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Category Archives: business model innovation

Observations on Retail in the United States today

Last night and today my wife and I ran around getting errands done… shopping.  As a result, I’ve got a few observations:

  • Retail staff are obviously getting spoken to about customer relationships.
    – At Kohls last night, I had possibly the best cashier I’ve ever been served by.  At the end of the his service, he pleaded with us to complete a survey on his service to us.
    – At the Sears hardware store multiple floor personnel greeted me and offered me help.
  • The SKUs that stores carry is still abysmal.

My assessment is this:

  • At least in my case, I’m so used to store personnel that in the past just didn’t give a damn, I really don’t know how to react to these newly caring personnel.  I’ve learn to become so self-sufficient when I’m shopping, that I feel like these folks are intruding on my shopping experience.  Strange, eh?
  • Retailers next threat is a new threat from Amazon.  In the New York Times article “Amazon, Forced to Collect a Tax, Is Adding Roots,” (http://www.nytimes.com/2012/09/12/technology/amazon-forced-to-collect-sales-tax-aims-to-keep-its-competitive-edge.html?smid=pl-share), David Streitfeld reports “Amazon will soon be able to cut as much as a day off its two-day shipping times, said Jeff Bezos, its chief executive, in an interview. This will put the much-rumored same-day delivery — the elusive aspiration of every online merchant — potentially within reach in some metropolitan areas.”  Amazon has an almost endless lists of SKUs… almost everything I could want for less than retailers have fewer SKUs I really don’t want so much.
  • Helpful personnel are only great if you’ve stock something you can sell your customer.

It only stands to reason that the following use case would be more optimal than Amazon’s next day shipping:

  • I go online, say to http://www.BestBuy.com, find what I want, but see that it isn’t available in my local store.
  • I place an order for NEXT DAY DELIVERY (or if early enough in the day, SAME DAY DELIVERY) to be delivered to my local store.
  • When item is delivered to my local store from a district distribution center, I am notified and go and pick it up.

Lots of retailers provide delivery to local stores now, but to the best of my knowledge, none of them do it in one day.  There are lots of advantages of this to the retailer and me:

  • The retailer better competes with Amazon.
  • The retailer has an extended set of SKUs available at a short time.
  • Since I’m coming into the store to pick up the item, the retailer has an opportunity to cross-sell me something.
  • And for me, I don’t have to be home to accept the delivery: my item is securely delivered to my local retailer.

This means that retailers are going to need to tune up their distribution centers and online systems, because without that, their local presences, with limited set of SKUs, will matter less and less in the face of Amazon’s next day “retail lite” model.

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IT, users, tools, and machine shops

I was reading the article “Bring your own apps: The new consumer threat to the CIO” on TechRepublic this morning.  I had to chuckle.

The lead sentence,”The CIO’s control over workplace IT is gradually slipping away as today’s digitally-savvy workforce have decided they want to call the shots when it comes to the technology they use at work,” could have come out of a Computerworld from 1983.  The IBM PC had been released in 1981 and in January of 1983 Lotus 1-2-3 allowed users to take IT into their hands.

Backing up, historically speaking, we find:

“There is no reason anyone would want a computer in their home.” — Ken Olson, president, chairman and founder of Digital Equipment Corp., 1977, and

“I think there is a world market for maybe five computers.” — Thomas Watson, chairman of IBM, 1943.

(both courtesy “Bad Predictions”)

What does this “history repeating” moment tell us?

It has always been about users, taking what’s available to get what they need, when they need it, the way they need it. Technology is not an end onto itself.  Technology is a tool to get something done.

And, ultimately, isn’t how we make, use, and improve our tools fundamental to our humanity?

It has been said that IT departments should be tool-chests for users.  I’d argue that they need to be more like a  machine shop, allowing users to craft their own tools.  IT departments need to furnish the nuts and bolts of their enterprises and the tools to use those parts to fabricate whole new tools.

I think we need to stop clinging to old models. We talk about mashups with its throwback to the term “lash-up” which Merriam-Webster defines “as any improvised arrangement for temporary use.” To use this term actually belittles the activity: it implies that mashups are put together until IT comes up with a more permanent solution.  Actually, mashups are a tool-defining activity onto themselves: users getting what they need, when they need it, the way they need it. Let’s give credit where credit is due: the user!

 

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OpenDNS & DNSCrypt – Cool new security for the web

I’ve got to hand it to the folks at OpenDNS… they are really, really, smart cookies.

I think Clayton Christensen would be proud. They took a pretty mundane job that needs to be done, reliable domain name services (DNS), and have created the number one DNS service on the internet.  They are so big, it is difficult to see a competitor trying to come after them.  In fact, one has to wonder why Google didn’t think of this… and why they aren’t competing.

DNS is the internet service your computer uses to find servers on the web.  When you type in “www.google.com” into your browser, the network software in your computer sends it to a DNS server which returns a numeric IP address.  Think of DNS like a phone book: you search for a name and end up with a phone number.

All internet service providers (ISPs) provide DNS services.  Unfortunately, while DNS is very important to the proper operation of their network, they really don’t spend a lot of time optimizing it.  What does that mean to you?  Slow lookups… which means it takes longer to get to the website you want to view.

OpenDNS solved that by creating a really, really, REALLY fast and reliable DNS.  It is likely that if you change your computer to use OpenDNS, you will have a faster browsing experience.

Best of all, OpenDNS is free.

But the folks at OpenDNS didn’t stop there.  They added things parental controls and usage monitor. Doing it in a DNS server is the perfect place to do it, instead of each computer, because it is centralized in “the cloud.”

What is OpenDNS’s economic incentive to do this?  Just like Google sells information about the click throughs that occur when people search on Google, OpenDNS sells information about who is looking up which websites when.

Additionally, OpenDNS sells premium DNS services to large organizations like BP and Eastern Mountain Sports.

Now OpenDNS has created DNSCrypt.  What’s that and how does it make them money?

Well, when your computer talks to a regular DNS, it does so in a very trusting manner.  DNS was designed for an internet where the network was completely trusted: when a computer wishes to be directed to a computer at a specific numeric IP address, it was assumed the network would reliably and truthfully directed you to that computer.

Unfortunately, when your computer is in the wild, such as on a WiFi hotspot, your computer may not be on a trustworthy network.  The network can actually intercept requests going to a DNS server and provide nefarious responses.

For example, let’s say your computer is asking to go to http://www.your-banks-website.com and you are using your computer on a bad guy’s WiFi hotspot (or a good hotspot that has been hacked).  The evil network can imitate the DNS your computer was trying to use and direct it to a bad guy’s website that looks like your bank’s website.  Then all the bad guy’s website needs to do is simulate the login page of your bank.  You’ll enter your userid and password, they’ll save it, and then pass you to the bank’s website.  It might appear as if you’ve typed the wrong password, so once you are at the legitimate bank’s website, you’ll be prompted again, and this time login into your bank’s website. You won’t even know your userid and password have been compromised.

(You might ask about the lock icon in the status line of your browser and why that can’t be trusted.  Most people don’t even pay attention to the lock icon anymore, and that can be hacked, too, for lots of other reasons we won’t go into here.)

The bottom line is the bad guys can trick your computer into tricking you to give up your userid and password. This is called man-in-the-middle attack.

What DNSCrypt does is this: it causes your computer to only use a DNS server if that server can speak a secret language.  In more technical terms, it encrypts all the requests flowing from your computer to a DNS server.  Since this is encrypted, the bad guys can’t get in the middle and pretend to be a DNS.

What is the business opportunity, then for OpenDNS by providing DNSCrypt?  By providing DNSCrypt, more people will use OpenDNS, resulting in more websites being looked up by OpenDNS, and resulting in more information for OpenDNS to sell.  In fact, one could see a day virtually everyone who has a mobile device uses DNSCrypt and by extension OpenDNS.

Honestly, you got to love these folks… this is brilliant way to make money, much in the same brilliant way that Google makes their money.  Given what OpenDNS has accomplished already, I see them being right up there with the significant web businesses in the future. Further, I’m convinced they’ve got a bunch of other cool money making ideas up their sleeves.

OpenDNS-a company to watch.

 
 
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