I found myself recently referencing a post from 2 years ago on these two works. Here is an update.

The Blue Ocean Strategy has become a staple of business strategy and most MBA programs. At its core, the Blue Ocean strategy is about value innovation.

“Red” oceans are known industries and markets. The competition is constantly trying to outperform rivals and the waters bloody. It is an inevitable race to a pure commodity market. “Blue” oceans are industries and markets that are unknown today. Demand is created rather than fought over. There is ample opportunity for growth and profit. Blue oceans are often created from red oceans. A competitor finds an opening to create value and finds their blue ocean. Several examples are cited such as Henry Ford and the Model T and more recently Michael Dell and Dell Computer. I believe that Facebook would be another example since they have been able to execute on an idea that was not necessarily new (i.e. Friendster, MySpace, etc.).

The authors, Kim and Mauborgne, are too dismissive of red ocean companies. They state rather bluntly that corporate strategy is heavily influenced by its roots in military strategy. While this is in fact true, the authors insist that the goal of military strategy is to engage and combat the enemy. Competition, confronting the opponent and driving him from the battlefield are listed; however this is not military strategy. It is the goal of a direct attack. The direct attack is only one strategy that can be used and it is usually the one of last resort. This notion made me think how the blue ocean strategy would compare to Sun Tzu’s The Art of War, one of the oldest and most successful books on military strategy.

Here are some select passages from The Art of War that conflict with the red ocean view of corporate/military strategy:
1) All warfare is based on deception.
2) In all history, there is no instance of a country having benefited from prolonged warfare.
3) Supreme excellence consists in breaking the enemy’s resistance without fighting.

Sun Tzu would not advocate a red ocean. In contrast, The Art of War is blue ocean:

You can only be sure of succeeding in your attacks is you only attack places that are undefended.

Pretty clear talk of finding uncontested market space, capturing new demand and making the competition irrelevant. In contrast, red oceans are prolonged fights exploiting differentiation or cost. These are commodity markets, not drivers of innovation. Blue oceans are value innovators and have been known to mankind for since at least the 6th century BC. Red oceans work if and only if there are in fact commodity markets. Perhaps for agricultural products and metals, but what about technology? What about something as simple as an electric toaster? After all electric toaster was invented in 1893. These should be freely traded on the open market, the reddest of red oceans right? For more data and history on toasters and a fine article on commoditization read Schrage’s The Myth of Commoditization. Another compelling look at why red oceans aren’t so red.

The Kalakala Ferry leaves Seattle, March 2004

A piece of Seattle history is likely to finally meet its end in what has been a long and sad decline. The Kalakala, a beautiful art deco ferry, served the Seattle to Bremerton route for decades. After being rescued from live as a fish canary in Alaska the many rescue attempts have all been fruitless in their attempts to return the ship to it’s glory. There is news that she has now been battered by the recent storm. When she was towed from Lake Union in Seattle, people turned out in droves to see the ferry go through Ballard Locks to see a bit of Seattle history. Many were sentimental remembering when they rode the ferry. While I never did, I will admit to getting caught up in the nostalgia.

Two worthwhile recent articles on the Kalakala:
Three Sheets Northwest: Storm-damaged Kalakala close to sinking

NPR: Sinking Ship? Saving The Historic Kalakala Ferry

This is a Kodak Brownie No 2A, Model B that my great-grandmother purchased sometime around 1920. It still works. I was able to find some 116 film for it a few years ago and took this timeless picture of the Space Needle.

Much has already been written about the demise of Kodak and their likely impending bankruptcy filing. Many focus on the “cash cow” of film and how while Kodak invented many of the critical elements of digital photography they never capitalized as they should have. These articles are missing a critical piece to understand the long, slow death of an American great. Kodak had started to abandon and alienate even film customers as early as 1984.

What happened in 1984? Kodak eliminated the dated 116 and 616 formats used by my Brownie above. But that is not the real reason. Truth is that Kodak was starting to feel the heat of true competition from Japanese rivals like Fujiflim. How it responded is why the company failed. The company had twice been slapped with antitrust consent decrees. Kodak litigated its way to having those decrees removed in 1994. Later, Kodak attempted to inflame US-Japanese trade tensions with filing a Section 301 petition against Fujifilm. At the time, then CEO George Fisher had had success successfully used legal and political leverage to alter market behavior in Japan when he ran Motorola. The trade dispute was pre-emptive. Kodak’s never filed its concerned with the Japanese government before filing this petition. Amazingly the company disregarded that at the time it was being outspent in the Japanese market by a ratio of 10:1 while charging more for its own film. Somehow, Kodak was still able to have about 10% of the Japanese market. While the company sought to litigate in the US and Japanese markets, it failed to keep pace with innovation in film. Two examples where Kodak did not live up to its comparative advantage. First is the one-time use camera. Fujifilm introduced the one-time use camera that thrilled the Japanese public. A camera could now be purchased cheaply just about anywhere from a department store, drug store or kiosk. The product became an immediate hit. Kodak did not respond to this new product development for two years. Second is high resolution ISO 400 film, a technical breakthrough that addressed the image quality issues. It was a huge success. Again, Kodak did not respond to this new product development for two years.

Kodak consistently choose to cede two years of first-mover advantage to Fujifilm. This is not the Kodak you will read about over the coming days. This great American company lost its way long before the advent of the digital photography. Kodak lost the innovation edge and resorted to attacking the nature of free enterprise to protect its markets. As a result, it lost in the long-term.

That should be a lesson worth remembering today.

In the past 24 hours, I have had two diametrically opposed customer experiences. One was delightful, the other made me cancel my account.

I used to bank with a large national bank. When the wife (Disclosure: the wife works for Amazon but does not read my blog) and I married, we consolidated accounts to another bank, but kept this account to have a local presence. This arrangement worked for the last 7 years. Yesterday, I received my statement which included in my opinion ridiculous fees. Now, I was never informed that these fees would be incurred. The statement was the only notification. I am sure that there was some fine print that I missed; however nearly $20 for a “free checking” account is just poor business. I went to the local branch to close the account and they did do their best to try to keep my business. Given how these fees were incurred, large unnamed bank did not want my business any longer, so I was happy to oblige.

This afternoon, I re-started working on a project to extend a WiFi antenna into my attic. This has long been on my to-do list. During the basement remodel when I wired the house with coax and Cat 5e, I even ran a 50 ohm coax cable into the basement to extend the antenna. I never finished the project. Recently, I purchased what I believed to be the correct TNC connectors. Well, I goofed. I bought the wrong ones. The return process from Amazon (Disclosure: the wife does not work for the retail side of Amazon) was dead simple. I was not even required to return the connectors. Amazon just gave me the refund! While I may be a great customer, the shipping and restocking costs were likely more than the cost of the connectors. Not only does it make good business sense, it is an incredible customer experience. Hey, I am even blogging about it.

So who are you, large unnamed bank or Amazon? Can you delight customers while still making sound business decisions? How will your customers rate their experiences? Keep these questions in mind and stay customer obsessed in 2012!

You shall hold cherished places in our Christmas hearts, an by our Christmas fires; and in the season of immortal hope, we wish you a very Merry Christmas!
~ Dickens
Paraphrased from “What Christmas is as We Grow Older”

The United States entered the Second World War seventy years ago today. Both my grandfathers served in the Pacific. The courage and sacrifice of the nation as a whole at that time was unparalleled. Sadly, it has never been seen since. You will be humbled and likely cry like I did on the USS Arizona memorial’s sacred ground.

Ron Santo was finally elected to the National Baseball Hall of Fame today. It should have happened a long time ago. Growing up in Chicago, Santo’s legacy loomed large over the very unremarkable Chicago Cubs teams of the late ’70′s. Now with Ernie Banks and Billy Williams, he will be a part of Cooperstown. He was a workhorse playing the hot corner and hitting with power. He was an All Star nine times.

Santo also has the distinction of being the best player ever from Seattle.

I never got to see him play and I never met him. When he passed away around this time last year, this article was the best read on the man.

Also worth reading is Larry Stone’s fine article.

Since June I have been working with some very exciting technology that will change the way we sense the world. It is an ultra-low power radio circuit developed at the University of Washington’s Wireless Sensing Lab. My work has focused on finding commercial applications and partners for the technology. One application that will be reality and absorbed into our culture in the near future is the wireless body area network (WBAN).

WBANs are wearable bio-signal sensors combined with some computing power and an ultra-low power radio. There are many different applications but all center on measuring and communicating bio-signals (i.e., EKG, EEG, EMG). Emerging products in this space are measured by 3 related characteristics: size, weight and power consumption (SWAP). Higher power consumption requires higher-capacity batteries, which increases the size and weight of the product. Bandwidth (and data throughput) is an important consideration that is also related to power consumption. The higher the bandwidth, the greater the power consumed. Radio frequency spectrum has different bandwidth properties and power requirements to broadcast at different frequencies. This relationship is close to linear, that is, at higher frequencies, more power is needed, and more bandwidth can be utilized. Also important to consider is that today there approximately on average 5 radios per household. In the future there may be as many as 5 per square meter. Being able to do more with less is key.

Areas where WBANs will be important:
1) Military
The Department of Defense is researching future combat systems that provide commanding, unfair competitive advantages in communication and situational awareness. Being able to actively see the heartbeats of soldiers in the field or to detect an activated helmet-embedded concussion sensor will be the first step of turning the soldier of today into the future force warrior of tomorrow. Proposed designs are not far removed from a Star Wars Stormtrooper.

2) Healthcare
WBANs will be able to provide portable, low cost non-intrusive, real-time wireless monitoring of multiple physiological vital signs. Think reduced costs and patient compliance while improving the quality of care. Healthcare by wirelessly connecting individuals to healthcare providers – simply, affordably and unobtrusively, is an emerging trend. Corventis, CardioNet and Toumaz all offer low power wireless devices to monitor biosignials. CardioNet and Toumaz are public traded while Corventis has taken venture funding including a $10 million Series C round in late 2009. Something to think about: All WBAN products with medical applications will have a dual regulatory FDA and FCC considerations.

3) Sports and Fitness
The sport and fitness market is very much in the hobbyist and early adopter stage. There are two distinct camps, the sports monitoring startups like Zephyr and the hobbyist camp known as the Quantified Self movement. Zephyr is focused on the athlete. The Quantified Self movement is looking to measure, track and analyze bio-data. There are a rage of professional quality products, like Zephyr, to personal consumer items such as Nike+, Fitbit and the Up from Jawbone.

Bluetooth Low Energy, Ant and other protocols are beginning to address the issues of 5 radios per square meter. When those are solved, WBANs will be everywhere. The application possibilities will be pretty amazing.

While digging through some older posts, I came across the “Google Apps Sync for Microsoft Outlook” release announcement from 18 months ago. Google recently released version 2.5 of the product just over 1 week ago. An open question was how Microsoft would respond. Windows Live was the response. The functionality matched Google Apps for email, contacts and calendar. Windows Live versions of the Office suite have followed.

Exchange has long been a category killer for Microsoft. Google is going for the jugular. The most obvious objection to Google Apps will be “our guys love Outlook.” You do not hear much about the product, yet it is still being updated while scores of other Google projects bite the dust. Windows Live did go through a major upgrade over the summer. I use the Windows Live email for one of my accounts. I have been a happy gMail user for years, but wanted to see how the service matched up. The summer upgrade helped tremendously. No longer will emails from the same domain end up in my spam folder. The down side was that I lost 6 months of emails in the upgrade. Nothing terribly important, but occasionally, I find myself searching for one of those lost messages.

The Google vs Microsoft enterprise battle is just starting to heat up. Will be interesting to see what this looks like in a year.

Will Google enter the enterprise applications market?
It is a matter of time.

The recent GM announcement signal that the company is almost there. For many enterprises, the first business process to be put into place is CRM. Google will enter the enterprise application space in CRM to better leverage existing services.

Considerations:
1) gMail is becoming widely used in the enterprise. The cloud is proving privacy can work.

2) Email is the de facto CRM application. Sales, service and marketing all rely on email to connect with customers.

3) Google has great corporate data research with finance.google.com.

4) Searching for anyone (customer, prospect, etc.) involves a Google search in addition to searches in other services like LinkedIn, Jigsaw and Gist.

5) Alerts could be configured to prompt action based on search results.

6) Sales, service and marketing are becoming more about individual and less about the company due to social tools.

7) Microsoft and, Google partner, Salesforce are battling it out for cloud-based CRM. gCRM would be less robust, but give companies a reason to move from Office to Google Docs.

So what does Google need that they do not have today? I see 3 big pieces.

One, process across marketing, sales and service:
Process is a must. Organizations turn to a CRM system to give them best practices and process flows that they do not have. In my experience, all CRM clients are looking to improve process through technology — not the other way around. Process for marketing, sales and services organizations are very different, but all have a common thread of measuring the cost per call (also called contact, customer, or incident).

Two, sales pipeline and forecasting
Sales pipeline and forecasting is an extension of process, but it needs to be more flexible and dead simple to configure. Why? Because the average VP of Sales is on the job just 19 months. Every new VP of Sales will want to be measured by his or her own agreed to metrics, not by the old metrics that got the last VP ousted. This is very common and will be so for the foreseeable future.

Three, integration to back-end systems. Integration with back-end systems is one of the constants in CRM. This can be any system from ACD call routers to an ERP system. In the 30 or so CRM deployments I have been involved with, integration has played an critical part every time.

If Google will address these three missing pieces in a way that is robust yet flexible, gCRM will be a winner.