Blake Mycoskie spent 2006 doing volunteer work in Buenos Aires, when he noticed that most young people wore simple canvas slip-on shoes called alpargatas. The shoes have also been worn by Argentine farmers for hundreds of years, and he decided to start exporting them to his native North America. As he explored more of the city he also realised that many children wore nothing on their feet, unable even to afford the $5-10 for alpargatas.
Shoes for Tomorrow (shortened to Toms) was born, a for-profit company, making cool shoes in an Argentine factory for Santa Monica beach, but also donating a second pair to it not-for-profit sister company Friends of Toms. “One for one” took off, with 10000 pairs sold, and given away, in the first six months. By 2012 2 million pairs of shoes had been made, and an equal number given away to children in developing countries around the world.
https://www.youtube.com/watch?v=uPiQNqbiZa0
Pivot points for Toms in “changing the game” of fashion have been:
- Think: Driven by a higher purpose, to make life better for poor kids
- Design: Creating a dual business model, where profit enables non-profit
- Mobilise: Building a global movement, an inspiring model of caring capitalism
- Sustain: Working with manufacturers and charities in developing markets
The brand has extended its “one for one” business model into eyewear and clothing, and now coffee, primarily through word-of-mouth advocacy. In the case of eyeware, Toms provides eye surgery or prescription glasses for every pair of sunglasses sold. Beyond charity, the Toms brand has become for movement for more caring capitalism, including volunteering, education and support to entrepreneurs in development markets.
T-Shirts are supposed to be cool, and the coolest t-shirts are not made by big companies with corporate logos, but designed and selected by cool people like you. Threadless was founded in 2000 by Jake Nickell and Jake DeHart, investing $1000 of their own money in a website that encouraged people to submit designs, vote for the best ones each week, from which they would then make the limited editions.
Around 1000 designs are submitted each week, and after an initial filter, put up for public votes. The winning designs are sold online, and through the brand’s stores and vending machines. Winning designers receive $2000 in cash a $500 Threadless voucher or $200 cash. Whilst every design has a time limit, with sufficient requests for reprints, the winner could get another $500.
The combination of crowdsourcing, frequent competitions and new editions, creates a 2.5 million-strong community who become actively involved in the brand, and between each other. They are supported by four “community ambassadors” who sustain the buzz and interaction, but also be specific groups. The “Threadless 12 Club” is a subscription-based VIP network with their own ultra-limited editions the annual “Family Reunion” brings people together physically. “Bestee Awards” recognise the best designers by category whilst the “Alumni Club” is for winners to stay in touch. Add to this are customers’ own networks ranging from local groups who meet to share their love of design, through cake-baking and clothes-making based on submitted designs.
https://youtu.be/cZzpuprg6ms?list=PLrq1QRGfqfN91hidWYSlufZTGOP1vv2sm
Pivot points for Threadless in “changing the game” of clothing retail has been:
- Design: Crowd-sourced designs through monthly competitions and prizes
- Resonate: Staying cool and topical through unique designs, with limited life
- Enable: People take part in submitting, selecting, buying and sharing their t-shirts
- Mobilise: Building a movement of young designers and brand partners
Stuart Brooke started running 5 years ago and was appalled at the poor quality of all the major brands. Having founded his own business 15 years ago making high specification products for other manufacturers, he knew that there were much better solutions. The reality was that most big brands were compromising on quality to hit key price points in the mainstream market. They each chose the same mediocre fabrics, and all looked the same. Other sports, such as Cycling and Skiing had far better technical products, and enthusiasts were prepared to pay more for them.
Stuart started life as a fabric designer, but quickly focused on sport, joining Pentland with brands like Reebok and Speedo. But he soon became disenchanted with the endless meeting culture of companies, and the lack of ambition. He wanted to create a brand that was fresh and distinctive. Ashmei was born, a name inspired by his Chinese wife, and an anagram of his daughter Meisha’s name. The Chinese lettering, interestingly also used in Japanese, means “ultimate”. He wanted to create the ultimate running apparel, the best fabrics, using the latest manufacturing technologies.
Ashmei focused on design, specifying requirements and then sourcing from the best suppliers and manufacturers around the world. Fabrics from France, Italy, and India are combined in China then shipped to stockists, mainly in Europe. The design is functional, but includes distinctive styling which echoes the Asian name. Initially using selective retailers, Ashmei carefully avoids working with competing retailers, and thereby discounting. It create enduring collections, rather than cosmetic seasonal derivatives, so there are no sales, and it can increase volumes quickly because of the large factories of its suppliers.
Ashmei is a premium, niche brand for enthusiasts who are willing to pay more, and also likely to become ardent loyal fans. Marketing is about building connections with core users, using social media and inspirational events, like the Ashmei Mud Race. Word spreads rapidly by PR and word of mouth within established communities. International growth is through exclusive partners, and then specialist retailers who can often create more buzz with Ashmei than they can on their own, or with ubiquitous brands. Partnering with a complementary shoe brand is likely, alongside growth into adjacent categories like triathlon.
“Ashmei was developed specifically to address the lack of good quality, high performance running apparel” says Brooke. “The market is full of average running clothes that all perform to mediocre standards, have similar features, made from identical fibres and look exactly the same. These are then sold in the same bargain driven environment that offers poor brand promotion.”
Pivot points for Ashmei in “changing the game” of sports apparel have been:
- Disrupt: Believing in better, that people will pay more for premium products
- Design: Focusing on product design, then bring together the best partners
- Inspire: Articulating a brand that captures the aspirations of serious runners
- Mobilise: Building a community that shares their passion, enabled by the brand
https://youtu.be/PYMio8C69EI?list=PLrq1QRGfqfN91hidWYSlufZTGOP1vv2sm
The niche and premium focused business model is working. “Many presume Ashmei is simply expensive running gear” says Brookes “but the percentage of repeat orders we see prove that once Ashmei has been tried, it becomes the runner’s favourite and soon becomes their entire running wardrobe. We believe in three words – performance, quality and style. Of these performance matters most. It’s why we started, and it’s why people love us.”
Whilst most people choose Spotify for free access to streamed music, co-founder Daniel Ek if focused on ensuring that the premium services, such as the ability to download and play the music offline for a monthly subscription, significantly exceeds the diversity of royalties it pays to record labels, collecting societies, artists and publishers.
When Ek first invited big music labels, he forgot to mention that they were all invited together, causing panic on arrival at Stockholm airport. Ek apologised for his naivity, whilst telling them he was about to change their world. Sweden was already home to the notorious Pirate Bay file-sharing hub, and Swedes had grown used to not paying for content. He therefore started with his home market, streaming music in a way that was faster, easier, and less risky than piracy.
Spotify is best known for helping to legitimize the “freemium” model: the tiered pricing strategy whereby basic services like music streaming are provided free of charge (with advertising, in Spotify’s case), but premium services like ad-free listening and direct downloads cost users extra.
A six-month free trial starts upon account registration allowing the user to listen to an unlimited amount of music supported by visual and radio-style advertising. After the trial, there is a listening limit of 2.5 hour a week. The “unlimited” subscription removes advertisements and time limits and a “premium” subscription introduces extra features such as faster, higher quality, and offline access to music. There is also a close partnership with Facebook, encouraging people to access through the site, and then share activity with friends.
Spotify now provides unlimited streaming access to 25 million songs. Around 25% of users pay $10-15 a month for a premium version, a fee that is shared with record companies whose royalties are higher than for many years. Around 70% of music revenues now come from digital streaming, and Spotify is at the forefront of a revolution that is spreading rapidly across the globe.
Despite controversy over artist pay and some musicians (like Taylor Swift and Adele) withholding their music from the service, Spotify continues to grow. Now with more than 75 million total users and 20 million paid subscribers in 2015 (double its paid number in 2014) as well as $3 billion in royalties paid to artists, Spotify has become a veritable music-industry powerhouse. Even longtime licensing withholders, The Beatles, have entered the platform’s massive library.
Much of Spotify’s success is due to increasingly sophisticated data collection, which allows it to keep releasing new products that captivate its users around a particular mood or moment in time rather than offering the same tired genres. Users can constantly change up and enhance their listening experience with data-powered features like a Discovery tool for new music that rivals Pandora’s capabilities, a Running feature that curates music timed to the beat of your workout, and Taste Rewind which tells you what you would have listened to in the past by analyzing what you listen to now.
Spotify, now based in London, has started using the fruits of its labor to expand, teaming up with Songkick to provide concert recommendations based on listening behavior and location. And now that Spotify has proved that people will pay for convenient, one-stop access to their tunes, all in the face of Apple’s marketing blitz for Apple Music, the next big move will be a transition into premium-only content.
Pivot points for Spotify in changing the game of digital music were
- Explore: Looking for deviant behavior in the margins of markets
- Disrupt: Making content free but in a way that is commercial
- Design: Continually evolving the business model to find a better solution
- Mobilise: Building a community of advocates, the cool thing to do
Netflix is transforming the way we find movies, when and how we watch them. Founded in 1997 as a DVD by mail service, it soon migrated online to offer more than 100,000 movies streamed to your screen for a monthly subscription. Reed Hastings, and colleague Marc Randolph, set up the business after making $700 million selling their Pure Software business, and then being fined $40 for the overdue return of his rented copy of Apollo 13. Outraged he vowed to find a better model.
Within two years of launch it had moved from charging per DVD, to a flat subscription. Within a decade it had 25 million subscribers, had delivered a billion DVDs although most users now preferred online streaming. Netflix found the customer base actually grew faster during the economic downturn that at other times – partly as broadband penetration grew, but mainly because a Netflix subscription had become a household essential.
https://www.youtube.com/watch?v=7Vxv4aVb6k4&t=12s
Whilst the business might appear to be about distribution, the data on subscribers and their viewing behaviours became most significant. Initially this provided a highly accurate way of targeting advertising, but even more profitably in creating original content that specifically matched the preferences of target audiences. Big data started to replace, or enhance, creativity. Netflex invested $100,000 in “House of Cards” based entirely on data algorithms, seeking to create the perfect TV series to match its target audience and advertisers.
Pivot points for Netflix in changing the game of home entertainment were
- Explore: Observing the frustrating limitations of existing approaches
- Design: Creating and evolving a new business model, on demand then streaming
- Resonate: Using big data analytics to match audiences and content.
- Amplify: Harnessing network-based models to exponentially grow
Anyone, anywhere can now study paleobiology with the help of the University of Alberto which has made its “Dino 101″ course available free online, and uses interactive techniques developed for the gaming industry to bring the science of the dinosaurs to life. It is just one of thousands of free study modules available through Coursera which has signed up over 100 of the world’s best universities since its launch in 2012. Within a year it had 4.8 million students in 195 countries, giving anyone – old as well as young – the opportunity to study almost anything, free and from their home.
Coursera, founded by two computer science professors, Andrew Ng and Daphne Koller, at Stanford University is leading the MOOC revolution in education. “Massive open online courses” are transformed who and how the world learns. Inspired by the Khan Academy, Ng started posting his course material on YouTube in 2008. Before long, each video had generated at least 100,000 views compared to his Stanford class, by contrast, had just 400 students a year, paying up to $200k for their degrees. To reach a comparable audience, he would have had to teach at Stanford for 250 years.
The business model is still evolving. Whilst it is not easy to replicate some aspects of a university experience, Coursera with partners as diverse as Duke and Tokyo, and rivals like edX supported by Harvard and MIT, can transform the lives of billions of people looking to start, advance or change careers. Coursera, as a non-profit, plans to charge $100 for certificates, shared with university partners, but free to those who cannot afford it. Many courses count towards degrees. More significant revenues could involve licensing content to community colleges, and recruitment fees to potential employers.
Pivot points for Coursera in changing the game of education were
- Think: Imagining a future of lifelong learning available to everyone
- Disrupt: Bringing together the best academic content, free to access
- Design: Redesigning course material for self learning, eg using gaming
- Mobilise: Engaging new audiences, communities schools, and employers
Renova makes toilet paper. Colourful and sexy, not white and boring. As CEO Paulo Pereira da Silva says “We think that Renova is the living proof that no product is too dull or commoditized to be reinvented and no product is too stigmatized to be loved.
People now create emotional relations with our products whereas before it was all rational.”
The Portugeuse brand, founded in 1818 as a paper maker, first came to attention by adding micro dropleys of smoothing cream to its toilet paper called Fresh & Clean. However its 2002 ad campaign that introduced sex appeal to toilet paper, with Francius Rousseau’s black and white photography, really grabbed attention from Hollywood to Japan. Renova Black Toilet Tissue soon followed, and then other colours. “With this product and the subsequent range we pushed the borders of what toilet paper was all about in order to establish a new design icon that is loved and talked about”
Other colours followed. Red is said to be the favourite of Beyonce. As did extensions into napkins, kitchen rolls, wet wipes and writing paper.
Yet bathrooms remained the priority with ads proclaiming “The Sexiest WC on Earth”. Toilets are one of the most intimate, personal spaces, yet they appear sterile and bland. “We are not afraid of being different and of following what we believe in. We try to be very careful with the aesthetics of everything we produce as we like aesthetics in simple things.
Pivot points for Renova in “changing the game” of toilet paper were:
- Think: Audacious to think differently, to break the rules, and be different
- Disrupt: Reframing their market space, from tissue paper to “sexy bathrooms”
- Design: Embracing functional and aesthetic design, bold and surprising
- Resonate: Connecting with consumers through celebrity endorsement and PR.
“We seek to bring a shining light into a heavily under-glamorized, over-homogenized and even stigmatized category. Every day we work to make people´s day better even if in a very small way. Why not? Why be normal?” says da Silva.
Look at the tag inside a pair of Nike shoes. It says “to bring inspiration and innovation to every athlete* in the world” with a footnote explaining the asterix “* if you have a body, you are an athlete”
Steve Prefontaine believed that there were no limits. America’s top miler of 1970s ran with freedom and courage, inspiring future generations. Despite his tragically short life, he remains the brand’s folk hero, not because of his achievements, but for his attitude. Since founder Bill Bowerman first moulded the waffles onto his Tiger running shoes using a waffle iron, and Phil Knight persuaded his girlfriend to create the swoosh logo for $35, Nike has been pushing the limits of what is possible.
Mark Parker understands the passion of the Oregon-based business too. He was a track athlete himself, who joined Nike as a footwear designer in 1979 and slowly worked his way up to replace Knight as CEO in 2006. Whilst there might seem a limit to how much you can innovate a running shoe, once you see it in the context of a runner, Parker claims the potential innovation is endless. And the same with every other activity, competitive or recreational. “I’m a product geek. I’m obsessed with working with product, with the athletes, and to see the potential that exists just with the technology we talked about today is huge. Let alone the things we haven’t talked about” he told a recent investor meeting.
Some of the highlights in Nike’s running shoe innovation timeline include the early waffle sole design, which provided grip and differentiation. Then there was Nike Air, the patented midsole cushioning approach. Then there was Nike+ which was nothing to do with shoes, but a range of technical gadgets to help measure and enhance the run, in partnership with Philips and then Apple. Nike Considered was more of a business process, ensuring that every aspect of sourcing and production is sustainable. Nike Free is about minimalism, taking away the unnecessary cushioning which built up over years, to replicate natural motion. And most recently Nike Flyknit, an entire shoe upper made from one thread, enabling more comfort and lightness.
Parker is CEO but his desk contains no computers, spreadsheets or files. It’s all objects and oddities, tech gadgets and electric guitars, fashion items and artistic scultures. There is even an Andy Warhol, and props from Batman. This is inspiration, to get Nike thinking beyond what they do, beyond their world. He sees a fusion of digital and physical worlds, as demonstrated by Nike+ watches and monitors. The Nike+ Fuelband, for example, is worn through the day measuring the amount of “fuel” consumed, against target levels. It can even link to online games, social media and community. It is a fitness program, computer game and fashion accessory all in one.
“The last thing we want is to be a big dumb company that feels we can put a swoosh logo on something and people will buy that” Parker says in an interview with Fast Company magazine “Things are accelerating. It’s a high-velocity world, we’re digitally connected, everything is changing.” Nike’s management style doesn’t come from a business school tectbook, its more intuitive and fast moving, like the culture of sports. Fast and competitive, where records are there to be broken. And Parker’s own style is to embrace diversity from Olympic athletes to graffiti artists, taking his designer sketch book with him, always working, sharing and building on ideas.
Nike’s biggest challenge, according is where to focus in a world of infinite choices. “We are an idea-rich organization. Never have I seen more opportunity. You don’t always pick the right things, you have to edit and amplify” he says. He see this as perhaps the most important skill of leaders today. Not so much in making the choices, but in creating the pressure and criteria through which to focus, and then the support and resources to amplify. He also sees his role as searching for new ideas, both inside and outside. The best ideas are often raw, in the lower parts of the organisation, uncontaminated. This is how Parker got ahead, with founder Phil Knight one day saw him working on creating little windows in the shoe’s sole, to make the air cushions visible. A $1billion idea.
Pivot points for Nike in “changing the game” of sportswear were:
- Think: Ideas driven by people and aspirations, not products and capability
- Inspire: Building a brand that has passion brought to life by incredible athletes
- Design: Focusing on concept innovations, like Air and Free, as brand platforms
- Enable: Creating enabling experiences through events and adjacent products.
When Parker arrived in Beaverton, Coe and Ovett were trading world records in their Nike Zoom track spikes. In those days Nike was a niche brand, smaller than Adidas. Today it is 25 times bigger than its rival, and whilst only15% of the company’s $25bn comes from running, it remains the heritage and passion of the brand.
Insight into Nike Kitchen, cooking up new ideas and brand innovation:
https://www.youtube.com/watch?v=YnWWHICvjl4
Nike’s new 3D printing lab will revolutionise design and manufacturing:
Nike’s superfast growth in China. CEO Mark Parker tells more:
Adam Lowry and Eric Ryan were childhood friends, who became (in their own words) “brainparents” of one of America’s fast growing consumer goods brands. Adam trained as a designer and marketer, whilst Eric studied chemical engineering. Method emerged out of their maddening frustration with cleaning products – poorly designed, environmental pollutants and many just didn’t work. They declared war on dirt, and dreamt of a cleaning world which was eco-friendly and non-toxic, stylish and exciting.
They started by mixing soap formulas in beer pitchers labelled “do not drink”. In 2001 they got (slightly more) serious, and launched the Method brand as “people against dirty”, and declared themselves “superheroes” for seeking to rid the world of dirt. Adam’s passion was to produce cleaning products that people would be proud of, displayed like fragrance bottles, and smelt as good. Eric knew how to make them. In their own words, they “set out to save the world and create an entire line of home care products, gentler than a thousand puppy licks, able to detox a home in an afternoon.”
Mollie Stone, a Californian grocery store, was their first customer, stocking a range of cleaning sprays. They were good, but didn’t stand out. Packaging design, was their response, starting with an hourglass-shaped bottle of dish soap, and within a year they were being stocked in Target supermarkets across the nation. By 2003, their designer Karim Rashid started winning awards, particularly for his tear-drop bottle of hand wash.
They articulated their distinctive attitude as “the Humanifesto” which includes “we look at the world through bright-green colored glasses”, “to get out and fight dirty, take deep, satisfyin breaths all day and sleep easy at night”, “We’re entranced by shiny objects like clean dnner plates, floors you could eat off, nobel peace prixes and tasteful public scultures”, and “above all we believe dirty, in all its slimy, smoggy, toxix, disgusting incarnations, is public enemy number one”.
Within four years, the brand was ready to go international – launching in Canada and UK, now also with a concentrated laundry liquid. They focused on their environmental credentials, winning awards from PeTA and ensuring their bottles were 100% biodegradeable. Growth followed rapidly, as did their product range. Inc Magazine named Method one of the fastest growing private companies in the USA.
A year later, Adam and Eric set up B Corporation, a non-profit network of organisations, collectively committed to “solving the big social and environmental challenges through the power of business”. Alongside Method, they attracted brands as diverse as Ben & Jerry’s, Etsy and 750 others to join, sharing best practices and resources, creating a standard certification and a shared platform for promoting a better way to do business.
Pivot points for Method in “changing the game” of cleaning products were:
- Think: Establishing a market for “better” cleaning products, cool and caring
- Design: Innovating better products and packaging, emotional. beautiful for home
- Impact: Balancing doing good for the environment with long-term financial success
- Amplify: Getting together with the largest competitor to take on the world
Revenues grew to over $100 million by 2012, although the great impact on the market has been the imitation and adoption of more caring cleaning products by large competitors.
Later that year, Method was acquired by similarly sized Ecover, the Belgian manufacturer of green cleaning products, although continuing to operate as a separate brand. The two brands seek the economies of scale to improve profitability in a market where there is still little scope to charge a premium, and also to reciprocate each other’s distribution networks across Europe and North America.
Narayana Hrudayalaya is a leading network of hospitals based in the Indian city of Bengalura. Founded in 2000 by a 40 year old Indian heart surgeon, Dr Devi Shetty, it has operated a record-breaking15,000 surgeries on patients from 25 countries, with a relentless pursuit of extending access for more people to more services, at low cost.
Narayana is perhaps most famous for its heart hospital on the outskirts of Bangalore, one of the largest in the world, and with a particular focus on children. where the average open-heart surgery costs less than $2,000, a third or less what it costs elsewhere in India and a fraction of what it costs in western countries.
By thinking differently about its role, scale and partner benefits, the hospital can achieve huge economies of scale. The company (owned by Shetty’s family plus a few investors including JPMorgan) negotiates for better prices and buys directly from manufacturers, cutting out distributors. Starting with cardiac care, an equipment-intensive specialty, made it easier for the hospital group to expand into other areas that require the same infrastructure.
Shetty recognised that most Indian hospitals are exclusively for the wealthy. “My hospital is for poor people, but we also treat some rich people. So we’re mentally geared for people who are shabbily dressed and have trouble paying. We don’t look at them as outsiders. We look at them as customers.”
He has grown the Bangalore hospital into what he calls a “health city,” a series of huge medical centres specialising in eye, accident, and cancer care spread across 35 acres. There are also hospitals in 14 other Indian cities.
The “telemedicine” practice, where each surgeon has Skype on his laptop, reaches across the developing world, including 50 partner locations in Africa, offering support at no charge. His latest initiative, dispersing 5,000 dialysis machines, will make the company the country’s largest kidney-care provider.
Beyond low costs, Narayana Hrudayalaya finds creative ways to make its economics work. The company started a micro-insurance business that enables 3 million farmers to have coverage for as little as 22 cents a month in premiums. Patients who pay discounted rates are effectively subsidised by those who pay full price or chose additional services. These “premium” customers include foreigners for whom a $7,000 heart operation, access to an experienced specialist, and a deluxe private room seems like a bargain.
Every day surgeons receive a profit and loss statement of the previous day that describes their operations and the various levels of reimbursement. The data allows them to manage the mix of payment levels. “When you look at financials at the end of the month, you’re doing a postmortem,” one administrator told The Times of India “When you look at it daily, you can do something.”
Pivot points for Dr Shetty in “changing the game” of low-cost healthcare were:
- Think: Have an inspiring vision as to how you can make the world a better place
- Explore: Build a reputation in one area first, to refine the model and grow reputation
- Design: Explore new business models, including subsidies between segments
- Impact: Embrace new technologies as emerging markets change quickly for commercial edge, and social benefit.
In 2012 Dr Shetty received the Padma Bhushan, one of India’s top three public honours. He was also voted Entreprenuer of the Year by the Economic Times, and The Economist’s innovation award for business processes. The Wall Street Journal called him “the Henry Ford of heart surgery”.