When Your Office Weighs 5 Pounds

Valdis Krebs, whose interesting study of polarized political books has been written up in the New York Times, describes his office:

"Come to Cafe Ah Roma on Friday afternoons to see how new business is done by Cleveland entrepreneurs. In fact visit any coffee house, with free WIFI, any day of the week and you will see the new office work of the 21st century!



My office? A 5lb aluminum laptop w/Bluetooth and WIFI!"

Via George at Brewed Fresh Daily.





Want to know something else interesting about today's entrepreneurs? They're not just twenty-somethings. I've been to the "Entrepreneur Friday" at Cafe Ah Roma that Valdis mentions. Most of the entrepreneurs and business people there range from thirty-something to fifty-something. Many bring with them world-class training and sophisticated business experience gained while having worked in Corporate America.



So the next time you think about an entrepreneur or small business owner in a coffee house as being a green 22-year old with limited business experiences, think again. It's a different world.

Little Guys Thrive in Visual Effects Market

Trend Watch reports that the entertainment and broadcast media industries depend on very small businesses for their visual effects.



There are 30,000 visual effects and/or dynamics media studios in the United States developing computer-generated graphics for the entertainment and broadcast media industries.



Of these visual effects studios, over half are very small businesses:

• Approximately 54% have fewer than 5 employees.
• One in three (29%) are freelancers.

Of course, the businesses that purchase creations from these small studios tend to be much larger themselves. Purchasers of visual effects and dynamic media include major film production companies, theme parks, computer game companies -- to name a few.





The visual effects industry presents an example of a thriving and complex ecosystem that can exist between large and small businesses. Large entertainment and broadcast businesses are outsourcing visual effects to a host of smaller companies. And the smaller companies in turn rely upon the larger businesses to be customers of their services. Sounds like some great partnerships to me.

Debit Cards Make Inroads in Credit Card Use

Nearly half of US households holding credit cards (48%) still use credit cards for the majority of their card-based purchases. These credit-card loyalists charge $1,000 or more each month, tend to be slightly older, and disproportionately reflect households at both the bottom and the top of the economic ladder.



However, a growing number of households do most of their shopping with debit cards rather than credit cards. These consumers now total about one-third of all households and are heavy spenders. On average, using all possible payment methods, they spend $1,000 more than the credit card loyalists. Of that additional spending, $950 is done with debit cards and less than $50 with credit cards.



Twenty percent of households use credit and debit cards interchangeably. This group is comprised of consumers who spend at the limits of their budget. While they spend more than the other two groups, they have the lowest income.



Of those who make purchases almost exclusively with credit cards, 60% say they do so because of points, rewards, or airline-miles programs. Consumers who prefer to use debit cards and those who use both types of cards interchangeably say they use debit cards to avoid going into debt.



The above data is based on March 2004 collection and comes from Forrester Research's Ultimate Consumer Panel, a single-source panel that electronically captures an array of offline and online behavior, including credit card and bank transactions and monthly statements, from a sample of 10,000 US households.



The trend to debit cards would seem to reflect a growing concern on the part of consumers about debt. However, the fact that the those who use debt cards the most are still among the heaviest spenders, would seem to indicate fear of debt has not created major restraints on their spending. For retail businesses relying on card purchases for the bulk of their sales, understanding changing card usage is an important dynamic. For companies selling goods and services to those businesses, the trend toward debit cards is an opportunity in need of exploration.

Traditional R&D Hit with Double Whammy from Two Respected Sources

Is heavy investment in R&D a guarantee of bottom line success? No say Booz Allen Hamilton's Alexander Kandybin and Martin Kihn in an article posted on the Booz Allen website Strategy+Business..



Drawing conclusions that seem to fly in the face of conventional wisdom, they state, "Our recent work has shown tha...each additional dollar spent on new product development ultimately yields a lower and lower return." They say that both anecdotal and statistical evidence indicate that additional spending on product innovation does not yield a direct acceleration of sales, market share, or profits.



In support of this thesis, they point out that the ratio of new consumer products introduced in the United States to increased sales is greater than 2 to 1. Kandybin and Kihn cite their own analysis of personal-care and consumer healthcare companies as evidence that there is "...no clear correlation between R&D spending as a percentage of sales and growth in revenues or profitability." They find further support in Christoph-Friedrich von Braun's 1997 book The Innovation War, in which 30 Global 500 firms were analyzed, and almost no correlation was found between increased R&D spending and improved profitability.



Kandybin and Kihn identify four critical sets of capabilities necessary for successful innovation -- ideation, project selection, development, and commercialization. They stress how hard it is for a company to be expert in all four and note that an innovation chain is only as strong as its weakest link. They suggest outsourcing potential weak links in this innovation chain while strengthening internal capacity in those links that simply cannot be outsourced. Project selection and commercialization are identified as processes that must remain within a company, but ideation and development are seen as ripe for outsourcing.



The writers identify an innovation effectiveness curve that they believe can be determined for every company. (More on this innovation effectiveness curve) Interestingly in his just out book, Free Prize Inside, Seth Godin identifies a curve that shows a purported diminishing return for increased spending on technology and traditional interruptive marketing.



Since technology and marketing are often two strong components of any new product resulting from R&D, it would seem that Booz Allen and marketing guru Godin are arriving at similar positions.



While the Booz Allen authors and Godin are not saying exactly the same thing about R&D dollars they are addressing the area of innovation and its value chain with new insight at the same moment. Their independently arrived at conclusions make for very interesting reading. Also, Kandybin and Kihn, in their proposal for greater outsourcing of links in the R&D chain, may be pointing toward more symbiotic relationships between traditional big-firm R&D and smaller enterprises. If they are right, and if Godin's concept of what really constitutes viable innovation holds water, then small businesses can look forward to new and increased markets for their ability to innovate quickly.

Restaurants Adopting Fingerprint Scans

The axiom used to be that if you owned a restaurant, you had to be there all the time or your profits would be "eaten up."



That made the restaurant business a physically grueling one for most small business owners. A 60-, 70- or 80-hour work week was not uncommon.



Well, now, mom-and-pop restaurant owners are adopting fingerprint scanning as a way to find some time for themselves, as an article in the Akron Beacon Journal notes (as they say, read the whole thing). This emerging trend among smaller eateries not only lets restaurant owners take a break, but it promises to improve customer service, too.



Fingerprint scanning systems:

• Cut down on buddy punching, i.e., the practice of one employee clocking in for another who isn't there.



• Automatically enter orders into the computer system, cutting down on mistakes.



• Speed up orders, leading to happier customers and faster table turns.



• Require managers to physically process voids and other transactions needing a manager's approval, cutting down on fraud.

Surprisingly, it's the small, independently-owned restaurants that are adopting fingerprint scanning technology -- not the national chains. In fact, the distributors of these biometric systems are exclusively marketing to small-restaurant owners:

"Steve Pritchard, co-owner of Cash Register Sales Co., said he only markets to small mom-and-pop shops instead of the large national chains, which haven't yet embraced the new technology. But owners of the small restaurants are eager to try the new technology that helps with security, he said.



James Coffelt, owner of Business Data Systems, agreed. Small-restaurant owners are very open to the new technology because restaurants are such a labor-intensive business that have a lot of people working in them."

Yet another example of small businesses improving and even revolutionizing their operations with technology. Frequently it is larger businesses that are the first to adopt new technologies. One reason is economics. Larger businesses can better afford the investment. But when a technology's productivity value is significant and obvious, small businesses become trendsetters.