Posts from — September 2010

Battery-powered, and built of carbon fiber and aluminum," the Megacity Vehicle "is meant to win BMW a place in … sprawling urban megalopolises," reports Chris Reiter in Bloomberg Businessweek (9/27/10). A four-seater scheduled to launch in 2013, the Megacity pushes "BMW beyond its core strengths of speed and style, and toward solving different problems, like global warming, oil depletion, and the shift in growth from the West to the East." BMW hopes it will secure its future "without sacrificing its status as a rarefied drive for the open road."

As BMW design chief Adrian van Hooydonk puts it: "Since we’re BMW, we don’t want to create any old electric car … We want to deliver what people so far think is impossible: the combination of joy and zero emissions." It’s a tall order, but for BMW it’s not an option. Because it is much smaller than rivals (Volkswagen sells five times as many cars as BMW) it needs to create a fuel-efficient, city-friendly car of the future so it can continue to make its beautiful and fast cars of the past. The goal is "to sell more than two million cars annually by 2020, an increase of 55 percent over 2009."

Getting there requires "the use of costly materials like lightweight aluminum and carbon fiber," which is "50 percent lighter than steel" and will "reduce the size and cost of the battery needed to move the car." BMW’s chief executive, Norbert Reithofer suggests he’s going for broke: "The Megacity Vehicle is a must-have for BMW," he says. "I would have decided to produce (it) even if, contrary to our expectations, it doesn’t make money in the first generation." He adds: "As a leader, you can either be an entrepreneur or an administrator. I see myself as an entrepreneur."

Chrysler came close to manufacturing a car with a jet engine in the 1970s, but came up short, reports Patrick Cooke in a Wall Street Journal review of Chrysler’s Turbine Car by Steve Lehto (9/25/10). George Huebner, an automotive engineer, got the idea rolling in the 1950s, and he and his team managed to scale down a turbine engine so it would fit in a car. They also figured out how to get it to run smoothly — "virtually vibration free," unlike the piston engine.

There was a lot to recommend turbine engines, which "weighed less than piston engines, had fewer moving parts and were easy to work on. What’s more, they never needed a tuneup or an oil change and could cruise all day at 100 miles per hour." Plus, they would run "on any kind of flammable liquid … diesel, kerosene, jet fuel, peanut oil, alcohol, tequila, perfume," for instance. The car itself was designed by Ghia, and the "prototype design perfectly evoked the rocket vehicle of the future and the hopes of a nation headed to the moon."

Chrysler built a total of 50 prototypes, which were tested for a few months at a time by about 200 families. Another 350,000 people test-drove the car at the 1964 New York World’s Fair. The reviews were overwhelmingly positive, but the project was done in by a combination of the 1973 OPEC oil embargo, government regulations on clean emissions and Chrysler’s own "managerial dithering and bad decision-making." All but four of the prototype cars were destroyed "to make sure that competitors couldn’t get their hands on anything connected to the abandoned endeavor."

The digital age offers a new path-to-purchase model. By Stanley Stevens. It may be surprising to hear that Puma, the athletic apparel brand, released a smartphone earlier this year.

Why would Puma create a technology that seems so far from its core business or product? The answer lies within an idea called beyond the product marketing, which aims to fully leverage today’s technologies … read >>

Grand Rapids, Michigan is one of a number of communities using the arts as an economic stimulant, reports John Wisely in USA Today (9/28/10). Rick DeVos, an heir to the Amway fortune, came up with the idea to offer a total of $449,000 in prizes in an arts competition. This year, more than 1,200 artists submitted pieces with Grand Rapids residents voting for their favorites, using "their mobile phones to text in thumbs up or thumbs down on various works."

The competition, called ArtPrize, "drew an estimated 200,000 people downtown, far exceeding expectations … A research team from Michigan’s Grand Valley State University estimated the economic impact of ArtPrize at $5 million to $7 million." This year’s event — ArtPrize’s second — is on now through October 10th, and so far "local restaurants and bars are reporting sales up 20 percent to 40 percent over last year’s opening days."

Baltimore has a similar program, called Artscape, "which features visual and performing arts across the city for a weekend." It "drew more than 350,000 people in 2009 and generated about $26 million for the economy." The only naysayers are art experts who think everyday people have no business judging arts competitions. Even Ran Ortner, who won $250,000 in last year’s ArtPrize, agrees: "If you have children voting on a culinary competition, they are going to vote for the ice cream and candy" he says.

A juvenile court judge in St. Louis has created a school where troubled kids learn life lessons by playing chess, reports Stephanie Banchero in the Wall Street Journal (9/27/10). "Most of my kids are impulsive, reactionary and they lash out without thinking through the consequences," says Judge Jimmie Edwards. "Chess teaches them patience and teaches them that there are consequences to bad decisions."

With this in mind, Judge Jimmie founded a school called Innovative Concept Academy, for "sixth through 12th graders who have either been suspended or expelled for fighting, bringing weapons to class, getting caught with drugs or other illegal behavior." Students attend regular classes, along with "courses in ballroom dance, creative writing and golf." Chess classes are held just twice a week, but "are mandatory for most the school’s 97 students."

Joann, a 15-year-old, landed at Judge Jimmie’s school after punching another student, is new to the game, but says that chess "messes with your brain and makes you think about something before you do it. And it makes you think there’s a way out of something if you think about it hard enough." Chess has also been shown to help students sharpen their math skills. The classes are funded by the Chess Club and Scholastic Center of St. Louis, which "wants to make St. Louis the chess capital of the U.S."

Retail figures prominently into the transformation of Michael Kors from hot designer to global brand, reports Sheridan Prasso in Fortune (9/27/10). The reason is that the market rewards retailers "with price multiples in the high teens and 20s, versus 12 to 14 for wholesalers." Michael, known to television viewers as a "sassy, quip-happy judge" on Project Runway, plans to make that transition with the help of some heavy-duty financial backers as well as fashions that seem to be well aligned with tough, economic times.

"He makes extraordinarily beautiful clothes that are cross-generational and uniquely American," said Anna Wintour at an industry event honoring Michael with a lifetime achievement award (he’s only 50). He also "seems to have managed to walk the precarious tightrope of expanding into more affordable territory without diluting the value of his higher-end collection." His "affordable" items, introduced in 2004, range from "$99 to $300, in contrast with the $1,000 to $3,000 dresses at the top of his collection."

As retail consultant Cynthia Cohen notes, "He wasn’t selling at 40 percent off; he was introducing at a lower price point what a woman wanted to spend for apparel." And he "is said to operate better, faster and more efficiently than rivals, getting new products out quickly and filling inventory on time to capture the always fleeting fashion zeitgeist." Michael started his "aggressive retail expansion" in 2006, building some 80 stores in the US "with plans for 100 worldwide by year-end and 200 by 2012 … Retail sales will hit $1 billion this year, up from a reported $400 million in 2007.

A pair of handbag designers are trying to re-define the meaning of Tiffany’s signature robin-egg blue, reports Elizabeth Holmes in the Wall Street Journal (8/26/10). "The color can be kind of frightening," says Richard Lambertson, one of the designers. "It’s not subtle." Richard, along with design partner John Treux, figured they’d avoid focusing on Tiffany’s logo. "We wanted to have something recognizable about the bags so that people would say ‘Oh! That must be a Tiffany bag!," says Richard. "It’s really hard to do that."

Tiffany’s signature shade helps, though, and the new line includes the blue-hued satin Holly clutch ($3,200) as well as a snakeskin Hadley shoulder bag ($1,495). Then there’s the "large crocodile handbag" ($17,500). Despite such prices, Tiffany’s handbag strategy is partly recession-driven: "Unlike jewelry, which sometimes feels extravagant, handbags always serve a purpose," says John Long of Kurt Salmon Associates. They also work well as gifts from men, as they "offer luxury cachet without the symbolic weight of the little blue box."

Jewelry still represents 90 percent of Tiffany’s business, and 31 percent of the retailer’s total sales last year "came from its lowest-priced merchandise category — sterling silver jewelry with no gemstones and an average price of $200." Not surprisingly, the new handbags take "design cues from Tiffany’s jewelry roots." One bag features a closure "inspired by the six-prong Tiffany engagement-ring setting" and another, called the Bracelet bag, has a handle that’s "intended to look like a bracelet when dangling from a woman’s wrists."

Caribou turns a cup of coffee into a daily affirmation. By Dori Molitor. Why bother? That’s what I call the drink I always order at Caribou because it has everything taken out of it.

The bigger, and even more obvious question is, why do I bother going to Caribou at all if I don’t even particularly like coffee? Why would anyone go there to spend five dollars on any drink, with the economy still struggling and with a Starbucks right across the street? … read >>

Minnesota Mining & Manufacturing — 3M — is "about inventing hundreds and hundreds of Next Small Things," reports Marc Gunther in Fortune (9/27/10). "Our business model is literally new-product innovation," says Larry Wendling, head of 3M’s corporate research. No kidding: "The St. Paul company produces a mind-bending 55,000 products." As CEO George Buckley notes, "even in the worst economic times in memory, we released over 1,000 new products."

But you probably will never hear of any of them "because they’re embedded in other products and places: autos, factories, hospitals, homes and offices." These products won’t "generate the buzz of, say, the next iPhone." However, says George, "There’s lots of 3M inside" the iPhone. (He just can’t say exactly what, because he might get a cranky email, or something even worse, from Steve Jobs.)

3M is inventing some pretty cool stuff, though, like Cubitron II, "an industrial abrasive that cuts faster, lasts longer, sharpens itself, and requires less elbow grease." The percentage of 3M’s revenues from new products is back up to 30 percent, having dipped to 21 percent in the first half of the 2000s, when Six Sigma ruled the labs (no more). And most of those are "core technologies — things like abrasives, adhesives, imaging and films," driving growth, "often in unexpected ways." It all adds up to a $23.1 billion business.

Innovation is defined as "the adoption of new practice in a community" in "The Innovator’s Way," reports Nancy F. Cohen in the New York Times (9/5/10). Written by Peter J. Denning and Robert Dunham, the book "sets out to understand how individuals and organizations can raise the rate of effective innovation." The authors set forth various principles and explore "effective leadership, specifically how people create and sustain change in groups."

Another new book on innovation, "Where Good Ideas Come From," by Steven Johnson examines the context of innovation, "including the physical, social, technological and economic conditions … in which successful innovation occurs." Two examples of innovative environments are the internet and the city, which Steven uses "as a backdrop" to identify seven patterns that distinguish "unusually fertile environments." The patterns "include the power of the slow hunch and the role of serendipity, error and inventive borrowing."

A key premise is that innovation happens "when ideas can serendipitously connect and recombine with other ideas." However, Steven notes "that a great deal of the past two centuries of legal and folk wisdom about innovation has pursued the exact opposite argument, building walls between ideas," in the form of "patents, trade secrets and protections of intellectual property" which he says effectively reduce the "overall network of minds that can potentially engage with a problem."