Appendix 1: Company Cases 537 As for the others, Zipcar has a big head start in terms of size and Sources: Based on information from Mark Clothier, "Zipcar Soars af- experience, cozy relationships in targeted neighborhoods, and ter Profit Topped Analysts' Estimates," Bloomberg.com, November 9, an urban hipster cred that corporate giants like Hertz will have 2012, www.bloomberg.comews/2012-11-09/zipcar-soars-after-profit- trouble matching. To Zipsters, Hertz rents cars, but Zipcar is a topped-analysts-estimates.html; Darrell Etherington, "Zipcar CEO part of their hectic urban lives. Details In-Car Assistant, Personalized Deals and Member Onboard- ing for Mobile App," Techcrunch, October 9, 2012, www.techcrunch Questions for Discussion com/2012/10/09/zipcar-ceo-details-in-car-assistant-personalized- 1. Evaluate Zipcar based on benefit-based positioning. deals-and-member-onboarding-for-mobile-app/; Jerry Hirsch, "Zipcar CEO Talks about Car Sharing as Lifestyle Choice," Seattle Times, May 13, 2. Describe the beliefs and values associated with Zipcar's 2012, www.seattletimes.nwsource.com/html/businesstechnology/ brand image. 2018197748_inpersonzipcar 14.html; Paul Keegan, "Zipcar: The Best 3. Compare positioning based on benefits to positioning New Idea in Business," Fortune, August 27, 2009, www.money.cnn based on beliefs and values. Which is stronger? .com/2009/08/26ews/companies/zipcar_car_rentals.fortune/; Stephanie Clifford, "How Fast Can This Thing Go, Anyway?" Inc., March 1, 2008, 4/ Do you think the acquisition of Zipcar by Avis will be posi- www.inc.com/magazine/20080301/how-fast-can-this-thing-go-anyway tive or negative for Zipcar? .html; and www.zipcar.com, accessed May 2013. Company Case 8 process moves at the speed of light. The nimble innovator im- plements major new services in less time than it takes competi- tors to refine and approve an initial idea. For example, a Google Google: New Product Innovation senior project manager describes the lightning-quick develop- ment of iGoogle, Google's customizable home page: at the Speed of Light It was clear to Google that there were two groups [of Google us- ers]: people who loved the site's clean, classic look and people who Google is wildly innovative. It recently topped Fast Company wanted tons of information there-e-mail, news, local weather. [For magazine's list of the world's most innovative companies, and it those who wanted a fuller home page,] iGoogle started out with me regularly ranks among everyone else's top two or three most in- and three engineers. I was 22, and I thought, "This is awesome." novative. Google is also spectacularly successful. Despite for- Six weeks later, we launched the first version. The happiness met- midable competition from giants such as Microsoft and Yahoo!, rics were good, there was healthy growth, and [a few months later], Google's share in its core business-online search-stands at a we had [iGoogle fully operational with] a link on Google.com. decisive 86 percent, more than five times the combined market shares of all other competitors combined. The company also Such fast-paced innovation would boggle the minds of dominates when it comes to paid search advertising, with 86 product developers at most other companies, but at Google percent of that online ad segment. And that doesn't include paid it is standard operating procedure. "That's what we do," says search on mobile devices, where Google commands an even Google's vice president for search products and user experi- greater market share. ence. "The hardest part about indoctrinating people into our But Google has grown to become much more than just an culture is when engineers show me a prototype and I'm like, Internet search and advertising company. Google's mission is Great, let's go!' They'll say, 'Oh, no, it's not ready.' I tell them, "to organize the world's information and make it universally 'The Googly thing is to launch it early on [as a beta product] and accessible and useful." In Google's view, information is a kind then to iterate, learning what the market wants-and making it of natural resource-one to be mined, refined, and universally great.'" Adds a Google engineering manager, "We set an op- distributed. That idea unifies what would otherwise appear to erational tempo: When in doubt, do something. If you have two be a widely diverse set of Google projects, such as mapping the paths and you're not sure which is right, take the fastest path." world, searching the Internet on a smartphone screen, or even When it comes to new product development at Google, providing for the early detection of flu epidemics. If it has to do there are no two-year plans. The company's new product plan- with harnessing and using information, Google's got it covered ning looks ahead only four to five months. Google would rather in some innovative way. see projects fail quickly than see a carefully planned, long and drawn-out project fail. An Innovative Approach to Innovating Google's famously chaotic innovation process has un- leashed a seemingly unending flurry of diverse products, most Perhaps more than anything else, Google knows how to inno- of which are market leaders in their categories. These include vate. At many companies, new product development is a cau- everything from an e-mail service (Gmail), a blog search en- tious, step-by-step affair that might take a year or two to unfold. gine (Google Blog Search), an online payment service (Google In contrast, Google's freewheeling new product development Checkout), and a photo-sharing service (Google Picasa) to a538 Appendix 1: Company Cases universal platform for mobile phone applications (Google An- droid), a faster-than-anythin g-else-out- there broadband network (Google Fiber), a cloud-friendly Internet browser (Chrome), projects for mapping and exploring the world (Google Maps and Google Earth), and even an early warning system for u outbreaks in your area (Flu-Trends). Google claims that Flu- Trends has identied outbreaks two weeks before the US. Cen- ters for Disease Control and Prevention. ' Competing through Innovation Not only is Google innovative, but it uses this core compe tency as a primary competitive weapon. Take some of its recent product introductions. First, there's Google Play. Even though it created the number-one smartphone operating system in the worldAndroidGoogle still could not capture the purchases and activities of all those Android users when it came to apps and entertainment media. Nor could it come close to match- ing its operatingsystems penetration in the tablet market. So Google combined and redesigned everything it had in that de- partment and launched G00gle Play, an i'l'uneslike marketplace for apps, music, movies, and games. Although one reviewer claims that this launch \"lacks the polish of Apple,\" he goes on to say that \"there should be little doubt . . . about Google's de- termination to change that.\" A second recent major product introduction is Google+, an all-purpose social network. With Google+, the search leader fired a shot right over the bow of Facebook. In response, Face- book founder and CEO Mark Zuckerberg put all Facebook em- ployees on \"lockdown\" alert, working around the clock to copy the best features of Google+ and accelerate development of other Facebook features already being developed. In less than two years' time, Google+ has acquired over 500 million regis- tered members, about half of those who now share their lives on Facebook, making it the second largest social networking site. Like Google Play, Google+ is a cutting-edge product. Such new products put Google in the dash for riches in completely new competitive arenas. On a smaller scale, Google has added a feature to its mo- bile search app, Google Now, which has the industry buzzing. Clearly targeting Apple, Google Now features voice recogni- tion that many observers think is even better than Apple's Siri. Based on a branch of articial intelligence called deep learning, Google's voice recognition feature emulates the way the human brain recognizes patterns and engages in what we call thinking. Although it's extremely complicated and cutting-edge stuff, Google's experts still managed to crank out this feature in only nine months. And they aren't done. Google's experts are fast at work developing image recognition capabilities based on the same deep learning technology that will soon make searching images and even video more accurate and intuitive than ever. Innovation without Borders With Google's process and culture for innovation, even the sky doesn't seem to be the limit. No product illustrates that better that Google Glass, the wearable smart device that has the Whole world talking. Worn like a pair of glasses, Google Glass has a tiny projection screen that hovers in front of the user's face that only the user can see. Voice recognition (the same as found in Google Now) and eye movement recognition provide instant re- sponse to the user's every desire and a truly hands-free experi- ence. And that experience is oriented around having the entire virtual world more conveniently accessible than ever before. Still in the beta testing phase, it remains to be seen just what im- pact Google Glass will have. But based on reactions thus far, the impact will be nothing short of huge. After using Google Glass for only a few days, Mashable's editor-in-chief, Lance Ulanoff, dubbed it \"the future.\" Says Ulanoff, \"Google Glass could be the next big thing because it's a piece of powerful, yet elegant con- sumer technology that anyone can use with almost no training.\" Google is open to new product ideas from just about any source. What ties it all together is the company's passion for helping people nd and use information. Innovation is the re- sponsibility of every Google employee. Google engineers are encouraged to spend 20 percent of their time developing their own \"cool and wacky\" new product ideas. And all new Google ideas are quickly tested in beta form by the ultimate judges those who will use them. According to one observer, \"Anytime you cram some 20,000 of the world's smartest people into one company, you can expect to grow a garden of unrelated ideas. Especially when you give some of those geniuses one workday a weekGoogle's famous '20 percent time'to work on what- ever projects fan their passions." Such thinking sends Google beyond its own corporate boundaries in search of the next wave of big ideas. Recently, Google hosted what it called the \"Solve For X" conference. The company invited about 50 of the smartest people in the world to tackle some of the world's biggest problems. The empha- sis was on \"radical.\" Just how radical were some of the ideas that emerged? How about turning contact lenses into computer monitors with heads-up displays packed full of data? Or how about solving the world's clean water problems through exist ing desalinization technologies? If that doesn't go far enough for you, how about using magnetic resonance imaging (MRI) technology to put images from the human mind onto a com- puter screen? Just the fact that Google organized Solve For X indicates what type of innovator Google is. For Google, innovation is more than a processit's part of the company's DNA. \"Where does innovation happen at Google? It happens everywhere,\" says a Google research scientist. If you talk to Googlers at various levels and departments, one powerful theme emerges: Whether they're designing search engines for the blind or preparing meals for their colleagues, these people feel that their work can change the world. The marvel of Google is its ability to continue to instill a sense of creative fearlessness and ambition in its employees. Prospec- tive hires are often asked, \"If you could change the world using Google's resources, what would you build?\" But here, this isn't a goofy or even theoretical question: Google wants to know because thinkingand buildingon that scale is what Google Appendix 1: Company Cases 539 does. After all, this is the company that wants to make available Sources: Robert Hof, "Meet the Guy Who Helped Google Beat Ap- online every page of every book ever published. Smaller-gauge ple's Siri," Forbes, May 1, 2013, www.forbes.com/sites/roberthof/ ideas die of disinterest. When it comes to innovation, Google is 2013/05/01/meet-the-guy-who-helped-google-beat-apples-siri/; different. But the difference isn't tangible. It's in the air-in the "Covario Finds Q1 Global Paid Search Spending Grew 33 Percent spirit of the place. over Last Year," March 28, 2013, www.marketwatch.com/story/ covario-finds-q1-global-paid-search-spending-grew-33-percent-over- Questions for Discussion last-year-2013-03-28; www.karmasnack.com/about/search-engine- market-share/, accessed May, 2013; Matt Lynley, "Here Are the 17 1. Identify major similarities and differences between the new Radical Ideas from Google's Top Genius Conference That Could Change product development process at Google versus that found the World," Business Insider, February 11, 2012, www.businessinsider at most other companies. .com/here-are-the-17-radical-ideas-from-googles-top-genius-conference- 2. Is Google's product development process customer cen- that-could-change-the-world-2012-2?op=1#ixzz21TPojmMs; Chuck tered? Team based? Systematic? Salter, "Google: The Faces and Voices of the World's Most Innovative Company," Fast Company, March 2008, pp. 74-88; "World's 50 Most 3. Considering the product life cycle, what challenges does Innovative Companies," Fast Company, March 2013, www.fastcompany Google face in managing its product portfolio? .com/section/most-innovative-companies-2013; Lance Ulanoff, "This 4. Is there a limit to how big Google's product portfolio can Is Why Google Glass Is the Future," Mashable, May 1, 2013, www grow? Explain. .mashable.com/2013/04/30/google-glass-future/; and www.google com, accessed November 2013. 5. Will Google be successful in markets where it does not dominate, such as social networks and app/entertainment stores? Why or why not? Company Case 9 2011 Penney's annual sales had bottomed out at $17 billion and its stock price plunged along with sales. Desperate for a turnaround, JCPenney hired a new CEO, JCPenney: The Struggle Ron Johnson, who had first cut his retailing teeth at Target and then worked wonders for a decade as head of retail operations to Find Optimum Price at Apple. After taking time to analyze the company's situation, Johnson knew that the store needed to make dramatic changes. JCPenney, the 110-year-old veteran retail chain, has been on a He announced a $1 billion, four-year transformation, one of the recent roller coaster ride. Years of stagnant and declining sales most sweeping retail makeovers in history, designed to radi- ushered in a new era-a new CEO, a new strategic plan, and cally reinvent the JCPenney customer experience. Penney's be- a major price-based campaign to revamp JCPenney's image. gan making seismic changes across almost every aspect of its When that failed, the retailer followed up with multiple revi- operations and marketing. sions to the pricing campaign, changes to the overall strategic For starters, Johnson put the "department" back in depart- plan, and, finally, a return to the old CEO. But nothing so far ment stores. Under the turnaround plan, each JCPenney store has reversed JCPenney's declining sales nor slowed the flow of would be reorganized into a collection of 80 to 100 brand customers heading out the door. In fact, things are only getting stores-within-a-store by 2015. The new stores would be a worse for Penny's. Is there any hope for this failing icon of kind of "Main Street" of in-store brand shops spread along American retailing, or is it doomed to eventual extinction? Let's wider, less-cluttered aisles. Like Apple stores, Johnson wanted take a deeper look, Penney's stores to be places where shoppers come to hang out. So each Penny's store would have a "Town Square" at its center, Fair and Square Pricing a large area featuring changing services and attractions, such as expert advice plus, say, free haircuts during back-to-school As the new millennium debuted, things were looking pretty days or free hotdogs and ice cream in July. bright for JCPenney. Sales were at an all-time high of $32.5 bil- Such operational changes were pretty revolutionary for lion and the company commanded a sizable share of the depart- JCPenney. But the lynchpin of Penney's revitalization was a ment store market. Then the market changed. Shoppers began new "Fair and Square" pricing strategy. As Penney's had fallen spending less time at the mall and more time at discount stores behind rivals in recent years, it had come to rely on deep and like Walmart and Target, big-box general merchandise chains frequent discounts to drive sales. When Johnson arrived at like Kohl's, and nimble specialty retailers like Bed, Bath, and JCPenney, the retailer was holding some 590 separate sales Beyond and Sports Authority. JCPenney began steadily losing each year. Such sales were crushing margins and profits. Al- ground to these rivals. For a while, sales remained more or less most 75 percent of JCPenney's merchandise was being sold at stagnant. Then in 2005, they began to decline. Despite a brief discounts of. 50 percent or more, and less than 1 percent was flirtation with an all-time high stock price of $83 in 2007, by sold at full price