Velox Coffee Maker and Espresso Maker

I discovered that Velox from Italy make coffee makers and espresso makers for the car.

Froogle: Velox coffee maker

Interesting! Now it's the same general idea that I want to pursue but a different design and definitely a completely different marketing concept.

I want to integrate the coffee mug and the coffee maker into a single machine. The basic components are the coffee mug, a pump, heating element, coffee pod brew compartment, and drip back into the coffee mug. The coffee mug is used to store the water and the brewed coffee drips back into it. So the entire volume of the flow outside of the coffee mug should be equal to or more than the volume of the coffee mug. That's as much as I've thought about the design aspect of the mug. I'll try to come up with a picture of the concept in my head.

So the coffee connoisseur can fill up his coffee mug, bring it to his car, replace the coffee pod, and brew his coffee in less than a minute. I need to figure out cream and sugar, because after the coffee is brewed, the cream and sugar need to be mixed in. I don't want the coffee connoisuer to have to open the mug and mix it in himself, but that might be unavoidable. This has to be travel safe, so when the connoisseur is driving and making the coffee, it doesn't hurt spill and cause burns. So an automatic temperature/brew lock should be factored in. All this in under US$100 can be quite a task. The Velox coffee/espresso maker is around $70.

The marketing concept is different and I'm still thinking about it. I'll try to come up with brand design and I'm reading right now a book (text book) on branding called Strategic Brand Management by Kevin Lane Keller. I like the CBBE (Customer Based Brand Equity) Model that's expounded in the book. And I'll try to follow the concepts to come up with a branding plan.

Coffee brewing continued...

After researching the Carnot cycle, thermodynamic equations, and looking at how coffee makers and espresso makers work, I've come to the conclusion that a simple heating element, one way valve tube and a pump would be adequate for my needs. However, can't afford to have a large tank of water. It's has to be mobile. So have to come up with concepts. Thinking of using the Coffee mug as part of the maker. Don't know how yet.

As an aside, the coffee pods are really expensive. It's a quarter a pod or more. So another short-term product could be a 'Make your own Pod'. Freedom to the consumer to choose which beans they want. Don't know much about how they make it now. May be economies of scale will prevent this product from becoming a home pod maker. For a hack job look here.

Coffee brewing

Short of experimenting with my girlfriends slow cooker for brewing coffee, I can't think of another way to experiment with taste and brewing temperatures. I'm going to start design a coffee maker on the go for the coffee pods.

So Senseo's design is covered by patents. Mellita has another one cup brew. So there must be some wiggle room in Senseo's patents.

I need a heating element to heat up the water, sensor for monitoring the temperature, a steam pump to send the hot water through the pod at pressure, and of course the travel aspects of brewing a hot cup of coffee.

Steam pump, not for a locomotive engine, but for a coffee maker. That's my area of research now. I guess it doesn't need to be steam, just hot water between 195 and 205°& F. Don't want coffee soup.

If liquid is compressed doesn't it cool? Is there another way to create pressure? Have to refresh on Thermodynamics. ugh. More research to do..

Ah Coffee...

I thought I knew a lot about coffee. I fooled myself thinking if I can make myself a shot of Espresso, I know a lot.

Not the case as my travels in the coffee websites have shown.

Well, where is the strategy canvas that I promised?

I'm running a bit behind on my schedule having gone through Thanksgiving and using it as an excuse for my laziness. I want to be true to the book on the strategy canvas but I'm not convinced that I'm an expert yet. So the status is pending more reading and thinking.

However, I might want to fit another problem into the Blue Ocean strategy model.

Now I remember it talks about redrawing the market boundaries and focusing on Value Innovation. Creating value and decreasing costs at the same time.

So I got to thinking as I was driving in my car, wouldn't it be nice to have good coffee made in my car? Now after some brief research, I did find coffee makers with a 12V adapter.

So if we can cut the 'middle man', like Starbucks, Dunkin Donuts and so on and get coffee in the car/truck/etc., wouldn't this be a new way of looking at the retail coffee industry.

Now my friend Kris, would be disappointed if Starbucks went away. Where would he find the good looking girls now? But that's not the point of this exercise. The point being creating Blue Oceans of creating Uncontested market place and making the competition irrelevant.

You say, wait, isn't there coffee machines at home? Why wouldn't you bother just making a hot cup of coffee at home? I do make my own coffee at home. However, there are variables in the brewing process that we can't control precisely, like brew temperature, ratio of coffee bean to water (does this matter?), etc. This results in inconsistent coffee brews everyday. Sometimes not drinkable.

So began my adventures in finding out more about coffee brewing.

The latest in the coffee brewing methods is the coffee pod. Now you might have seen the coffee pods in Target, Walmart, etc. It's a pre-measured quantity of coffee in a 'pod' or a bag, which reduces the complexity of cleaning up after the brew. The process is so simple. Just add water, insert the coffee pod, coffee brews, remove the pod. No messy coffee grinds to dispose, no measuring how much coffee to get done, no waiting for a long time to get your coffee. It's done in 20 seconds. Keurig, Senseo and a bunch of others makes coffee pods. It's supposedly sweeping the beverage industry and is supposed to be the next best thing since bottled water.

The coffee pod is in it's infancy or 'Ferment' stage in the industry Life Cycle's S curve. There are no standard coffee pods. There are DIY coffee pod instructions. No clear leader emerging yet. Lots of potential growth. This phenomenon needs to be watched more closely. I might even invest in a few companies if I had the money.

There's also the cold-brewing technique which is interesting where they replace heat with time (takes 12 hours to brew using cold-brew), but results in less acidity as fatty oils and acids are left behind in the regular brewing process. Interesting idea. Javo and Toddy use this method although they have different patented methods.

And for a list of traditional brewing methods, I turn to a really good website I Need Coffee which has a host of interesting articles for coffee aficionados.

Having researched all the brewing techniques (although I haven't pulled patents on the cold-brew methods), it looks like there is some opportunity to create a new one. Something that combines the cold brew and the hot brew. I need coffee site tells me that the coffee liquer needs to be extracted between 195° and 205°F. And the cold brew method which takes forever is done at room temperature(?).

I personally like less acidic coffee and flavors that are full and don't prefer dark roasts. Key point is less acidic. Which pulls me toward the cold brew process. This is such a complicated set of steps that has simplification written all over it.

Now Javo gives you liquid coffee concentrates and is targeted toward food service operators. This would be the easiest thing to do, however, transportation and costs would be an issue.

So, back to our 'design' problem of how to marry the two different temperature processes and get our flavorful coffee. Another post. Can't think right now. Too saturated. Need a cup of coffee.

The Coffee Industry

After trying to Google to find research analysts for the coffee industry, I gave up. Seems like only financial analysts are available. Maybe D&B or Hoovers have it. Hoovers and D&B are one company now? When did that happen?

Ok, Hoovers did have the industry information.

Beverages|Non-alcoholic Beverages|Coffee and Tea

Now there are other companies like PepsiCo, Coca-Cola, etc. But for the purposes of our analysis, lets chalk up 3 or 4 'relevant' companies.

• Starbucks


• Dunkin' Donuts


• Peet's Coffee


• Diedrich Coffee (Gloria Jean's, etc.)

We'll take a quick look at these companies financials and other information. Now I have to say that the Blue Ocean Strategy book discourages analyzing competition in this way. Telling us that it will lead to Red Ocean strategies of direct competition. But I'm doing this exercise to get a better understanding of the companies involved and to give the reader a bit of a background as well.

More information on the Blue Ocean strategy versus Red Ocean strategy is here.

We'll draw a 'strategy canvas' on these companies (may be not all of them) and try to find 'blue oceans' in this pseudo-category. Starbucks does sell toys and music too. Oh well.

Not another Innovation Blog

Ok. A bit of a bummer. I found out that I'm not the first blog to be passionate about innovation.

Innovation Weblog is a good example.

So I've decided to create a 'differentiator'. I will not try to 'review' books or tools. But 'review' strategic techniques and innovation practices. Creating hypothetic business models and innovation would probably be my 'mission'. Ok, I know missions change all the time. But I'll try to stick with this for now.

I'll give a shot at competing with Dunkin Donuts and Starbucks. If anything it should be a worthwhile exercise for using things like 'stragegy canvas' and 'scenario planning' techniques and sharpening my skills. Any and all feedback would be welcome. I'm open to constructive criticism.

Customer based Economic Model

In the Customer based Model, service and support to the customer is a primary means of differentiation from competition.

The difference between Gartner and Meta Group is a good example. Gartner was focused on research, whereas Meta Group tried to distinguish itself by listening and working closely to their customers needs. And it was successful in doing so. Gartner then acquired Meta Group in April 2005 for $162 Million in an all cash deal. Meta Group's revenues were $122 million when the deal happened, so I don't know if it's that impressive.

Now every organization says 'Customer is King/Queen', 'Customers come first' and so on. The real test of a Customer Economic Model would be to see if the inputs given by the customer are absorbed and strategy and products are reshaped based on this.

All other organizations just masquerade good customer service or support as being Customer based.

This particular model is very interesting to me. I've been fascinated on how to create 'killer' products or solutions that competition doesn't provide and customers can barely vocalize their needs.

What are the characteristics of the Organization/Person in this model?

• Customers focused strategy

Top and Middle management believe there are important 'revelations' that customers can bring to the table. Again, this is not about Customer Service. This is about treating customers as 'business partners' and viewing them as an inherent input into strategy.
For service oriented businesses, this might be very natural. However, it becomes easy to 'templatize' a service and forget about the customer as a business partner. Getting constant feedback and acting on it is an important aspect for service oriented businesses. If it's a single person offering a service, it might mean changing personalities, changing interactions or hiring people with complementary traits.

• Customer Relationships

Customer service is an important aspect of the Customer Economic Model. Trust needs to be established and relationships need to be built that can be leveraged in periods of difficulty or when competition kicks in.
The customers must be able to trust that you would make their lives easier. Access to top management is typically a good way to foster this. Sometimes this can be counter productive, but we're shooting for building long term relationships.
This can become an 'Intangible Asset' for an Organization. I barely remember the HBR (Harvard Business Review) article on Intangible Assets. I'll try digging for it.

What are the risks involved?

• Segment oblivious

When you talk to one customer, you're getting to know what she wants. How do you scale in breadth and depth based on what one particular customers want?
You can't. You have to talk to many customers and talk to customers in different segments. Identifying feedback from different segments is an important step to counter this risk. Segment definition is in itself a tedious exercise and prone to mistakes.

• The Customer is WRONG

Many times customers try to 'solve' problems and project a 'solution' onto their need. And explain everything from a 'solution' perspective. Now there are some very smart people who can do that. But the majority of the customers don't know the solution domain as much as the vendor or provider does. It is important to restrict the feedback from customers to the needs domain. It might be too early to come up with a solution to a problem when receiving customer feedback or inputs. Separating the problem from the solution is an effort in itself, but an important aspect of understanding the problem.

• Time frame

Time frames are very important in any economic model. The 'window of opportunity' is especially critical to this economic model. It so happens that organizational 'priorities' take over and the customer is left to bite the dust. However, lasting relationships are not forged and can actually be hurt if the customer's feedback is ignored. It is important to give the customer feedback on the status of their feedback.
Execution plays an important role in dealing with time frames.

In my next post, I will review a book 'Blue Ocean Strategy' by W. Chan Kim and Renee Mauborgne. I read an HBR article on Blue Ocean Strategy and decided to buy the book. It is very interesting and hopefully I can do justice in my review.

Economic models

A business provides a product or service to customers and tries to survive and grow in the process.

While a business model is about how a business intends to generate revenue and profits, what I'm talking about here is what Dale Kutnick says about 'economic models'.

A company can make money by three means:
- Focusing on the customer
- Focusing on research or innovation
- Focusing on cutting costs

I have had opportunities to work under the first two economic models. And I hope not to be in the third one. Who wants to be in a commodity business cutting costs for competing and growing? Well, ok, GE, Dell, and others, not me.

Now, would I like to create new products sitting in my desk, browsing the internet, evaluating other technologies and coming up with something? Of course. If there's a guarantee of success in the market, who would want to talk to customers? Now before I alienate all customers from this blog, let's just say it takes a lot of effort to get to talk to the right people and then understand their business and issues. Also, it's quite easy to make a fool of yourself if you're under prepared.

But there are no guarantee's in life or the markets.

It's all about the risk. What is the acceptable risk of creating a new product using a particular method?

Research Model

Imagine a lab with scientists in white coats, trying to come up with the next big thing. This is the research model. Typically focused on a technology area or technique, this model comes up with break through ideas and solutions.

What are the characteristics of an industry/organization/person in this model?

• Technical Superiority and focus:
  
In the space between the solution domain and the needs domain, the focus is more toward the solution domain.

• Committed Investment in Research
  
New organizations need a lot more investment to get into the space. That itself might be a significant deterrent to entry.

• Reduced time to market
  
Time to market is a critical component of the Research economic model. This can be a significant advantage with respect to competition.

The risks would be:

• Competition catches up
  
With every move that you make, the competition can catch up. Yes, Intellectual Property protection is key to this model, but unless litigation is a big part of the budget, it is a cumbersome process. I'll dedicate another post to my views on competition.

• Group Think, talent pool stagnation, etc.
  
Some people are with a company for too long. While they may produce very effective incremental innovation, the talent pool needs to be rejuvenated with new or rotating talent for revolutionary innovation. Group Think, is a problem with a bully boss. Alright, there may be other 'team' issues that are legitimate in Group Think, but innovation suffers in Group Think.

• Execution failures
  
Ok, this is a risk in any economic model. But with the research model, any failure in execution can set the clock back by months or years. But conversely, coming up with a new innovation can set the competitors clock back by several months/years.

In future posts about the economic models, we'll talk about the Customer Model.