Design Sojourn | Strategic Industrial Design Blog

A warm welcome to you dear reader! If you have not already, why not subscribe to my RSS feed, or get my latest thoughts on Industrial Design in your Email Inbox for free?

Thanks for visiting and please keep in touch? ~ D.T.

A fantastic article at Guy Kawasaki’s blog “Signal Without Noise”. He interviews Polly LaBarre with his usual G.K. style and flair, getting her to give insightful and indepth answers. In particular this answer stuck a cord with me:

They (mavericks) all seemed to have a couple of survival strategies in common:

1. They unleashed tough questions and critiques of their organization without losing their sense of loyalty to it. They’re the kind of questions every CEO should be asking. For example, Jane Harper asked of IBM, Why would great people want to work here? And Larry Huston, now vice president of innovation at Procter & Gamble argued, The current business model for R&D is broken. How can P&G possibly build all of the scientific capabilities we need by ourselves?

2. Mavericks don’t just ask questions, they act. We saw this again and again: they just got started-usually without a budget or formal permission-by designing an experiment around their question. Jane Harper launched an experimental Extreme Blue lab in Cambridge and spent a couple years begging and borrowing resources until the program’s impact became clear.

3. Mavericks look for peers and fellow travelers outside the boundaries of their company. Not surprisingly, mavericks tend to click when they meet other mavericks. They’re great networkers and learners and are always looking for kindred spirits for support and ideas.

Brackets are mine.

I’m now off to buy the book! You can read more of the interview here.

About 3-4 years ago my family and I paid a low six figure amount to attend a course on how to run a successful business. My share was $35K of my hard earned savings, and the course provided me with the biggest learning experience I have ever faced.

You see we invested in a start-up education company that is now basically worthless. Not because of an inferior product, far from it, but because of the way the business was run. It’s a classic story of greed in business left un-moderated.

It opened my eyes that a business is more than just a product, it is the sum total of every aspect of it. This is contrary to the usual main focus of business plan activities that place a lot of emphasis on the company’s product and its delivery to the customer.

I won’t name this company as it’s currently embroiled in a legal battle with its minority shareholders like me. Suffice to say when we invested in the company, the due diligence I did only considered the product and its prospective sales. Even though the company was making an operational loss then, the product was a cash cow, and the forecasted cash receivables of jobs done that would have put it in the black at the end of financial year. Together with some prominent investors, it looked to be a good long term investment with a yearly increase in valuation and dividend payouts.

1) Cash Flow Management
Things started to go down hill as the company’s cash flow was managed poorly. The CEO basically spent more than the company could earn. He made many poor business decisions, for example, splurging on a fringe CBD corporate premises in access of 4,000 Square Feet (the staff counts hovered at 2-8 at any one time), paid himself an obnoxious 5 figure monthly salary, bought an expensive luxury car for the company directors to use, etc.

All these payments were made in lieu to more important things like business and product licensing, and contractor fees.

The irony is this was happening at the same time as the NKF fiasco!

You would be surprised how this could happen, but the cash generated by the core product was actually supporting such expenditures. This was how good the core product was.

However things came to light when he decided to alter the business plan without consulting the shareholders. He decided to stop managing the business cash cow, and focus on “global expansion” and “corporate acquisition” so as to IPO the company.

2) Good Accounting practices
This was the start of the end. Companies that wanted to buy us out would laugh at our accounts and accounting procedures.

There were no 3 quotation purchasing practices, no petty cash locker, the purchasing and bank signatory was the same person, a single executive director initiating and approving motions. Often business and personal purchases were made on the same corporate credit card, with no effort of repayment towards the company.

What was worst, the corporate accounts have been repeatedly submitted more than 2 years late and never signed off by the accountants. Till date the shareholders have not seen the audited 2004 accounts.

The company was run like a sole proprietor and never in the best interests of the shareholders that numbered 20+ persons and institutions.

3) Developing a management team.
One of the huge problems was after more than 6 years of operations, there was really only 1 employee running the show, the CEO. There was no one in Administration / Finance / Product Development / Logistics / Operations Management.

As a result there were many systems such as accounting and operations practices that were never set-up or developed. Often in the first few years of a start-up things do get messy and very horizontal. It’s often the entrepreneur or founder that has to do it all and get his/her hands dirty in every aspect of the business. But once you hit the 3 year mark and especially if you have large shareholders, such systems and management team needs to be in place. This is especially important if you want to grow the business in to a global enterprise.

4) Integrity of the Staff
Actually the company could survive if the company went quickly into cost cutting measures.

Suddenly the integrity of the CEO came into sharp focus. What I did not tell you dear readers, was that the large corporate premises and luxury car actually belongs to the CEO.

He had put it into the books as a “director’s loan” to the company and in return for the use of the asset, the company was paying of the bank loans for him. Furthermore he refused to take a pay cut citing that it was salary entitled to him. The problem was that the exact amount the company was in the red was the same amount as his yearly salary…

The story goes on and on, and I could continue talking about this matter for a whole day. But this little narrative does show, running a successful business is not easy, as there are many pitfalls and aspects to consider. However I must take my hat off at the CEO’s creative accounting practices I have learnt from this situation! .

I hope this article has helped you as much as it did me, as I will never run my business in this way.

Update 1: Oops sorry forgot to add. The Industrial Design 101 series are about my adventures of designing, creating, hacking and remodding my own brand of Cool Mp3 players.

I’m not a marketing expert here but when ever I consider a new design I always encourage designers to create “mood” boards or collect pictures that reflect the target consumers that will use or buy our product. Which is in this case our MP3 player concept.

I often don’t waste too much time writing down marketing details, thats the marketing department’s job. Here we just want pictures to give us a healthy understanding on our target consumer and allow us to get into their head to live a day of their life in their shoes.

Images thanks to lifeclever and FashionistaTV. The additional graphics are mine…

Update 2: Geekette has a cool female version of this fashion set!

Heh-heh, here are a few more to wheat your interests on the people I plan to target:

Thanks Nikita!

Thanks KK+!

Wow this is a great collection of images of my market all nicely done by Ben.
Thanks Ben!

I also like to run a collection of products that our target market will use as well. This completes the picture as it gives us an indication on how our target user lives his life. Really you are what you use.

Notice these guys are technology people, not geeks, but techno-philes. They appreciate design and are savvy enough to subscribe to well designed products (Sony PSP, Palm handheld, Crumpler bag, Jabra headset, Gameboy Micro etc.), even ipod.

Really the point here is that they subscribe to many different kinds of technology products. I also like their use of the old-school pen and note books. This to me means my target market prefers their product as a task specific and focused one. In other words they like to use a particular product that is the best of its category that best completes the task at hand.

Do stay tuned for ID 104: Engineering Functionality and Usability.

Update 3: I love blogging. Wendy Maynard from Kinetic Ideas has written a very cool extension on this discussion on techno-philes in her blog post on “Chic Geeks” here. Thanks Wendy!

Update: If you have not read, do take a look at Part 1: Industrial Design 101 to get a bearing on what I’m trying to do here.

Update2: Posted the images of the new iPod nano and shuffle.

The benchmark to beat:

Damn, I had thoughts along the line of the new ipod shuffle. I’m considering scrapping this project.

Beosound 2

Above SDG$1000

Asono

iRiver

Samsung Yepp

Philips Active

There are really are a lot of poorly designed Mp3 players out there as these are the only handful I have found are what I consider well designed.

On to ID 103

Sure! Aim high as they say. Its nice to have a dreams don’t you think?

Well I am sure the Apple fan boys are preparing their ammo, but I must say I wont guarantee our final design will be an iPod killer, but what I will guarantee is at the end of this series, you will at least have a good idea of how designers are able to create good designs from seemingly nowhere or how they are able to create clever products.

Before we go on lets take a quick look and try to understand how we do design from a helicopter view or in other words the design process. The process of design is actually a narrowing one, where we start by casting our net wide and narrow the scope until you get your final solution.

So now is the “what” part, or what are we going to do? What will influence our product conception and mold its growth and birth?

Some random thoughts to get me going. At the end of the day, I need to figure out what will be the “big idea”, that is going to make this product different from the iPod. Any feedback on what you also dislike about your iPod or Apple in general?

I like to wrap up this post with a few other thoughts:
1) This post is also a start of something different at Design Sojourn. I’ll be posting most of my thoughts for this series through sketch or graphics, something my designer audience has been nagging me non-stop for, well at least one designer anyway! (You know who you are!)

2) With iPoor up and running, its time for a new product for Design Sojourn. So this series will be an on-going open ended one. It will likely end when we arrive, hopefully, with a finished product. However whatever the outcome will be, you are invited to be part of this journey and to leave as many comments as you feel comfortable with!

On to ID 102

Really this should have been the Art of the Small Start Part 3, but I figured this title was punchier.

In the last discussion, Part 1 and Part 2, we talked about the critical aspects of People, Product, Pricing, Promotion and Place (Distribution) as part of a business strategy in making successful products to sell.

A failure to consider any one aspect is a recipe for failure.

Furthermore in the Long Tail strategy, we discussed that low inventory does not mean no inventory, and there are still cost to be considered.

Yep, thats what nearly killed me. I failed to consider the cost of distribution, and the logistical cost of getting things around. I suppose, this is an area that I have very little experience as this aspect of the business I deal very little with at my day job.

Here are the things to consider which I did not!

1) Cost of shipping a product is based on exact weight. Do test runs, get a weighing scale, but you need to calculate you cost exactly. This is very important especially if your business, like mine, runs very lean. I totally miscalculated my shipping cost, barely breaking even for each T-shirt.

2) Cost of travel for you to deliver or get things done. I totally missed this. Having to lug 35 orders, approximately 60 T-shirts, to the post office is no laughing matter. Furthermore I had to make 2 trips to the post office as I had to buy packaging materials first.

3) Cost of your time. How much is your time worth? This is normally known as the “administration” cost to the lay man. What else can you be doing instead of spending this time, the opportunity cost of doing this activity?

4) Finally the cost of working in a different currency. The logistics of moving your money. Yep this was one of the contributing factors that ate into my bottom line and the cost of doing business. The strengthening Singapore dollar meant that the US dollars I was selling my iPoor T-Shirt in, was worth less. Even in small amounts, my cost for shipping grew and was not covered.

At the end of the day, I failed to make correct calculations and my bottom line was eroded. I did not have much choice, but to cover the remaining cost, I had to increase my shipping and handling cost for each T-Shirt.

Oh well as they say nothing ventured nothing gained, or nothing learned in my case!

A few quick pictures of my little booth at the MAAD Sunday Market last Sunday!

MAAD with stands for Market for Artists and Designers is a little flea market focusing on original wares from Artists and Designers. You can be rest assured that anything setup there is original and designed or made in Singapore.

So if you are a budding artist or designer, hungry for a place to hawk your stuff, have a go at MAAD!

Recently I have been exploring the highs and lows of Paypal.com while managing payments for my iPoor T-shirts. It’s not the world’s most perfect banking system, but in my opinion its a great online banking system that allows transactions to anyone or anywhere with a paypal account espically if your transactions are in small amounts.

Paypal started as an on-line escrow middle man for eBay payments where you can pull funds from your credit card AND your bank account for payment to someone else.

For small business it’s very ideal as it’s very low cost to operate the account. There is no minimum account keeping fee for very small amounts (even at $0). Operations wise, you can for accounting purposes, download transaction data into a spreadsheet or Quicken to track purchases or transactions. Also for each of my T-shirts sold, I can print out shipping receipts to insert with each of my transactions for easy reference of delivery information and order details. On the whole very professional if you ask me.

If your business conducts the majority of sales online, you can receive money from your buyers from either their Paypal account or from their credit card. This means you do not need to setup expensive credit card merchant accounts nor require minimum monthly transactions as Paypal is now your middle man. There is however a small commission about USD$1-2 depending on amounts, which I forgot to charge for my iPoor T-Shirts! How ignorant of me! But this is how Paypal makes money.

Also Paypal works in only a few major currencies such as US dollar, Euros and British Pounds, so if your local currency is not of their major currency, you will have currency exchange risks. However after comparing their exchange rate with XE.com, I find their rates pretty fair, but you will just have to deal with the ups and downs of the global currency market.

For example when I calculated my pricing for my T-shirts I calculated it based on 1US$ = 1.70SGD$, the Singapore Dollar has since strengthened and it’s now in the high 1.58SGD$ eating into my already low margins.

There are however quite a few limitations.

One is the ability to pay someone without a Paypal account. If that person needs to receive money, he/she needs to setup a Paypal account, other wise there is no way to receive the money. But in most cases I just transfer the monies from the paypal account to my personal account and pay conventionally.

However let me warn you, setting up the linking banking account is “Nasty”. I suggest you read all the instructions carefully before you set-up you Paypal account as your Paypal account and your Bank Account name needs to be exactly the SAME.

Another problem as mentioned is customer support. I made a mistake in my Paypal account and account name and have been sending emails to them to change it. They still have not done anything to date after 2 weeks of 5-6 emails sent.

In the end, with the help of my designer friend, I’ve decided it’s easier to set up multiple papal accounts which you can transfer money to each other just like having multiple accounts in a bank.

The last and biggest problem is I constantly worry about how safe your money is on this online “bank”. A bank securely holds your money in a “pool” and unlike traditional banks there are no “bricks or mortar” institutions or government backing on your money. Some advice that has been given to me is pay thru Paypal, but when you recieve payment, get your money out ASAP dont leave it in the account.

Check out Paypalsucks for some more horror stories. Good site for more information on the short comings of Paypal.

At the end of the day it does take some getting use to, as well as a change in mindset and getting over the online issues and horror stories. This is especially if you are the type, like me, that gets frustrated easily and want to pick up the phone to yell at someone. But after getting over the “teething problems” I find the pros do outweighs the cons.

Just an update that we will be shipping the iPoor T-shirts to all customers by the middle of next week! So your wait is almost over!

Sorry for the lack of posts, I’m currently in Hong Kong for a quick holiday.

Furthermore in the last couple of days, I’ve been washing and testing iPoor T-Shirt samples with friends of different sizes. This is so as to give you the best possible customer satisfaction when you receive your purchase!

Here are the compiled feedback from my 5 “testers”.

1) As the T-shirt is 100% cotton, it does shrink in the wash. After washing a few shirts, we tried them on and here are the results.

If you are 159cm, weight 50kg, waist 27″ then the S is comfortable and slightly baggy.

If you are 184cm, 80kg, with waist 32-33″ and the L fits just right, but it will not be baggy grunge style.

If you are 192cm, 100kg, and 36″ waist you will need to go with the XL. Again the fit just right.

Anyone larger will not be able to fit the XL.

2) Finally please wash all the t-shirts before you wear them, especially the black. The black T-shirt’s color DOES run. So please soak for a bit before you wash it in the washing machine!

Yep we are back in stock! But thanks to my wonderful supporters we are actually 60% SOLD. Also the hot favourite Black XL is already sold out!

Click on the image for ordering information. Please do allow for 4-6 weeks for shipping and delivery.

Gosh at this rate I may have to do another run of hundred pieces. What do you guys think?