Archive for March, 2010

Digitizing the Real World: Virtual Cookie Jars

Wednesday, March 31st, 2010

In my previous post, I discussed a framework for thinking up new products based on Relating to Offline Experiences. The following is an application of that framework:

A low-tech method of saving money is the cookie jar, or envelope, system in which you take multiple jars and label each one: Car, Down Payment, Vacation, Christmas, Clothes, etc. Then you save a designated amount of money in each jar, building up the money over time so you can pay for your vacation directly from the Vacation jar as opposed to putting it on credit, taking money from savings, or trying to fit the vacation into the monthly budget. This system has been repopularized in recent years in the book Secrets of the Millionaire Mind by T Harv Eker. However, if one wants to use this system but prefers to keep their money in a bank for security and interest, then they would have to open, and manage, multiple savings accounts. And each would have to be setup to auto-deposit the specified amount of money from their checking account each month.

It would be much easier to manage if I could have one savings account and break it into as many virtual ‘cookie jars’ as needed. I could use a form similar to the following to setup transfers to my cookie savings account:

Add Funds to Cookie Jars

And then when I want to withdraw for Christmas shopping and a Winter Ski Vacation, I would do so with a form like this:

This savings account functionality would allow users to save money like they do without banks and software. The concept is simple for users to understand and see the value. Major banks like Wachovia, Wells Fargo, Chase, Bank of America, etc could allow this very easily by building an interface like above and a very simple database structure. This functionality would differentiate them from the other banks offering the same paltry 1.24% interest right now. They have already demonstrated that they have the desire and capability to innovate savings accounts with programs like Way2Save. Why not allow people to have one savings account at their bank with all of their cookie jars rather than having to open multiple accounts at multiple banks to satisfy their needs?

Online Products Should Relate to Offline Experiences

Tuesday, March 30th, 2010

People do and understand what they know.  They don’t read manuals for websites and most sites don’t have commercials telling us why we should use that site.  For an online website, product or feature to take-off, it helps if the user can quickly and easily relate the functionality to offline experiences.  Users spend only a few seconds when they land on your site or look at an unfamiliar feature of your site before deciding if they want to continue or not.  If they easily understand what they see then they are more likely to proceed.  Also, if you want users to champion your product, then they need to be able to easily explain it to others so that the people they talk to “get it” and the ideavirus can spread.

Hopefully this isn't your user!

So one framework for creating new ideas is to examine real world behaviors and ponder how they could be translated to the online paradigm, preferably enhanced greatly by leveraging the power of the internet and software.  Note that this does not mean that you can simply port offline activities online and expect to be successful.  As you look to build products and functionality for your website, consider what offline behaviors or products they relate to and how a user will view them with that context in mind.

One of the main use cases for the internet is to enhance what people already do offline.  Email is a faster form of the mail and online shopping is usually cheaper, faster and offers more options than offline shopping. Online news is instantaneous instead of daily, from many sources instead of a handful and  online radio is customizable and commercial-free.  A few more quick examples:

Virtual Gifts – It has been historically difficult to get users to make micropayments online.  Users don’t want to go through the hassle and security risk to make  a $1 payment here or 50 cent payment there.  One of the very few places that micropayments have gained traction is Virtual Gifts, which is estimated to be a $1.6 billion industry in 2010.  Our society loves to give gifts so it’s pretty obvious that users get the idea of virtual gifts as soon as they are exposed to it.  By allowing users to quickly and easily mimic their offline behavior of gift giving, Virtual Gift merchants have struck gold.

Online Reviews – People love to spread the word about businesses and products that they either love or hate.  They want to help people find the gems and avoid the duds.  Online reviews tap into our desire to tell others about our experiences.  In the past, if you had a bad experience you may call 5 of your friends and family to warn them about the business or product.  But online you can tell your story once and broadcast it to thousands of people across the globe.

Don’t Think Outside the Box – Expand It, Compress It, or Build a New One

Monday, March 29th, 2010

The phrase “Think Outside the Box” is thrown around a lot.  It can be helpful: open brainstorming, writing down everything you think of no matter how out there or implausible it is, can lead to some unique solutions as you process the ideas, attempting to make them feasible.  However, what is meant by thinking outside the box is really removing the constraints that you place, consciously or subconsciously, on potential solutions.  It may be that you have ingrained prejudices about how things should be done, or that the industry standards are unknowingly holding you back from finding the best solutions.  This is why many times an innovation in an industry comes from someone new to that industry.  They aren’t prejudiced by “how things have always been done,” and can thus see an “obvious solution” that alluded the brightest in the field.

The Danger in Thinking Outside the Box

"Outside the Box" isn't always the most productive place

“Outside the Box” is a BIG area.  There are infinite ideas outside of the box because there are no constraints.  It can create too much noise, drowning out the potential solutions in a sea of implausible or unhelpful ideas.  A helpful alternate exercise is to break down the box that you are in.  Determine what constraints make up the boundaries of your box and figure out which need to be thrown out and which should be kept.  This will build you a bigger box, which hopefully contains the solution you seek, as you remove those unnecessary constraints.

If you determine that there are no constraints that should be thrown out, then you can compress the box by finding additional constraints to add to it.  If you are accurate that there are no incorrect assumptions, then the solution exists “inside the box” but the box may just be too big to easily find it.  The noise of all the potential solutions from a too-large box is drowning out the real solutions.  So hone in on the solutions by compressing the box, raising the signal-to-noise ratio until the solution is easier to find.

Another method is to find a new box.  Start from zero assumptions and add constraints to form a new box.  Logically think through what constraints should be in place and why instead of blindly putting the standard constraints in place, which would simply build the original box again.  Perhaps the new box will yield solutions that were hidden from you before.  If you only put in place the appropriate boundaries, then you will still have the potential solutions inside your box, but the box won’t be infinitely large like the area “outside the box.”

It takes 30 Days to Form a New Habit

Sunday, March 28th, 2010

They say it takes roughly 30 days to form a new habit, due in part to myeliniation, so my goal is to write at least one post per day for the next 30 days.  I’ve got a good number of starts, so I’m confident I can meet my goal.  After 30 days, I’ll evaluate and likely scale back to a reasonable long-term posting rate.

The Sweet Spot – Where to Look to Gain a Competitive Advantage

Sunday, March 28th, 2010

In order to get users to not only use our products, but also champion them, we need to differentiate from the competition and find a competitive advantage. Simply copying the current offerings won’t usually do much for us. If I go out and build a google clone, i’m not likely to get much traction. Conversely, offering products that users don’t want or can’t figure out how to use won’t do much for us either. If I build a google clone, but show the results in random order to differentiate my product, then I won’t gain many users either. And if I design a product that I cannot deliver, then I’ll get nowhere fast as well. I can decide to offer every user who does a web search on my site $5, but I don’t have the capabilities to fund that. So we find the sweet spot in the area seen in the graphic below.

Where Differentiation Should Live

If I can find, design and deliver unique products, features and functionality that users want, then I’ll have a chance to thrive. If I simply aim for parity, the center section where the 3 circles intersect, then I’ll be another me-too and won’t have much chance at gaining traction or winning a large share of the market unless I differentiate on price or some other facet that can bring diminishing returns.