Understand Innovation's Value and Behavioral Econmics from Apple iPhone 5s & 5c

Understand the reasons why Apple iPhone 5s and 5c, despite being double the price of its cheaper competitors, do extremely well in China.

Most people expected Apple to sell a cheaper iPhone5 to compete with the cheaper competitors, especially those from China. When Apple sells a lower price iPhone5c with price that is about double that of the Chinese competitors, they got upset and expected Apple to get into big trouble. Apple stock dropped. But Apple iPhones sold 9 millions pieces over the weekend in China and even Apple has to revised its forecast. Many don't understand why. That's because they don't understand the customer's value and behavioral economics. Here is the explanation.

Here is the Apple stock price around the announcement in September 2013. There is a drop in price after the announcement in 10 Sep showing the market disappointment and then rise in price after the China success about 2 weeks later see Apple Sells Nine Million iPhones Over Debut Weekend:

Understand What Influence Customer Value:

l expect the iPhone 5s and iPhone 5c to do well in China even though there are cheaper and more features Android Chinese phones.  I made such a prediction on my facebook on 12 Sep after reading journal articles that complained that the 5c is not as cheap as the Chinese competitors. See:

Why?

The value of a product has two main factors - the rational or utility factor and the other more powerful one is the Identity factor of emotional appeal, the status symbol and life style statement and significance. Rational factors need only to be necessary, but the Identity factor is the true motivator.
See Innovation Defined

Behavioral Economics

According to Behavioral Economics, the present of 5C makes 5S to be of a higher class and a better status symbol. With Gold color, the preference of Chinese, 5S becomes a real desirable phone to own. For luxury class products, the high price is a key factor besides the design and quality. The higher the price, the more desirable is the product!

With 5C priced lower and higher than the cheaper Chinese local phones, and designed as Funky to attract the younger generation. Owning a cheaper local phones only show one as cheap but owner the more expensive iPhone 5C shows one has taste and class. Will you still buy the Chinese phones? Only if you can't afford the higher priced and higher class iPhones which prove Apple's point.

Once we have a correct model about the value of any innovation and the behavioral psychology of the consumers, we can roughly predict the outcome, of success or failure, of the innovation.

An Opposite Illustration - The Tata Nano
Tata Nano was to be the cheapest car that the poor can afford to have. About the vision of the Ford Model-T, car for the masses (or at least the middle class). But it is now reported that Nano was a failure. See for example The Tata Nano Failed Because It Was Too Cheap, or what went wrong with tata motors nano and WSJ A look into why the world's cheapest car flopped:http://on.wsj.com/1hT3YRf.

A key point is that the bike/scooters don't want to buy 'cheap' car, and they rather buy a used better class car.

“It turns out that those climbing into India's middle class want cheap cars, but they don't want cars that seem cheap—and are willing to pay more than Tata reckoned for a vehicle that has a more upmarket image.” from  The Tata Nano Failed Because It Was Too Cheap.

We must therefore understand that customers value has at least 2 factors of utility (cheaper, faster, better, safer, easier and longer lasting) and identity ( of style, status, and significance); or economic and social value.

Lim Liat (c)

Creating Fully Engaged & High Performance Teams and the Wisdom of I-Ching

There are many articles and books that talk about how to create high performance teams. But many only cover the subject from a narrow angle. The wisdom of I-Ching however, is able to look at the subject from a wider angle. This post gives the details to show the power of I-Ching wisdom. So, save yourself the time to read many business books and let I-Ching guides you.

How to have an engaged and high-performance team has become a popular topic recently again. Maybe this is due to the multi-generation workforce, or the merger and acquisitions that are getting more frequent. Team building has always been a corporation favorite subject. Many team building programs are activities based. They get the people to play some games and to socialize together. They are good basic steps to get staff to know one another better, especially for some for the staff that are new to one another. However, just having happy staff working and socializing with one another is not the only objective of a business. A business is about having engaged staff working together to achieve the mission and visions of the business. The mission objectives must be shared, cascaded and aligned for all the staff to work passionately towards achieving them. Therefore, having team building games are but the very basic starting point for building a high-performance team. There are much more to be done to create the policies, directions and culture for high performance and fully engaged staff. We must address the mindset and the attitudes in greater scope and depth.

By searching, we can find many articles and books on the subject of teamwork. Each one will cover a certain aspect of the subject. If you can find some books that address the topic more comprehensively, please let us know. I personally find that the I-Ching is able to do more comprehensively than the books we find today. For example, in term of leadership, in 4 Basic and 5 Orientation Principles of Leadership from I-Ching, we find that leaders need to have creative power, receptive and nurturing love, integrity and humility as for basic virtues and five orientations to lead, depending on the situations. The five orientations are mission-task centered people-centred, synergy from diversities, congregational (team) culture centered and matching of talents and jobs. I have yet to find a leadership book that covers the scope and the agile principles for application. The early days business books talk about task oriented to achieve the mission. Later business books shift to people-centred. Present business books talk about inclusivity and the importance of talents. Business fads are like fashion where certain topic becomes popular and then dies off. But a business cannot be run by following the fads of its day.

Back to the main topic of interest, namely, "teamwork". I can do a keyword search of 'team' on my I-Ching mind-map. The following is the result of the search with the relevant wisdom being displayed:

What's Next?

1. I will expand the selected Hexagram (#38, #10) to include the wisdom from the 6 stage-lines associated with the Hexagram (i.e. like the Hexagram 45 Congregation in the map).

I will then get the following mind-map with some highlight to make it clearer:

2. Go through Each Branch of Map and Write down the thought triggered and the action that you will take to improve teamwork. The thoughts and actions will be very specific to your organization and hence I offer no specific answer here.

3. Grouping 
I will then group the thoughts and actions into clusters. It will get rid of duplicates but keep the related ideas together. Then, I will end up with a shorter list of things to do.

4. Prioritize, Collaborate and Share.
I will then prioritize the list of actions. The important and easiest things to do will be listed first.
I may want to share my discovery with my staff and gather more feedbacks and suggestions. After this, it will be a good time to think of the 5W2H for the actions. i.e. What, Who, When, Where, How and How much/many. Such assignment of work can also be conducted in a group with the right person volunteering to take over the relevant tasks.

In summary, I hope you find the wisdom of I-Ching useful. It can give you a wider and deeper view of things. It serves as a trigger to other or better ideas.

Lim Liat (c) 8 Oct 2013