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On November 19, 2016, qwerty commented on Going Once… Going Twice… Sold to Technology! :

Thanks for your post! It’s so interesting that Sotheby’s is choosing to go digital in so many different ways. As you point out, it was almost a necessity given the competitive landscape, but I wonder how their traditional clientele has reacted. Offering online perusal of art, for example, gives many more people access. Presumably traditional customers valued the sense of exclusivity they gained from participating in a Sotheby’s event. Have there been any demographic shifts in the clientele since Sotheby’s initiated its digital innovations? Did the new digital channels lead to increased sales, either in volume or in price? The partnership with eBay seems particularly risky to me in terms of brand equity. Looking back, did the upside outweigh the risks?

On November 19, 2016, qwerty commented on Nordstrom: Balancing Bricks with Clicks :

Thanks for your post! Nordstrom’s e-Commerce CAGR seems quite impressive, but how does that compare to the industry average? Do you think that this growth is more reflective of Nordstrom’s approach, or of the general shift to online purchasing? I also wonder in the long-run what this shift means for Nordstrom and its famous customer service. I love that they are using Pinterest to influence their purchasing decisions–does the company also use data analytics to determine what types of social media posts it pushes to specific users? Like Shreya, I’m excited to see how they might use this information to influence customers’ in-store experience as well–could Nordstrom start to track customer traffic patterns through their stores through mobile phones logged in to their internet? Are there other ways that digital tech might change our brick-and-mortar shopping experience?

Thanks for your post! Netflix’s use of data to outbid competing networks for show rights is fascinating–what a leg up to have! I wonder, though, how Netflix’s use of data to determine what shows to produce will affect the industry more broadly. In the past, knowledgable industry leaders could actually serve as progressive forces to move society forward by taking big bets on new ideas of what society would accept (silly example: in 1967, the same year that the Supreme Court legalized interracial marriage, there was a interracial kiss on Star Trek). HBO’s Six Feet Under featured an interracial homosexual couple in 2001, well before the Supreme Court legalized gay marriage. I have to believe that such inclusion pushes society forward, and the tech-fearful, artist-supporting part of me wonders if using data on past preferences to determine future production will inhibit the representation of new ideas or broader societal trends. TV can be a powerful force for normalizing “new” behavior. But using analytics, will we ultimately end up seeing more of the same tv, or will Netflix be able to use past preference data in creative ways? Will we be getting TV that we like more, but that challenges us less?

On November 19, 2016, qwerty commented on Progressive: The digitization drag race in car insurance :

As you noted, one challenge Progressive will face as it moves forward will be the ability to transform massive amounts of data (both that which is collects through Snapshot, as well as that which it can scrape from other sources) into actionable insight. Doing so will require a very different kind of employee than it has traditionally hired. Insurance companies will now have to compete with a whole host of new companies (big tech, etc.) to attract talent. As it has built up Snapshot, how has Progressive addressed the talent gap? I would be curious to know how it markets its own employment opportunities vis-a-vis its competition in tech, and if this competition has changed anything within Progressive’s own operations.

I really like your idea of data privacy as an opportunity for differentiation for Progressive, as well. As a consumer, I certainly hope that insurance companies will compete in this regard, rather than using collected data as a profit-generating mechanism. Data privacy policies are going to be something that we as consumers need to become increasingly aware and critical of!

On November 19, 2016, qwerty commented on Fishing for Fish Data: Digitizing Aquaculture :

This was fascinating, Jina. I’m curious about the relatives costs and potential upside of this technology. Is the price differential between farmed and drifter pod-raised fish large enough to make this project worthwhile for a first-mover? Or, given that Lockheed Martin was a partner, was it developed with potential other applications beyond the fish industry in mind? Do you have any sense of the competition’s response to this–is this popular in the fish market?

Not related to digitization, but out of personal curiosity: you seemed careful to refer only to “perceived” quality differences between farmed and wild-caught fish. As a fish consumer, I know that I feel as though I perceive a difference in taste between the two. Are there any differences in actual nutritional quality between the farmed and wild-caught fish, or has there been any research into other quality differences? Or is this difference something that can be tackled through marketing? Will marketing their fish as “pod-raised” affect consumer preferences for Kampachi’s products?

On November 5, 2016, qwerty commented on IT’S TIME TO PLAY BY THE RULES :

Thanks for this interesting take on an industry leader who seems to be falling behind in sustainability goals. What strikes me most about the opportunities for Mattel is the relatively easy opportunity for it to “sell” sustainable practices to the consumer in the form of higher prices. This is partly a function of their products: for many people in the U.S., at least, the Barbie doll is practically the definition of toys for young girls. Therefore, I can only assume that the demand for Barbie dolls is fairly price inelastic.

But customer demand aside, Mattel has such an easy marketing win if it works to promote sustainable practices now. As we have seen in Marketing, the easiest wins that galvanize even really diverse groups of people behind your product are those that emphasize building a better future for children (think Dove, or the Hillary Clinton commercial “Role Models”). Mattel could so easily market slightly more expensive, sustainably manufactured products as not only being good for your children now, but also good for their future. They are especially in danger if Lego, who as you note is ahead in adopting circular economy practices, starts to do this first. Combining the marketshare imperative with the economic regulatory environment that is mandating adoption of circular economy models, it seems like many incentives are aligning to have Mattel update their practices. What do you think has held them back so far? What would it take to get them to address this in a proactive manner?

Like you, I’m also very skeptical of Uber’s claim that UberPOOL is an environmentally-friendly mode of transportation. As always, the key when making a statement like that is the “compared to what.” I’m surprised that the California study you reference only found that 8% of users were switching to rides because of an app. I think the study makes an important distinction, however, that while 92% of users would have made the trip anyway, 43% would have done so by public transit, walking or biking had the app not been available. I think this is really the danger of UberPOOL–not that it gets people to take more trips, but that is encourages switching from more environmentally friendly modes of transportation to more convenient, carbon-heavy ones.

Uber itself is also operating under competing incentives. Right now, it is so concerned with limiting the marketshare of its competitors that it, as you pointed out, offers subsidies both for consumers and for its drivers. Uber is incentivized to have as many drivers as possible–this means having drivers ready to go even if they are driving around the city idle, creating carbon emissions for no reason. Uber is also incentivized to make its services more attractive for customers, driving down its prices through temporary promotions and making switching from public transit to Uber even more attractive. I look forward to further studies in more areas outside of San Francisco on Uber consumers and how they construe their transportation alternatives. My strong suspicion is that across the board, and particularly among asset-light millennials, Uber is not causing people to switch from driving their own cars to taking shared cars, but rather causing people to switch from public transit to shared cars. If this happens en masse and begins to affect the margins of public transit, it could have ripple effect throughout the transportation market and leave the sector in an even more carbon-heavy state than it is today. With great power comes great responsibility! I hope Uber will begin to take its environmental impact more seriously and price to reflect its real effect on the environment.

Thanks for your post! This is such an interesting example to think about, since, as you so clearly laid out, so many aspects of Inditex/Zara’s business model run directly counter to sustainable practices. It reminded me of our class discussion about IKEA–what stance should a company take on sustainability when its very design encourages consumers to discard and repurchase products frequently rather than hold them for a long period of time? I wonder if the mix of “self,” “social,” and “sacrifice” consumers identified in the McNeill and Moore article will shift over time. But to what extent should Inditex respond to shifting consumer preferences, and to what extent should it actually try to drive them?

The changes Inditex has made so far to make its stores and distribution centers more efficient are great, and provide the company with economic benefit in addition to the public good of more sustainable production. But I agree with your skepticism that Inditex will actually be willing to make changes that affect some of its current core value proposition. Do you think that by now, Zara has a powerful enough role in the market to actually shift consumer behavior to emphasize “sacrifice” over “self”? If they use their reputation and global reach to do this, this could be a major contribution to the global fight against climate change.

On November 5, 2016, JE commented on Chocolate Endangered :

Thanks for your post! This is a really interesting example of competitors coming together to address a challenge, rather than simply resign themselves to mutually assured destruction. As Lindt & Sprüngli work together with their competitors to teach sustainable farming practices to the very fragmented cocoa production market, do you think that this will reveal opportunities for consolidation of small farms? That is, I wonder if some of the sustainable practices may necessitate increased cooperation among fairly independent small farmers in order to implement (if some require significant capital investment, for example, or increased monitoring and control of shared resources like water for irrigation).

I’m also curious as to how the big chocolate players will evaluate the success of their partnership. The challenges they face seem to be quite similar to those of the coffee industry, which, according to another blog post, seems to be addressing the problem on a firm-by-firm basis thus far. Coffee and cocoa are grown in similar regions–I wonder if there might even be cross-industry partnership potential to teach sustainable farming practices in a way that leverages the resources and knowledge of even more large firms without the shadow of competition. In any case, it is heartening to see the big chocolate firms at least attempt to set aside their identity as competitors to work together to solve this problem. Hopefully they will be able to report good results soon!

Thanks for your post! It’s really exciting to hear about Starbucks working now to tackle challenges that will come into play over the next few decades. Their attempts to develop strains of coffee plants that are more resilient in the face of changing climate and pest conditions are really interesting, but make me worried about potential backlash from consumers and regulators who are fearful of genetic modification of food. I know that developing a new strain doesn’t necessarily imply genetic modification–it can encompass everything from Gregor Mendel to, as you mentioned, Indigo Agriculture. But would this be an option for Starbucks? To what extent will large, multi-national food and beverage companies take on policy advocacy roles to normalize the concept of genetically modified food?

I also wonder about the effects of competition among Starbucks and other large coffee purchasers (Lavazza, Illy, etc.). Would it be possible for firms to collaborate and pool resources to address the effects of climate change on their crops, or will they continue to pursue individual solutions? If Starbucks is helping its farmers by giving them access to Coffee Leaf Rust resistant seedlings, it seems likely that these farmers could share later seeds with their community. Depending on how discretely organized farming communities are as suppliers, this could mean that the resistant seedlings Starbucks develops end up benefitting their competition. I wonder how Starbucks accounts for this as they think about their strain development costs.

Thanks for your post! Time to go drink another cup of coffee, while I still can…