Sunday, September 15, 2013

Gimmicks

Over the years I’ve encountered a number of business models based on unique, innovative, or just plain weird concepts – what are often thought of as “gimmicks,” especially by people outside the field of management. This isn’t always a fair assessment, of course; the term “gimmick” carries the connotation of something used in a con game to create the illusion of value when none actually exists, and many forms of business innovation offer real value to the customer. Still, it is difficult to blame an observer from applying the term to some of the more outlandish examples. There is always going to be some temptation to dismiss businesses of this type; to claim that they are not fundamentally sound, and are simply relying on the novelty of whatever specialty item or service they offer to the customer. And in some cases this is undoubtedly true – a combination singles bar and Laundromat did very well in Texas for a number of years, while a traffic school and wine-tasting operation in California did not stay open long enough for me to decide whether or not it was a joke…

What tends to get overlooked in these discussions is that all business models appear novel when first introduced, but some will continue to generate value for the customer even when the company becomes widely familiar, and some will prove difficult to imitate even after the particulars of the business model become well known. My favorite case to date is probably The Legal Grind, a business in Southern California that combines various aspects of a neighborhood legal clinic (consultations, referrals, self-help materials, etc.) with a coffee house. To the best of my knowledge, it’s the only venue in the world where you can get a latte and a bankruptcy – or a mocha and a divorce, if that’s what you need. Legend has it that the founder (a fully-qualified attorney) got fed up with traditional legal practice and wanted to open a coffee house, but people kept coming in and asking for legal advice – and a good idea is a good idea. Whether you’d consider this a coffee house with a legal service as a gimmick, or a legal service with a coffee house as a gimmick is up to you, but the firm has been in operation for over 18 years as of this writing, and has expanded into three locations now…

Then there’s the case of a “fully automated” restaurant in Germany. This isn’t actually a new story – I saw it on ABC News when they first ran the piece – but it was reprinted online this past week and struck me as a gimmick business that may or may not have staying power. The place is called Bagger’s, and their gimmick is that there is no waitstaff working there – you place your order on a touch screen at your table and your plates are delivered down a curving track by a gravity-feed system. It’s an arrangement that would be difficult to set up in a retail space where you couldn’t put the kitchen on the second floor, and it isn’t clear from context how you would send something back if it isn’t prepared correctly, but the real question from where I’m sitting is whether such an operation has any utility. Which is to say, does this arrangement offer any value to the customer above what you would expect from a more traditional method of service?

On the one hand, there would be no delay while you attempt to get the waiter’s attention or while you wait for a food runner to turn up with your plate. And there would be no issues with the waiter spilling soup on you; if the delivery system is working properly the only one who could spill anything would be you. And, at least in theory, if you wanted a drink refill, another plate of something, or to place a dessert order you could arrange for it by using the touch screen. But on the other hand, people enjoy some amount of human contact, and part of the service a traditional restaurant offers is people who will take your order, bring you what you’ve requested, and answer your questions, no matter how absurd any of this might me. People who, in fact, serve you…

I’m not sure the technical details can be easily overcome, and I’m not sure if anyone else is going to want to assume the costs of setting up the hardware or the risks inherent in a faulty delivery system spilling something hot onto a customer. But if we ever get such an operation in Central Michigan, I know I’d at least go and give it a look…

No comments: