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Why does physical service lag behind online service?

Online service that precedes physical service seems to be always better. OK Amazon.com is an exception which is able to physically deliver to a consumers' delight.  There are numerous examples of this "sure to disappoint the consumer" situation.

A recent example from a top  hotel that  sends you an email asking you to check-in online and just pick up the key and save the wait at check-in. In small print, the email tells you that another email will come in once the room is ready.. and we are talking about the regular check in time. Several different folks who had actually checked in on-line find themselves waiting because the room is not ready. The reception desk reads the email and offers rather unhelpfully that a "second" email is the confirmation that you have your room. 

And the experience repeats in all those situations where you do some stuff online but have to receive the actual service physically. Consider banking online and going to the bank to complete an infrequent activity like loan documents or trying to change your seat or fight in an airport. Why does this happen so often? Here are some thoughts:

• Most organizations do not see the importance of giving top priority and focus on delivery like Amazon.com.  So even if you order only occasionally Amazon does better than what it promises at the ordering stage. The customer is not expected to do anything more than ordering and paying. No wonder Amazon is among America's most loved companies.
• In contrast, most organizations expect customers to do work beyond ordering and paying online. Sounds unfair but most organizations don't seem to realize this. This additional work includes in the hotel example (a) check in online (b) stay away from the registration desk because the second email has not arrived confirming a ready room  and all this after the posted check in time. 
• In most repeated off-line /on-line transactions the customer gets experience and does not feel as bad. Think of banking online and going in to deposit a check. You know the "routine" and things don't appear difficult.
• Infrequent transactions are where the customer has no experience in dealing with the delivery process of the organization. The service provider, when untrained makes things worse by ridiculing or getting annoyed with customers who are just trying to work out how the delivery of service will happen.

So if your organization has moved any part of your processes online it's really useful to check how your customers, particularly the infrequent ones are coping. Else all that effort, money and hopes on technology, mobile phone app etc. is not succeeding in that ultimate goal: to keep your customer happy. Contact StratoServe.

Sustainable innovation in the supply chain: over 2 kilos of trash/person/day

According to the EPA in 2010 each person in the US put out Municipal Solid Waste (MSW)- popularly known as  garbage/trash  equal to 4.43 lb or  over 2 kilos per day. If you look at the number of garbage cans on the weekly trash collection days- you know that the number has not decreased and the volume of garbage has gone up. The time is therefore appropriate to look at possibilities of innovation in the upstream supply chain that leads to these very large quantities of garbage. See the 2010 estimates of the composition of trash from the EPA and here are some innovation possibilities with respect to each component of Municipal Solid Waste (MSW):

• Organic content: Includes yard trimmings and food scrap that is over 27%. Innovations could include proper disposal of yard trimmings like grass and leaves that need to be put out in paper bags. Food waste at about 14 % works out to 35 million tons and is really a waste given the poverty in the US itself. Awareness and smaller portions might be the answer. The disposal of food scrap in bio-degradable bags is an innovation whose time has come.
• Paper and Paper-Board is about 28% and recycling is possible if consumers are more alert about segregating these items. Reducing outer packaging in the upstream supply chain and dealing with plastic coated paper board is an ongoing challenge and avenues for innovation.
• Plastics, Metal and Rubber are about a third and here again education is required in disposal by consumers. In the US, San Francisco has banned the plastic bag and Delhi, India has banned plastic bags and plastics are seen as villians in sustainability. Plastics are great - it’s just that the municipal systems and individuals they serve do not have clear systems to deal with plastics. For example although towns have occasional solid waste collection days - most people seem to throw out their metal and glass waste in the trash.

In other words, there is a lot of innovation opportunity both at the municipal garbage disposal and re-cycling end and reducing waste at the consumer and upstream supply chain. Contact StratoServe.

How the Internet affects business: top of the sales funnel and an instant reference- “value” check

Most organizations that are not pure-play internet (like Amazon.com) do not seem fully understand how the Internet affects their business. The  top of the sales funnel and an instant reference- “value” check are two ways the internet affects your business:

• Internet can fill top of the sales funnel: And this can be huge. Between search marketing (also Search Engine Optimization – SEO) and pay per click (PPC) advertising like Google AdWords you can bump up the traffic to your business website and to your business. At a fraction of the cost of traditional media including direct mail, print or broadcast media the Internet can drive traffic to your website and business.  In case you have e-commerce, you can also expect the visitor to buy. For first time buyers if you see your Google Analytics data (see under conversionsà multi-channel funnels) you’ll be surprised to see that folks might visit your website  ten or more times over a few days  before starting on your online shopping cart. They might have come directly, via Facebook, through search and so on. Can you go to any physical store ten times before picking up a physical shopping basket?  Not really, unless you want to be declared “suspicious” by the store-owner!

• Internet is an instant reference and “value” check: There are previous posts on this aspect and is one of the least addressed issues by organizations-large and small- whether they are for profit, non-profits or government. Consumers do compare prices in things like airfares and hotels as do businesses in B2B situations. In B2B and high value consumer decisions (like cars) it’s really important to go beyond the print brochures material. For example, there is no point in mentioning the mileage of an hybrid version  of an auto but remaining silent about the gas version's mileage. A serious buyer can and should be expected to Google it and get what best they can from a discussion board or auto website. Think of your business category and you can expect serious B2B customers to do the same thing. In other words, its probably far better to clearly explain FAQ’s on the official website rather than allowing unofficial versions to take the lead, by default.

Thinking about how the top of your  web funnel is working and what can you add to your website is a good way to capitalize on the opportunities the Internet offers your business.  Contact StratoServe.

Innovation and US jobs: two types of opportunity- of iPhones and frozen yogurt

Given the substantial interest in previous posts about how innovation creates jobs here are some more thoughts on exactly how these jobs can happen. But first about innovation which is at its most basic level is: doing something new. The newness can be huge like when the iPhone was introduced or can be just opening the first frozen yogurt shop in your town. Let us think about the kinds of job opportunities both these create:

• The Hi-Tech iPhone involved a great deal of design and technology at the back end. It simply created a global consumer following bordering on frenzy with every new model. The consumer demand is what created all the jobs in its supply chain including many overseas jobs. The high paid jobs in the US are in design, software but not so much in manufacturing. But when you think of the iPhone marketing related jobs you think of the huge boost AT&T got from its exclusive arrangement in distributing the iPhone in the US. Don't forget those little kiosks in the mall that sell iPhone cases and screen covers and the person who is happy to neatly paste a screen cover for $5 on to your iPhone or smart phone. In fact, the employment effects just continue to competing products like Samsung despite the controversy surrounding patent infringements. An amazing spillover of the iPhone and an Apple store in an US mall is estimated at a 12% rise in sales per square foot according to a Time magazine article. In other words, it is not just Apple that becomes hugely profitable but there is a whole bunch of jobs that is created in the supply chain, distribution channel and the telecom service providers. You can be sure that telecom equipment makers like wireless tower makers also got additional business due to the huge consumer adoption of the iPhone. The majority  of the retail and customer service jobs associated with the iPhone are low pay but do require the individual to be interested in technology to be able to service the customer. The so called steady well paid manufacturing jobs are mainly in China but are not well paid by US standards. And the comparatively few high paying design and software jobs at Apple involve a great deal of education and expertise.
• Comparatively  Low-Tech Frozen Yogurt is catching on in the US and retail stores are popping up given the increased health consciousness. Here the dairy farm is US based and the Yogurt factory is local as are the employees of the store who need to be present to serve customers from an assortment of flavors and toppings. The selling price, margins and sales volumes are decent but much more modest compared to an Apple store. As a result the associated jobs in the supply chain, distribution channel are also more modest. In fact, if a customer had an Yogurt the neighboring sandwich shop might actually lose business ! Nevertheless, the Frozen Yogurt business does create jobs and with global marketing like Apple might create a great deal of opportunity for US entrepreneurs.

To summarize, while lifetime traditional manufacturing jobs seem to be disappearing new opportunities are opening up in global marketing at both ends of the technology spectrum. Contact StratoServe.

NASA Curiosity lands on Mars and creates high tech US jobs

NASA's Curiosity Mars Rover landed on Mars today and started sending back photos to great celebration at NASA, the US and across the world. Particularly encouraging is the news that much of the leading technology was developed and supplied by US suppliers.  Here are some innovators that need congratulations apart from the NASA team and their prime contractors like Boeing and Lockheed Martin:

• Lithium Batteries come from Yardney Technical Products of Connecticut who were able to deliver these high tech batteries with far extended life while maintaining low weight.
• Parachutes cames from Pioneer Aerospace Connecticut. 
• Metal Legs for the Curiosity rover  were made by the American Bicycle Group at Tennessee, the makers of Litespeed bikes. They settled on an aluminum,titanium, vanadium allow to make sure that the legs of the rover will work in the extreme condition of the journey and landing at Mars.
• Mars soil collecting robots are made by Honey Bee Robotics of New York. 

While this list is preliminary and is likely to grow, it is a cause for celebration because many of these are small businesses and operate at the high knowledge end with highly qualified personnel. They specialize in what they do and being in highly specialized B2B markets probably don't realize the huge applications all these technologies can have in other markets. The local media is doing a good job of highlighting the contribution of these businesses.The ability of these businesses to scale their products and services in other markets will greatly help in growing the high knowledge/high skill /high paid segments of American enterprise. Contact StratoServe.

US Textile Industry and the outsourcing of US Olympic team uniforms by Ralph Lauren

The outsourcing of US Olympic team uniforms by Ralph Lauren to China seems to cause a great deal of angst among US politicians as you can see in the Wall Street Journal video alongside.

The reality is that if you checked out any clothing or home furnishing at the apparel section of Walmart, JCPenney or Macy's it will be hard to find a garment, or for that matter undergarment, made in the USA. Only perhaps  the design and certainly the marketing is  done from the USA. Much of the rest of the value/supply chain for textiles is either overseas or taken over by technology.

Take the cotton example. USA  is the second largest grower of cotton.It exports half of its product overseas and the rest is converted to yarn or thread and then exported after value add. Weaving mills are overseas because of labor costs. In any case agriculture,spinning and weaving have become highly developed and automated industries and therefore employ less people who are more technically skilled.There is literally no low skill job like  watching over the spinning machine because computers do so.

The US Textile industry overall has declined every year since the 1950's when the textile and apparel industry was 2.8%  of the economy to merely 0,45% of the economy in 2001. The US textile industry has tried to go up the value chain and manufacture high tech/high end products like space suits. Here again the demand is obviously not booming as the middle markets of Asia and in any case employs very few  folks who are highly skilled and qualified.

It is however possible to export value added yarn from the USA instead of just shipping the cotton in bales. For example, by locating the spinning mill near the cotton growing farms,  Zagis was expected in 2010 to create 160 jobs and 645 indirect jobs by 2012 in Lousiana. Mere outrage at Ralph Lauren getting the US Olympic uniforms made in China is not the answer.Contact StratoServe.

What jobs are not outsourceable in the US? Going global in Agriculture,Manufacturing and Services

What jobs are not outsourceable in the US will be a question on top of mind as the Presidential election campaigns gather steam.This as globalization and technology moves forward at an ever faster pace.  A useful way to think about the challenge for young and mid-career Americans is as follows:

• Agriculture: Only a tiny 0.7% are involved directly in Agriculture (CIA Factbook) and there is a larger percentage of folks involved in different managerial,research and other activities, for whom there is the great opportunity of Africa and Latin America. Agriculture related activities in Africa are underdeveloped and the increasing world population needs to be fed and it is a good time for folks in Agriculture and allied professions (say you sell seeds,fertilizer) to look at overseas opportunities. Also great opportunity exists in Latin America.
• Manufacturing : Manufacturing seems to be at the center of the  current outsourcing debate and angst as it fuelled the American middle class in post World War-II USA.There is no way that American manufacturing of mid skill items like a plastic torch will compete globally.  Two examples come to mind both from the Eastern USA. A factory owner mentioned that the only plastic product made in their industrial park  are garbage cans because they are expensive to transport from China. Similarly, a detergent manufacturing manager said that detergents, particularly concentrated ones are viably manufactured in the USA.  Thus you have the iPhone made in China along with solar panels. Thus Americans must develop the skills for inventing the iPhone as explained in the Smiley Curve of Innovation, through an active interest in the science and technology in the classroom and global marketing skills. The latter is really possible because there are always students and immigrants from any country that you are interested in reaching. These folks are always delighted to tell you stuff that even Google does'nt know!
• Services:  About  80 % of the population is in service related activities and here only tasks that require personal contact cannot be outsourced. Within services you have a variety of professions that are under seige due to technology. Take healthcare, a nurse's job cannot be outsourced but a radiologists job can be. More challenging is the outsourcing to technology as has happened for tax preparation and travel agents. Coping with changes requires an active interest in the Internet and all the great opportunities it can offer. No matter what your profession, there is an Internet angle to it that you must understand and develop. You'll find global opportunities to leverage your skills and and expertise no matter what that Internet angle is. Contact StratoServe.

Steps in Engineering Outsourcing : What goes out - must come back

Given the interest in an earlier post on engineering outsourcing its timely to think about the steps of engineering outsourcing and keep in mind that what goes out must come back! Here are the most basic steps of the engineering outsourcing process:

1. Core competence: As discussed in several articles innovation and intellectual property is best managed if the organization has a clear sense of how the outsourced work fits into its core competence. Simply speaking - core competence is what you can do better than other competitors in terms of cost,quality and customer satisfaction. Whether it is engineering design or drawings - outsource only those parts that are not too close to what what makes you special.
2. Selecting vendors: capable and responsive vendors make all the difference and finding them,developing them,encouraging them is a complex but satisfying process. Be aware that whatever vendors you choose you might just get stuck with them as it becomes difficult to "fire" an existing vendor in the engineering services space. So choose carefully but commit completely after the contract.
3. Manage transition: As pointed out in an innovation and outsourcing article, transition is the phase that is absolutely critical. This is when a transition team from the vendor's organization is trying to understand the task at the outsourcing organization's office. What exactly is to be done? Who will assign the work? Who will receive the work and integrate it to the re-configured value chain of the outsourcing firm.
4. People issues: If some people have to be re-assigned or let go, an active constructive HR process must work. If not, you can hardly expect the existing team to help with a good transition. And after your remaining organization is re-configured ... the entire tacit knowledge of your team will be lost. The vendors' performance will be compromised from the start.
5. What goes out - must come back: Its much harder to specify an engineering service compared to a physical product. You cannot really do a quick quality check of a bunch of engineering drawings. And if you have to check and re-do any parts of the drawings - what was the point of outsourcing in the first place? In other words, recognize that anything that is outsourced has to come back and fit in with the rest of your value/supply chain that is facing your market. The more effort you put in the previous steps- the better will be the outcomes in the last step.

Engineering outsoucing is a great opportunity to speed up innovation. If you can do one drawing in a day in house - you can get 10 drawings done at the same cost and time overseas. The catch is that your existing engineering draftsperson/manager must be able and willing to move up the value chain and co-ordinate the vendor. Doing so can lead to higher paying jobs in America by speeding up innovation - while leveraging worldwide engineering skills now accessible through the Internet. Contact StratoServe.

Mayors Innovation Challenge for US cities from NYC Mayor Bloomberg

The Mayor's Challenge for US cities from New York City Mayor Michael Bloomberg is a great idea. The rationale for the Mayors Challenge is explained in the video alongside and  details of the competition are available at the Bloomberg Philanthropies website. Mayor Bloomberg is personally funding the effort and it is available to all cities with over 30,000 population and the first prize is $5 million with four second prizes of $1 Million each.

An example of a great idea is from Chicago where there are two phone numbers. 911 for emergencies and 311 for everything else. The 311 idea has spread to 70 other cities and has greatly enhanced the effectiveness and responsiveness of the city to resident services. Details of the Chicago example are worth reading. To summarize , in Chicago, before 311 if you had a charge complaint for a cab ride, you did not know who to call in the city. By getting feedback from public the 311 service has helped prevent flooding, deal with the West Nile virus and vastly improve emergency response times.

Mayors of US cities with over 30,000 population will get an invitation to participate. By just participating, cities will start focussing on areas they can make a difference including healthcare as in the Camden experiment mentioned in an earlier post.

The reason that the Mayors Innovation Challenge  is a great idea is because this will encourage on the ground local leaders to propose and highlight innovative solutions to some of the most pressing problems in America. This decentralized grassroots approach to innovation in the public sector will work because guess what:  if say a city submits an innovative science and math popularizing program for the High School the town will talk about it, have it be the lead story on the local TV News and newspaper and make long but enthusiastic speeches at the Board of Ed meetin.g And many city leaders will facilitate Tweets and Facebook pages. Whether or not the innovation idea wins overall, it will make a difference at the originating city and to those  who learn about it -worldwide.Let's hope that every city that is eligible will apply: confirmation of interest is July 14 and submissions are September 14. Contact StratoServe.

May Jobs Report: What can college students do?

The May jobs report is devastating. It's estimated that over half the graduating class of 2012 will not have jobs. Yes the economy is slow, it's slowing in emerging markets as well besides Europe that seems very bad. However, those US  students who are entering college in the fall need to consider the following things:

• Stay with a Science/Engineering Major: Unless you totally hate science and math in high school stay with science and engineering in college. You can always do a double major/minor  in subjects that you love but those that do not have jobs.  Science/Engineering have the highest paying jobs and a shortage.
• Even Business needs Math and Science: This blog is biased towards innovation but the point is that emerging opportunities in fields like marketing no longer depend only on "social skills" and "creativity." Data analysis with big data is an emerging field with huge opportunities for fields within business including supply chain,finance and accounting.
• Get Internships from freshman year: Internships are  a no-brainer in today's job market. Yet parents are surprised when they learn that a majority of college students start preparing a resume in their senior year. Even high demand majors need students to have experience in the field. It's better that your experience is part of a structured company internship program.
• Large companies are looking for interns : Most large companies are looking for interns. It makes economic sense for them and also decreases hiring costs if there is a mutual fit. For the intern, its a win anyway because an internship on a resume makes all the difference in your job hunt. A good reference from your internship supervisor can be great in landing your job after graduation.
• Engage with College Career Events: All colleges, faculty and administrators understand the urgency of the economic situation. They organize career events, activities and the majority of students do not show up. Unless you are in it- you cannot win it whether- it is an internship or a job offer.
• Engage with professional clubs: Among professional associations less than 20% members show up for events - even when they are free, include dinner and have a great speaker. College professional clubs tend to be thinly attended as well. This is a lost opportunity to take leadership and engage with the Professional Association who are happy to come and speak, offer internships or at least tips and advise.

Facebook and LinkedIn should supplement the college student's networking efforts and not replace the "on ground" opportunities that colleges, the community and professional associations keep trying to provide.

In summary, with globalization the graduating class of 2016 will face an equally turbulent job market and the time to start preparing is from the Fall of Freshman year in 2012. Contact StratoServe.