ImaginativePRO Blog

THE DESIGNERS BEAT OUT THE MBA'S AT TORONTO'S ROTMAN DESIGN CHALLENGE 2012, A LACK OF DESIGN KNOWLEDGE BY MBA-ERS BLAMED

NUMBERS AND BULLET POINTS AREN’T THE ONLY THINGS DRIVING EXECUTIVE DECISION MAKING. AND PRETTY PICTURES WON’T GET YOU THERE EITHER. BOTH DESIGNERS AND MBAS HAVE A LOT TO LEARN.

This year marks the third anniversary of the Rotman Design Challenge. It started out as a commendable experiment by the school’s Business Design Club to expose MBAs at the University of Toronto’s Rotman School of Management to the value of design methods in business problem solving.  This year, the competition drew teams from a few other MBA schools and some of the best design schools in North America. As a final-round judge, I had a front-row seat to the five best solutions to the competition’s challenge: To help TD Bank foster lifelong customer relationships with students and recent graduates while encouraging healthy financial behaviors.

Both this year and last--the two years that Rotman invited other schools to participate--business school students were slaughtered by the design school students. Of the 12 Rotman teams this year, not one of them made the final round. And while only seven of the 23 competing teams were from design schools (including California College of Arts, Ontario College of Art and Design, and the University of Cincinnati), design teams scooped the top three places in the competition, doing significantly better than their MBA counterparts. So what does this tell us?

Product design and development

It might tell us that MBAs significantly underestimate the skill and expertise a designer brings to the table. After all, about 80 MBA students volunteered their evenings and weekends, believing they had a chance of winning a design competition with minimal, if any, design training. Would you go toe-to-toe with even a purple belt in jiu jitsu having never taken a lesson? While the typical design-school competitor has (at the least) studied the design process in depth for several semesters and practiced it in co-ops and internships, for many MBA students, this was their very first exposure to the discipline. So while we should applaud the organizers’ efforts to open MBA eyes to the importance and value of design in solving business problems, it seems that even its most forward-thinking students may not have fully digested that design is a serious pursuit that requires serious training.

The competition outcome might also tell us that designers have reason to be encouraged. With only 15 minutes to convince a skeptical panel of experienced professionals about a new idea that doesn’t exist in the world today, they fared significantly better than their MBA counterparts. Why? Because they shared real user insights to engage us emotionally, used narrative and stories to compel us, drew sketches and visualizations to inspire us, and simplified the complex to focus us. It’s proof positive that numbers and bullet points, while important, aren’t necessarily what drive executive decision making.

Finally, it tells us that we still have a long way to go to develop business professionals who both appreciate and can engage the tools of design effectively. Rotman gets kudos for taking a step in the right direction. But a few workshops and an extracurricular competition won’t produce business leaders with real design-thinking skills. Business education must be completely redefined to include the best, most appropriate principles of design in every curriculum. Marketing classes should teach a deep reverence for the user in context and the power of observational research methods. Finance classes should teach the art of storytelling and information design. Strategy classes should teach systems thinking and synthesis. If the goal is to create great "hybrid thinkers" who will have real impact, design should not be tacked on to existing business education but infused throughout it. 

I’m not letting design schools off the hook either. While design students fared much better than their MBA counterparts that Saturday afternoon, I should point out that only the winning team from the Institute of Design at IIT actually charged a fee for the service they developed (a fact that was not overlooked by my final-round co-judge Ray Chun, the senior vice president of retail banking at TD). Some competitors were able to offer a vague notion that their ideas would generally create economic value, but crisp articulations of a profit model and underlying assumptions were hard to come by.

And I was less than impressed with the business-thinking skills of designers the following Monday morning, when I interviewed 10 of them at the Institute of Design in Chicago for jobs at Doblin. To most candidates, I asked of the ideas they presented in their portfolios, “But how does it make money? Who will pay for that? How much would you need to sell to be profitable?” and was met with far too many blank expressions when I did so. Design schools have a long way to go to integrate good business thinking into their programs. In order to make their value known to the world, designers need to speak the language of business--that’s where great ideas get funded and developed. Design education needs as much of an overhaul as business education if we are to benefit from the talents of design thinkers in the business world.

I hope that we see meaningful reinvention of both design and business education so that the business world can realize the true value of design thinking. Until that happens, Rotman’s Business Design Club would be wise to require challenge teams to comprise both designers and MBAs. At least it would level the playing field, and it may improve the educational experience for both--assuming each can decipher what the other is saying.

COMMENTARY:   I could've predicted that a designer would win a product design contest over an MBA, no matter what school he or she attended.  You're talking about two different brain types--Type A (serious business, marketing, lawyers)  versus Type B (creative types like musicians, artists, engineers and designers).  

I agree that combining elements of design into a graduate business program would be a great idea.   It would certainly open the graduate student in business, finance and marketing to the importance of good design in designing products, attracting the consumer and being able to compete in the marketplace.  

Graduate programs would certainly be more interesting than just debits and credits, and boring case studies.  Design is very important whether you are marketing a line of fashion apparel, accessories, or mobile devices like smartphones or tablet computers.  

I don't think you need too much proof to convince people that good design wins over the consumer. Apple has clearly demonstrated that simple, elegant and well engineered products increase perceived value and win over consumers, and that they are willing to pay premium prices.

I spent several years in the advertising agency business, and having worked in such a creative environment, learned the importance of design and creativity from an advertising perspective. Even an inferior product can be made to look and sound good, and from a marketing perspective this is very important in communicating with your marketplace.

According to the Rotman School of Management, a team from the Illinois Institute of Technology (IIT) emerged as the winner of the 2012 Rotman Design Challenge. The competition was held at the University of Toronto’s Rotman School on Management on March 24, 2011.   The IIT team narrowly edged out a team from OCAD University who won the competition in 2011.

Teams from the Darden School of Business, Massachusetts Institute of Technology, NYU Stern, California College of the Arts, Illinois Institute of Technology, OCAD University, the Rotman School and UofT’s Daniels Faculty of Architecture, Landscape and Design presented their ideas on developing concepts and products which will shape students’ financial behavior that will lead to a more sustainable and economically viable adult life.

Here are the Top 3:  

• Winner - Team Beta (Lauren Braun, John Shin, Helen Wills, Jorge Angarita, and Janice Wong) from Illinois Institute of Technology won the competition with their TD Stacks engagement model. 
• 2nd Place - The A-Team, (Jen Chow, Josina Vink, Jessica Mills, Martin Ryan, and Phouphet Sihavong), from OCADU, last year winners of the Rotman Design Challenge, placed second with their TD Table Talk platform. 
• 3rd Place - FabFore, (Ben McCammon, Uma Maharaj, Eric Leo Blais, and Ana Matic), also from OCADU placed third with TD BranchOut.

Martin Ryan of The A-Team said.

“Competitions like the Rotman Design Challenge are vital to the future of graduate education in business and design. They are the closest students get to real life experimentation with the evolving mindsets and toolsets of innovation, and how they can be best put into practice to deliver both human and business value.“  

This was the first year participants, visitors and judges were also able to cast their vote as part of the people’s choice awards for:

• The Best Story, won by OCADU’s FabFore. 
• Most Fun Presentation award to Team Beta from IIT. 
• Most Disruptive Idea won by OCADU’s The A-Team.

Lauren Braun speaking on behalf of the Beta team said.

“We're so grateful to have been part of the event this year. The chance to compete against such a diverse group of schools was both challenging and rewarding. The exposure to different perspectives and problem-solving methods left a lasting impression.” 

Plans are already underway for the next Rotman Design Challenge as it continues to develop as one of the premier international venue for sharing best business design practices and solving wicked problems.

Josina Vink of The A-Team said.

“There is so much we can gain from sharing our unique approaches to thinking through these sorts of complex challenges.” 

TD Bank Group was the lead sponsor of the 2012 Rotman Design Challenge 

The Rotman School of Management at the University of Toronto is redesigning business education for the 21st century with a curriculum based on Integrative Thinking. Located in the world’s most diverse city, the Rotman School fosters a new way to think that enables the design of creative business solutions. The School is currently raising $200 million to ensure Canada has the world-class business school it deserves. For more information, visit http://www.rotman.utoronto.ca.

Courtesy of an article dated 

http://www.fastcodesign.com/1669544/need-to-solve-a-tough-business-problem-dont-hire-an-mba?partner=homepage_newsletter

THE TOP 10 PRICING MODELS USED TODAY AND HOW TO PRICE YOUR PRODUCT OR SERVICE TO MAKE MONEY AND COMPETE EFFECTIVELY

 

One of the toughest decisions for a startup is how to price their product or service. The alternatives range from giving it away for free (like Twitter), to pricing based on costs, to charging what the market will bear (premium pricing). The implications of the decision you make are huge, defining your brand image, your funding requirements, and your long-term business viability.

The revenue model you select is basically the implementation of your business strategy, and the key to attaining your financial objectives. Obviously, it must be grounded by the characteristics of the market and customers you choose to serve, the pricing model of existing competitors, and a strategy you believe is consistent with your future products and direction.

So what are some of the most common revenue models being used by startups today? Here is a summary, with some of the pros and cons or special considerations for each:

1. Product or service is free, revenue from ads and critical mass. This is the most common model touted by Internet startups today, the so-called Facebook model a.k.a. ad-supported revenue model, where the service is free, and the revenue comes from click-through advertising. It’s great for customers, but not for startups, unless you have deep pockets. If you have real guts, try the Twitter model of no revenue, counting on the critical mass value from millions of customers.  NOTE: This is incorrect.  Twitter is also utilizing the ad-supported revenue model and has revenues.
2. Product is free, but you pay for services. In this model, the product is given away for free and the customers are charged for installation, customization, training or other services. This is a good model for getting your foot in the door, but be aware that this is basically a services business with the product as a marketing cost.
3. “Freemium” model. In this variation on the free model, used by LinkedIn and many other Internet offerings, the basic services are free, but premium services are available for an additional fee. This also requires a huge investment to get to critical mass, and real work to differentiate and sell premium services to users locked-in as free.
4. Cost-based model. In this more traditional product pricing model, the price is set at two to five times the product cost. If your product is a commodity, the margin may be as thin as ten percent. Use it when your new technology gives you a tremendous cost improvement. Skip it where there are many competitors.
5. Value model. If you can quantify a large value or cost savings to the customer, charge a price commensurate with the value delivered. This doesn’t work well with “nice to have” offerings, like social networks, but does work for new drugs that solve critical health problems.
6. Portfolio pricing. This model is relevant only if you have multiple products and services, each with a different cost and utility. Here your objective is to make money with the portfolio, some with high markups and some with low, depending on competition, lock-in, value delivered, and loyal customers. This one takes expert management to work.
7. Tiered or volume pricing. In certain product environments, where a given enterprise product may have one user or hundreds of thousands, a common approach is to price by user group ranges, or volume usage ranges. Keep the number of tiers small for manageability. This approach doesn’t typically apply to consumer products and services.
8. Competitive positioning. In heavily competitive environments, the price has to be competitive, no matter what the cost or volume. This model is often a euphemism for pricing low in certain areas to drive competitors out, and high where competition is low. Competing on price alone is a good way to kill your startup.
9. Feature pricing. This approach works if your product can be sold “bare-bones” for a low price, and price increments added for additional features. It can be a very competitive approach, but the product must be designed and built to provide good utility at many levels. This is a very costly development, testing, documentation, and support challenge.
10. Razor blade model. In this model, like cheap printers with expensive ink cartridges, the base unit is often sold below cost, with the anticipation of ongoing revenue from expensive supplies. This is another model that requires deep pockets to start, so is normally not an option for startups.

Your business model interacts closely with your marketing model, but don’t get them confused. Marketing is initially required to get visibility and access to the opportunity, but pricing defines how you will actually make money over the long term.

Overall, I’m a huge fan of the “keep it simple (KISS)” principle – customers are typically wary of complex or artificial pricing. Your challenge is to set the right price to match value perceived by the customer, with a fair return for you. It’s not a game show, so don’t guess - do your research early with real customers.

Marty Zwilling

COMMENTARY:   Developing a revenue model requires a thorough understanding of competitors, your competitive strengths and weaknesses and those of your competitors, how products or services in your industry are distributed, how those products and services are priced, factors affecting product production costs, types of customers who buy the products, trends in the marketplace, and other factors.  

Strategic Innovation In Developing A Pricing Model

Most companies compete on the basis of price, differentiation or product niche.  I am of the opinion that you should try to compete on three fronts by striving to differentiate yourself from the competition and lowering costs simulataneously, then if possible, expand the existing market by targeting a different class or type of customer not presently being served by the marketplace. This strategy requires excellent strong leadership abilities with the ability to convince the members of your management team to pursue this three-prong strategy.

The three-prong approach described above does not necessarily mean adding more features to the product or service in order to differentiate.   In fact, the reverse maybe true.   Sometimes it is best to "Say no to 1,000 things" something Steve Jobs said, and reduce the number of product features, product sizes and colors.  A testament to the wisdom of this strategy is what Steve Jobs did upon his return to Apple in 1996.  He reduced the number of Apple products to about a dozen by drastically cutting back their numbers or totally eliminating them from the inventory.  Product accessories were eliminated from production, and outsourced through third parties.  Reducing the number of products reduced Apple's production costs, warehousing and inventory carrying costs. Steve also differentiated itself by redesigning products so that they were easier to use by eliminating nearly all buttons, levers and dials.  Apple products also came in only one color:  white. This strategy has been continued through today, with all iMacs, iPods, iPhones and iPads coming in white.  Product accessories that give each product different colors and personalities are still produced by third parties. 

In 1998, Steve Jobs hired Tim Cook to manage Apple's product manufacturing.   One of the first things Tim did was to outsource the manufacturing of all Apple products to third-party vendors, a practice which continues to this day.  This strategy allowed Apple to eliminate plant and equipment capital expenditures and maintain the highest product margins of any consumer electronics company in the World. 

CEO's should not be afraid to make bold, game-changing strategic innovations that disrupt industries when the opportunity presents itself, rather than making small incremental changes.   Steve Jobs did this at Apple by:

1. Disrupting the portable music player industry when Apple introduced the iPod. 
2. Disrupting the digital music industry when Apple launched iTunes.
3. Disrupting the smartphone market when Apple introduced the iPhone.
4. Disrupting the computer industry when Apple introduced the iPad.  

Apple is reported to be working on an Apple television set that could disrupt how we consume television content in the home.

Apple clearly implemented a three-prong strategic innovation approach when it reduced or eliminated products from its inventory, reduced product external features and produced everything in white, outsourced all product manufacturing to third party vendors, entered new markets where it had never competed in by introducing four new consumer electronics products that disruped entire industries.  These changes differentiated Apple from the competition, created higher perceived value, reduced its operating costs and greatly improved profits margins.   In doing so, Apple clearly adopted the Value business model.  Its customers are willing to pay premium prices for its products because they believe Apple delivers greater perceived value in terms of design, engineering and performance.

The important point is to never stop innovating or take your competition for granted.  The innovation strategies that made Apple into the largest and most valuable (in market capitalized value) consumer electronics company in the world, and has allowed Apple to maintain its competive lead in its markets, must not be taken for granted.    

Value, Perceived Benefits, Price and Why Consumers Buy

Customers do not make their purchase decisions based solely on price. They select the best value for themselves.  To increase your customers' perceived value of your product or service, either increase the benefits or decrease the price.   Surround your product or service with so many benefits of such great value to your customers, that they will pay a higher price, and you will attain a greater market share profitably.

Developing Prices For Products or Services

To help you decide what to charge for your product/service you must know the following:

• What are your costs to produce a service, or buy a product? (Direct and indirect) 
• What is the customer willing to pay? (The urgency of market demand)
• What are your competitors charging? (Market research data) 
• What do you need to charge to make a profit. (How much do you want to make?) 
• These factors must be balanced.  

There are a variety of pricing methods in use.  One of the most common is Formula-Based Pricing.

• This method is widely used by consultants.
• It is vital to research the competition and have set guidelines.
• Do not undercharge.
• Invoice customers at the end of the month for work in progress.
• Multiply salary by 3.  If you want to earn $20 per hour, you charge $60 per hour.  This figure covers salary, overhead and profit.

The Product Pricing Formula

(Direct Material Costs + Direct Labor Costs + Overhead Expenses) / No of Items Produced = Cost Per Item.

Let's look at each component of the Product Pricing Formula:

• Direct Material Costs. 
  • The raw material and component costs to produce a single item or unit.
  • OR Divide the total direct material and component costs of a batch of the same item, by the number of items produced to obtain an average direct material cost per unit.
• Direct Labor Costs.  
  • The direct labor costs to produce a single item or unit.  
  • OR Divide the total labor costs you pay your workers to produce a batch of the same item, and divide it by the number of items produced to obtain an average direct labor cost per unit.
• Indirect Costs or Overhead Expenses.
  • This includes expenses that are not directly incurred in the production of the product, but are never the less necessary and incurred by the business like rent, utilities, telephone, cleaning, insurance, depreciation, office supplies, postage, repairs, maintenance, research and development, warehousing and storage, delivery and freight charges, packaging and shipping supplies. TIPS:  1) If you are renting or own a building used to produce the item or items, you should allocate the indirect costs incurred on the basis of square footage allocated to production and non-production areas. 2) For accounting purposes always segregate business expenses by department (manufacturing, sales and marketing, warehousing, research and development, general administration, etc) so that you can allocate indirect costs more accurately.  
  • In some cases, indirect costs can exceed the direct costs. This is often the case for startups because they incur very heavy initial startup capital expenditures for plant, equipment, tooling, initial research and development costs and legal costs for patents that can be tied directly or indirectly to the product.       
  • If you are working from home calculate a portion of your total rent or mortgage payment, in proportion to your workspace, or assign a reasonable figure.
  • List all indirect costs or overhead expense items and total them.
  • Divide the total overhead figure by the number of items produced per month.  This amount will be your overhead cost per item. 
• Profit.
  • Your profit will depend on whether you are selling your product direct to the consumer or selling your product through authorized resellers.   
    • Direct-To-Consumer Prices - If you are selling your product direct to the consumer, multiply the cost per item (see the Product Pricing Formula) by 2. If you have a unique product and the competition is not offering anything similar to it, you may multiply your cost per item by 3, 4 or even 5, but don't get carried away.  The prices you set will depend on market conditions, alternatives and the costs to produce the item.  If you have very low production costs, a superior design, better features or game-changing technology, you may be able to charge premium prices.  Whatever you do, always research your market for competing products and market trends that could affect the demand for your product.       
    • Wholesale Prices -  If you are selling your product through authorized resellers your wholesale prices should be sufficient to yield a minimum profit margin of 65%.   

The Service Pricing Formula

(Hourly Rate + Hourly Overhead Expense) * 2 = Price per Hour

Let's look at each component of the Service Pricing Formula:

• Hourly Rate - Your time is valuable whether you work for yourself or someone else. Decide on what you are worth taking into account your industry experience, education, training, special knowledge and contacts.  Establish a reasonable hourly rate based on the above factors.   Compare your hourly rate to industry averages to insure you are within the ballpark.
• Hourly Overhead Expense Rate - Calculate all the costs related to operating your business from home or private office, and arrive at a total cost per month.  Divide this by the average number of hours worked per month, to obtain your hourly expense. 
• Price Per Hour -  Add your hourly rate and hourly overhead expense rate, then multiply the result by a factor of 2, to yield a Price per Hour.    Your competition, market conditions and demand for your services will dictate how much you can reasonably charge per hour.   The effects of the Great Recession, high unemployment rate and global economy means you may have a lot of competition from within your industry and from moonlighters and independent consultants.  

Price Ranges

Prices for products and services can vary greatly based on brand recognition, geography, knowledge and expertise, economic conditions, scarcity, monopolization and other factors.  The global economy means that you must compete not only locally or even nationally, but internationally as well.   The internet now makes it possible to quickly compare prices, find the lowest price and obtain product reviews.  The Great Recession reduced the prices of just about everything.  Real estate values in many parts of the country are still down, and many homeowners are underwater, owing more than their property is worth.  Due to high unemployment rates in many parts of the country, average hourly rates in many industries are down.  It's a buyers market. Having said this, prices generally fall into three categories:  High-end, Mid-range and Low-end.   Let's look at the characteristics of each price category:

• HIGH-END
  • Prestige and Image.  
  • Strong brand name. 
  • Numerous features.
  • Known for high quality.
  • Warranty.
  • Uniqueness.
  • Novelty. (price is not a major factor.)
  • Scarcity (valuable earth metals, diamonds, gold, real estate, etc.)   
• MID-RANGE
  • Good quality. 
  • Features. (Value is critical.  Trade off with Price)
  • Warranty.
  • Practicality.
  • Serviceability.
• LOW-END  (Caution.  In a service business, people tend to think that something is wrong, if your prices are too low.  They assume that the services are of inferior quality.) 
  • Inferior or poor quality.
  • Less features or services provided.
  • No customer loyalty.
  • Unknown brand name.
  • Competitors compete almost solely on the basis of price.  

Competing in the Mid-Range price range could be an advantage for some brands, especially during the Great Recession, because they can get customers from the High-End looking for a bit lower price and comparable quality and can get customers from the low-end spectrum who are looking to upgrade in quality and pay a bit more.  This has actually happened a lot with packaged goods manufacturers who have produced their products in smaller sizes to appeal to thrifty consumers looking for better quality and a prestige brand.  The same thing has happened in fashion apparel and accessories, with many designers producing mid-range fashion apparel and accessories to appeal to consumers looking for a prestige brand at a bit lower price point.  '99 cent stores' exploded during the Great Recession to meet the needs of the low-end consumer who just wants the lowest price possible while sacrificing quality and features.  

As an alternative to lowering prices, many producers have turned to discount coupons to lure customers.  This tactic allows them to keep customers loyal to their brand from buying mid-range brands.  This also allows mid-range consumers to upgrade to high-end brands.  This is a win-win for the consumer and keeps the producer's volume high enough to keep production costs under control.

 

Courtesy of an article dated April 21, 2012 appearing in Startup Professionals Musings

 

NASA’S PSYCHEDELIC CONCEPTS FROM THE 1970'S ABOUT HUMAN'S LIVING IN HUGE SPACE COLONIES ARE STILL AWE INSPIRING EVEN TODAY

NASA's psychodelic concepts from the 1970's. Space colony housing units inside a huge mothership (Click Image To Enlarge)

A REMINDER THAT NASA NEEDS TO REMEMBER THE POWERFUL FORCE OF CONCEPTUAL DESIGN.

Our excitement for space didn’t end when we put a man on the moon in the 1960s. In the late 1970s, we were still obsessed with the voids beyond our atmosphere. A little film called Star Wars came out, of course, but we also had the rise of Carl Sagan as a household name. He was producing a nonfiction series called Cosmos that would be seen by 500 million people worldwide and become the most successful series in PBS history.

Unsurprisingly, it was a time when NASA, too, dreamed on the epic scale.

NASA'S psychedlic concepts from the 1970's. Huge mothership orbits in outerspace (Click Image To Enlarge)

Amongst their many projects at the time, NASA Ames proposed massive spaceships that would orbit communities of 10,000 people around the earth--planned communities in space--and they commissioned a series fantastical artistic renderings of the vision. “These orbital space settlements could be wonderful places to live; about the size of a California beach town and endowed with weightless recreation, fantastic views, freedom, elbow-room in spades, and great wealth,” describes Al Globus, Senior Research Associate for NASA Ames.

NASA's psychedelic concepts from the 1970's.  Huge mothership in the shape of a ferris wheel that spins creating artificial gravity (Click Image To Enlarge)

The concepts look like America’s post-WWII suburban settlements popped LSD, as if every manicured bush is humming the national anthem while it soars through the galaxy on a psychedelic rainbow. Today, we’re convincing millionaires to book a glorified bus trip into the closest edge of space. In the 1970s, the same efforts could have leased them a two-bed, two-bath condo in the stars, complete with integrated Hi-Fi.

NASA's psychedelic concepts from the 1970's. Inside a huge space colony mothership shows a landscape enclosed in glass (Click Image To Enlarge)

As of late, NASA has lost something that’s a lot bigger than their funding--and a skeptic might say it’s the very reason they’ve lost their funding. Case in point: These jaw-dropping human colony concepts are now outsourced to students.

While our Mars rovers and the newly modified Hubble telescope have represented some of the greatest scientific accomplishments in human history, when is the last time that the common person was inspired by the vision and scope of the space program? When is the last time we got a wide-eyed, multicolor explosion of ideas from some of the greatest thinkers in the world pondering the largest problems in the universe? When is the last time physicists painted a picture of the future that they’d otherwise only glimpse in their mind’s eye?

NASA's psychedelic concepts from the 1970's.  Scene of a space colony mothership in space complete with artificial landscapes that include hills, lakes, rivers, roads and bridges like on Earth (Click Image To Enlarge

Though they’re often silly in retrospect, concept designs are a powerful tool. They’re lucid dreaming that the public gets to share in. NASA, sometimes it’s worth coming down from orbit, just to remind us all how very, very high you’re trying to fly.

COMMENTARY:    It's incredible just how much imagination and forward thinking early NASA scientists had about the future of space.  The idea that humans would live in space in these humongous motherships or space colonies with lakes, rivers, bridges, mountains, flora and vegetation just like on mother Earth has yet to be realized.  We're probably at least 100 years away from this even today.  However, given the explosion in population on Earth and predictions of shortages of water and food, and mass famine caused by rising termperatures and sea levels due to due to global warming, probably means we should be planning on living in space.  Perhaps we should consider living on the Moon or even on Mars. It's either this or moving our population centers underground.   

Courtesy of an article dated April 27, 2012 appearing in Fast Company Design

 

 

 

 

http://www.fastcodesign.com/1669597/nasa-s-psychedelic-concepts-from-the-1970s-are-still-inspiring-today

HOW JAPAN'S TENGA REINVENTED THE ART OF MALE MASTURBATION THROUGH TECHNOLOGY, SLICK DESIGN AND ELEGANT PRODUCTS

TENGA, the "New Adult Concept" was created in Japan by Mr. Koichi Matsumoto to satisfy the needs of every man.  Cosmetically elegant and stylish, TENGA produces the latest in disposable masturbation technology that stands out when compared to traditional male masturbation products.

TENGA promises a new level of sexual sensation to its users. Tenga's popular line-up of disposable masturbation products includes Tenga Onacups: (top row, from left-to-right) the Deep Throat Cup, Soft Tube Cup, Rolling Head Cup, and (bottom row, from left-to-right) interior view of the Deep throat Cup, Air Cushion Cup and Double Hole Cup.

[Click Image To Enlarge]

TENGA also produced  the ultra popular TENGA Flip Hole, a line of reusable masturbators, and the next step in the evolution of male masturbation technology.  With an all new set of interior structure including the Waving Ball, Cross Wall, Brushing Edge, and Moving Ball, it is designed to be different from the standard TENGA onacups and the original TENGA Flip Hole. Also as the second reusable TENGA product, it uses the the same revolutionary flip design for cleaning and the expandable mid-section for different sized girth. TENGA has included a mini set of 3 different lotions named “real”, “mild”, and “wild” for further customization of the ultimate experience. 

 

Tenga's winning product is the Tenga Egg, an egg shaped disposable masturbator.  It comes complete with everything needed for one masturbation session. The discreet Egg shaped packaging comes with one Egg masturbator and a lubricant packet. The Tenga Egg offers extra stimulation and joy to the traditional "hand job" for men that are busy and on the go.

The outside of the Temga Egg, looks like an egg.  It is a very smooth and silky texture. The inside of the egg is packed with clusters rounded nubs. The entire egg is white and made of 100% Silicone. Silicone is free of Phthalates and Latex. It is food grade material and hypo-allergenic. The Egg is tasteless and odorless. The inside of the Egg is mildly sticky, but goes away once lubricant is applied.

The Tenga Egg comes packaged in a white plastic egg covered with a plastic wrap. The wrap has small silver designs on the package to show the texture of the masturbator. The front has the name on the product in English. The back of the packaging is in Japanese.  

The plastic wrapping can be torn off. Next the plastic Egg pops open at the middle to expose the masturbator. The masturbator can then be removed from the egg. It has a small plastic spacer inside the egg to keeps its shape. And the lube package is placed inside the plastic spacer. 

The Tenga Egg comes in six inside textures: Twister, Spider, Wavy, Clicler, Silky and Stepper. Each inside texture is unique and printed on the packaging.   

Tenga uses a slick water-based lubricant that works well with the Tenga Egg. It is single use as is the Egg. Both work well together. There is about a tablespoon of lubricant in the package. It provides enough to cover the inside of the Egg.  It lasts for about a 20-minute session. 

 

It took years of engineering to develop the right design that delivers the ultimate experience. TENGA uses soft, skin-like materials in combination with soft foam creating not only the most comfortable, but the most ergonomically correct masturbator on the market. Massage nubs of different size and shapes are used in all the different models to create an unique experience for each model. Select a product below and find out how different they are.

 

COMMENTARY:   Tenga is the first adult wellness company that has brought dignity and class to male masturbation.  Masturbation is a natural human biological function that is often viewed as taboo, ridiculed and even frowned upon by some cultures and religions. 

At the age of 34, Koichi Matsumoto, the founder of Tenga, left his job as a used car salesman to start his own company.  With 10 million in yen he had saved, he began to work on designing his own products.  After various ideas, he picks “This one! This is what I am going to revolutionize!” That product theme was adult goods.

Three years after becoming self-employed, with various trials and errors behind him and his self funding starting to reach an end, March 2005 saw the birth of TENGA Inc.

July 7th of that same year, the fruits of his blood, sweat and tears, the products which he put his heart and soul into, the original 5 types of “TENGA” were released.

Tenga became virtually an overnight sensation in Japan through its unique product designs.  In its first year of operations, Tenga sold over 1 million units without media coverage or Japanese celebrity endorsements.  

Tenga has really differentiated itself from competitors through the unique designs, shapes, colors, materials, textures, packaging and functionality of its products.  For Tenga, "The Future of Masturbation is Now".  Tenga has truly brought high-technology to male masturbation.  Tenga is the first company to develop the single session or disposable masturbator.   

Since 2007, the TENGA brand is available globally, and is now sold in over 40 countries worldwide, including among others, the USA, the UK, Spain, Australia, Brazil, Russia and Singapore.

TENGA Co., Ltd. has collaborated with Japan’s largest condom manufacturer OKAMOTO to produce the “OKAMOTO x TENGA” CUP series of products available in pharmacies and drugstores across Japan since September 2007.  

In November 2010, TENGA Co., Ltd. collaborated with Japan borne clothing labels Roen, VANQUISH, SWAGGER, XLARGE® and roar for a Limited Edition product line up to raise money for the STOP AIDS fund for World AIDS Day.  

Now in their seventh year, TENGA has sold over 15 million units worldwide, and is currently the number 1 brand of male masturbation products by units sold.

I love happy endings, don't you??!!

STUMBLEUPON HITS 25 MILLION USERS -- AND IS GAINING 1 MILLION A MONTH

StumbleUpon passed the 25 million user mark earlier this week — that’s about one million users every month since it announced it had reached 20 million users in October.

The discovery service has existed in some form since 2001. It accepted its first round of funding in 2006, was purchased by eBay in 2007 and became independent again in 2009.

At that point, it had about 5.5 million registered users. It’s been growing at a lightning rate since, nearly quadrupling its userbase in three years.

StumbleUpon VP of Business Development and Marketing Marc Leibowitz tells Mashable.

“For all intents and purposes this is a new company since the spin out from eBay.  Virtually all of the 120 employees we have today have joined since then [when there were about 30 employees.”

Leibowitz also cites the launch of a web-based service and mobile apps as contributing to StumbleUpon’s post-eBay growth. Previously, StumbleUpon had been available solely through a browser extension, and it didn’t launch its Android and iOS apps until August 2010 — fairly late in the mobile game.

Today, about 20% of the 1.2 billion Stumbles made per month are made on mobile phones.

StumbleUpon is not yet a mainstream social network. Its 25 million users pale in comparison to Twitter’s 140 million accounts, Facebook’s 901 million users or Tumblr’s 53 million blogs.

BranchOut, a startup that builds a LinkedIn-style social network on Facebook, recently reached as many users in about two years as StumbleUpon has in 11 years.

But at its current growth rate, StumbleUpon could be on its way to some major mainstream recognition.

The recommendation engine, by one StatCounter study’s measure, is already responsible for referring more traffic to websites than any other social network in the U.S. It has more than 75,000 advertisers. And its users are active — according to Leibowitz, on average they spend about seven hours every month hitting the Stumble button.

Meanwhile, StumbleUpon has been busy building features that already come with mainstream social networks. A redesign in December added brand channels, which are somewhat equivalent to Facebook brand pages in that they create a profile for marketers separate from personal profiles. About 250 organizations have launched free channels since.

StumbleUpon also plans to launch an API that helps power third-party products’ recommendation features. The company also wants to create international versions of its own discovery engine (only 15% of Stumblers are currently based outside of North America). Meanwhile, you can expect to see more social features.

Leibowitz says. 

“I think StumbleUpon is often the source of content that goes viral on other social networks.  But I don’t think we’ve done a great job of creating a viral loop.  Content is launched into other social networks, but we don’t do a particularly good job of capturing the content around that into StumbleUpon.”

COMMENTARY:    I just love StumbleUpon because I have gotten a lot of traffic through them, and my viewership has exploded.   I am very impressed with their rapid growth.  Thank you so much StumbleUpon.

Courtesy of an article dated April 26, 2012 appearing in Mashable

5 THINGS YOU DIDN'T KNOW ABOUT MARK CUBAN, DALLAS MAVERICKS OWNER AN D INTERNET AND ENTERTAINMENT ENTREPRENEUR

Internet and entertainment mogul Mark Cuban may be most well known for owning the Dallas Mavericks and his roles on Shark Tank, Entourage and Dancing with the Stars, but here are some things you may not know about him:

• 1. He hates Silicon Valley.
• 2. He sold garbage bags door to door.
• 3. He believes in transactional VOD for video.
• 4. He started his blog to “combat media.”
• 5. He got naked with his investment Naked Pizza.

Cuban sat down with Jesse Draper of "The Valley Girl Show" in San Francisco to talk shop. We covered everything from his hatred of Silicon Valley “pretentious,” to the private jet he bought online and how he invests in people without meeting them.

 

He also shares his first entrepreneurial experiences, how the Mavs are his only investment not making money (because they have to win) and how his competitive nature is the reason he loves sports.

COMMENTARY:  Jesse Draper is creator and host of “The Valley Girl Show” through which she’s become a spokesperson for startups and helped pioneer the way of new media content distribution. Formerly a Nickelodeon star, Draper is now CEO of Valley Girl™ where she oversees the show and runs technology blog Lalawag.com.

I like Mark Cuban, because he is very outspoken and opinionated. Mark will always give you the straight scoop on a business startup or new innovative idea. If you have ever watched him on ABC TV's Shark Tank, you know he can be very arrogant, hard hitting and asks the hard questions and doesn't care if feelings are hurt.  He probes for the right answers and always looks for any signs of weakness in a startup business model.  He is definitely a lone wolf, often making investments other panelists on the Shark Tank would shun.           

Courtesy of an article dated April 25, 2012 appearingi n Mashable

 

SAMSUNG TOPS NOKIA AS THE "WORLD'S BIGGEST HANDSET MAKER" FOR Q1 2012, APPLE RANKS NO 3, BUT NO 1 IN SMARTPHONES

Samsung Galaxy S-II

One of the big ironies about Nokia is that while it has struggled to beat off competition from Samsung and Apple, the company has for 14 years reigned as “world’s biggest handset maker” thanks more recently to it reach into emerging markets with cheap, feature phones.

Not any more.

Today, two research companies report that Samsung has finally unseated Nokia as the world’s biggest maker of mobile phones, based on shipments in the first three months of 2012.

Samsung shipped 93.5 million handsets in the first quarter of 2012, compared to the 82.7 million units shipped by Nokia, according to Strategy Analytics.

IHS iSuppli puts the numbers at 92 million for Samsung and 83 million for Nokia.

Nokia recently released a range of high-end smartphones that run on Windows Phone, following a 14-month partnership with Microsoft, but offerings like the Lumia 800 have failed to get the traction needed to keep apace with the sales-decline of phones that use Nokia’s older, Symbian operating system.

Neil Mawston, Executive Director at Strategy Analytics said. 

“Samsung and Apple are outcompeting most of their major rivals and the smartphone market is at risk of becoming a two-horse race.”

A “two-horse race” is precisely what Nokia CEO Stephen Elop said he wanted to prevent when he announced his company’s partnership with Microsoft in February 2011.

Samsung and Apple’s combined global market share for smartphone shipments stood at 30.3% this time last year; now it’s at 54.8%, according to Strategy Analytics.

Shares of Nokia were down by 0.7% to 2.74 euros in Helsinki on Friday afternoon. They’ve fallend by 54% since the start of the year, and currently give the Finnish company a market cap of 10.3 billion euros ($13.6 billion).

Samsung meanwhile reported its highest quarterly profits since 2008. The South Korean company earned $4.5 billion in the three months to March 31, up from the $2.5 billion it made in the first quarter last year.

COMMENTARY:   This is obviously very bad news for Nokia.   Strategy Analytics executive director Neil Mawston said of the new figures. 

”Nokia was the world’s largest handset vendor between 1998 and 2011, for 14 years, before finally yielding top position to rival Samsung this quarter.” 

According to IHS iSuppli, Nokia is also being left in the dust by Apple and Samsung when it comes to unit sales of smartphones.  

Smartphone quarterly unit sales were down across the board between Q4 2011 and Q1 2012:

• Apple dropped 5% 
• Samsung dropped 11. 
• Nokia dropped  39%. 
• RIM dropped 21%.
• LG struggled with a 19-percent drop. 

Courtesy of an article dated April 27, 2012 appearing in Forbes and an article dated April 27, 2012 appearing in SlashGear

SPACEX ANNOUNCES APRIL 30 LIVE WEBCAST OF A STATIC FIRE TEST OF THE FALCON 9 ROCKET, PRELUDE TO DOCKING WITH THE ISS IN MAY

dd-

Hawthorne, CA – On Monday, April 30, Space Exploration Technologies (SpaceX) will webcast a static fire test of the Falcon 9 rocket’s nine powerful Merlin engines in preparation for the company’s upcoming launch.

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SpaceX CEO and founder Elon Musk stands alongside the Falcon 9 Heavy rocket which is equipped with nine powerful rocket engines (Click Image To Enlarge)

The webcast, available at spacex.com, is set to begin on April 30, 2012 at 2:30 PM ET/ 11:30 AM PT, with the actual static fire targeted for 3:00 PM ET/ 12:00 PM PT.

SpaceX Falcon 9 Heavy space rocket (Click Image To Enlarge)

The 9 engine test will take place at the company’s Space Launch Complex 40 (SLC-40) at the Cape Canaveral Air Force Station as part of a full launch dress rehearsal leading up to the second Commercial Orbital Transportation Services (COTS) launch. During the rehearsal, SpaceX engineers will run through all countdown processes as though it were launch day. The exercise will end with all nine engines firing at full power for two seconds.

Various configurations of SpaceX's Falcon 9 rocket (Click Image To Enlarge) 

After the test, SpaceX will conduct a thorough review of all data as engineers make final preparations for the upcoming launch, currently targeted for May 7. SpaceX plans to launch its Dragon spacecraft into low-Earth orbit atop a Falcon 9 rocket. During the mission, Dragon’s sensors and flight systems will be subject to a series of tests to determine if the vehicle is ready to berth with the space station. If NASA decides Dragon is ready, the vehicle will attach to the station and astronauts will open Dragon’s hatch and unload the cargo onboard.

SpaceX Falcon 9 Rocket & Dragon Spacecraft with comparison to Soyuz FG and NASA Space Shuttle (Click Image To Enlarge)

This will be the first attempt by a commercial company to send a spacecraft to the International Space Station, a feat previously performed by only a few governments. Success is not guaranteed. If any aspect of the mission is not successful, SpaceX will learn from the experience and try again. It is also the second demonstration flight under NASA’s program to develop commercial supply services to the International Space Station.

SpaceX Dragon Spacecraft in outspace orbit (Click Image To Enlarge)

The first SpaceX COTS flight, in December 2010, made SpaceX the first commercial company in history to send a spacecraft to orbit and return it safely to Earth. Once SpaceX demonstrates the ability to carry cargo to the space station, it will begin to fulfill its Commercial Resupply Services (CRS) contract for NASA for at least 12 missions to carry cargo to and from the space station. The Falcon 9 rocket and Dragon spacecraft were designed to one day carry astronauts; both the COTS and CRS missions will yield valuable flight experience toward this goal.

Artist illustration of SpaceX's Dragon spacecraft docking with the International Space Station or ISS (Click Image To Enlarge)

COMMENTARY:    I can hardly wait to watch the rocket test webcast and the May 7, 2012 launch of the Falcon 9 Heavy rocket and Dragon spacecraft as it tries to dock with the International Space Station.  If you haven't seen the animation of a launch of the Falcon 9 rocket carrying the Dragon spacecraft as it docks with the ISS check out the video below.  

 

Go SpaceX!! 

Courtesy of a press release dated April 27, 2012 from SpaceX 

REDSHIFT: AN ALL-ELECTRIC MOTORCYCLE THAT BREAKS THE RULES (AND SPEED LIMITS)

HOW DO YOU SELL RIDERS ON ELECTRIC MOTORCYCLES? JUST SELL RIDERS ON A FASTER MOTORCYCLE.

When most consumers think “electric car,” they’ve been conditioned to think green, to think “Prius” and “limited range” and “braking efficiency.” But electric’s greatest advantage isn’t necessary an environmental one; it’s that an electric motor isn’t limited by the physics of combustion. Rather, just like an electric screwdriver, an electric car can go full throttle, instantly, without switching gears. Smart designers can take advantage of that.   Marc Fenigstein, CEO of motorcycle startup BRD says. 

“We didn’t set out to build a bike for the masses.  We set out to build a bike for a very specific format where we knew electric was the best option.”

 

BRD developed a groundbreaking electric motocross bike called the RedShift. Fenigstein tells Co.Design.

“It looks familiar because in function it is the same as gas motocross bikes.  It looks different because it doesn’t need an exhaust or gas tank anymore.”

Some may see the bike as green. Others may recognize its economic savings--despite the relatively high $15,000 price tag--as an electric bike pays for itself by sidestepping oil changes and constant engine rebuilds. But instead of using these features as a marketing crutch, BRD designed and sold for speed. 

Fenigstein writes. 

“The major breakthrough is simply the approach.  BRD doesn’t assume that anyone needs electric. Gas bikes kick ass, and none of us would trade our gas bikes for anything that is slower, uglier, or less fun. We set out to build a bike that was prettier, faster, and more fun than what was in our garages.”

BRD RedShift all-electric motorcycle (Click Images To Enlarge)

By using gas performance as their design standard rather than some arbitrary engineering metric, BRD created a bike that was 100lbs (or 30%) lighter than competing electrics in their class and a bike that one-ups gas competition by putting out peak horsepower at will and requiring no shifting. It’s also just a beautiful vehicle to look at, with a surprisingly unique, almost anime color scheme in a field filled with eye-punishing chroma.

Fenigstein writes. 

“The motorcycle market has very strong brand associations for the primary and secondary colors (Red = Honda and Ducati, Green = Kawasaki, Yellow = Yamaha and Suzuki, Blue = Yamaha, Orange = KTM) so we had to find something off the beaten path.  We drew from some of our favorite racing liveries and played around until we found something that stood out for its subtlety, rather than competing for ‘OMG LOOK AT ME AAAAAAHHHH.’"

 

I’m not sure that you can call anything about the RedShift subtle, but it is a gorgeous bike that’s hiding at least one awesome feature that your eyes can’t see: It sounds like a Star Wars podracer in action.

COMMENTARY:   Now that's what I call a super-cool all-electric motorcycle for the masses.

About BRD

"BRD is a team of riders, racers, designers, engineers, makers, builders, thinkers, mechanics and troublemakers. We build motorcycles because it's what we were born to do."

"We love motorcycles. The best ones make you tingle when you look at them, giggle when you ride them, and scare you just a little bit (i.e. score a 90 or above on the Tingle-Giggle-Scream Index). We love going fast. And we love finding new ways and new places to go fast. Our goal from the beginning was to create motos that are easier to ride fast than anything else out there. We build electric bikes because we are in love with instant throttle response and flat, endless torque. Because we want the next bike we purchase, gas or electric, to be faster than our last one."

"Though it didn't yet have a name, BRD began in about 2007 when two riding buddies, Derek Dorresteyn (CTO and co-founder) and Jeff Sand (CDO and co-founder), who happened to have an unbelievable amount of fabrication, engineering and design experience and expertise between the two of them, fell in love with the idea of the smooth, perfectly responsive torque curve of an electric motor and started kicking around the possibilities for building their own electric motorcycle... a motorcycle that could be faster and more rideable than their gas bikes."

Management Team

• Derek Dorresteyn, CTO and Co-Founder
• Jeff Sand, CDO and Co-Founder
• Marc Fenigstein, CEO and Co-Founder

BRD Bike Models

The RedShift MX is barely legal - a race bike with lights. Designed for MX2/Lites class racing, the MX light and quick, without the lost seconds from hunting through gears trying to find torque. With 200 hour maintenance intervals, you'll also spend more time riding and less time wrenching. 

Specifications

Power (hp):  25/40 hp *

Battery capacity (kWh):  5.2 kWh

Est. range:  2 hours **

Top speed:  80 mph ***

Street weight (lbs):  260 lbs +

Race weight (lbs):  250 lbs ++

Front suspension:  12" fully-adjustable

Rear suspension:  12" fully-adjustable

Front wheel:  21" spoked

Rear wheel:  19" spoked

Wheelbase:  57.3

Seat height (in):   37 ins

* Continuous/Peak (10s)

** Based on recreational trail or mixed road use

*** Redline based on standard gearing;

+ With lighting and switchgear

++ With lighting and switchgear removed

Estimated retail price:  $14,995

The RedShift SM is a race sumo without the oil changes. It is designed for everything a city can throw at a bike. Because of its off-road roots, it may be pretty but it's not precious. Feel free to beat on it, but remember: just because it is fully capable of launching stair gaps and airing out the crests of San Francisco hills does not mean we condone that use or behavior in any way.

Specifications

Power (hp):  25/40 hp *

Battery capacity (kWh):  5.2 kWh

Est. range:  50 miles **

Top speed:  85 mph ***

Street weight (lbs):  265 lbs +

Race weight (lbs):  255 lbs ++

Front suspension:  12" fully-adjustable

Rear suspension:  12" fully-adjustable

Front wheel:  17" spoked

Rear wheel:  17" spoked

Wheelbase:  56.6

Seat height (in):   35.5 ins

* Continuous/Peak (10s)

** Based on recreational trail or mixed road use

*** Redline based on standard gearing;

+ With lighting and switchgear

++ With lighting and switchgear removed

Estimated retail price:  $15,495

BRD is now taking advance orders for delivery in 2013.

Courtesy of an article dated April 25, 2012 appearing in Fast Company Design 

HOW SAKS FIFTH AVENUE CREATED COMPETITIVE ADVANTAGE, BY USING ROBOTS TO AUTOMATE ITS ORDER FULFILLMENT

Saks Direct 500,000-sq.-ft. distribution center in Aberdeen, MD (Click Image To Enlarge)

R etailers always seem to be fighting through notoriously tight operating margins, so any competitive advantage that accrues to the bottom line is welcome.

Saks Direct, the high-flying e-commerce division of Saks and companion of the high-end Saks Fifth Avenue retail stores, is certain it has found a nice fulfillment advantage over some of its rivals for consumers’ online shopping dollars.

The humdrum world of order fulfillment and product distribution hardly matches the luxurious and legendary Saks brand. But an ambitious decision two years ago to revamp the company’s fulfillment processes allowed Saks Direct to meet equally ambitious 2011 holiday shopping season delivery opportunities.

Casting aside its fixed warehouse automation systems for moving product, Saks took a capital-intensive leap of faith and began implementing a mobile-robotic approach to picking and packing for Saks Direct at its 500,000-sq.-ft. distribution center in Aberdeen, Md. Michael Rodgers, executive vice president and CIO for Saks, says the new fulfillment system allowed Saks Direct to promise Christmas Eve delivery for customers ordering as late as the day before.It seemed to make a difference: Saks Direct reported a 21 percent increase in fourth quarter sales from the same period in 2010.

Rodgers says. 

“That’s a competitive advantage.  I don’t know how many of our competitors were able to do that and how many weren’t. I just know that we were, and we didn’t break a sweat doing it.”

Efficiencies created

Breaking a sweat in the Aberdeen DC isn’t for humans anymore. With the Kiva Mobile-robotic Fulfillment System, hundreds of “robots” do the grunt work, automatically moving products of different shapes and sizes on mobile, modular shelving units across the DC floor. The robotic-drive shelving units are guided to workstations where associates await — a process Kiva markets as “Goods-to-Man Order Picking.”

 

Peter Blair, Kiva senior director of marketing, says the system reduces cycle time through efficiencies of scale as associates can pick, pack and ship orders more quickly without having to move around the warehouse floor to locate products.

Blair says.

“Say Mrs. Smith orders a pair of shoes, a dress and some earrings.  In most cases, you have two options. Either one person goes out with the cart and walks miles around the warehouse … [or you] take three people and send one over to get the dress, one over to get the shoes and one over to get the earrings.”

The heart of the Kiva Systems' mobile-robotic fulfillment are the bright orange mobile robotic units which move inventory shelves from their warehouse floor locations to the worker stations where a human picker pulls the items ordered.  This eliminates warehouse people from having to walk all over the warehouse to pull inventory items off the shelves (Click Image To Enlarge)

Kiva Systems stations include a stock picker who pulls stock items, mobile inventory pods attached to shelves and mobile packaging pods which bring empty boxes for packing (Click Image To Enlarge)

Blair explains that efficiencies are created because all the robotic drives do is ferry products to workstations. Associates use hand-held barcode scanners to point to the shelf to verify the product. A light on the shelf activates indicating the location of the item, accommodating product elements like size and color. Once done, the robotic drive moves to the next workstation, leaving another pod ready in the queue to deliver product.

The scanning system leaves little to chance, while enabling associates to pick multiple orders simultaneously and completely.  Blair says.

“It’s very nice for the worker because it is very accurate.  They don’t have to think too much about what they are doing. It’s very clear.”

Increased space & flexibility

The Kiva system covers inventory control, forward replenishment, picking, packing, shipping sortation, finishing and quality assurance. With shipping sortation, for instance, orders can be picked depending on their destination. If the delivery is going from the East Coast to the West Coast, the order might get picked and packaged earlier in the workday to accommodate air travel schedules.

Rodgers says going to robotic fulfillment from a manual operation was a strategic decision to create leverage from expanding consumer interest in online shopping. Online spending during the 2011 holiday season (November 1 through December 31) reached $35.3 billion, according to digital research firm comScore – a 15 percent increase from 2010.

Rodgers says.

“This was a big bet Saks made ... during the throes of the recession.  We asked, ‘What are some of the big bets we can make that are going to make a difference when we come out of this recession?’”

Rodgers says mobile-robotic fulfillment worked so well for Saks that the company implemented the system at Aberdeen much sooner than anticipated. Saks Direct initially converted four departments to Kiva, completing that phase by September 2010. The company waited to complete the remainder of the conversion so as to not interfere with the impending 2010 holiday shopping season, though executives already were convinced of its benefits, Rodgers says. Saks completed the makeover by June 2011, well ahead of the 30 months planned.

Rodgers says.  

“It is a relatively new technology, bu5t from the day it started to today we haven’t had problem one. The biggest thing was how fast we could get the rest of it converted.”

Rodgers says two other benefits of the robotic system are space and flexibility. As online shopping is expanding rapidly among consumers, so is the need for retailers to keep more inventory in warehouses to satisfy service requirements for shipping and delivery. With dynamic shelving, Saks could create 30 percent more space at Aberdeen.

He says.  

“It maximizes the issue of shelving [because] it’s a non-human environment.  People don’t have to walk up and down aisles, and you can pack items in more closely.”

Rapid product delivery 

As it expands its omni-channel marketing efforts, Saks is seeking to grow its distribution footprint – possibly to new facilities. Since the Kiva system is based on a mobile principle.  Rogers says.  

“I can pick it up and move it to other locations."

Blair says that in today’s e-commerce consumer environment, superior customer service demands super-fast product delivery.

He says.  

“It used to be that [retailers] could take a week to get you something.  That has changed. Everyone now expects that shipping is going to be quick and that it may even be free. Consumers also expect to have value-added services like gift wrapping and all those other things. Expectations have gone way up.”

Rodgers says the benefits from robotic fulfillment have been like a rallying cry for Saks.

He says.  

“We’ve done things our competition hasn’t done.  Everybody feels really happy about it. It is one of the things we hold up as a strategic investment that is paying big dividends for the company, not only from a return on investment standpoint but also from a service standpoint. That’s probably the most important thing in the dot-com arena.”

COMMENTARY:  Kiva Systems delivers accuracy, productivity and flexibility across a wide range of products, processes and industries.  Kiva distribution operations handle products from aspirin to audio components, books to bath towels, crutches to candles, diapers to dishes, elbow pads to earrings, fan belts to folders, golf balls to ball gowns, hair gel to hand bags…well, you get the picture. If a product is picked as eaches or cases to satisfy orders, a Kiva system will handle it more accurately, productively and cost-effectively than any traditional automation approach.

Kiva automates eCommerce and catalog direct-to-consumer fulfillment, business-to-business order fulfillment, retail store re-stocking operations, industrial MRO and parts distribution, work-in-process parts supply functions, medical and hospital restocking programs and other order processing operations across a diverse spectrum of vertical markets. Kiva Systems has implemented its mobile-robotic order fulfillment system in these markets.

• eCommerce - Kiva is widely recognized as THE solution for eCommerce fulfillment.
  For internet retailers the fulfillment center is the store and customer satisfaction is the top priority. Kiva makes it possible to pick eaches and cases as productively as full pallets. Kiva builds accuracy into the solution and enables just-in-time order fulfillment. Light directed picking, put-away and order consolidation combined with barcode scanning and multiple methods for confirming quantity ensure that inventory and orders are 99.9% accurate. Kiva does not require batching and waving of orders so any online order can be processed in as little as 15 minutes from the time a consumer submits an order to when a picked, packed and labeled package is sitting on a delivery truck.  Additionally, Internet retailing often involves large assortments and strategies for offering the 'long tail' of goods selection that's impractical in brick-and-mortar stores. This imposes both storage and productivity challenges on eCommerce fulfillment operations tasked with handling high volumes of individually slow-moving goods.
• Retail - The Kiva solution allows retail distribution centers to improve service and lower inventory levels for the enterprise while improving distribution productivity.  Kiva makes it possible to pick eaches and cases as productively as full pallets.  Kiva delivers just-in-time store replenishment.  By integrating store front-end systems with Kiva's back-end order processing system, retailers are capable of selling an item at store level and picking a replacement item in the distribution center within minutes. It is even viable to ship the store replenishment order on the same day. 
• Medical Devices & Supplies - The Kiva solution simultaneously delivers speed, accuracy, productivity, and flexibility while meeting the challenges imposed on distribution operations by the inherent quality concerns of the medical supply chain.  With Kiva it is possible to pick eaches and cases as productively as full pallets. Kiva builds accuracy into the solution and enables just-in-time order fulfillment. Light-directed picking, put-away and order consolidation, combined with barcode scanning and multiple methods for confirming quantity, ensure that inventory and orders are 99.9% accurate.  The Kiva warehouse automation system was designed to meet medical device order fulfillment challenges while delivering operational efficiency and labor savings for distribution center operators.
• Apparel & Footwear - The Kiva solution enables apparel and footwear distribution centers to improve service and lower inventory levels for the enterprise while actually improving distribution productivity. Kiva makes it possible to pick eaches and cases as productively as full pallets. Kiva delivers just-in-time order processing. Kiva customers use the system to store and process single garment picks, cut-case picking, full case picking, garment-on-hanger selection, lay-flat handling, bagged goods, boxed goods and shoes of all size, shape and type. If your company is involved with distributing apparel and footwear products, Kiva has a solution that works for you.
• Health & Beauty - Operations that deal with health and beauty care (HBC) products are excellent candidates for automating with a Kiva solution. Cosmetics, skin care, hair products, vitamins, supplements and similar goods are often picked in each and case quantities to replenish retail stores and salons or to ship directly to consumers. High SKU counts are normal. There are a multitude of packaging configurations to deal with - inner packs, outer packs, cases, clamshells, peg-and-hook-friendly hanging packages, tubes, vials, bottles, and boxes of various shapes and sizes. Additionally, due to formulations and color choices many different products look almost identical which makes it a challenge to pick them accurately. The average warehouse worker would be hard pressed to tell the difference between tubes of red, ruby, scarlet and passion sunset lipstick without some systematic aid in the picking process.
• Other - Kiva automation solutions deliver accuracy, productivity and flexibility across a wide range of products, processes and industries. As opposed to traditional systems where many items are considered "non-conveyable," most items will work with Kiva. Kiva is flexible enough to handle just about any product that a single human can pick alone. Every new customer challenges us to handle at least one item we haven't seen before.

Kiva Systems' major customers include:

• Acumen Brands - ecommerce retailer
• Boston Scientific - medical device manufacturer
• Crate & Barrell - Housewares retailer
• Dansko - Footwear, socks and healthcare apparel manufacturer
• Diapers.com - ecommerce retailer 
• Dillard's - Fashion apparel, cosmetics and home furnishings retailer
• Drugstore.com - Drug internet retailer
• Gap - Apparel, footwear and accessories retailer
• Gilt Group - Designer fashions retailer
• Office Depot - Office supplies and equipment retailer
• Saks Fifth Avenue - Apparel, footwear and accessories retailer
• Staples - Office supplies and equipment retailer
• Timberland - Footwear manufacturer and retailer
• Toys R Us - Toys retailer
• Walgreens - Drug retailer

UPDATE: On March 19, 2012, Amazon.com announced that it has agreed to acquire Kiva Systems for about $775 million in cash. It is considered the latest bid by the online retailer to streamline its growing distribution network.

 Courtesy of an article appearing in the April 2012 issue of Stores Magazine