SCHMITTblog

iPhone’s Smart Price Slash

Apple drew a lot of shocked responses when it announced last week that it would slash prices on the uber-hyped iPhone, from $599 to $399.

The Wall Street Journal reported that Apple’s stock price took a hit from nervous investors.  And my “early-adopter” friends who paid full price last summer for this gorgeous gizmo must have been wincing at the news.

But I think the market got it wrong. This isn’t bad news for Apple at all. The iPhone was never supposed to be another iPod -- a breakthrough product that redefined a category (digital music players) and transformed its customer reach (from engineering students to the music-loving masses).

The iPhone represented a very different strategy: an extremely well-designed new offer intended to help Apple get a foot into a large and mature (i.e. price-sensitive) market,  cellular phones.

The cut in the iPhone's price makes sense for Apple’s ambitions. As Gene Munster, an analyst with Piper Jaffray, told the Journal:

"The bottom line: Apple is investing iPhone profit dollars over the next few quarters in order to be a legitimate player in the phone market," Mr. Munster wrote in a report.

Apple was smart to cash in on the iPhone’s hyper-buzz this summer (though it’s thoughtfully offering a $100 coupon for its customers who bought the full-price bullet).  But with Holiday Season 2007 approaching, Apple may be able to use a less stratospheric price to achieve some meaningful penetration in the cell phone market.

At only $399, I would even consider buying one.

-David Rogers

Can creativity be learned?

When I run corporate workshops and seminars, I am often struck by the lack of creativity and creative individuals in companies.  And that at a time when every company wants innovative, disruptive, bold ideas.  On the other hand, the argument in most of the management  literature is that everybody can be creative: creativity can be learned.  (I realize part of the argument is driven by the desire to sell books to creativity-deprived managers, but let’s take the argument for what it is.)

Yes, creativity can be learned – but it is hard.  It certainly does not happen over night, by jumping on trampolines, listening to an inspirational pianist in the middle of a conference room playing tacky tunes, or drawing a face, one stroke at a time, as part of team work. I have seen such creativity-stimulating tools in action, and they don’t work.

They don’t work because creativity is sort of like language.  In part it may be inborn: creativity requires “storing extensive specialized knowledge in the temporoparietal cortex,” and we must be “capable of frontal mediated divergent thinking, and have a special ability to modulate the frontal lobe-locus coeruleus (norepinephrine) system, such that during creative innovation cerebral levels of norepinephrine diminish,” says Dr. Kenneth Heilman, an expert on creativity and the brain.  And it requires the right environment to stimulate neural development – such as a stimulating environment and organizational infrastructure that combine work with play.  So, an off-shore one-day workshop will not do.  Organizational change (in attitude, thinking style, structures and processes) is needed.

In fact, at one point in our lives, we were all creative: when we were allowed to play as children, when we were using smashed cola cans to play soccer, when we were building sand castles on the beach.  Soon after, we are subjected to the process of socialization which eradicates most of the playfulness required for creativity.   Yet some of us (perhaps the “undersocialized”) remain excited like children.  For the rest, learning to be creative as an adult, while working in a corporate environment, is like second-language acquisition.  You can do it, but you will always have an accent.

We Map the World

Just when I was starting to think that social media (“user-generated content”) are destined to give us little more than an ocean of self-description (party photos, MySpace profiles, and favorite band lists)… something comes along and surprises me.

Like the recent New York Times article about the rise of map mash-ups (“With Tools on Web, Amateurs Reshape Mapmaking” 7/26/07).

I’ve actually used one of these for over a year. OnNYturf (http://www.onnyturf.com/subway/) has taken Google’s map of New York City and overlaid it with a map of the city’s subway system.  So the next time you need to find your way to an unobvious address (say… 200 Henry Street), all you have to do is type it into this site and zoom around to see which subway stop is closest (East Broadway on the F train), whether there are any other options (Delancey Street on the J, M, or Z aren’t much further), and what train connections you might make to get there.

The Times reports that by opening up their online map platforms to users, Google’s My Maps service and Microsoft’s Collections are allowing people to create millions of maps, showing mountain bike rides, biodiesel fueling stations in New England, even a map that shows the spread of graffiti within the town of Federal Way, WA.  Location-tagged photos from Flickr can be pulled in too, to add ground-level photos to a new map mash-up.  The total result, dubbed the GeoWeb, is turning into a project that might rival Wikipedia in its usefulness and collaborative spirit.

-David Rogers

[Read the full NYTimes article]

White Food

Today I got my second and final Brite Smile tooth whitening here in Singapore. Originally, I wanted to do Lasik eye surgery, but a Singaporean friend and brand consultant protested, saying “Schmitt without glasses is a brand travesty.” So I at least treated myself to white teeth.   Now, I have teeth like a movie star, as the lady at the front desk of my service apartment put it.

I am also on a strict 24-hour diet of white and clear food only: bananas, milk, water, rice, apples (no peels), white bread, white fish etc.  It’s interesting when you suddenly have to use an unfamiliar categorization scheme when you enter restaurants and supermarkets.  But it’s fun too.  And it sensitizes me to color in food.  Try for yourself. Eat purple on Monday, and black on Wednesday, and see how you feel. Or only round food on Tuesday, and triangular food on Thursday.  It’s not that easy to find what you need – but it stretches your mind and may boost your creativity.

Daimler sells Chrysler: Now what's going to happen with the Mercedes brand?

Just flew from New York to Milan to give a speech at the World Marketing and Innovation Forum organized by HSM: http://www.hsm-us.com/  I had lots of fun reading the articles about Daimler selling Chryler in the German press. They talk a lot about the huge financial loss for the German company, about executive hubris and about the Chrysler auto unions.  What I found curiously absent from the articles was a discussion of the future of the Mercedes brand.  The assumption seems to be that the company will do very well in the future because it is no longer distracted by Chrysler and can now fully refocus on one of its core brands. The only problem: the competition did not sleep -- namely, BMW and Audi.  So we will see if the Daimler managers can pull off a big-growth miracle with the Mercedes brand.

Skinny Ties

Suddenly those skinny ties are everywhere!  I saw them at the Oscars: all the cool actors were wearing them.  The only ones that still showed up in the dated bow tie outfits were the low-hierarchy documentary film editing folks.  Last night the host of American Idol wore a skinny tie.  Anderson Cooper will most likely be next.  Even Levav, my most fashionable academic colleague, may be pulling out his by next year's Oscars.  (My other colleagues may never have stopped wearing theirs from 20 years ago.)

So, it’s time to make a major wardrobe shift myself.  Watch out for an auction of my “old” ties on this blog soon.

If you didn't keep your own Miami Vice black leather skinny tie, try:
http://www.findcoolclothes.com/01187.html

SCHMITT Wears Zachary Prell

A former student of mine has launched a luxury men's shirts brand, and I just bought three of them.  Watch this video to find out about the new global brand "Zachary Prell."

SCHMITT Goes to Video

We just got a hard-drive videocamera in my office.  You take it out of the box, shoot, and copy the video right to your computer via USB.

With technology like this, I don't understand why not everyone's using video these days!

Who has time to type?

Welcome to the new, video SCHMITTblog!!!!

WHERE IDEAS MEET BEER

Just got back from a ten-day trip to Korea, China and Italy.  Before I left for the trip, I was holding the first SCHMITT OKTOBERFEST REUNION, an event for the Columbia executive MBA students that took my Munich seminar over the last three years. 

The theme of the reunion was “Where Ideas Meet Beer.” 

I have felt for a long time that the separation between ideas and beer is not only artificial but also unnecessary.  So, to set the record straight once and for all, I created the d’Wiesn Bierideen Lecture where – and I am quoting – “ideas are presented that lend themselves toward the consumption of beer and are best consumed under the influence of beer.”

The inaugural speaker was my colleague Don Lehmann who spoke on brand equity illustrating his ideas with lots of beer examples.  The speech was interrupted multiple times by toasts featuring the German drinking song “Ein Prosit der Gemütlichkeit.”  It is precisely this sort of Bierideengemütlichkeit that is key to innovation, as I will argue in my forthcoming book to be published by the Harvard Business Press next year.

The Beauty of Beta

We just completed our first Skypecast leading up to the 2006 Innovative Marketing Conference being help in New York June 8-9. This was made possible through the BETA version of Skype (v. 2.5). The Skypecast was coordinated in part through gmail, a BETA offering from Google (even though it’s been around for quite some time).

Google seems to be the king of beta, but the term beta is showing up all over the web these days. And why not? There are several great advantages to releasing a beta version of software, or other products, services, or even ideas for that matter.

Being involved in something during its beta phase makes people feel like they are “in the know” – part of that special group of early adopters. This benefits the organization by creating a larger group of early adopters who are more likely to tell their friends about their “discovery.”

Beta takes advantage of co-creation. Customers are able to give their input to actually improve new products. And perhaps more importantly, they feel like they are making a difference.

Beta accelerates the process of implementing new ideas while at the some time providing cover for the organization for imperfect elements of a product offering. In the current issue of Wired magazine, the head of Google Video responded to reviewers who called it “chaotic and frustrating” by saying

“We tend to ship products earlier than other companies because we want to see how people use them. We were very keen to find out what would sell. We’ve made changes in response. I think users see us as a group that has a living product and cares what people think.”

How's that for customer-centric?