A beautiful consumer experience is also central to success, and in many cases is more difficult to achieve since it often requires us to rethink business processes and organisational models, along with the heavy lifting of change management. This can be particularly difficult for an established organisation, since it needs to accomplish it in parallel and often in conflict with existing business models and channels.
Why the Nook found no niche
Consider Barnes & Noble's failed tablet, the Nook, which suffered a fate similar to the Microsofts Zune. The misstep was due to an excessive focus on the amplifier which was, by the way, a beautiful physical machine with limited thought given to the application and overall experience. As a result, Barnes & Noble suffered substantial financial and reputational loss.
The Nook should have succeeded. Barnes & Noble has a strong brand and loyal customers; the book industry is unambiguously going digital; and tablet sales have been booming. In 2012, they grew 78 per cent worldwide with 128 million units sold; growth rates were predicted to more than double through 2017.10 In October of 2012 just two years after introducing the iPad Apple shipped its one hundred millionth tablet. Amazon's Kindle sales doubled from 2011 to 2012, and accounted for roughly one in five tablet sales in the United States. Yet the Nooks sales were declining through 2012, and Barnes & Noble halted production of the machine by the middle of 2013.
How did Barnes & Noble so badly miss this party? The market seemed ready-made for them, and was one in which there was already great evidence of success. Unlike Borders which completely missed the eBusiness transition Barnes & Noble seemed to have jumped on the bandwagon just in time.
They had the right idea. But they had the wrong implementation.
In short, the Nook didn't generate a beautiful experience. It failed to produce the necessary "Wow, how did they read my mind?" effect. In other words, the process of discovery that a Barnes & Noble customer may have when walking the aisles of its retail stores was not an experience that the Nook replicated. By failing to meet if not exceed the beauty of the physical Barnes & Noble experience, the Nook experience violated the Barnes & Noble brand promise. And what was even worse it paled badly in comparison to its competitors, Apple and Amazon, both masters of Code Halo thinking.
The focus of the Nook team on the hardware device at the expense of the algorithms and overall business model was particularly devastating as the amplifier was quickly commoditizing, and those customers who were purchasing either an iPad or Android-based tablet were not going to also buy a Nook. For Barnes & Noble to attempt to win in digital markets by producing its own amplifier is akin to Arista Records or RKO Records, in the 1970s, trying to build a market by manufacturing their own record players.
So why did Amazon build the Kindle, and how was it successful? Simple. Amazon had all of the elements in place to make the Kindle experience a beautiful one. Amazon already had a successful application interface through Amazon.com. It had highly sophisticated algorithms created from mountains of data it had been collecting and analyzing for years. Amazon also had an incredibly robust business ecosystem on the back end allowing it not to simply fulfill the reading needs of its customers, but many associated needs as well. Amazon, in other words, already had the full anatomy of a Code Halo: interface, amplifier, Big Data, algorithms, and business model. Delivering its experience through a different amplifier the Kindle as opposed to a PC was a seamless transition and provided a similarly beautiful overall experience. The Nook initiative, on the other hand, failed because of poor management of Code Halos and the lack of a sophisticated anatomy.
This failure to understand and, thus, compete in the Code Halo economy has had a devastating effect on Barnes & Noble. The firm is at a strategic crossroads. Will it try again, or retreat and focus solely on being a traditional, physical-book retailer? This unanswered question is creating confusion.
Code Halos connect data to insight, to real-world business opportunities
Anything that costs more than $50, which you cant eat, should have a Code Halo as part of the value proposition, Roehrig tells Ankita Rai
Please explain the Code Halos approach. How is it different from the traditional big data analytics prevalent in the industry?
Big data is certainly a key component of Code Halos but there is a lot more to it than that. Most of us know that our company has valuable data but we dont know where it is. Many decision-makers stay stuck because theres so little justification for why you should divert focus to what can often feel like some sort of science project. In this context, enterprise data starts to feel like that drawer we never clean because we dont really have a compelling reason. The Code Halos approach helps bring clarity to this problem because it connects data to insight to real-world business opportunities.
Explain the five core elements of Code Halos.
Anything that costs more than $50, which you cant eat, should have a Code Halo as part of the value proposition. All successful solutions in the market have the same five essential components. Although they may seem vastly different, they all have a very similar anatomy.
* Each has some sort of device, what you might call a Code Halo amplifier. This could be any device considered part of the Internet of Things.
* They all have an effective application interface. These applications are intersection points of the user experience. It is through this interface that the Code Halo is engaged.
* Data is the raw material for analysis. Without good data, youre really still guessing.
* Every solution has some configuration of analysis process and algorithms to draw business insight from the data being generated.
* Successful Code Halo solutions have a new type of commercial model to monetise the meaning and insight derived.
CODE HALOS: HOW THE DIGITAL LIVES OF PEOPLE, THINGS, AND ORGANIZATIONS ARE CHANGING THE RULES OF BUSINESS
AUTHORS: Malcolm Frank, Paul Roehrig, Ben Pring
PRICE: Rs 599
Re-printed with permission. Copyright 2014 Cognizant Technology Solutions US Corporation. All rights reserved