Monday, April 2, 2007

Innovation Tools Part 5: Opposites Attract $

There’s an old trick using a 3x5 card. On one side of the card you write: “What it says on the opposite side of this card is true.” On the opposite side of the card, you write, “What is says on the opposite side of this card is false.” Then you give the card to a friend and ask them what the truth is.

So the friend looks at the side of the card that says “What it says on the opposite side of this card is true.” Keeping that in mind, the friend flips over the card and reads, “What it says on the opposite side of this card is false.” So now, you friend thinks…well, the first side said that the second side is true, so this second side must be a true statement.

But then again, if the second side is true, then it is saying that the first side of the card is a lie. If the first side of the card is a lie, then it is no longer saying that the opposite side of the card is true, but actually that the statement on the second side is false.

But then, if the statement on the second side is false, then the second side is no longer saying that the first side is false, but rather that it is true. So that would mean that the first side really is saying what is on the second side is true after all.

But then again…

The card game mentioned above is frustrating, because it forces a person to have to deal with having opposite points of view both simultaneously being true. We are far more comfortable with the notion that if one statement is true, then the opposite statement is false. The card game does not provide that option.

In reality, business can be more like that card game than we would like. Often times, opposites in business can both be true. For example, it can be true that centralizing one’s business can lead to more success, and it can also be true that decentralizing a business can lead to greater success.

We are in the middle of a series of blogs on how to think about ways to create new business innovations. One of the ways to innovate is by looking for a “truth” that is opposite to conventional wisdom. By looking in the opposite direction of conventional wisdom, one can often find another type of success. In his autobiography, Sam Walton referred to this as “swimming upstream.” By going the opposite direction as the crowd, one can often do quite well, as Sam Walton did.

The principle here is innovation through doing the opposite of the norm. This principle works because not everyone in society wants the same thing. Some people want the opposite of what others want.

Robyn Waters talks about something similar to this in a book called “The Hummer and the Mini: Navigating the Contradictions of the New Trend Landscape.” In this book, Robyn claims that “it is hip to contradict” because “consumers pursue opposites simultaneously.” The prime example is in the title of the book where two of the fastest growing car segments are on the extremes of size—the huge Hummer and the tiny Cooper Mini.

This not only applies to products, but also business models. Sometimes, people have become so accustomed to what’s normal that they haven’t thought of the benefits which could come by doing things completely different. We are going to look at several types of opposite pairings to illustrate how swimming upstream can lead to profitable innovation. There is a host of others we could have tackled, but there is only so much space in a blog. The pairings we will look at are:

1) Pay For Vs. Free
2) Cherished Vs. Disposable
3) Government Sector Vs. Private Sector
4) Own Vs. Rent

1) Pay For Vs. Free
There are certain things for which we have been conditioned through habit to assume as free (or virtually free). Take water, for example. A decade ago or so, most people saw water as a “free” commodity and would think it silly to pay for water. Now, the market for bottled water in the US is well over $15 billion, and in terms of volume, the US is only about one-sixth of the global market.

It also works the other way. People used to expect to pay money for information and various forms of entertainment, such as magazines. Now, thanks to the internet, people expect to get information and entertainment for free. Payment has been substituted with an advertising sponsored approach. Now people are talking about advertising sponsored approaches to make cell phone usage virtually free.

If your business is perceived as costly, can you devise a way to create a subsidized model where someone other than the customer pays for the product (such as advertising). Or, if people expect to pay very little for what you have to offer, can you find a way to change their perceptions so that they will pay much more for it?

2) Cherished Vs. Disposable
Some products are made durable, with loads of features and quality. They are meant to be prized possessions. Think of some of the high end cell phones costing close to $1000, with tons of features. At the same time, there are people who sell disposable cell phones, which cost far less and are thrown away when the minutes are used up.

The same thing occurred in cameras. There are high-end cameras loaded with qualities and features. There is also a huge market for cheap, disposable cameras. Both are in demand.

I even read one time about a company in the paper business who was marketing disposable wedding gowns, made out of a high grade of paper. The logic was that you only wear it once, so why put a lot of money into it? If you can sell disposable wedding gowns, then you can make just about anything disposable to at least some segment of the population.

It can also work the other way. Most pens have traditionally been rather inexpensive. In fact, pens are a very popular item to give away for free as a promotional item. When finished with them, they are thrown away. Lately, there has growth in the high end luxury writing instrument market, where pens are designed to be cherished for a long time.

3) Government Sector Vs. Private Sector
It used to be that certain parts of the economy were considered to be in the private sector and other items were considered to be in the public sector. In recent years, the lines are blurring more. Interstate highway tolls roads are now being run by private companies. Prisons are now being run by private companies. Heck, if you were to look at all the activity occurring outside the beltline in Washington DC, you’d begin to think that all of Homeland Security was being outsourced to the private sector.

Conversely, there are moves in the other direction, from private to public. There are people trying to push private pension programs onto the government. There is all kinds of movement in the health care industry around increasing the potential role of government. The lines are blurred in the war in Iraq. Soldiers are involved in establishing a private business infrastructure. Private subcontractors are working along side the soldiers doing things more traditionally thought of as being the role of the military.

4) Own Vs. Rent
There have been things that one typically owns verses things one traditionally rents. These lines are also being blurred. Retailers like Men’s Wearhouse have made tuxedos so inexpensive that owning is becoming cheaper than renting.

These days, there are people who will rent you just about anything you would have traditionally purchased in the past. For example, there are companies adapting the Netflix type of rental model to high end fashion. An example is Bag, Borrow & Steal, who specializes is renting out expensive designer handbags. You pay so much a month for the privilege of having the designer bag of your choice, and when you want another, you just return the current bag. There are other companies that do the same type of Netflix model for designer dresses, jewelry and other such items.

The timeshare industry will give you the opportunity to partially own all sorts of things, from places to live, expensive boats, expensive cars—you name it.

How things get paid for, who owns the item, how long one has possession—all of these issues appear to be up for grabs and negotiable.

We live in a time when conventional thoughts about how business models should work are continually being successfully challenged. Society is diverse enough that seemingly contradictory business models can all simultaneously be successful.

Therefore, when looking for a new innovation, your success may come from doing the exact opposite of what other successful people are doing. It’s time to get comfortable with simultaneously opposite ideas both being true. Life is a lot like that 3x5 card we talked about.

FINAL THOUGHTSIt is said that imitation is the sincerest form of flattery. It is also said that opposites attract. In this case, going the opposite direction may attract a lot of money to your business.

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