Nau company

Ana Innovating for Social Consciousness By Alex Claws Can a for- dough enterprise watch if its main substructure is valuing social consciousness as often whiles as shareholder returns? The question is particularly relevant in a meter of high gas prices and a growing find that our current exercise of natural resources is simply un go on qualified. The founders of Ana, a fledgling retail prohibitederwear corporation, believed the react to this question to be a resounding mimes. Built with an unprecedented take of environmental, social, and human-rights unconsciousness, by April 2008 Ana was an underground success on the West Coast, opening cardinal stick ins and a website selling critically acclaimed dress collections. Then, at the beginning of May, Nans advance of managers voted to shut down the political party. Viewed finished keennesss lenses, Nans promise becomes clear-?a foresightful with the perils that led to its downfall. Ana had a reason equal phone line mod el built somewhat a well-defined line of vocation-to-be-done. still if as exit become clear, Ana didnt follow an emergent strategy.And Nans vigilance discovered that a railway line model that looks good on radical doesnt al personal manners trans new-fangled into immediate profits. Ultimately, a lack of wakeful action and a push for quick expansion doomed Nans first incarnation. except the story of Ana is still unfolding. Ana 2. 0 is currently underway, and that venture appears to cook a better chance of success. The Launch Ana (Maori for welcome) began with the dream of Eric Reynolds, an outdoor enthusiast entrepreneur, co-founder (in 1974) of outerwear betray Marmot, and subscriber to the belief that a single person gage get under ones skin an impact on the world.In the summer of 2003, Reynolds conceived of Ana, a sustainable array company that would donate a of import portion of its tax income to nonprofit organizations. Specifically, Reynolds envisioned cus tomers presented with a unique question at point-of-sale To which organization should my tail fin share go? By giving five share of its tax to nonprofits, Ana would break rising ground. (For comparison, the approximately generous corporations give extraneous one percentageageage of r steadyue, with the average corporation giving less than . 05 percent. ) In the summer of 2004, Reynolds began recruiting a heed team up.In 2005, he hired a payoff of individuals away from Patagonia, a upstanding comm and considered a leader in outerwear, social consciousness, ND charitable giving. Chris Van Dyke (son of actor dig Van Dyke), an ex-Nikkei employee 1 and ex-Patagonia vice president of branding and marketing, was hired as CEO. Mark Calibrating, a prospered Patagonia designer, Joined Ana as lead designer. Patagonians director of marketing, Ian Yells, Joined as vice president of marketing. Nans inscription to sustainability framed the constraints in spite of appearance which Calibrating worked as he designed Nans habiliment collection.Calibrating avoided any materials that werent re unfermentedable or recyclable small-arm seeking a balance betwixt performance, sustainability, and style. As a result, n otherwise(a) all of the 30 fabrics utilized in Nans robes collection were custom materials surfaceed specifically for Ana. The fabrics -?made from corn, recycled plastic bottles, cytosine percent organic wool, and recycled synthetics-?set a sore standard for sustainability. Nans enclothe creation process led to a round of innovations, including the elimination of solvent-based adhesives.The efforts of Calibrating and his team were rewarded-?Nans first collection received critical praise from much(prenominal) disparate sources as Mens Vogue and Rock and Ice magazines. One downside The fabric choices greatly constrained the range of colors possible, resulting in just almostly sulky hues. Nans custom fabrics also call for that customers pay a substantial agio for their clothing, just now Nans management team did non see this as a problem for its target customer segments the affluent multidimensional outdoor athlete, the innovative activist, and creative. The Ana team expected that their customers keepion for sustainability would overcome any price resistance. Nans loading to sustainability was enforced as carefully in its shop classs as in its clothing. The company eschewed traditional 4,000-square-foot retail injects for a 2,000-square-foot Webfoot concept. The store spaces were long and narrow, designed purposefully with ricocheted space for inventory that would be restocked twice weekly. Ana also widened customers a 10 percent discount and vacate s pelvic girdleping if they were pull up stakesing to discover clothing in the store, and then purchase it online.Assembled from a modular, prefabricated design, each store featured energy-saving lighting and leveraged materials much(prenominal) as reclaimed t imber, toxin-free fiberboard, and recycled resin (for mannequins). Customers were offered a choice of 12 carefully selected environmental, social, and humanitarian nonprofit organizations, and five percent of the purchase price was donated to the chosen group. Nans time take to bes extended to its trustworthy kingdom leasing strategy as well-?Ana only leased store space that was LED-certified (LED support indicates environmental- and health-consciousness standards).The company also set a minimum age limit for the workers at its overseas material suppliers. Nans principles included the constraint that the highest-paid worker at bottom the company could only earn a maximum of 12 mimes the lowest-paid employees salary. Finally, Ana did non invest in marketing or public relations beyond a series of websites, choosing instead to rely on word-of- mouth, a more sustainable form of marketing in the eyes of Yells and his team. time Ana managed to be unco consistent in the infusion of its look upons into its processes, one of the key factors in its withaltual downfall was that the company had a difficult time securing financing. At least one investors legal counsel balked at a consider clause that nonplusd the expects of society equal to the needs of shareholders, but Ana held firm. 2 Nans origin plan called for it to earn more than $250 million in revenue in 2010 and to achieve profitability in 2009 or 2010, figures based on opening four stores in 2007, 20 stores in 2008, and 150 stores by 2010.To build the necessary momentum toward these goals, Ana needed at least $51 million in financing. By the end of 2006, Ana had raised $24 million, by and large from super angels, individual investors who included the chairman of Seagate Technology, Steve Lucid, and Stephen Gomez, Nans chairman and a former Nikkei corporate vice president. Despite the fact that Ana had only reached half of its funding goal, the first Ana store penned in Boulder, Colorado, in Janu ary 2007, with three more successful store openings following during the year in Adulating, Oregon Chicago and Bellevue, Washington.Ana finish its first year of operation in 2007 with 92 employees, four clothing collections, and four stores. In March 2008, Ana donated $223,000 to its 12 nonprofit organizations, implying 2007 sales of around $4. 5 million. In mid-April, Ana opened its fifth store in Los Angels. In late April 2008, despite raising an additional $10 million in funding, Ana announced that it would scale sustain its store- peeing plans to a total of five in 2008, down from an already-reduced projection of 10.Finally, on May 1, Nans board of directors voted to current of air down its business operations, citing insurmountable pecuniary obstacles. All inventory was liquidated at 50 percent off and the stores were closed. Post-mortem interviews with Nans executives suggest that the company was approximately $5 million to $10 million short of the funds needed to sustain its operations and open additional stores towards its goal of profitability.In the days following the decision, some customers commented on Nans blob, expressing sadness, frustration, and anger and questioning why Ana had failed. Ana The Post-Mortem Looking at Ana by brain waves business model innovation framework and a number of Insight lenses offers insight into how Ana developed such a devoted following as well as how the management team might have been able to ensure a brighter future for their company. Insight believes that business model innovation is one of the most powerful ways for organizations to achieve impertinently growth.By carefully adjusting business model components-?the customer value pro sit (the offering itself), the profit system (how the company raises value for itself), key resources (the critical things required to acquit on the value proposition), and key processes (how the company organizes and acts to deliver on the value proposition) -?organizatio ns brook build the type of competitive advantage necessary to create truly transformation growth. Nans business model looked good-?on paper, at least.But Nans hot push for profits made it hard to really validate whether the business model would in fact work, and shut all opportunities for learning. Ana pulled the customer value proposition lever expertly. The company created potently positive solutions to a number of emotional, social, and functional Jobs-to- be-done. The sustainability of Nans operations and products set a cutting standard of gratification for the emotional Job Feel good about 3 the environmental and social consciousness of my clothing. Nans clothing also satisfied the social Job Convey to opposites that I prioritize the sustainability of my clothing over its color and flash. And, as lauded by Rock and Ice magazine, Nans clothing also satisfied uncounted functional Jobs related to comfort and technical performance. Since its sustainable materials carried up t o a 20-percent price subsidy over more commercially in stock(predicate) materials, Ana had to pass the premium along to customers.But Nans management team was correct in presume that the high persona and the redeeming social and environmental value of its clothing Justified that premium in the eyes of customers -?as long as the economy was robust enough that sufficient customers could afford it. And Ana broke new ground with its Webfoot stores by implementing a retail business model that required lower capital and operational expenditures than a traditional retail store model. But there was a signifi gitt downside to Nans profit-system choices.Insight recommends that new ventures be enduring for growth, impatient for profit. Nans management expected the company to have 150 stores in operation by 2010, but did not expect profitability until 2009 at the earliest. Growth was thus essential to profitability, creating a significant risk of trouble if the company could not reach it s early-stage funding goals. Insight also recommends that new ventures pursue an emergent strategy, to take small steps by conducting two-a-penny tests of its key assumptions about the new racket.When the test results are in, the venture can analyze the results, adjust its strategy accordingly, and then conduct additional tests. This careful approach helps new ventures optimize for success succession avoiding huge, potentially mortal resource commitments. In Nans case, an emergent strategy might have enabled the firm to consume its funding more slowly while developing an best strategy. Instead, the team decided to go straight to launching full Webfoots previous than testing the clothing line in a department store or opening a single, test-store concept.The root cause for the failure of Ana 1. 0 seems to have been that Nans business strategy and some of its business model decisions turn out questionable. By following a more careful, emergent strategy and by focusing on profita bility before growth, Nans executives might have been able to strike a better balance amongst vision and execution. Ana 2. 0 On June 24, 2008, Nans fortunes turned around. steamy Toad Activities, a Santa Barbara-based lifestyle clothing company, stepped in to buy Nans assets with the goal of re-launching a modified version of Ana by late summer. term Ana 2. Is gust beginning to emerge, early signs suggest that the re-launch exit follow a strategy more closely aligned to that which Insight would recommend for success. Horny Toad creates and sells mens and womens lifestyle and outerwear clothing. Horny Toads tagging, every day is an adventure, introduces a humorous, irreverent, socially-conscious approach that lies at the core of everything the company does. Indeed, Horny Toad and Ana have much in common. Horny Toads give tongue to commitment to lightening its environmental footprint and to 4 documentation both the community and organizations that improve the world immediately s uggest synergies.Much as Ana showcased the organizations chosen for customer contributions, the Horny Toad website highlights its support for causes ranging from helping adults with developmental disabilities to supporting clean energy, with a wide range of other environmental and community-activist organizations in between. However, in contrast to Nans commitment to sell its clothing solely finished a growing number of its own stores, Horny Toad has only two stores and sells its clothing in a wide variety of online and brick-and-mortar retailers. In addition to a store inFreeport, Maine, Horny Toad runs the lounge lizard sofa in Portland, Oregon, complete with unison, wireless access, coffee, and ping-pong. Horny Toad clothing has been lauded for its hip funkiness by print publications and blobs alike. Recognizing the similarities between Ana and Horny Toad, Horny Toad snarl that it would support its motto do well by doing good by purchasing Nans assets and hiring its leadersh ip to help re-launch the clothing line. In addition to providing financial support, Horny Toad will sell Ana clothing in the Lizard Lounge and, in a break from Nans original treated, through other retailers as well.And, with Horny Toads support, a percentage of Ana sales will cover up to go to worthy non-profits. According to Nans Thought Kitchen blob, shortly after the kin was finalized Ana leadership began working to resurrect relationships with company partners and to jell together a Fall/Holiday clothing collection in time for October availability. While the Ana clothing line will continue to deliver on the Beauty, Performance, and Sustainability commitment through the use of environmentally friendly and socially conscious trials and methods, a quote from Nans website gets to the heart of why Ana 2. May very well survive while 1. 0 failed As we move forward with the re-launch of Ana, youll definitely blemish us, but we intend to do some things differently Were going away to arrest small and grow the business organically in relationship to the exact for our product. Well continue to sell our product at Ana. Com, but were also going to partner with select retailers who share our common goals. We will not be operating our own retail stores, at least not in the near term So stay tuned. Were coming back. Smaller and a little wiser, our ambitions tempered a bit by the experience, but our passions most definitely intact. Ana 2. Gs strategy will most credibly enable the brand to focus more closely on identifying the product, marketing, and channel mix that appeals most to customers, without worrying about the pressures of rapid expansion. Particularly in a new venture, vision and passion tempered by patience and pragmatism is the way to go. This approach is also particularly appropriate in these tough economic times. Satisfying social and emotional Jobs-to-be-done around environmental friendliness ND social consciousness whitethorn be enough to earn signi ficant premiums for clothing in a strong economy.However, during an economic downturn, financial humans frequently wins out as consumers prioritize value over the comfort of some social and emotional Jobs. 5 For example, since the economy began to sour, Whole Foods marketplace has seen some of its consumers move their food spending to more budget-friendly alternatives. Whole Foods has responded by shifting its marketing strategy from a focus on quality and environmental friendliness to an emphasis on discounts, store brands, and reduce value as it attempts to keep its customers.Even if Ana 1. 0 had received enough funding earlier in 2008 to continue operations, economic conditions would likely have pushed the enterprise to the break point, as has happened with many other fledgling clothing boutiques. When Ana 1. 0 launched, its management team made an impressive commitment to the companys values, taking steps such as tracing the wool use in its clothing back to the sheep to ensu re that they were well-treated and implementing a sustainable word-of-mouth marketing strategy.To launch the new Ana, it is clear that the team as had to compromise on some of its values, such as the control provided by company-owned storefronts, a grassroots-only marketing effort, and potentially the level of contribution to nonprofits. In the end, however, the Ana 2. 0 strategy, with the help of Horny Toad, may be the key to enabling the companys sustainable operation. Making their operations as sustainable as their values will help ensure that Ana is able to be a force for good in the world for a long time to come. For more randomness http//www. Ana. Com/coming-this-fall. HTML (Accessed 8/29/08, 1 41 pm) http// www. Gibbousness. Com/CGI-bin/magma/article. Pl? Articled=30412 http// gratifiers. Com/content/fullest/? Acid=50781 6 Innovators Insight In Need of an Innovation Fill-up By Stephen Hunker Recent news that Consulships will be selling all 600 of its U. S. Service stations f or $800 million comes as little surprise. Oil companies are facing extraordinarily attractive investiture opportunities in exploration and production, and the expediency station business has been tightly squeezed between rising wholesale costs, inability to pass along those cost increases, and locomote rent as driving declines.Clearly the stations buyer-?closely held Peterson burn-?sees it differently. We do too. In our view, Peterson Fuel is buying cheap assets with lots of innovation headroom. While stick to your plain stitch is a popular business maxim, it is of course common to find diversify businesses. There are several reasons diversification can make sense If the new business can share costs and customers with the core business-? in this case, owning both enterprises can provide scale economies, improve distribution, create a better buying experience, and other advantages.This is why many European parameters have armed advantage stations outside their doors, for ex ample. If the new business provides a useable hedge against a core with volatile returns but a need for consistent investment. This explains why many pharmaceutical firms own over-the-counter consumer health care brands. By diversifying, a firm can hold on to a seemingly unrelated business because it sees substantial headroom for growth and a right to triumph in that arena. This is one reason News commode bought Namespace. Historically, oil companies owned attend stations for each of these reasons.The end nonuser drove demand, and having direct access to that consumer allowed firms to exercise some control over demand levels while also gaining precise information about what products were demanded where. Profits from service stations could offset volatility in exploration and production. Also, the advent of thingamajig stores at service stations created a new high-margin business. Each of these Justifications for consolidation now seems threatened by changes such as improved information technology, more efficient capital markets, and communication of the service station experience.With supermarket-owned service stations now coming to the United States, oil companies face new competitors who may even sell gasoline at a departure in order to drive traffic into their stores. In the I-J, pressure from supermarkets is a factor leading to the net closure of 600 service stations per year. The service station business is feeling much less attractive than it used to. So, what might Peterson Fuel be thinking? We imagine two major(ip)(ip) Justifications for the investment. First, if oil prices decline, the profit margins on service stations may rise, and Peterson will have bought valuable assets for a song.Second, there may be much more innovation headroom in this business than oil companies have traditionally assumed. For instance, Fullness Media International offers local news, weather, and sports on screens at pumps at a few hundred stations. Fullness pays th e retailer and shows ads to this highly intent audience. Shell is experimenting with fuel pumps that are activated simply by a swipe of a fingerprint. Dutch inventors have created a robotic arm that finds a cars fuel cap, unscrews it, and automatically pumps gas. Regional fuel retailer Sheets differentiates itself through premium coffee and made- o-order sandwiches.Another retailer, Valier, is piloting 5,000-square-foot convenience stores with fully nonwhite of the space dedicated to saucily food and other perishables. Oil companies would be well-served by thinking through how well the jobs of their customers are getting done, and whether they can De-commoditized the service station business through new propositions or re-definition of the competitive set. Looking through this lens, we can imagine how a mother could prefer a certain service station because it offers very fast, targeted entertainment for bored children n the back seat, or how a senior might prefer one with very br ight lit displays.The advent of electric- and fuel-cell-powered vehicles opens further possibilities for using service station real estate in new ways. Look at how Best bargain reconciled what an electronics retailer could be, and how it escaped sedulousness communication in the process. While Wall-Mart and others cut prices ruthlessly, Best Buy rolled out Geek Squad-?a service tightly integrated with its retailing business that addressed a wide swath of unsatisfied Jobs its customers faced post-sale. It also became a place to try new videotapes. The store is even trying to become a hub for medicationians buying electric guitars and other gear.In the process, the company increased revenue 92 percent over five years, almost entirely through internally generated growth. It turned out that electronics retailing wasnt a commodity business at all. Sometimes a pawl business is Just a dog business. MM spun off its floppy disk and magnetic tape business in 1996, and that turned out to b e a smart move. But we find it hard to believe that there is little room for economic innovation in a retail business that hundreds of millions consumers have to realize on a regular basis.When the finance people come knocking, looking to sell downtrodden assets and invest the proceeds in high-flying businesses, lock the doors for a bit. The business may indeed have few prospects. On the other hand, it may support the core business in many oblique but important ways, and it may have far more innovation headroom left to exploit. Consulships Will Sell Its Company-owned Service Stations, by Brett Clayton, Houston Chronicle, noble-minded 27, 2008 (http//www. Chronic. Com/disk/story. Ml/business/energy/5969574. HTML) 8 Finding the cover Job for your Product, by Clayton Christensen, Scott Anthony, Gerald Brewster and Denies Meetinghouse, Sloan Management Review, Spring 2007 (http//www. Insight. Com/innovation_resources/research. HTML? Id=167) 9 Innovators Update A Good Start for vira go vitamin A viragos digital music store keeps sailing on the winds of industry changes Insight 98 from October 2007, Handicapping amazons Low-Cost Music Store, suggested that amazon might find the results of its then freshly launched music download store disappointing. What has happened since?By Renee Hopkins Callahan When Amazon launched its Amazon AMP online music download store in September 007, we were skeptical. At the time, orchard apple tree had sold more than 100 million pods and tunes had a lock on the online music market. Amazon AMP planned to sell music free of Digital Rights Management (DORM) protection-?a limited supply, since at the time only one of the four major music labels had agreed to make its music ready(prenominal) without DORM protection. Amazon AMP seemed unlikely to succeed with a business model focused on undercutting tunes on price, selling songs for 89 cents instead of 99 cents.We were right that the low-cost strategy would not put much of a dent in the popularity of Tunes. Yet circumstances in the year since its launch have helped Amazon refine its strategy and offer a preview of possible success. According to NYPD Group research released in late July, tunes remains on top of the music retail pack. It is the largest music retailer in the world and it sells at least 90 percent of digital downloads in the U. S. However, the same research showed that Amazon AMP has braggart(a) to be the fourth-largest retailer of music in the U. S. , behind tunes, Walter, and Best Buy.That puts Amazon AMP in second place for online music download sales. And while heres still a huge gap in volume between tunes and Amazon AMP-?with Amazons share of the market in single digits-?Amazon is in the game. However, Amazon hasnt accomplished that by stealing tunes customers. Russ Cropping, an entertainment industry psychoanalyst for NYPD, said in an April 2008 report that only about 10 percent of Amazon AMP customers used to be tunes users, with the othe r 90 percent likely to be people who had been using other services or were new to digital downloading.Amazon AMP attracts young adults age 18 to 25, while tunes strongest demographic is teens age 13 to 17, another April 2008 study said. Amazon has likely benefited from winds of change blowing in the music industry. A number of analysts have speculated that the industry sees Amazon as an ally in an effort to break Apples authorisation in digital music. It would seem counterintuitive that the music industry would loss to bypass its richest retail channel. But some of Apples practices cut profits for the major labels.In late August, the Wall Street Journal reported on a growing trend in the music business labels deliberately deny some of their music from tunes. The article cites several cases in which albums were either not made available on Tunes or were pulled. Why? While consumers potently prefer purchasing music by song, music label executives, managers and even some artists di slike the tunes policy that requires that music be made available by the song as well 10 as by the album, because profit margins for single-song sales arent nearly as good as the margins for album sales.Meanwhile, Amazon AMP lets labels sell music the way they want to. If a label wishes to make an artists work available only by the album, Amazon AMP allows it. Some of the music that the labels have been withholding from tunes is ending up on Amazon AMP. The DORM issue has worked to Amazons benefit as well. Apples tunes has historically sold Deteriorated downloads. Such encoding means that songs downloaded on tunes cannot be contend on other AMP devices. Apple has worked to persuade the major labels to stray DORM, though it still seeks to keep tunes the only source of song downloads for the pod.At the time that Amazon AMP launched, only MIME, one of the four major music labels, had announced it would drop DORM protection on its music. By early January 2008, a few months after Amazo n AMP launched, the three other major labels-universal Music Group, Warner Music Group, and Sony BMW- dropped DORM. That meant their music could be made available on Amazon AMP, which does not use DORM, and which features free software that delivers a customers AMP file directly to their tunes library.Meanwhile, according to a May 30 Macdonald magazine story, Sony, Universal, and Warner continue to withhold the unencumbered tracks from Apple, choosing instead to back tuners rivals. Amazon may have more surprises up its virtual sleeve. In late July, Fortune magazine reported that Amazon was in talks with Namespace about becoming the social networking giants download store partner hen it rolls out its highly anticipated Joint venture with Universal, Warner Music and Sony BMW in September.If the care goes through, it puts Amazon in a good position to continue pungent at Apples heels. According to the Fortune report, Namespace plans to let its 120 million users pour entire songs bef ore downloading them. That potentially changes the convenience trade-off for the Namespace customers in Amazons favor, because they would be able to buy a song and get it into their computers music manager, even tunes, with one click using Amazons software. Those who wanted to use tunes would have to ply Namespace and physically go to Tunes to accomplish the same end.Clearly, we underestimated the desire of other companies to develop a reasonable Number Two to Apple, a position that Amazon AMP seems to have grown into in the last year. If Amazon can figure out more ways to capitalize on its toehold position in the digital music business,