market research before a product can be released and often times these products still fail when brought to the market.

Kickstarter has lowered barriers to entry for a firm to get in business with a product that is only funded if people are willing to pay for it.

Corporations may need to restructure their value chain by working more directly with its community of customers first and then building a product/solution according to customer interest.  Of course this also raises the threat of competitors and substitute products because it leaves the product idea out in the open and reduces IP protection.

It is not clear how the corporate world will adapt to this model, but they will need to find a way to leverage the wisdom of crowds to prevent the average Joe from coming up with a competing product that gets funded over night.

New iPad shows how Apple continues to stay above Competitors

 

With the relase of the new iPad, Apple has broken sales records and continues to lead the tablet market.  This if paritucularly interesting because so many other tablets and smartphones boast as impressive and in some cases more impressive specs than Apple's line of products. A value/innovation curve would look something like this:

Apple vs Droid

Processor                          X            X

Screen Size                        X            X

Price                 X                             X

Brand                                X            X

Uniqueness       X                             X

What's interesting is that even though some of the other products on the market may be cheaper and have more impressive specs than the iPad, but Droid Tablets tend to be 'me too' products; merely a copycat of the original innovation: the iPad.  If other Droid tablets can't find a way to add unique value, they will continue to be beaten by the iPad, which stands out by being the true innovator in the marketplace.

As I was reading out of "Good to Great" by Jim Collins, I came across the Hedgehog principle and it reminded me of a work experience I had last February.

Collins says that great companies fall in the intersection of 3 circles:

1) What are you passionate about?
2) What can you be the best in the world at?
3) What drives your economic engine

I was working as an intern for a small business consulting firm.  We had a project that allowed me to do things for the company that were both very creative and very analytic/numbers driven.  I soon came to realize that I didn't enjoy the data compiling and analyzing nearly as much as I liked getting to be creative through marketing and developing business strategies for the company.  I realized that for my career, I wanted to be able to use my creative side at least every now and then in my job.

I have also realized that I much more a "big picture", "visionary", "or idea-maker" type of person.  I have realized that may be the greatest skill that I have and is probably the thing I can truly be best at.

Lastly, I began taking classes in entrepreneurship.  This is a way that I can take my creativity and ideas and build real economic value.  I have recently begun building my own company and loving the direction my career has taken.

Now that I have applied the Hedgehog model to myself, I can apply it to my start-up as well.  I am passionate about what we are doing.  The idea is a blue-ocean idea and so we can be the best at it because no one else is doing what we are doing.  As I have thought about our economic engine, we should probably take a "per customer" approach because we will be selling a physical product and we can likely augment our core product with complimentary products that are cheap for us and high margin, in order to gain more profit per customer.

Overall, Jim Collins' Hedgehog Model is an interesting model that can be used to describe both success in find a career that works for you and in building a great company!

Kodak's bankruptcy explained by Porter's Five Forces

The following article show a great example of the how the Market forces outlined in the Porter's Five Forces Model can push a company of the playing field:


http://finance.yahoo.com/news/kodak-bankruptcy-dims-once-bright-025841813.html

Here's my analysis of the article:
Kodak was once a strong and thriving business.  As of this week, it has filed for bankruptcy!  So, how did this happen?  Well, if we take the situation and explain the events leading up to Kodak's demise with the Five Forces Model, we can understand how an industry giant can be brought to it's knees by a rapidly changing market.

As the article states, Kodak invented the handheld camera.  In other words, they created the Market for handheld photography.  Kodak remained the market leader until the late 1990's, when digital technology became a legitimate Threat as a Substitute Product.  Since Kodak acts a supplier to motion picture studios and other photographers, they began to lose bargaining power as a supplier because their customers had more options to suit their needs and gradually became less dependent on film.  


Chris McGurk said, "Kodak failed to recognize the game-changing impact the digital technology would have on the film-making business.  Those who didn't see it have fallen by the wayside.


The industry began to change and there began to be great competition within the industry, from companies with superior technology, like Canon and Olympus.  Along with an increase in competition  and new entrants came an increase in the bargaining power of consumers.  Consumers had more choices, better products, and lower prices thank to this competition.  The competitors who got on board with digital technology and led the market were able to push Kodak out of the market as industry leader and take over the market.  Essentially, everyone won except for Kodak because they failed to implement an effective strategy for a changing market.