Business Blog: Hoover’s Business Insight Zone

It’s hard to believe, but nearly two years after its release, the Wii phenomenon is still building. Just yesterday I was talking to a colleague who’s had real trouble running down a Wii to purchase, and then comes this story in the morning’s news:

Nintendo Forecasts Profit Will Rise 26% This Year

April 24 (Bloomberg) — Nintendo Co., the world’s biggest maker of handheld game players, forecast profit will rise 26 percent this year as its Wii console outsells rival machines. […]

“Wii console sales are still on an upward trend,” Koki Shiraishi, an analyst with Daiwa Institute, said before results were released. “I don’t expect them to peak this fiscal year.”

I love how the mighty-mite Wii is kicking the butts of Microsoft’s Xbox360 and Sony’s Play Station 3. Why? Because the Wii is just . . . plain . . . BETTER.

Now, all the hard-core gamers in the audience will immediately say, “Nuh-uh!” — because the Xbox and the PS3 have demonstrably higher-tech components. More “horsepower,” in other words.

But pesky little Nintendo thought differently and figured out that they were trying to sell a more competitive gaming system — one that more people like better, instead of one that’s “better” in terms of component specs. The result has been a monster hit — surely one of the greatest products in the history of consumer electronics.

We’ve talked about this before:

• The best thing I’ve read about Nintendo’s Wii. (Links to a great article from Fortune.)
• Company of the Day, current edition: Nintendo. (Back when we were doing Company of the Day.)
• The Wii little dragon-slayer of the video game industry. (Most detailed entry; Chris Huston nailed the appeal of the Wii on the first take.)

As I was writing this entry, I talked about the Wii phenomenon with a different colleague. As he and I were talking, we came to the idea that the Wii might be something like the original Model T. Henry Ford’s great insight was that his company could use then-cutting-edge manufacturing processes to lower the price — and increase the ease of use — of automobiles to the point that they would appeal to a mass audience.

In comparison to Sony and Microsoft, Nintendo has done the same thing for the gaming-console business. History in the making, at least for this one niche.

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(Photo via Wikipedia.)

You need to get your head on straight instead.

A pencil is high technology if you use it for deeper thinking.

This comes to mind as I re-read this Dan Markovitz post:

The Lean Approach to Email Management: It’s Not About Technology

. . . Toyota is legendary for its production efficiency. The company is also legendary for being slow to introduce new technology. Management has always felt that it’s pointless to spend money on shiny new hardware, software, and equipment when the underlying process is broken: first get the process right, and then figure out whether it makes sense to invest in new technology.

. . . The real solution to the explosion of email isn’t a new Outlook add-in that makes sorting, filing, or finding email easier, any more than the solution to your weight problem is buying a bigger pair of pants.

I know many, many people who struggle with their e-mail overload. Or with meetings. Or with keeping track of the confustion of all their competing projects. Or whatever. Many of them are looking for a technology solution, whether that means a new e-mail filtering system, an enlarged memory partition on the e-mail server, or a better mobile device that lets them keep up with e-mails and IMs and tweets etc. while they’re in meetings. We could proliferate examples.

But what these folks really need is to get a grip on themselves. To ask themselves hard, basic questions about what their real work is and what they need to do to accomplish it. They need to examine — and then discard — their excuses. They need to really think about what value they bring.

By “they” I mean “we,” since I like the new shiny piece of technology as much as anybody. If I have a better grasp on this problem than some people, it’s because I’ve realized that in the overwhelming majority of cases, we don’t need better technology. We need to use our own brains better.

Okay, sure, some problems will only be answered by better technology. Samples:

• Cheap space travel.
• Ordinary cars that can run wholly off of solar power.
• Dirt-cheap desalination of seawater.
• Groundbreaking research in genomics, pharmaceuticals, and particle physics.
• 100% reduction in some industrial effluents.

But seriously, if you put your e-mail load into this category, you’re fooling yourself.

Stop fooling yourself. Think better.

I’ll try to help.

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More on this:

• The False God Opens a New Front - Kevin Meyer’s post includes this great line: “Automating the management of a problem is not managing the problem.”)
• “Workiness” is to work as “truthiness” is to truth. - Shiny new technology is often no more than a pit of “workiness.” You must avoid this like a plague.

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(Photo by Arwen Abendstern.)

It’s good news for me that I’m not in the business of predicting the future — because like most everybody else, I’m lousy at it. But it pleased me to see this post from ReadWriteWeb:

Is the iPhone the Ultimate eBook Reader?

“People don’t read anymore,” said Steve Jobs last month. Try telling that to users of his company’s iPhone and iPod Touch devices, many of whom seem to be using the device as an eBook reader. Our network blog last100 theorized that what Jobs’ really meant was, who needs the Amazon Kindle when you’ve got an iPhone that does a lot more? “Will a developer write an app to read books on the iPhone or Touch?” asked last100’s Daniel Langendorf. Actually, a few developers already have, and at least one is doing very well.

The posts seems to confirm the prediction I made back in August:

Is the iPhone the answer for e-books?

One of these days, Harper or some other publishing house is going to crack this nut. They’re going to figure out — or take a risk to try figuring out — just how many books they can move in electronic format. It’s much likelier to happen on a popular device like the iPhone than on an expensive, standalone e-book reader. The publisher who figures this out will have an audience of commuters, air-travelers, bored people in waiting rooms, and so on who already have the right piece of technology in their pockets, and who only need to be convinced to pay a reduced price for the layout and words of a book without the paper and cardboard trappings.

So, score one for Tim!

My next not-so-radical prediction: Apple will make a bigger version of its iPod Touch that will be even better suited for reading e-books — and many other kinds of browsing as well.

Late in 2007, Atul Gawande made a stir with this New Yorker article:

The Checklist

Maybe it would be more accurate to say that Dr. Peter Pronovost, the subject of the article, has made a stir in the world of intensive-care medicine with his work introducing systematic checklists to monitor ICU procedures.

The concept is simple: for many medical procedures, the bulk of problems can be avoided and the bulk of benefits gained by hewing closely to “best practices” that are well-known within the medical profession. In many cases, these practices aren’t complicated; they include things like making sure that all doctors and nurses wash their hands thoroughly right before a procedure, or covering a patient’s entire body with antiseptic drapes when inserting a stent.

Simple as these individual steps may be, remembering them all is tough to do amid the hurly-burly of an emergency room or an ICU. So Pronovost, an M.D./Ph.D. with lots of smarts and lots of energy, has worked on setting up procedures for using checklists that take care of the remembering for you. A nurse is responsible for ensuring that medical staff adhere to every step of the checklist in every case.

As Gawande tells it, the results have been little short of astounding. Here’s a sampler:

Pronovost and his colleagues monitored what happened for a year afterward. The results were so dramatic that they weren’t sure whether to believe them: the ten-day line-infection rate went from eleven per cent to zero. So they followed patients for fifteen more months. Only two line infections occurred during the entire period. They calculated that, in this one hospital, the checklist had prevented forty-three infections and eight deaths, and saved two million dollars in costs.

Read more

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John Murrell has a nice post at Good Morning Silicon Valley talking about recent moves at Facebook and Google that reflect the classic divide between programmers and users. It’s worth reading in full:

Developers are from Mars, users are from Venus

Many years ago now, I worked as a database administrator for a large, bureaucratic organization. Those of us who represented the users of our database tool would sit in meetings with the programming teams who were assigned to improve the tool. The programming team broke down into three groups:

• The unhelpful. Happily, there were few of these. Unhappily, one of them ran the main team that was supposed to be meeting our needs. I shudder at the memory — let’s move on.
• The helpful-but-misguided. This was the bulk of the programming team, and the problem was more or less exactly as described by Murrell. These coders wanted to do right by the users . . . but we the users often found out, much later than anyone would have liked, that their ideas and ours simply didn’t mesh. This was a problem since they were the only ones with the ability (and the mandate) to implement their understanding of users’ needs.
• The truly helpful. Out of the main group that worked with us, there were two programmers who genuinely grasped what we were after. One of them had learned programming during a long military career, and benefited from a level-headed engineering mindset. The other was a musician with a lot of interests outside of coding, who had the ability to talk across the programmer/user chasm. Both of them were big-minded enough that they truly wanted to implement the most useful changes rather than their own pet ideas.

Doing that is a lot harder than it sounds, and it’s hardly a one-way street where users know what’s right and the IT folks misunderstand them. My IT pals, including the two programmers I just praised, could tell you all kinds of horror stories about user ambiguity and rapidly shifting requirements. It’s a two-way street that is so hard to navigate that you tend to be more surprised when the process does work without a hitch.

It’s tempting, if you keep your head in the tech blogosphere, to think that the only meaningful pools of innovation to be tapped are in the traditional fields attached to computing and telecommunications — hardware, microchips, software, wireless transmission, etc. Then you read something like this:

Gibson shows new self-tuning guitar

. . . Nashville, Tenn., guitar maker Gibson and Tronical said Powertune is the world’s first self-tuning technology, and Gibson says it is particularly useful for beginners, who tend to find tuning a headache.

Musician Ichiro Tanaka, who tuned and played a sample guitar at Gibson’s Tokyo office Monday, said the technology is handy for professionals too. If they use special tuning for just part of a concert, as he often does, it means they don’t have to lug around an extra guitar with the second tuning ready.

“It’s more than just convenience,” said Tanaka, of Japan. “It’s a feature I really appreciate.” . . .

Kudos to Gibson for continuing the tradition of guitar innovation embodied in every Les Paul it makes. And thanks to my Hoover’s colleague Paula Smith (a hard-shredding guitarist herself) for pointing this out.

Om Malik has this short item about rolling out tech in the developing world to test and learn before rolling it out in the higher-stakes markets of the more-highly-industrialized world.

Emerging Markets As Cutting Edge Tech Test Beds

Worth reading, and worth contemplating how the phenomenon — which Malik addresses in business-technology terms — also applies to boosting environmental and social goods in the developing world, as discussed in this May 2007 post from WorldChanging:

Principle 8: Leapfrogging

Whatever angle you take on this — human development, green business, filthy lucre, whatever — it certainly seems worthwhile to test concepts in markets without an intrenched infrastructure that must be overcome. Doing so eliminates one of the major status-quo inputs to the market equation, which would seem to make experimentation easier.

It’s nearly December, which means it’s time for the 2007 retrospectives. Here’s a good pretty good one that reviews some of the top tech failures of the year. (I might have included the unfolding Beacon saga at Facebook, but that’s with the advantage of an extra 10 days of hindsight over this November 20 story.)

Top 10 Tech Train Wrecks of 2007

(Thanks for the link, Mom!)

Thanks to Marc Andreessen, I came across this great piece from Patrick Goldstein of the L.A. Times:

Come on, writers, script your futures
The Big Picture: As the writers strike enters its third week, I think the future belongs to a tantalizing new hyphenate: the writer-entrepreneur.

. . . “The studios have got to be hoping that this idea about being entrepreneurs doesn’t sweep over the TV show runners, because once you start seeing really good production values on the Internet, I mean, what does Larry David really need HBO for? This is all everybody is talking about on the line. They’re not talking about healthcare. They’re going, ‘Wow, is there a different way to get our movies and TV shows made?’ ”

. . . “Writers who create something rare — a story with great, original characters that movie stars will cut their price to play — have a real value,” says Mandate production chief Nathan Kahane. “But that value doesn’t get unlocked in the studio system. If writers are willing to share our risk, then we’re willing to give them a lot of control and share in the profits too.”

This kind of entrepreneurial formula couldn’t have existed in the era when the studios had a stranglehold on every facet of the business, notably talent, money and distribution. But those days are gone. The stars became free agents long ago. In the last few years, with billions of private-equity dollars flooding the business, the studios have lost their lock on financing too.

All that’s left is marketing and distribution. It’s hard to equal the way studios launch their summer popcorn extravaganzas with a $40-million marketing blitz. But as more entertainment migrates to the Internet, where distribution is basically free to anyone with a computer, the studios will lose that monopoly as well. If the last couple of weeks are any indication, with clips from out-of-work comedy writers popping up every day, the Web could be littered with new must-see video sites by Christmas.

Various things can scramble a monopoly, starting with antitrust actions by the government, e.g. the Standard Oil case, or the breakup of the old vertical integration in which the movie studios also owned movie theaters. But government actions can usually be undone — just witness the different ways that the Clinton and Bush administrations have handled Microsoft. Labor actions like the current writers’ strike, or the repeated strikes by the Major League Baseball Players’ Association, can have profound effects, too.

But the thing that will really scramble a power relationship is technology, which is exactly what we’re seeing now. And all this cheap digital-video equipment seems to be working together with the phenomenon of independent wealth looking to bankroll movies. There have always been rich individuals underwriting films, but now the environment is such that some of those backers are willing to underwrite films totally outside the studio system.

The studios aren’t going to go away overnight. The trend Goldstein describes is about films with budgets below $30. That being said, though, independents can even make the big special-effects-driven blockbusters, as we know from the examples of George Lucas and Peter Jackson, who have succeeded in going their own ways and making tons of money working in parallel with — but hardly in obeisance to — major studios.

So, to echo Goldstein and Andreessen, here’s a memo to studio executives: prepare to be disintermediated. The sweep of technological history is not on your side.

[As he does occasionally in this space, my friend and colleague Chris Huston offers his take on happenings in the world of video games.]

Nolan Bushnell, inventor of the seminal video game Pong, recently lamented the state and social impact of video games, calling them “unadulterated trash” and “a race to the bottom.”

“Social games represent something that has been missing.…We used to have families sit down and play a game together. A lot of video games today are very isolated. You don’t see mom and dad, sister and brother, sitting down like they used to play, say, Monopoly. That represented good mentoring time for families that just isn’t happening now.”

He says it like it’s a bad thing.

Seriously, “isolated” doesn’t necessarily mean “bad.” That’s point A. And B, what were we learning by playing Monopoly or Chutes and Ladders anyway? Were they really such a great mentoring tool? There is a social aspect about that dynamic that is healthy and valuable, but I don’t think Bushnell gets it here, nor should today’s video games be the scapegoat for its demise.

People have long made the same accusations against movies, and they are just as right and wrong as Bushnell is here. Video games are, as it happens, a social force similar to movies in some striking respects, and they provoke similar dilemmas, but they are also capable of similar contributions. And video games can do a better job at replacing Candy Land than any movie for social interaction. Nintendo is doing a pretty snazzy job of showing that with the Wii.*

My point is not to pit one medium against the other, though that seems to be Bushnell’s. Clearly, he isn’t against the medium of video games, but he seems to be against the “isolated” type of video game, and that, I believe, is a mistake. One could easily decry how board games keep kids and families indoors, inactive, and mentally disengaged compared to going to the park or the zoo or out for a hike.

One can find something to complain about with any pastime, and, like movies, you will always have junk and it will probably be the majority. [Ed.: Sturgeon’s Law reigns across all genres.] You will always have movies like 2 Fast 2 Furious and the people who want to go see that instead of Schindler’s List. So, where is the real problem, with the movie or the movie-goer?

Like movies, video games can be an isolated user experience that entertain and, indeed, even inspire and educate. They don’t need to do more to be valid, and we have to accept that they, like movies or any other thing, will often do less.

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* Case in point: Wii bowling tournaments in nursing homes.