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Guest Bloggers

Guest Bloggers

Can Marvel Comics Make You Love Blue Ocean Strategy?

On Aug 17, 2018 6:00:00 AM

/ Andrea Simon

Categories: Blue Ocean, Andrea Simon, Blue Ocean Strategy, business strategy, Blue Ocean Strategy Expert

Can Marvel Comics Make You Love Blue Ocean Strategy?

From Guest Blogger Michael Olenick

The idea that higher value and lower cost are incompatible is taken as an assumption. Better things cost more, right?

Sometimes that’s true, but not always. Blue Ocean Strategy theorizes the relationship can be broken, that higher value can be delivered at lower cost. This concept is called the cost/value trade-off.

Let’s use an obvious example:

Complex remote control

All those covered-up buttons add cost; each must be engineered to do something, tested, manufactured, distributed, and explained to consumers (who have no interest in them). The extra cost adds unnecessary complexity. Let’s check out Apple’s TV remote instead:

Apple Remote Control

Much better.

Now a larger example, the turnaround of an entire company and creation of a new movie studio.

Marvel, the beloved comic book/movie/TV/game/toy company went from bankrupt and deeply in debt to a $4.2 billion buyout, in just over a decade, by breaking the cost/value trade-off. Marvel movies earn considerably more than movies from other studios yet cost considerably less to make.

A brief history. Marvel’s success as a business reads like a plot from one of their movies, with superheroes and supervillains of business. The company was founded in 1939. They did OK as one of five unremarkable comic book companies for decades until German psychologist Dr. Frederic Wertham testified to the US Senate, in televised hearings in 1954, that comic books cause homosexuality and teenage pregnancy. Never mind that common sense dictates this is ridiculous (homosexuality and teenage pregnancy?!) – or that Wertham released a sensational book a day before his Senate testimony – his arrow hit the target. There were Nazi-style comic book burnings.

 

Marvek Comic story

By the time comic book hysteria subsided, the five comic publishers had been reduced to two, Detective Comics (DC) and Marvel.

Not content to rest on the strength of their characters, DC purchased Marvel’s distribution channel and allowed only a small number of books to be published each month. It is in this context, from 1960 to 1964, that Marvel issued a mandate to their then middle-aged employees, editor-in-chief Stanley (“Stan Lee”) Lieber, lead cartoonist Jack Kirby, and the slightly younger Steve Ditko, to make new characters or find new jobs. Over about four years they created virtually every Marvel character we now know.

Marvel thrived until the 1980’s when raider Ronald Perelman purchased the company, leveraged it by issuing a lot of bonds (that he largely pocketed the proceeds of), and extracted as much value as possible. By 1996 about two-thirds of the staff were gone, about half the comic book stores were out of business, there was a fan boycott, and a comic book collectible pricing bubble burst. In December 1996 Perelman’s Marvel filed for bankruptcy, hoping to reorganize their way back to profitability.

Ron Pearlman

Ron “Ronnie” Perelman

As if one corporate raider weren’t enough, Carl Icahn had purchased the bonds and decided on a hostile takeover. Icahn did briefly gain control of the business, but it was Isaac “Ike” Perlmutter, who owned a toy company, Toy Biz, that had an exclusive deal with Marvel who prevailed. Perlmutter had a history of buying bankrupt companies and fixing them. After a 17-month hotly contested bankruptcy Perlmutter gained control of Marvel, thanks to a $250 million high-interest loan.

Perlmutter, as Chairman of the Board, hired turnaround specialist Peter Cuneo as CEO. He knew the normal (oftentimes ineffective) cost-cutting that turnaround artists embrace would not work. It seldom works anyway and, at Marvel, there was nothing left to cut.

Instead, Cuneo created an atmosphere where creativity and risk-taking could thrive. Cuneo inked deals with Sony to make Spider-Man movies and with Fox for X-Men movies. Eventually, Perlmutter hired Hollywood insider David Maisel to build Marvel’s own movie studio. After their first movie, Iron Man, Maisel sold a debt-free Marvel to Disney for $4.2 billion ($4.5 billion by the time the deal closed), barely a decade after the company emerged from bankruptcy.

In reviewing the idea that Marvel movies are different one person said “seriously – all those superhero movies are the same.” They’re not. Marvel produced movies, featuring Marvel characters, gross about double the amount of Marvel movies produced by other studios, which in turn gross about double the amount of non-Marvel characters. The X-Men movies, Marvel characters licensed to Fox, did considerably better than Superman movies, owned by DC Comics. Iron Man and the rest – Marvel characters in films produced by Marvel itself – earn even more.

Since Marvel movies gross about 2-4 times more than non-Marvel superhero movies, don't they cost more to make? No, they cost less. About 30 percent less. They have more value and cost less to produce, breaking the value/cost trade-off.

OK, answer people still not ready to accept the idea. That’s because Marvel produced movies are their best characters whereas the others are boring and stale, right? Remember that Marvel licensed Spider-Man to Sony and the X-Men to Fox; they were left with largely unknown characters. Iron Man, Thor, Ant-Man, Black Panther ... the only character anybody outside comic book nerdom knew was Hulk, and their first and only standalone Hulk movie is also their lowest grossing Marvel produced movie out of the 20 released so far.

Why do Marvel movies resonate more than other superhero movies? Like the simpler remote control, the lower cost movies are better. Instead of high priced stars there are top-quality largely unknown actors. Rather than flashy backstories there’s a couple of good actors discussing a story in a cave, allowing the audience's imagination to fill in the place of expensive CGI scenes. Instead of a dozen cars chasing the protagonists from a remote military base there’s two cars, because the budget supported only two cars exactly like a poorly financed military outpost would.

“Our strategy from the beginning was that our characters were the heroes of the films and we did not want to hire any highly paid actors or actresses,” said Cuneo. “We thought the heroes, the stars, were the characters and there were many fine actors who could play these roles and we did not need expensive talent. Obviously, we hired talented people. We had very talented directors and producers, which are very important. If you were a highly paid actor and wanted to be in our films then you had to take less than normal compensation.”

Marvel characters are people first, superheroes second. Often reluctantly transformed from one to the other. They have angst about the bad guys and often resent their superpowers. These are dramas with superheroes, rather than superheroes trying to shoehorn effects into a plot.

Marvel’s Blue Ocean movie studio broke the cost/value trade-off to become the most profitable movie franchise in history.

Read more about Marvel’s Blue Ocean movie studio here, at Harvard Business Review: The Marvel Way: Restoring a Blue Ocean.

About Michael Olenick

Michaell OlenickMichael is an experienced product and business developer who has used Blue Ocean Strategy to create businesses that have added substantive value. Michael works with startups, established firms, consulting companies and government entities. He is a senior research fellow at INSEAD and a long-time certified Blue Ocean Strategy consultant. 

Michael can be found on LinkedIn: www.linkedin.com/in/michaelolenick

Some additional reading to enjoy

We, too, are Blue Ocean Strategists. This blog pulls together some of our favorite posts, podcasts and white papers and we think is well worth a read. 

goldfish clear water-square

Mid-Year Update: SAMC's 10 Best Blue Ocean Strategy® Blogs/Podcasts/White Papers 

The phenomenally successful book Blue Ocean Strategy powerfully teaches entrepreneurs and business leaders to go where the profits and growth are and the competition isn’t. But how exactly do you do that? These 10 blogs, podcasts and white papers will show you. Enjoy.

SAMC Guest Bloggers  

We have a select number of guest bloggers whom we have invited to share their insights with our readers. They bring different perspectives on the challenges of change, innovation and opening new market space. Please enjoy their viewpoints and share them with others.

Resources:

From Observation to Innovation,

AndiSimon_headshot.png

Andi Simon, Ph.D.
Corporate Anthropologist | President
Simon Associates Management Consultants
Info@simonassociates.net
@simonandi

Don't miss a single episode of our On The Brink podcast! 
Subscribe now

 Subscribe to "On The Brink" Podcast

Buy On the Brink by Andi Simon

Read More → Back to Top

David Grebow and Stephen Gill: When History Happens And No One Notices

On Jun 14, 2018 6:00:00 AM

/ David Grebow and Stephen Gill

Categories: business change, technological innovation

David Grebow and Stephen Gill: When History Happens And No One Notices 
From Guest Bloggers David Grebow and Stephen Gill

“When we look back across five centuries, the implications of the Renaissance appear to be obvious. It seems astonishing that no one saw where it was leading, anticipating what lay around the next bend in the road and over the horizon. Even the wisest were at a hopeless disadvantage, for their only guide in sorting it all out the only guide anyone ever has was the past, and precedents are worse than useless when facing something entirely new.”

—William Manchester, A World Lit Only By Fire

Book by Steven Gill and David Grebow Minds at WorkIn the 1980’s, technology, automation, artificial intelligence and globalization combined for the first time to form a new powerful force. The impact of this force began the historic and too often unnoticed ­­ transition from a labor-intensive workforce that had existed for thousands of years to what is still a relatively new and emerging mind-intensive workforce. In our book, Minds at Work, we refer to this period as The Great Inflection Point when we moved from managing hands to managing minds.

The U.S. Department of Labor estimates the loss of the relatively unskilled jobs that populated most of the labor-intensive economy would impact more than 1.4 million workers by 2026. Yet, a World Economic Report analysis and report in response to these numbers pointed out that 96% of the 1.4 million jobs could be easily upskilled and transitioned into more challenging and skilled work once automation and AI replaced the repetitive, labor-intensive parts of their jobs. For example, assembly line workers could become construction laborers, electronic equipment assemblers could transition into electricians, and machine operators would learn to be machine mechanics.

Labor-intensive work that can be more cheaply and effectively done by automation and AI has aspects and elements to it that AI and automation cannot do. It means that parts of many jobs are, to use a new term, “robot-proof.” They are the parts of a job that requires you to use your mind life experiences, creativity, ability to continuously learn, and more  in the work you do. Harry Davis at the University of Chicago summed it up when he said, “We have to make it so that people don't leave too much of themselves in the trunk of their car.”

Some countries have paid more attention to this historic shift than others and are doing a better job training and educating their workforces for these upskilling transitions. In Singapore, they have started what is referred to as a “Lifelong Learning Initiative.” The focus is on training and education for skills that will be required in a world that is mind-intensive and not labor-intensive, the brainful work that will need to be done in the future. In Germany, there is the Educational Vocation Act that offers 500,000 Germans with up to three years of education in the classroom that is then coupled with a transition into the workplace as paid on-the-job apprenticeships. These countries have a growth mindset and know that people want to learn and prepare for the future.

Some countries, such as the United States, are still not seeing the implications of The Great Inflection Point and have no strategy for succeeding in this new mind-intensive world. A few companies are leading by example. AT&T realized (almost too late) that their new competitors include not only the new cellular phone companies Verizon and Sprint, but also the internet service providers Amazon, Netflix and Google. Randall Stephenson, AT&T's Chairman and Chief Executive, knew he had to reinvent the company to compete. So in 2014, he asked 280,000 employees worldwide to start a retraining program called Vision 2020. In his mind, it was an easy choice: Take classes and begin to upgrade your skills or limit your opportunities at AT&T to zero. The company knew that a large portion of the workforce needed to learn the new digital technology and quickly be able to work with AT&T’s cloud-based system, scheduled for implementation in 2020.

The World Economic Forum summed it up: "As the types of skills needed in the labor market change rapidly, individual workers will have to engage in lifelong learning if they are to achieve fulfilling and rewarding careers. For companies, reskilling and upskilling strategies will be critical if they are to find the talent they need and to contribute to socially responsible approaches to the future of work. For policymakers, reskilling and retraining the existing workforce are essential levers to fuel future economic growth, enhance societal resilience in the face of technological change and pave the way for future-ready education systems for the next generation of workers.”

History does not happen to someone else. It happens to all of us. The cost of not noticing when history happens is failing to react and falling behind other countries that have been paying attention.

About David Grebow and Stephen Gill

David Grebow has been considered a visionary in the management and education fields for over 35 years. He has held senior management positions with leading technology and education companies, including IBM where he co-founded the Institute for Advanced Learning and Research. David's blog, KnowledgeStar, is one of the most widely-read on learning and technology. 

Steve Gill 2015-979548-editedStephen J. Gill, co-author with David Grebow of "Minds at Work," is a co-founder of Learning To Be Great, an online resource for creating and sustaining a learning culture in organizations. He has designed and evaluated training and learning programs for office systems, manufacturing, utility, healthcare, education and philanthropic organizations, and has written over 50 articles.

SAMC Guest Bloggers  

We have a select number of guest bloggers whom we have invited to share their insights with our readers. They bring different perspectives on the challenges of change, innovation and opening new market space. Please enjoy their viewpoints and share them with others.

On The Brink podcast with David and Stephen

Take a listen to our On The Brink podcast with David and Stephen about the changes taking place all around us in the way people work. Today's "knowledge worker" in a typical corporation is very different from the line worker in a plant, yet so many of our businesses have paid little attention to this significant shift in the labor force and what their response to it should be. Pretty important stuff. Don't miss this!

Resources:

From Observation to Innovation,

AndiSimon_headshot.png

Andi Simon, Ph.D.
Corporate Anthropologist | President
Simon Associates Management Consultants
Info@simonassociates.net
@simonandi

Don't miss a single episode of our On The Brink podcast! 
Subscribe now

 Subscribe to "On The Brink" Podcast

Buy On the Brink by Andi Simon

Read More → Back to Top

Bob Roitblat: 9 Ways Traditional Market Research Fails Innovation And What To Do About It

On May 15, 2018 7:00:00 AM

/ Bob Roitblat

Categories: Business Anthropology, Corporate Anthropology, finding new customers, innovation

Bob Roitblat: 9 Ways Traditional Market Research Fails Innovation And What To Do About It 
From Guest Blogger Bob Roitblat:

"We should discard the old, unquestioned assumption that demographics is always the best way to segment markets."  —Daniel Yankelovich, New Criteria for Market Segmentation, Harvard Business Review, March-April 1964, page 89.

Bob Roitblat-1Traditional market research techniques focus on data, metrics, purchase intent and attribute preferences—i.e., on logical analysis. These provide only a fraction of the available knowledge and insight necessary for effective innovation for several reasons: 

1. Data mining is only effective at uncovering insights into your current customers’ current buying habits. It tells you nothing about people who never were customers or who eventually might be.

2. What customers say in surveys and focus groups often contradicts what they actually think and feel, and how they will ultimately act.

3. Asking customers what they need from your products and services tends to elicit predictable yet inadequate answers such as "less expensive," "easier to use," or "more features."

4. Surveys and focus groups tend to uncover explicit needs and not implicit or latent needs. These needs are most important to driving innovation.

5. Customers are often unable to fully articulate their own needs, at least not in much useful detail.

6. Focus groups produce opinions, but not how to derive meaning from them.

7. People don’t always know why they do certain things, so interviewing them doesn’t reveal their thought process.

8. Consumers often adapt their behavior to compensate for product inadequacies, or cobble together solutions for which no good alternatives exist. Since few people realize they are compensating, they are unable to explain what is missing or what might be improved.

9. Human behavior is influenced by many factors, most of which aren't conscious or rational, and, therefore, can’t be quantified. 

As UCLA professor Theodore Porter wrote in the preface to his 1995 book, Trust in Numbers (Princeton University Press), “quantification is a technology of distance.” 

Rather than being distant from customers and prospects, for successful innovation, we need to be closer to them. 

Empathy is more important than numbers when it comes to delivering successful innovation. 

Empathy, defined as “identification with and understanding of another's situation, feelings, and motives,” is the language of proximity. Empathy is what gets us closer to customers and helps us uncover their important yet unarticulated needs.

Empathy enables us to get close enough to individual customers or very specific market sub-segments to understand them in the context of the emotional world in which they live. It allows us to inhabit the customers’ minds and hearts in order to thoroughly understand their attitudes and aspirations, what works well for them, what doesn’t work so well, and where their pain and frustrations are within the context of their particular situation.

A deep understanding of customers and their needs, worries and motivations also enables us to find common, often unspoken, drivers of behavior shared by otherwise diverse, traditionally identified market segments.

Innovation starts with empathy for the people we want our ideas to matter to.

Empathy starts with observation; observing the customer up close and over time to uncover their unvoiced, often unrecognized needs.

What customers and prospects do speaks volumes compared to what they say or even hint at. Watch the gyrations your customers go through in real settings when trying to achieve their objectives: what are they frustrated with? What are they wasting time on? What are they struggling to obtain, understand or perform? What do they find easy and delightful?

The empathy gained through observation uncovers the greatest opportunities for innovation.

SAMC Guest Bloggers  

We have a select number of guest bloggers whom we have invited to share their insights with our readers. They bring different perspectives on the challenges of change, innovation and opening new market space. Please enjoy their viewpoints and share them with others.

On The Brink podcast with Bob 

Take a listen to my On The Brink podcast with Bob in which he shares with us how to develop a goal-focused mentality and the competitive skills we need to become great leaders whom people admire and follow. Using his experience as the CEO of Mainsail Consulting Group, combined with years as a competitive sailor, Bob powerfully draws parallels between building and leading a winning yacht racing team and building and leading a winning business. Listen, learn and share!

Resources:

From Observation to Innovation,

AndiSimon_headshot.png

Andi Simon, Ph.D.
Corporate Anthropologist | President
Simon Associates Management Consultants
Info@simonassociates.net
@simonandi

Don't miss a single episode of our On The Brink podcast! 
Subscribe now

 Subscribe to "On The Brink" Podcast

Buy On the Brink by Andi Simon

Read More → Back to Top

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