Tully's Letters

So... we've been talking about innovation and how a product or brand needs to be innovative to stay ahead of the curve and not become a commodity... but is there such a thing as too much innovation - or better yet -- innovation without explanation?

Mercedes-Benz recently sent out an email blast to its American customers about how to re-set the clock in their cars to adjust for day-light savings time. This wasn't done because the car maker thought that their customers, who can spend the equivalent of several year's college tuition on one of their cars, weren't capable of setting the clock on their own. It was done because the 'gizmos' that Mercedes and other upmarket car manufacturers include with their latest styles are, in plain old English, complicated. And that point, that 'complicated' point is what has many of these manufacturers worried that their customers do not truly appreciate what they have and view these innovations as problems!

This became evident in a recent J.D. Powers & Associates new car quality survey for the side rear-view mirrors on several of Mercedes newest models. The 'problem' was that on these models, the mirror automatically tilted down when the vehicle was put into reverse so that the driver could see obstacles in blind spots. Many customers didn't understand this innovation and expressed their angst within the survey. This is just the tip of the iceberg for this segment of this industry... try to imagine the Lexus LS 460's self-parking system!

So, while innovation keeps a brand fresh and ahead of the pack, if you don't have a proper communication platform in place that informs your customers about how your product's innovations will be beneficial to them, you risk the possibility of loosing ground and allowing another brand to take your place in their purchasing decisions.

Last year, a Los Angeles resident, Brenda Lifsey, purchased a tub of 'guacamole' which was produced by Kraft Foods. After tasting the product, she didn't think that the taste of the avocado was truly present (for the uninitiated, guacamole is, for the most part, mashed up avocado). According to the label, the product contained less than 2% avocado as an ingredient. The other ingredients included oil, corn syrup, dye and modified food starch.

On November 29th, Ms. Lifsey sued Kraft for fraud.

So... today's topic for debate is... If a consumer is looking for a brand experience that touches on all of their senses for product authenticity, is Kraft, makers of plastic looking slices of 'cheese product', a brand that can deliver on the premise of authenticity? Or, is a consumer better off to look to a more upmarket brand that may cost a little more, but delivers on authenticity?

Is this a case of 'buyer beware' or you 'get what you pay for'?

A story on security issues surrounding the MAC OS X operating system was recently published in The Wall Street Journal. Apparently two 'security experts,' Kevin Finisterre, a 26-year-old Ohioan and his mystery partner, named only as LMH, had announced through several security forums that January would be known as the "Month Of Apple Bugs." Their plan was to publish online a new security flaw with the MAC OS X system each day throughout the month.

One of their reasons for doing this, as they claim, is to bring to light the flawed assumption put forth by Apple that 'MACs are more secure than PCs." So far, they have kept to their word, and as of Jan. 22, they were correct in identifying 22 bugs. Once this whole saga began, MAC owners came to the rescue.

One individual, a programmer named Landon Fuller, went on line and announced that he would try to create a fix for each bug as it was reported. Other programmers joined him in his quest and now, each morning, these 'brand advocates' get to work on fixing that day's bug. A week after Mr. Fuller began his quest, Mr. Finisterre and LHM contacted him and offered to make him a partner.

He would be told about each upcoming bug, prior to the duo releasing it to the general web community so that he could begin working on a fix for that particular bug, but he would not be allowed to tell anyone about the bug until it was 'officially released.' Fuller declined their offer, stating that it would make him complicit in a practice that he strongly disagreed with.

Talk about brand advocacy....

Last week we talked about the fact that ignoring or not embracing innovation for your product or brand can bring disastrous results. Following up on that, LG Electronics, out of Seoul, Korea, just unveiled the Prada Phone.

Developed in conjunction with Italian fashion house, Prada, it has a buttonless touch screen, similar to that of Apple's new iPhone, but will command a premium price of $775, which is above iPhone's base price of $499.

While this isn't the first example of a cellphone maker teaming up with a fashion brand -- look at Motorola's launch of a limited edition RAZR phone that was designed by Dolce & Gabbana -- it is the the first time that a manufacturer has worked with a fashion brand to create a phone from scratch.

So, while Apple's iPhone, with all its bells and whistles was the hot ticket with media attention, the Prada Phone has all of the same techie trappings, with the addition of a slot for a digital memory card. And, the Prada Phone will be available before the iPhone.

This week's question, or perhaps questions, is/are... Will the Prada Phone erode any significant sales away from the iPhone with its earlier introduction and it's ability to hold a digital memory card? Or will consumers look at Apple's history of innovation and choose their product over a brand whose reputation is solely based in the fashion arena?

Columbia Business School's Bruce Greenwald once quipped, "In the long run, everything is a toaster..." What he was alluding to was the theory that products, such as a toaster, that undergo spectacular innovations eventually end up as commodities.

According to a recent Wall Street Journal article however, ignoring innovation and cutting prices can be fatal. As sited by MIT Media Lab researcher, Michael Schrage, innovation has a continued role, even in such mundane objects as toasters and vacuums.

The evolution of the toaster is "an unlikely symbol of sustainable innovation." He points out that the first commercially successful toaster was made by General Electric in 1909, with regular innovations to follow... 1919 saw bread grilled on both sides, the 1940s saw automated toasters, the toaster oven debuted in the 1950s and the 1990s saw the advent of digital toasters. Hoover on the other hand has focused on making vacuums cheaper and ignored innovation. Hence, the success of the pricey Dyson bagless vacuum cleaner.

So, today's question to ponder is, does your product or brand need some innovation to survive? Or, are you a commodity that could use a little innovation? As Mr. Schrage points out, "Look what Starbucks managed to do with coffee."