Point: Develop new products and services by applying innovative analytics to unused data.

Story: Three companies presenting at Techstars Demo Day last week illustrate a category of innovation that is based on new uses of data. First, Retel Technologies is a new company that helps retailers understand patterns of behavior at store locations. Many retailers have security cameras on site, but they rarely look at the data generated by those cameras because of the sheer volume of data. The raw data is typically viewed only in the event of a robbery. Retel, however, developed a cost-effective human-aided video data analysis service that extracts workplace performance analytics from all that unused video footage. For example, the system can help spot problems such as dirty tables at fast-food locations, employee theft, and capacity bottlenecks (such as a shortage of  cashiers during certain hours). Retel provides its clients monthly reports to help managers see trends, behaviors, and time-of-day patterns that can help them better manage their stores.

Second, a new company named Next Big Sound uses the realtime flow of events in social media to help band managers. The music industry is undergoing big changes, but sales of concert tickets are the highest they’ve been in ten years, and people are buying more music than ever. Giving band managers data can help them make better decisions. For example, real-time data from Twitter can be captured and analyzed to show who’s talking about which band and where they are — data that can provide great insight into a band’s fan base. Next Big Sound collects a host of both social media and web data to provide real-time marketing analytics that bands can use in variety of ways. For example, band managers can use the data to pinpoint the demographics of fans, scout new concert locations, and improve online ad placement. They can even suggest that a band mention people or events in the local area or give a shout-out to high-profile fans at a concert.

Third, Mailana is a company that uses communications analytics to help people leverage their social connections. These days, people are inundated by connections to other people. It’s not hard to have hundreds or thousands of connections in the form of entries in e-mail address books, friends on Facebook, colleagues on LinkedIn, and followers on Twitter. But who among the hoard of connections are the true trusted friends that one can really count on Mailana uses data on frequency and patterns of communication to automatically identify a person’s inner circle of most-trusted friends. Furthermore, Mailana helps people merge inner circles — a good trusted friend or a good trusted friend is far more valuable than a casual forgotten connection to another causal forgotten connection. Mailana helps people build and use the high-value core of their social graph.

In each of the three companies, innovative use of data provides new value.

Action:

• Inventory the data sources around you, your company, and industry
• Consider the potential analytic value of the data — what you might learn from that data? (or what might you learn more quickly?)
• Leverage low-cost computing and workflow technologies to extract new and actionable knowledge

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Tags: analytics, Case study, connections, data, entrepreneur, Innovation, music industry, publicly-available data, retail, Social Media, startups

Point: Use friction to your advantage

Story: McGuckin Hardware is a family-owned store in Boulder, Colorado, long known to any do-it-yourselfer as the place to go for supplies. The store has knowledgeable, friendly staff, many of whom have worked at the store for years over its 54-year history.

A few years ago, Home Depot opened a store in Boulder, with twice the space, offering lower prices. Can McGuckin’s survive against giant Home Depot? Or will it become another mom-&-pop store shuttered by behemoth retailers with economies of scale in supply chain and large marketing budgets?

According to recent research by Wharton’s Olivier Chatain INSEAD’s Peter Zemsky, McGuckins has a good shot at success due to a concept that Chatain and Zemsky call “friction.” As they define it, a friction is any force that makes it difficult for buyers and sellers to connect. For example, a poor location is a friction if it makes it harder for customers to get to the store. A complex website or a confusing store layout is a friction if it’s hard for customers to find the products they want to buy.

Smaller companies can out-compete giants by exploiting frictions. For example, McGuckin’s can use its loyal, knowledgeable staff to help customers quickly find what they need or give them sound advice if they’re embarking on a new project or product purchase. Long-time loyal employees are more likely to go the extra mile to help a customer. McGuckin’s loyal staff also know the local area, so they know which paints withstand Colorado’s intense sun and which garden plants thrive in the local climate. McGuckin’s local knowledge reduces its distance to its customers, which reduces friction.

Action:

• Document the time, costs, knowledge, hassles that customers face in finding your business, buying from you, or using your products
• Compare the frictions in your business or products with those of your competitors
• Adjust or redesign your business to minimize your friction
• Emphasize your low friction in your marketing and advertising

For more information:

Olivier Chatain and Peter Zemsky, Value Creation and Value Capture with Frictions

How a Little ‘Friction’ Can Change a Competitive Landscape

McGuckin Hardware

Tags: Case study, friction, How-to, retail, Strategy

Point: Innovation can bring tremendous value to the problem of scarce resources.

Story: The World Health Organization reports that water scarcity affects one in three people on every continent, including areas that have plenty of rainfall. Access to clean drinking water or adequate amounts of water for farming and industrial use are at issue. Further research shows that by the year 2035, two-thirds of the world will have water shortages. In China, two-thirds of its 660 cities already face water issues today; by 2035, they will see severe water shortages.

The fact, however, is that the world has plenty of fresh water — 2 trillion liters per person. But, the resource is not well distributed. Worse, water quality matters as much as water quantity. Contaminated water creates problems for human consumers, agriculture, and high value marine ecosystems. Only uncontaminated water counts toward solving this crisis.

What can be done? Companies like IBM are harnessing IT to address the problem. One example is the SmartBay project in Ireland, which seeks to monitor water properties in Galway Bay to help manage commercial fishing & aquaculture. Networks of sensor buoys, tide gauges, wave riders and data analysis nodes provide up-to-date environmental information to monitoring agencies and the public. In a second example, IBM is applying its materials science research to create better desalination technology for producing purified water. In particular, the new filter material can remove more toxic metals than can the old technology. Third, IBM is leveraging is expertise in super computing to offer “Deep Thunder” for advanced weather predictions and simulations that could affect water supply or water reservoirs.

IBM’s efforts on water resources are part of a broader pattern and opportunity for innovators. The world has no shortage of scarcities. Applications, people, companies and even countries compete for water, energy, minerals, money, and attention. This means that innovators can create value by inventing clever means to improve the production, utilization, and productivity of each scarce resource.

Action:

To address the problem of any scarce resource:

• Collaborate with experts to understand the supply-side issues of a scarce resource.
• Survey resource users to understand demand-side patterns, value propositions, and capability gaps.
• Look for solutions that:

• *** maximize production of the scarce resource
• *** improve quality of the resource
• *** help connect supply with demand
• *** increase efficiency of use, prevent waste, or support recycling of the resource.

Tags: Case study, Innovation, resources, scarcity