Amazon’s key strength is in it’s supply chain and distribution centers, delivering a vast array of long-tail products – this is how they started with books, and how they thrive with general merchandise today. Of course, excellent customer service.

So it makes sense they protect this strength from [...]]]> love the acquisition of Kiva by Amazon.

Amazon’s key strength is in it’s supply chain and distribution centers, delivering a vast array of long-tail products – this is how they started with books, and how they thrive with general merchandise today. Of course, excellent customer service.

So it makes sense they protect this strength from alternatives or duplication.

so taking Kiva off market is another way to ensure no competitor can best them in running better distribution centers, or, in the case of customer care, Zappos. The formula is clear – acquire any promising technology, and either embrase it or stub it out. but dont let it grow unchecked!

For what starts looking like a typical hindi movie with pity-inducing melodrama, it ends on a note that stuns even the most sophisticated indian movie goer. Not that we haven’t seen such films from hollywood before, but because a hindi [...]]]> It’s one of the best movies i have seen in recent times, go watch it.

For what starts looking like a typical hindi movie with pity-inducing melodrama, it ends on a note that stuns even the most sophisticated indian movie goer. Not that we haven’t seen such films from hollywood before, but because a hindi movie was even made with this kind of a story line.

It’s awful to reveal how it ends, but it’s notable about how it runs.

The story goes like this: a lady turns up in Kolkata, fully pregnant with a man that disappeared while on an IT assignment to Kolkata, determined to find out what happened to him. At this point, this movie has all the hallmarks of woman-against the wold feel to it – replete with situational inconsistencies, character development flaws, even glaring holes in the logic of the story. Here it goes again i wondered. Another half-hearted attempt at a good movie.

As she follows an unraveling trail of feeble leads, her husband gets linked to terrorist attacks a few years earlier, and higher officials of the intelligence establishment get involved. At this point, it  leading us to believe this is turning out to be a copy cat of something like Bourne Ultimatum, except the dashing hero replaced with a front woman to appease the ‘sentiment’ requirement for the indian moviegoer.

Just when you’d think the story will end with a happy reunion with her tormented husband, you’ll notice a third turn, albiet borrowed from hollywood. I was stunned at the audacity of introducing such sophisticated twist to indian audience, but the deftness with which it was delivered to the average indian movie goer. It has plenty of borrowed storytelling techniques – camera work borrowed from NYPD Blue, a well-used cultural texture for reliefs in story telling and an allegory to slam home the point.

While hindi directors have been successul in capturing the sprit of sophisticated youth, and southern directors mastered the art of the check-your-brain-at-the-door ‘entertainers’, quietly, bengali and kerala directors have mastered the art of telling sophisticated stories. I was stunned by Rain Coat, and I am amazed at Kahaani.

Watching sunset behind me as i drive home across the san mateo bridge, i kept thinking [...]]]> Heard an ad from Sleep Train on the radio today, announcing that they’d match any competitors’ published price for 90 days. at the outset, it sounded like price war problem in a race to lower and lower margins.

Watching sunset behind me as i drive home across the san mateo bridge, i kept thinking how they could be doing this and still be expanding their business. turns out it’s anything but race to the bottom. here’s how -

lets say Sleep Train offers price match guarantee. lets say their competitor, Mattress Discounters, did respond with a lower advertised price to customers of Sleep Train. If a customer actually did use this incentive, Sleep Train would rather refund the difference than to accept a product return - after all, the sale has already been made, and the cost of acquiring the customer is probably much higher than the price difference.

So Mattress Discounters doesn’t gain any new customers, but only managed to hurt the bottomline of Sleep Train. But wait.

The advertised lower price now applies to 100% of Mattress Discounters’ customers, not just those that are comparing them with Sleep Train!

So Sleep Train can safely offer this Price Match guarantee with impunity, with no real monetary value delivered to the customer. 

let me explain. a typical company starts out with an innovative idea for a product – it procures [...]]]> somewhere on the route to from good to great, it happens. companies start with an innovation, create a marketable product out of it, and produce it at scale. then they transform from innovators to ‘sourcers’ of innovations.

let me explain. a typical company starts out with an innovative idea for a product – it procures the raw materials/parts that it needs, combines them in the unique way to create a product that is valued higher than the cost of the sum of the materials/parts. as you can see, the value addition happens in the way the materials are combined. e.g. you can procure a piece of sheet metal and mould it to make a very ordinary water bucket, or the next best mousetrap. very different ways of creating value.

along the way, hoping the product is hugely successful, it becomes good and very familiar with handling the parts it procures. it develops the expertise in the materials and the whole org is tuned towards making that particular product that it invents.

but the catch is, sooner or later, the innovation is going to become a commodity, and the the money you can earn from the value you have created is going to diminish over time. so what is a company to do? well, it has to come up with a new innovation again – one that adds a large amount of value, but that will use almost the same materials/parts and people that the organization is tuned towards. e.g. companies diversifying from selling airline tickets to adding hotel reservations, etc.

this happens a few times, but then, there comes a point when this cycle yields lower and lower value innovations – e.g.the traditional internal combustion cars are a great example. a car can improve only so much from chassis, carburetor, tyros and engine.

at this point, the company starts to outsource innovation, and to an extant, even the supply chain. the company starts buy into new ‘adjacent’ supply chains and new innovations that they foster. e.g. car companies go into financing. computer makers go into home electronics.

assuming you an do this diversification successfully long enough, you come to realize, that you aren’t good at any particular product, but you are getting good at picking winners. i.e. looking at the budding innovations and supply chains that are ready to hit prime time, and pushing them over the hump. you become a pure marketing company – one that’s good at ‘research’ (knowing what the market is demanding), and ‘development’ (taking an innovation and developing it to reach it’s market at scale).

coca cola does it well with water bottling firms, energy drinks, and sports drinks. cisco does it well with networking innovations. drug companies have mastered this part. proctor and gamble does it all the time. oracle has started to do it in the last few years. that brings us to my side of the world – have the web companies matured enough to go this route? that for another post.