This means that one-person enterprises can get things made in a factory the way only big companies could before. Two trends are driving this. First, there’s the maturation and increasing Web-centrism of business practices in China. Now that the Web generation is entering management, Chinese factories increasingly take orders online, communicate with customers by e-mail, and accept payment by credit card or PayPal, a consumer-friendly alternative to traditional bank transfers, letters of credit, and purchase orders. Second, the current economic crisis has driven companies to seek higher-margin custom orders to mitigate the deflationary spiral of commodity goods.
Institute for the Future’s model for “lightweight innovation.” 1. Network your organizations: “The bike vendors in Chongqing hang out in tea houses and shanzhai vendors in Shenzhen have a vast network centered in the large electronics malls.” 2. Reward solution seekers: “Penny-a-unit profits force the shanzhai collaborations to be totally solutions-driven. They don’t make money if they don’t deliver. ‘Not invented here’ is never a problem.” 3. Err on the side of openness: “The wild west of shanzhai is all about openness. Trade secrets of big companies are flowing freely. Everything is ‘open sourced’ by default. If we take the [intellectual property rights] issue aside, it’s really the ultimate openness we in the open-source world are looking for.” 4. Engage actively: “The shanzhai vendors used to produce knockoffs after original vendors had the products on the market. But in the past year I have seen a lot of them act on the latest Web rumor, especially those related to Apple. It was kind of funny that there were several large-size iPhones (seven-inch and ten-inch) being produced by the shanzhai simply on the rumor that the iPad would look like a large iPhone.” The rise of shanzhai business practices “suggests a new approach to economic recovery as well, one based on small companies well networked with each other,” observes Tom Igoe, a core developer of the open-source Arduino computing platform. “What happens when that approach hits the manufacturing world? We’re about to find out.” Makers: The New Industrial Revolution by Chris Anderson The ad has all the elements you would expect any space ad to have. And to understand this first axiom, I would ask my students to define the purpose of each element in an advertisement. The following is what we finally decided:
1. Headline: To get your attention and draw you to the subheadline. 2. Subheadline: To give you more information and further explain the attention-getting headline. 3. Photo or Drawing: To get your attention and to illustrate the product more fully. 4. Caption: To describe the photo or drawing. An important element and one that is often read. 5. Copy: To convey the main selling message for your product or service. 6. Paragraph Headings: To break up the copy into chunks, thereby making the copy look less imposing. 7. Logo: To display the name of the company selling the product. 8. Price: To let the reader know what the product or service costs. The price could be in large type or could be buried in the copy. 9. Response Device: To give the reader a way to respond to the ad, by using the coupon, toll-free number or ordering information, usually near the end of the ad. 10. Overall Layout: To provide the overall appearance for the ad, by using effective graphic design for the other elements. Axiom #2 All the elements in an advertisement are primarily designed to do one thing and one thing only: get you to read the first sentence of the copy. At this point, there was usually a confused look on the faces of my students. They thought that each of these elements had its own reason for existence. But I was saying, “No, they are there strictly for the sole purpose of get ting you to read the first sentence.” I know what you’re thinking. “What about the headline? Isn’t it supposed to be 16 words long and what about . . .” Stop. Just accept my word at this point that each element (of an ad or copy) has a single purpose and that is to get you to read the first sentence. If somebody asked you for the main purpose of the logo in an advertisement, you could answer, “to establish the corporate integrity of the company selling the product,” or you could answer, “to provide a degree of continuity.” But the real answer is to get you to read the copy. Really. Advertising Secrets of the Written Word: The Ultimate Resource on How to Write Powerful Advertising Copy from One of America's Top Copywriters and Mail Order Entrepreneurs by Joseph Sugarman If 80 percent of success is, as Woody Allen once said, just showing up, then 80 percent of building and maintaining relationships is just staying in touch.
I call it “pinging.” It’s a quick, casual greeting, and it can be done in any number of creative ways. Once you develop your own style, you’ll find it easier to stay in touch with more people than you ever dreamed of in less time than you ever imagined. Becoming front and center in someone’s mental Rolodex is contingent on one invaluable little concept: repetition • People you’re contacting to create a new relationship need to see or hear your name in at least three modes of communication—by, say, an e-mail, a phone call, and a face-to-face encounter—before there is substantive recognition. • Once you have gained some early recognition, you need to nurture a developing relationship with a phone call or e-mail at least once a month. • If you want to transform a contact into a friend, you need a minimum of two face-to-face meetings out of the office. • Maintaining a secondary relationship requires two to three pings a year. I also send e-mail constantly. Using a BlackBerry, I’ve found I can do the majority of my pinging while in trains, planes, and automobiles. I remember—or at least my PDA remembers—personal events like birthdays and anniversaries, and I make a special point of reaching out to people during these times. When it comes to relationship maintenance, you have to be on your game 24/7, 365 days a year. One way I’ve found to make maintaining my network of contacts, colleagues, and friends easier is to create a rating system for the network that corresponds to how often I reach out. First, I divide my network into five general categories: Under “Personal,” I include my good friends and social acquaintances. Because I’m generally in contact with these people organically, I don’t include them on a contact list. The relationship is established, and when we talk, it’s as if we’d been in touch every day. “Customers” and “Prospects” are self-explanatory. “Important Business Associates” is reserved for people I’m actively involved with professionally. I’m either doing business with them currently or hoping to do business with them. This is the mission-critical category. Under “Aspirational Contacts,” I list people I’d like to get to know, or I’ve met briefly (which is anyone from your boss’s boss to a worthy celebrity) and would like to establish a better relationship with. Create a segmentation that works for you and your objectives. This is a good habit and one that deserves repeating. All successful people are planners. They think on paper. Failing to plan, as they say, is planning to fail. And a plan is a list of activities and names.R I ping via e-mail. I’ve developed the habit of saving every e-mail I send and receive. I put each e-mail, when I receive it, in one of my categories, and Outlook records whether I’ve returned the e-mail or not. Then I just open up those files and respond, pinging away. I make a habit of reviewing my master list at the end of the week and cross-checking it with the activities and travel plans I have for the following week. In this way, I stay up-to-date and have my trusty lists at my side all week long. My personal favorite pinging occasion remains birthdays, the neglected stepchild of life’s celebrated moments. As you get older, the people around you start forgetting your big day (mostly because they think they want to forget their own). Mom might not call a day late, but your brother or sister will. Your friends will figure, “Why remind the poor guy he’s getting up there in age?” Before long, that residual disappointment turns into resentment, and the resentment turns into apathy. Or at least the appearance of apathy. “Nah, birthdays aren’t my thing,” I hear people say all the time. You persuasively tell your family, “Don’t do anything big, but if you do something, make it small.” Well, I don’t believe it. I’m onto your game, friend. You care, and so does everybody else. Never Eat Alone: And Other Secrets to Success, One Relationship at a Time by Keith Ferrazzi, Tahl Raz “And in the end it is not the years in your life that count, it's the life in your years.”
― Abraham Lincoln So what are you doing this weekend? Are you planning on learning anything? Are you creating anything? Are you ready to start the business you always wanted, are you doing the things that will get you there? Why not? What is more important than building something new? Will what you did still be with you, still matter one week from now, one year from now? Those are the things that make your life better. This weekend read a chapter of a book. Start your business idea. Make a cold call. Make it happen. Start getting on line, get social. Social sells, social matters, making money involves other people, so making money is social. Use social media, use the phone, meet people on the street, meet people networking, Facebook, twitter, LinkedIn, crawl, run, walk, and cold call, but meet people. You need people to make money, and you make money by solving their problems. To solve their problems you have to know their problems. To know their problems, you have to know them. Make a cold call, meet some one new. Yes, new. Go ahead, now is good, I can wait. Bobby Flay say, “Take risks and you’ll get the payoffs. Learn from your mistakes until you succeed. It’s that simple.” D Maryam Alavi, vice-dean of Emery University’s Goizueta Business School, argues that the only way firms can continue to have lower transaction costs than the open market is if they become more complex internally in order to respond to the increasingly complex external market.
In the Aspen Institute’s “The Future of Work,” she explained that this was due to the “law of requisite variety” in systems theory, and she argued that a system must be as complex as the environment it is working within: “There are parts of the organization that are going to become more hierarchical because of the uncertainties that they deal with or don’t deal with. And there are parts of the organization that will need to be highly dynamic, open, and changing.”36 Thus the new industrial organizational model. It’s built around “small pieces, loosely joined.” Companies are smaller, virtual, and informal. Most participants are not employees. They form and re-form on the fly, driven by ability and need rather than affiliation and obligation. It doesn’t matter who the best people work for; if the project is interesting enough, the best people will find it. Makers: The New Industrial Revolution by Chris Anderson In the mid-1930s, Ronald Coase, then a recent London School of Economics graduate, was musing over what to many people might have seemed a silly question: Why do companies exist? Why do we pledge our allegiance to an institution and gather in the same building to get things done? His eventual answer, which he published in his landmark 1937 article “The Nature of the Firm,”33 was this: companies exist to minimize “transaction costs”—time, hassle, confusion, mistakes. When people share a purpose and have established roles, responsibilities, and modes of communication, it’s easy to make things happen. You simply turn to the person in the next cubicle and ask that individual to do his or her job. But in a passing comment in a 1990 interview, Bill Joy, one of the cofounders of Sun Microsystems, revealed a flaw in Coase’s model. “No matter who you are, most of the smartest people work for someone else,” he observed, stating what has now come to be known as “Joy’s Law.” His implication: for the sake of minimizing transaction costs, we don’t work with the best people. Instead, we work with whomever our company was able to hire. Even for the best companies, that’s a woefully inefficient process.
As New York Times columnist Thomas Friedman puts it, “It used to be that only cheap foreign manual labor was easily available; now cheap foreign genius is easily available.” Not just cheap because they work for less money; cheap because they’re often working for no money at all, as global volunteers in a project that they believe in while some other job puts food on the table. In short, because we don’t operate the company in a Coaseian model, we’ve got more and smarter people working for us. We minimize transaction costs with technology, not proximity. A social network is our common roof. Skype is the “next cubicle.” Our shared purpose is really shared, not dictated. Yet communities can’t make physical goods by themselves. Somebody has to do the manufacturing, handle the inventory, get the liability insurance, and run the customer support, and that takes money, a legal structure, and real day-to-day responsibilities. Thus, a company. So, in the new manufacturing model, you need a new kind of manufacturing company, too. At its core, it has to incorporate all the skills and learning of traditional manufacturing companies—tight quality control, efficient inventory management, and supply-chain management—so that it can compete with them on basic price and quality. But it also needs to incorporate many of the skills of Web companies in creating and harnessing a community around its products that allow it to design new goods faster, better, cheaper. In short, it must be like the best hardware companies and the best software companies. Atoms and bits. Makers: The New Industrial Revolution by Chris Anderson One of the first mistakes budding Makers make when they start to sell their product is not charging enough. It’s easy to see why, for all sorts of reasons. They want the product to be popular, and they know the lower the price, the more it will sell. Some may even feel that if the product was created with community volunteer help, it would be unseemly to charge more than it costs. Such thinking may be understandable, but it’s wrong. Making a reasonable profit is the only way to build a sustainable business. Let me give you an example. You make one hundred units of your delightful laser-cut handcrank toy Drummer Boy. Between the wood, the laser cutting, the hardware, the box, and
the instructions, it costs you $20 to make each one. Let’s say you price them at $25 just to cover any costs you may have missed, and start selling. Since it’s a fun kit and pretty cheap, it sells quickly. You suddenly realize that you’ve got to do it all again, this time in a batch of one thousand. Rather than putting up a couple thousand dollars to buy the materials, you’ve got to put up tens of thousands of dollars. Instead of packing the kits in your spare time, you’ve got to hire someone to do it. You need to rent space to store all the boxes, and you’ve got to make daily trips to FedEx. Now your hobby is starting to feel like a real job. Worse, the popularity of your kit has come to the attention of some big online retailers, and they’re asking about buying in batches of one hundred, with a volume wholesale discount. You’re thrilled that your kit is so popular and flattered that these retailers, who can reach many more people than your own website, want to sell it. But if you’re selling it at $25, that’s the market price—the retailers typically can’t sell it for more. The retailers ask for a lower price because they need to make their own profit on each one, usually around 50 percent. So they need to buy them at no more than $17 each. But that would mean you are selling each one at a loss! Your costs, which were once within the limits of hobby spending, are now at risk of driving you and your business into debt. What entrepreneurs quickly learn is that they need to price their product at least 2.3 times its cost to allow for at least one 50 percent margin for them and another 50 percent margin for their retailers (1.5 × 1.5 = 2.25). That first 50 percent margin for the entrepreneur is really mostly covering the hidden costs of doing business at a scale that they hadn’t thought of when they first started, from the employees that they didn’t think they’d have to hire to the insurance they didn’t think they’d need to take out and the customer support and returns they never expected. And the 50 percent margin for the third-party retailers is just the way the retail market works. (Most companies actually base their model on a 60 percent margin, which would lead to a 2.6x multiplier, but I’m applying a bit of a discount to capture that initial Maker altruism and growth accelerant.) In other words, that $20 kit should have been priced at $46, not $25. It may sound steep to you now, but if businesses don’t get the price right at the start, they won’t be able to keep making their products, and everyone loses. It’s the difference between a hobby and a real, thriving, profitable business. Makers: The New Industrial Revolution by Chris Anderson A business is like a aircraft carrier. It is a city on the ocean, a massive machine filled with thousands of people, most of them young, and inexperienced, and it they rotate through continually, and yet it runs like a machine, efficient and effective.
How? Processes. Every single process, machine, switch, thought that can be had or done on a aircraft carrier has been reviewed, the best way to handle found, the process documented, written down, everyone trained, and then the process is reviewed to insure that everyone is following the process, and to insure nothing has changed and the process needs to be reviewed again and possibly modified. There should be only way way to do anything in your business, so everyone that does that process does it the same way. It is your job to make sure that your team can only do it the right way. When I work on a new project, particularly one that I know little about, I first find the rules, how does it work today. What tells you it is working, how do you define success, how it is not working, and then you find the rules and principles that make it work the same way consistently and create a virtual machine to make that happen. D Chris Anderson announced today he was leaving editing Wired magazine to go run his electronics business. As I read about it in his book Makers I not only see why, but I get jealous.
D "It was time to start our own factory. I started a proper company, 3D Robotics, with a partner, Jordi Muñoz (of whom much more later). In a rented Los Angeles garage, Muñoz started building our own mini Sparkfun. Rather than a pick-and-place robot, we had a kid with sharp eyes and a steady hand, and for a reflow oven we used what was basically a modified toaster oven. We could do scores of boards per day this way. As demand picked up, we outgrew the garage. Muñoz moved the operation to commercial space in an industrial park in San Diego, which was nearer the low-cost labor center of Tijuana. In came real automated manufacturing tools: first a small pick-and-place machine, then a bigger one, and finally an even bigger one with automated component feeders. The toaster oven gave way to a proper automated reflow oven with a nitrogen cooling system for perfect temperature control. And for that we needed a nitrogen generator, of course. And so it went, with more and more professional tools, which Muñoz and his team learned to use by finding tutorials on the Web. By this time we had outgrown the first space and expanded to a bigger space next door. Then we outgrew that, too, and today 3D Robotics has a factory that sprawls over twelve thousand square feet and a second one of nearly the same size in Tijuana. The facilities are buzzing with robotic assembly machines run by factory workers, and teams of engineers developing new products. Pick-and-place robots build circuit boards, which are baked in automated reflow ovens temperature-regulated by a nitrogen generator. Laser cutters, 3-D printers, and CNC machines make quadcopter parts. These are real factories now, just three years after Muñoz started hand-assembling boards on his kitchen table with a soldering iron. From Maker to millions In our first year, we did about $250,000 in revenue; by 2011, our third year, we had broken $3 million. In 2012 we’re on track to break $5 million in revenues. Growth continues at about 75 to 100 percent per year, which is common for open-source hardware companies like ours. We’ve been profitable from the first year (it’s actually not that hard in the hardware business—just charge more than your costs!), but try to reinvest as much of the profits as possible into building new factory lines. Because we’re online, we’re global from the start and tend to grow more quickly than traditional manufacturing companies because of the network effects of online word of mouth. But because we’re making hardware, which costs money and takes time to make, we don’t show the hockey-stick exponential growth curve of the hottest Web companies. So, as a business, we’re a hybrid: the simple business model and cash-flow advantages of traditional manufacturing, with the marketing and reach advantages of a Web company. We’re still a small business, but the difference between our kind of small business and the dry cleaners and corner shops that make up the majority of micro-enterprise in the country is that we’re Web-centric and global. We’re competing in the international market from day one." Makers: The New Industrial Revolution by Chris Anderson This is just a great book, reading in parts so can stop and think about what I am learning. This is a great example of why social networks have so much power.
D "I set up DIYDrones.com as a social network (on the Ning platform), not as a blog (so 2004!). That distinction—a site created as a community, not a one-man news and information site like a blog—turned out to make all the difference. Like all good social networks, every participant, not just the creator, has access to the full range of authoring tools: along with the usual commenting, they can compose their own blog posts, start discussions, upload videos and pictures, and create profile pages and send messages to one another. Community members can be made moderators, to encourage good behavior and discourage bad. What this meant was that the site wasn’t just about me or my ideas. Instead, it was about anyone who chose to participate. And right from the start, that was almost everyone. The site was soon full of people trading ideas and reports of their own projects and research." Makers: The New Industrial Revolution by Chris Anderson Check out the website mentioned. http://diydrones.com/ |
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