Ignorance is Curable

I was wandering around on one of the news aggregation sites, as I am wont to do, when I found a posting about the newest Kaman helicopter design being offered for sale. As an unabashed aircraft wonk, I was glad to see one of the pioneering companies in aerospace getting back into the civilian market in a (potentially) big way, but I found the posting itself annoying – the user who posted it was mocking the intermeshed contra-rotating twin rotor design which makes the aircraft lighter, safer, and far more stable than more conventional helicopter designs, implying that there is something dangerous about a design in which the rotor blades pass over and under the same point. In a pre-Internet age this would just be displaying one’s ignorance, but today there’s really no excuse for this kind of brainless nonsense…

Anyone with a working Internet connection could have found out that Kaman Aircraft introduced its first intermeshed design 71 years ago, with the K-125 prototype, in a ten-second search. Only a few additional seconds would be required to find the Kaman HH-43 Huskie, a similar design built for the U.S. Air Force, Navy, and Marine Corps that was in service for over 20 years as a search-and-rescue platform. You’d have to care about helicopters and/or military history to notice that the Huskie flew more rescue missions during the Vietnam War than any other type of helicopter, while establishing an unequalled safety record, but even if you’re just looking at the new Kaman designs you should at least have noticed how effective these aircraft are, especially for the price…

Now, I don’t mean to suggest that anyone who does not make a hobby of either unusual aircraft or military history (or preferably both) would or even should know about the Kaman intermeshed rotor types, let alone be able to explain the significant advantages provided by its drive system. Nor would I ever suggest that all new technologies should be embraced from the moment of their introduction, or imply that there have never been fatally flawed aircraft offered for sale. What I am pointing out here is that this isn’t just a mature technology; it’s more than seven decades old. Intermeshed rotor designs were in service twenty-two years before the packet-switching technology that makes the Internet possible was invented, and nearly thirty years before Jobs and Wozniak built the first personal computer…

I don’t expect that anyone who is in charge of acquiring new aircraft for any company that operates helicopters is going to get their purchase information from a random commenter on an Internet news aggregation site, any more than I expect random readers of this blog (assuming I have readers) to care about the history of esoteric helicopters. But making fun of any technology just because it is unfamiliar to you is asinine, and in a business context it’s another one of the ways in which people manage to destroy perfectly good companies just because they weren’t paying attention…

I strongly recommend that anyone who has a need for helicopters capable of transporting medium-sized external slung loads check out the new offerings from Kaman aircraft. And even more strongly that anyone who finds themselves confronted by what appears to be an exotic new technology take another few seconds and make sure that it wasn’t decades old before they were born before they make any decisions about it…

Another Try for an Old Idea

I can’t exactly say that I was disappointed when I saw a news item about a “flying car” on one of the news aggregation sites. Flying cars have become a meme over the last decade or so, and there will be at least one mention of something that might be one, or a snarky reference to some flashy (but ultimately pointless) piece of technology that ends with the question “Where’s my flying car?” in the news each month. Most of these turn out to be vague rumors about something that might happen in ten or fifteen years if a currently unproven technology turns out to have legs, or something that has already failed to catch on multiple times before. Although this week’s story may ultimately turn out to be both…

We should probably note that flying cars, or “roadable” airplanes, have been around for at least seventy years at this point, and if you actually care I could show you both contemporary accounts and advertising pieces about models actually offered for sale at various points. Most of these projects ultimately fail, either because the vehicle in question is too expensive to afford, because it is too hard to operate, or because it is too hard to get permission to operate from the applicable Federal, state, or local laws. A flying car that you can’t use without first obtaining a (very expensive) private pilot’s license, or that you can’t fly from where you live or to anywhere that you’d want to go, isn’t going to be much of a draw as a consumer product…

In this particular case, the new entry into the field isn’t a new technology or even a new concept. Fans of James Bond movies are already familiar with it, and so is anyone who has ever studied the history of experimental aircraft in or out of the movies. The PAL-V Liberty, made by a Dutch company of the same name, is actually a gyroplane, or auto gyro. If you’re not familiar with the term, imagine a small propeller-driven airplane with an unpowered rotor instead of a conventional airfoil. It can take off and land on much shorter airstrips than a conventional airplane, and a skilled pilot can actually land one like a helicopter, although the leadership at PAL-V describes it as being more like landing a parachute or paraglider…

Now, I’m not saying that the Liberty and similar craft don’t have potential, because they absolutely do. The gyroplane was a competing technology to both fixed-wing aircraft and helicopters in the early 20^th Century, and its lack of acceptance had more to do with lower top speeds and problems with its public image than with its safety or V/STOL capabilities. Advocates of the type claim, with some justification, that it is safer to operate than comparable fixed-wing aircraft, and more efficient than comparable helicopters. But anyone who wants to keep one in the garage and just fly to work is going to be disappointed to learn that gyroplanes and their pilots are regulated, certified and licensed by the FAA just like any other light airplane…

The unfortunate fact is that flying cars, or at least the kind that anybody can get into and fly around any time or place they like, are a terrible idea. The next time you’re out on the road and you see someone driving like an idiot (and you will) imagine them travelling two or three times faster and crashing into the side of somebody’s house if they take their eyes off of what they are doing – and who’s even mentioned flying while texting or flying while under the influence yet?

I’m glad to see the humble gyroplane getting a new lease on life, and I’ll be looking forward to seeing more of them in use over the next few years, at least if PAL-V is as successful as they’re hoping to be. But anybody who is looking for the mythical flying car had best keep on walking…

Electricity in the Air

Some time ago I was reading through the Smithsonian’s Air & Space magazine when I found a small blurb about NASA testing an all-electric airplane. The design wasn’t quite ready yet; there were still issues with the weight and storage limitations of the batteries, which gave the experimental craft a small payload and a very short range, but apparently they were working on the concepts involved. On the plus side, the electric airplane had many of the same advantages than an all-electric car would have had: zero emissions, low engine noise, and the ability to charge directly from renewable energy sources rather than guzzling fossil fuels. I remarked at the time that we were going to need this technology, and more likely sooner rather than later, so I was very interested to see a story on the Reuters site this week about Norwegian authorities testing a two-seat all-electric aircraft…

You can pick up the original story – including some cool video footage of the plane in operation – here if you’d like. Apparently the craft is built by a company called Pipistrel, in Slovenia, and so far hasn’t got either the power or range for more than a few test flights, but both the officials and Alister Doyle at Reuters agree that the concept, at least, has potential. For the moment, the problem is all about energy density. For all of the problems for which they are (justifiably) famous, fossil fuels do have the advantage of containing/storing a relatively large amount of energy in a relatively small mass and volume. Battery technology has improved a great deal in recent years, but a bank of batteries big enough to propel an airplane of any size is still too heavy to get off the ground, and even if it could take off it couldn’t stay up for long…

Project teams at NASA, and apparently several other agencies and companies around the world, are working on smaller, lighter, more-efficient battery designs and also trying to come up with lighter airframes. There has also been some additional work on solar panels; NASA has flown at least one experimental drone that is basically a wing made out of solar cells with a series of small electric motors driving propellers along the leading edge. Called Pathfinder, and built by the same company that build the original Gossamer Penguin solar-powered aircraft, the most recent version can stay in the air for up to 15 hours (depending on day length and other conditions) and may be able to reach altitudes as high as 100,000 feet…

Why does he tell us this? I hear some of you wondering. After all, this is a business blog, and I have no credentials as an aerospace engineer, or even an electromechanical engineer. Because the folks in Norway are talking about introducing an entire fleet of electric-powered aircraft by 2040, with commercial flights potentially starting much sooner. I’ve been speculating for some time that the key technology of this century, or at least the one that will impact consumer products and services the most directly, isn’t going to be electronics or software applications, but rather battery technology. Not because there is any indication that these new energy storage methods are under development, or that I would understand them if they were, but because the demand for such products is growing…

I’m not saying that battery-powered airplanes are going to appear any time soon; unlike the advances we’ve gotten used to seeing in processing power, memory storage, or software sophistication, battery technology will require advances in our understanding of energy density and transmission efficiency, and can’t just be tweaked by hackers in a basement in Menlo Park, or thrown together using stock parts by two rogue geniuses in a garage in Palo Alto. I can’t even tell you where or when the technical breakthroughs are going to happen; as previously noted, none of my degrees are in engineering. But ignoring the potential of this technology over the next few decades would be very much like ignoring the potential of microprocessors, packet-switching software, or microwave telecommunications back in the 1960s…

Museum of Failure

As I’ve mentioned a number of times on this blog, I originally went back to grad school to learn more about management failure, with an eye towards getting people to stop running perfectly good companies into the ground. This turns out to be harder than you would expect, because as one of my professors pointed out during my first year in Michigan, it’s difficult to study companies that don’t exist anymore. Even if you could find financial data, operational records or human resources information for defunct companies, and you generally can’t, the problems that killed the company could just as easily be intangibles like personality conflicts, poor stakeholder management, greedy owners, poor corporate governance, or sudden economic downturns. Usually the best you can do is study the failure of specific products or programs…

Regular readers of this blog (assuming I have readers) already know that I collect these stories; they’re a staple of my lectures at MSU as well as a major part of why the “Stupidity” tag appears on more of these posts than any other. Sometimes I do find myself having to remind people that most businesses (and business people) aren’t actually idiotic failures; it’s just that people who operate a business successfully very rarely need to hire management consultants, and they even more rarely do anything funny enough to be worth making snarky comments about in a business blog. And while anyone who aspires to run a successful company, or even work for one, absolutely should study the way successful firms have accomplished their missions, I was still practically giddy when I learned that an entrepreneur and clinical psychologist had launched a Museum of Failure in the city of Helsingborg, Sweden…

You can visit the Museum’s own site if you want more information, or pick up the Detroit News story online if you’d like to read about the operation. Some of the artifacts in their collection will probably already be familiar to the reader, such as the infamous Apple Newton PDA or the venerable Sony Betamax, while others may have slipped under your radar, like the Harley-Davidson fragrance products or the visually revolting green catsup. But while many of these items may move you to wonder what the inventors were thinking, the key point of this exhibition isn’t so much that they failed as specifically how. Because while many of these products are every bit as preposterous as they sound, some of them are quite sound in themselves…

Take, for example, the Betamax. Most people know it simply as an older format that lost out to the more common VHS tapes (before the entire product category were rendered obsolete by DVDs, Blu-rays, and eventually streaming video services). What most people today may not realize (or remember) is that the Betamax was actually a better product. By any objective standard, the Betamax had better picture quality, better sound quality, better workmanship, and was generally more reliable than even the most advanced VHS systems. What did it in wasn’t price or quality so much as a fundamental misunderstanding of the market – and the competition…

When Sony first introduced the Betamax it was a very innovative concept: bringing both the size and the cost of video tape down to the point where any private citizen could have one at home. Consequently, the company decided to keep close control of all aspects of the system, refusing to allow anyone else to use the technology. With no real competitors, they could set the price point wherever they wanted to, and take their time bringing out additional features. The extent to which their competitors reverse-engineers the Betamax design remains somewhat unclear, but in addition to the lower price it was the longer tape running time and pre-recorded tapes that made the VHS so much more successful. With a run time of less than an hour, later increase to just over two, it would be difficult to record movies from cable or broadcast television on a Beta tape, and initially it was almost impossible to find anything pre-recorded on one…

Now, I don’t mean to suggest that the failure of the Betamax, or any of the other products in the Museum, for that matter, would have been easy to predict in advance. If I could tell you with any certainty what products or features would sell in any specific market I could probably have retired on the fees from telling companies not to build the Apple III, the Google Glass, or the Pontiac Aztec. I am in full agreement with the founder of the Museum that all future innovators, and the operational leadership of companies attempting to sell new and innovative products, should study all of the products in this collection, and any others that they can get their collective hands on…

Because I can almost guarantee you that the next big exhibit in the Museum of Failure will have its initial product launch any time now…

Booming Along

Earlier this year, in the March issue of Air and Space Magazine, I found the surprising story about a company called Boom Aerospace (or sometimes just “Boom”) that claims to be gearing up to build the fastest civilian aircraft in history. The company hasn’t revealed the name or model number of the design, but the airplane in question would apparently be a 45-seat airliner capable of about Mach 2.2 and a ceiling of around 60,000 feet. That’s about 1,450 miles per hour, or around 2.6 times the cruising speed of a conventional airliner – fast enough to go from New York to London in roughly 3 hours and 15 minutes. Even better, the company claims that its airliners will be efficient enough to make a transatlantic fare of $2,500 profitable for airlines flying that route – which is where things get really bizarre…

A quick check on Expedia shows that a business-class fare of $2,500 round-trip from New York to London is just barely possible, assuming you book well in advance, stay over a Saturday night, buy a non-refundable ticket, and so on. If you want a non-stop flight you will end up paying around three times more than that, but if you are willing to accept one of the 1-stop routes you will be in transit for 14 to 18 hours depending on how long the layover is. If the company’s claims hold up, travel on one of the Boom aircraft would be the greatest value in the air, giving a potential operator the option of maintaining price parity with other airlines on the same route and making far higher profits, or undercutting all of the existing competitors while making a similar level of profit, all while offering a highly superior service (at least in terms of transit time). Whether or not this will really work is a much bigger question…

Anyone familiar with commercial aircraft will probably remember the Concorde, an Anglo-French supersonic transport (SST) in service from 1976 to 2003. The aircraft was an amazing technical achievement, particularly considering the limits of 1970’s technology, but was never commercially viable, due in large part to the extremely high ticket price. Ranging as high as twice the cost of a first-class ticket on a conventional airliner, and twenty or more times as much as an economy-class fare, travel on the Concorde was beyond the reach of most flyers, and too expensive for most business travelers to justify. It certainly didn’t help that only a handful of units were ever produced, with the only buyers being Air France and British Airways (e.g. the national carriers of the countries that originated the project), or that due to noise concerns the Concorde was only allowed on flights over water…

Now, we might reasonably ask how a private company, without either the backing of a national government or decades of successful production of civilian or military aircraft, could hope to succeed where Aerospatiale and BAC failed. We might also ask how a private company would be able to successfully operate such a vehicle when the national carriers of two different countries couldn’t make a go of it. It’s possible that 40-plus years of technical advancement in the aerospace field, especially in advanced construction materials and computer-assisted production techniques, might make this new design cheaper to produce and more efficient to fly on a per-passenger basis than the Concorde. It is also possible that a private company will have an easier time selling the aircraft to various governments and their national carriers around the world. And it may be that as air travel has generally gotten slower, more drawn-out, and less comfortable than it has ever been before, that the idea of spending less than half as much time (or possibly less than one-sixth as much time) on an airplane will have a much greater draw than it did a generation ago…

Personally, I’m not going to plan on traveling on any Boom aircraft for the foreseeable future, at least not until they manage to get their financing worked out and their product actually available for purchase. But I have to admit that if the company goes public any time soon I’m going to be severely tempted to invest in at least a few shares. Because if they can actually build an airliner with these capabilities that is also economically viable, this will be the biggest change in the nature of air travel since the introduction of jet-powered airliners in 1952…

I have to admit, though, that’s still a pretty big “if”…

Best or Worst?

By now, any of my regular readers (assuming I have readers) must be aware that I spend a lot of time looking for products and organizations that have failed in amusing or instructive fashions – partly because I’m a business strategy teacher and a former failure analyst, and partly for my own amusement. To be fair, I have often brought you stories about the strange, bizarre and wonderful new ideas that turn up from time to time, some of which have actually lived up to the hype that their inventors and I have given them. This goes a long way toward explaining why the “Stupid” tag and the variations on the “Innovations” tag are so common on these posts. But much more infrequently, I will find a story online that might be either the smartest or the dumbest thing I have ever seen – or possibly both at once. Such was the case with the new movie theater design I read about today...

You can pick up the original story off the MSN home page if you want more detail, but the basic idea is that somebody decided to make a movie theater into an indoor playground. It’s got a typical screen and audio/visual equipment, but it also has a slide, a jungle gym, and various things to jump on, run around, and play with. They’re apparently going to include both conventional seating for adults (parents, one assumes) and kid-friendly seating areas like beanbag chairs and such. Since it’s difficult for smaller children to sit still and watch anything for two hours or more anyway, the people behind these facilities appear to have gone entirely the other way. Rather than trying to get people to be quiet and show respect for the other customers, they’re building a place where people can just let their kids do whatever they want…

Personally, I can’t think of any venue that would have less value for me, but then I don’t have (and do not ever expect to have) responsibility for any small children. I’m not the sort of person who takes children to age-inappropriate events, either, or at least I don’t think I am. Although I will concede that there are some people of my acquaintance who will never be able to watch a movie without annoying the crap out of everyone else in the building, and some of them are now well into middle age. But whatever the exact demographic of customers using these kid-friendly movie venues turns out to be, my strategy for dealing with them is simply not to go to any. The real question, from where I’m sitting, is what effect this will have on movie viewing experiences in other venues…

On the one hand, the existence of movie theaters in which the kids can run around and make all of the noise they want to might be a good thing. If we can convince any significant percentage of families with rambunctious children to go to such venues and leave the rest of us in peace, that could mean fewer disruptive children screaming and running around when we’re trying to watch a movie. On the other hand, I’m not sure that training people to assume that a given venue should make special provisions to accommodate their children is a good idea. It isn’t hard to imagine people who have grown up running wild in venues where they would normally be required to have some consideration for the other customers growing up to believe that they should always be allowed to do just as they like…

Of course, we should probably also concede that in recent years we have all witnessed increasing numbers of nominal adults who behave that way anyway. And we have already seen the appearance of movie theaters that do not tolerate any noise or disruption during the presentation, such as the Alamo Drafthouse organization, which does not permit very young children onto the premises at all. So maybe the idea of venues that serve the specific needs of a particular demographic group really is a brilliant idea; it might even be a way for this struggling industry to recover some of the market share it has lost to Blu-ray, DVRs, and Pay-Per-View/On-Demand cable services. Or perhaps this is the beginning of the end of movie-going as we know it…

I still can’t decide...

Who is the Customer?

I was reading about the new Apple Watch product in the Los Angeles Times over the weekend, and wondering if Apple knows something we don’t, or if they’re just getting ahead of the market again. The truth is that the company has made the right call a number of times in the last two decades, but not always; Apple has had their share of ideas that didn’t fly or just weren’t ready. Their introduction of the first real smart phone changed the telecommunications industry, not just the cell phone industry, forever, and they were also right about the tablet computer. But at the same time, they introduced the Newton PDA well before such devices achieved common usage, and never really did compete effectively with Palm Pilot for that market. The question here is whether there is anyone out there who wants a remote display and control node for their smart phone that you wear like a watch – and, more to the point, if anyone is willing to pay $349 USD and up for such a device…

If you’re not familiar with the Apple Watch – and you may not be, since the things are not for sale as of this writing – the descriptions of it that we have seen so far suggest that it really is a watch; you wear it on your wrist and you can use it to tell what time it is. You can also use it to get weather reports, stock quotes and reminders from your calendar, or to send and receive text messages and play music. The units will have a limited ability to tie into health-related applications on your telephone, and can monitor the number of steps you take during a workout and similar factors. Naturally, you will need to have a functioning smart phone on your person for any of these functions to work; the watch itself will not have cell phone or Wi-Fi connectivity. In fact, it’s really more of a peripheral for your phone – and, in the case of the gold-plated ones, a fashion statement – than the two-way wrist communicators beloved of some science fiction settings. The real question is who is going to buy the things?

As the Times reporter correctly notes, a lot of young adults today don’t even wear watches anymore; you will generally see them checking their phones for the time. But older customers, who do wear watches, are far less likely to see a use for a remote/peripheral device for their phones. One of the true advantages to an old-fashioned analog watch is that it will continue to function even if your cell phone’s battery is dead, the local cell network is down, or you happen to be an inconvenient distance from the nearest cell tower. And unlike certain markets and segments Apple has invaded in the past, in this case there is no population of users for them to take over, because this product category has never existed until now…

Now, I don’t want to sound like I’m beating up on Apple. Every company has to find the ideal balance between how much of their time they spend making money off of products and properties they already own, and how much of their time they spend exploring new products or technologies that will help them to make money. Apple has gotten this question right more often than not; there’s a reason they are still around and still profitable after nearly 40 years. They’ve got a lot riding on the new product category this time, though; the Apple Watch is the first major new product type to appear under their new CEO’s leadership, and if it fails badly enough this could cost the company in terms of investor confidence and cost of capital, not just money wasted on developing, producing and marketing a product no one wants to buy…

If Apple has guessed right, then wearable computers (and peripherals) really are the next big thing, and we can probably expect to see an increasingly sophisticated array of wrist-mounted computing platforms appearing over the next few years, some of which may eventually replace the smart phones they are currently just connected to. If they are wrong, the Apple Watch may be about to join the Newton, the Lisa, and the Apple TV system as ideas whose time just hadn’t arrived yet. And if Apple is able to leverage the development of the Watch system into a new product line or category that they can sell, then the actual success of the Apple Watch is irrelevant; the company will make back its money through later developments of the same technology – just as they did in all of the above cases…

Coming Soon to an Auto Mall Near You!

Over the years we’ve discussed a number of the emerging technologies that promise to one day produce cars that don’t require gasoline or other fossil fuels in order to run – including some which are already in use, like the biofuel diesel projects and the Tesla Motors all-electric vehicles. There’s one I keep bringing up which has, so far, failed to produce any street-legal production cars, despite its popularity in science fiction and the fact that the actual technology has been around since the 1960s: the fuel-cell power plant. This is the same device that was used to generate electricity onboard the Apollo missions; a relatively simple device that uses compressed hydrogen and a catalytic reaction to generate power, leaving water as the only by-product. They also have the advantage of not needing large batteries filled with lead and other heavy metals like the electric cars, or using food crops to make fuel, like the E85 projects…

From a technical standpoint, the big problems with fuel cell vehicles have always been the weight and bulk of the units, the difficulty in storing and dispensing pure hydrogen safely, and the cost of making the cells in the first place. From a business standpoint, the much larger issue has always been that no company with the resources to mass-produce such a vehicle has ever been interested in making one, which means there has also never been a financial incentive for anyone to produce service stations capable of refueling one. Tesla Motors has experienced some of the same issues with its electric cars; while they are still developing a network of charging stations, unless there are enough customers to keep such stations in business, no one is going to operate one. So far, there are only a handful of stations that can provide hydrogen for fuel-cell vehicles, all of them in California – but that could be about to change…

A story last week in the Washington Post describes a new offering from Toyota called the Mirai, which is being described as the first production car to use a fuel-cell power plant. This may be a bit of an exaggeration, in that the Mirai is only going to be produced in limited numbers (700 this year and 2,000 next year), but the same Post story mentions that Hyundai has already started producing a fuel-cell version of the Tucson-class SUV, and Honda’s first fuel-cell type will be available next year. If these vehicles perform as well in a business sense as they perform in the physical sense it seems likely that we will gradually see production increase, as it did in the case of the Prius-class hybrid and as it is starting to with the Tesla electric products. And there is reason to believe that these vehicles will take off and sell, given their advantages over all previous technologies…

Some of the advantages are practical, of course. A fuel-cell type like the Mirai will have significantly greater range than the Tesla electric cars, and will require three minutes to recharge, rather than the 30 to 60 needed by an electric vehicle. Toyota is also pricing them at about 70% of what the primary Tesla car is selling for. But the big difference should come in terms of industrial base and infrastructure. I will yield to no one in my respect for Elon Musk and the folks at Tesla Motors, but for all of their technical and financial brilliance, they do not begin to have the industrial resources of Toyota, let alone the Honda and Hyundai corporations, and who’s even mentioned access to capital or distribution channels yet? Toyota has the ability to build up the number of fuel-cell vehicles gradually over time, exporting them to more and more states as the fueling stations to support them come on line. If two or three major competitors are also dumping hydrogen-powered vehicles into the US market, it will very rapidly become economically viable to support and fuel these cars, and the whole cycle will begin to pick up speed…

There are still problems to work out, of course. It remains to be seen if the oil companies will pick up on the opportunity to sell hydrogen through their existing infrastructure (at the moment, most of the hydrogen is being delivered in various hydrocarbon storage media, and could be distributed through slightly-modified gas stations), or how long it will take to educate the public about the potential of hydrogen-powered vehicles. But if production volume starts to rise, and the price continues to drop, fuel cell vehicles might take off in exactly the same way gasoline-powered cars did a century earlier, and for almost exactly the same reasons…

Define Success

I can’t really take credit for this one – I was directed to the idea from the What If site, which was created by the genius behind the XKCD web comic – but as I followed up across the related sites a question popped up in my rather idiosyncratic thought process: When can you reasonably describe a crowdfunding exercise that brings in over $1.4 million as a failure? Just as important, though, is the counterpoint question: When can you reasonably describe a project that receives just 0.0000025% of the necessary funding (that’s one dollar for every 40,000,000 you actually need) as a success? Well, it depends on the how you define success – and on how big the project really is, I suppose…

If you haven’t seen any of the Solar Roadways video or text presentations you can find a good selection of them on You Tube, but the basic idea is to replace the asphalt and concrete surfaces of all of the roads (and highways and parking lots and so on) in America with solar panels. Since that’s somewhere around 29,000 square miles, we could conceivably generate three times our current total energy requirements just using current solar cell technologies, with more to come as the state of the art improves. There are a number of technical issues involved, which you can read about on the Jalopnik site here, but there are also some offsetting advantages, such as using the same roadway-mounted solar panels to house programmable LEDs, making the roads reconfigurable in real time. Unfortunately, when we look at the business side of the concept the whole thing gets murky with amazing speed…

Project estimates provided by the Extreme Tech website put the total cost of conversion for 29,000 square miles of roads at around $56 trillion USD – or about four times our current National Debt – using the cost figures provided by the Solar Roadways company’s own projections. And that doesn’t even consider the costs involved in developing the clear outer layer of the roadway – there isn’t currently any form of super-glass that can handle all of the operational requirements for such a substance. There are also issues like the proposed LED lane marker system costing more than the solar cells themselves, the cost of transmitting the generated energy to customers who can use it (which dwarfs the rest of the project), and operational concerns like cleaning the glass tiles (roadways get dirty a lot), replacing broken elements while traffic swirls around you at highway speeds, and hackers getting into the LED lane markers and configuring the roads into one giant death trap…

Now, we should probably acknowledge that there is nothing inherently wrong with the idea of widely dispersed solar collectors, assuming there is some economical and technically feasible way of connecting them to the power grid. For that matter, even if a continental-scale project isn’t possible, there’s no reason you couldn’t have single streets or individual parking lots built this way that can power their surrounding buildings. If creating a self-cleaning glass strong enough to stand up to truck traffic while still collecting sunlight isn’t feasible, then what about roof tiles made the same way? Or simple parking-space carports, which are common in the sunny parts of our country, that use the same technology to turn entire parking lots into giant solar arrays? Of course, that would require further research and development, since the current solar cells are still a bit too expensive for this sort of mass use. If only somebody were to come up with seed money for such a program – say, using crowdfunding…

It remains to be seen if the Solar Roadways people will get anywhere with their more advanced designs; as previously noted, they still need 40,000,000 times more money to complete the project. But between crowdfunding and Department of Transportation grants they now have around $2.2 million USD in research funds, which isn’t exactly small change. I don’t know if we will ever drive on continuous bands of solar collectors, but it’s possible that we might park under them, work under them, or live under them sometime soon. Even with a funding percentage of 0.0000025%, it’s hard to call that a failure…

Going to the Dogs

It was one of those headlines that you just know aren’t going to pan out, but you have to look anyway: “Canadian students invent ice cream that is stored at room temperature.” Anyone who has ever suffered through the freeze-dried abomination that is marketed as “Astronaut Ice Cream” already knows that the idea of storing a frozen dessert at room temperature is something of a dodgy idea to anyone whose idea of sweets does not include Styrofoam packing kernels. And if you follow the link, you will find that, as expected, the story it leads to isn’t entirely the one the headline would lead you to expect; it’s just closer than usual…

The product in question, which really was developed by students at McGill University, is less hype than a self-churning sorbet that can be stored indefinitely at room temperature before you activate its nitrogen canister and throw it in the freezer. It isn’t really ice cream in the sense that it isn’t actually frozen until you leave it in the freezer for a few hours, and also in the sense that it’s a vegan product containing no dairy products of any kind – hence, neither iced nor cream. I’m personally a little dubious about flavors like “hibiscus and ginger or almond and pistachio” – if it doesn’t contain chocolate, caramel, or vanilla it’s not really ice cream, as far as I’m concerned. But a much larger issue, at least as I see it, is that the people who shop for ice cream and the people who shop for “vegan sorbet” aren’t really the same people. Or, to put it another way, I don’t believe that there is currently any defined market for this product…

Now, in fairness, there is some precedent for a non-dairy/vegan frozen dessert product, including at least one brand that has been around for the last 25 years; it’s just that this category of product does not appear to have ever achieved mainstream acceptance. Sold under the name brand of “Tofutti,” these products make use of frozen tofu (and various flavoring, texturing and coloring additives) to produce non-dairy products that look – and, to some extent, taste – like real ice cream products, but which contain no animal products of any kind. It’s a great idea, in its own way; the product in question is cheaper to make and more ecologically responsible than conventional dairy products, and is generally considered healthier to eat, as well. The problem is, no matter how adept you become at freezing and flavoring bean curd, it still doesn’t taste that much like ice cream…

In management terms, a product or company that has a relatively weak position in a relatively unattractive industry (or part of a larger industry) is classified as a Dog – not to be cruel; it’s just a technical term. But from a management or financial standpoint, a company whose primary product is neither growing explosively in market share or revenue (like a Ben and Jerry’s or a Coldstone Creamery) or maintaining a consistent and profitable control over a large market share (like a Baskin-Robins or a Carvell) or even taking a strong position in an unstable part of the industry (such as any good frozen yogurt company) is not an attractive prospect for investment and further development, and should probably be removed from your portfolio. At least, that has been the case until now…

It remains to be seen, of course, whether or not the new stabilizing agent developed at McGill will work on tofu products, or whether the ability to store them for months/years without refrigeration and then churn up a batch whenever you want it will be a sufficiently large change in the product to make it more widely popular. Unless the inventors can also come up with some way of making the product chill itself as well – just open the box and hit the activator, and the product will do the rest – I can’t see this effectively competing with any of the existing types of frozen dessert. But, I must admit, I’ve been wrong before…

On a Roll

 A while back I brought you the story of a new development in the cola wars: a Coca-Cola invention called a “Freestyle” machine, which can produce any of the company’s 120 or so primary beverage products for you at the touch of a button, or create new ones by mixing together existing flavors. Since most soft drinks are just small volumes of flavorings (and in some cases colorings) added to a large volume of carbonated water it’s possible for a vending machine or a restaurant to offer a customer dozens or hundreds of choices in the space were a more conventional delivery system could only offer a few. After a few years in service it turns out that these gizmos are working out surprisingly well, although there have been some reports of learning curve being a problem – some people have to experience a mixture of Vanilla Coke and iced tea for themselves in order to learn that you should NEVER mix Vanilla Coke with iced tea (or anything else; Vanilla Coke is disgusting). This does lead me to wonder what will happen when they start releasing Freestyle machines with alcoholic options, however…

A story on the Atlanta Journal-Constitution website details some of the user comments about the Freestyle machines in use, and some of the planned developments. I thought the idea of using the Freestyle in a restaurant, where patrons can enter their drink orders at the table and have a server bring it to them, was interesting, although you’d apparently need to do something about people mixing revolting combinations and sending them back because said drinks are revolting. But you can limit that by only putting drinks on the customer interface that somebody might conceivably like, and there might be something you can do with disclaimers or payment up-front as well. I’m not sure about using it to mix drinks with alcohol in them, however…

One of the long-standing problems with trying to do anything clever in a bar concept is that many people go to bars with the intention of getting drunk, and there is literally nothing that drunk people will not think of doing – witness the cases each year where people get drunk and fall off of buildings unless prevented from doing so. Unless you can enforce some policy of people having to pay for whatever weird drink they order you’re going to end up with a lot of wasted alcohol – and unlike the other components in a Freestyle machine, that won’t be cheap to replace. But that problem aside, there’s no reason you couldn’t put several different alcohol tanks into the basic system, making it possible for the machine to create not just simple things like a rum-and-Coke or a vodka-and-tonic, but any combination of liquids that are stable enough to store. Add a bartender to handle complicated drinks and pour beers, and the Freestyle could lower your labor costs and cut the time it takes to fill a drink order. It’s the unattended versions that are going to cause trouble…

With the right plumbing and wiring, you can install a Freestyle machine almost anywhere – that was a key aspect of the original design. That means that with no additional effort you can have a self-contained kiosk almost anywhere that can mix up dozens (or hundreds) of alcoholic beverages at the touch of a button – a robotic bartender, you might say. But the moment you try that – and I think we can safely assume that someone WILL try that – there should be an instant firestorm between people who like the idea of getting a nice drink wherever and whenever they want (“Civil Rights!”) and people who think unrestricted access to alcohol is a menace to society (“Won’t Anyone Think of the Children!”)…

Of course, some countries already have unattended vending machines selling beer and other adult items, and perhaps the Coca-Cola people will start looking at sending some of the prototype machines to those locations. Meanwhile, PepsiCo is already working on a competing version that will also offer coffee products and smoothies, and there’s no telling what “inappropriate” uses somebody will come up with for those…

Not to Be Missed

I don’t do a lot of restaurant reviews on here, mostly because there are already lots of blogs and websites where you can get that kind of information, and partly because this is a business blog. But I’m going to make an exception this time, because this is really a follow-up on an earlier post, because I like this place and want it to succeed, and because I feel the company has things to teach us. And if you eat as many hamburgers as I do, it’s really hard not to comment on a company that appears to have put a new spin on this most basic of American favorites…

Regular visitors to this page (assuming I have any) will recall that for nearly three years there had been a large storefront sitting vacant in the strip mall right at the north-eastern end of MSU’s campus, which I mentioned in an earlier post when it appeared that there might finally be a new tenant going into that space. For a commercial property to have been left fallow for that long there almost had to be something wrong with it, and as far as any of us could tell nothing had changed about the location. There were no new housing units around that corner, nor had there been any change in traffic patterns or public transit, and the only changes in the mall itself had involved a few long-term tenants leaving and a few new ones arriving – a possible change to the center’s primary demographic, but nothing that should have made any difference to a potential renter…

What eventually arrived wasn’t a retail store at all; it was a restaurant called Bagger Dave’s – which calls itself a “Legendary Burger Tavern.” Talking with one of the senior staff, we found out that it’s a native Michigan company, founded about five years ago in Berkley, Michigan and now up to six locations in the lower part of the state. The company uses local sourcing for all of its meats, cheeses, produce and microbrew beers, and they’re apparently working on getting in local wines, too. The local sourcing is good for community relations, of course, and it’ a great way of getting local customers to accept you when you move into a new market – we’re all loyal Michigan people, just like you. But the thing is, this really IS good for the local economy, and it helps your new neighbors to get work, be more profitable, and make enough disposable income to go out for meals…

As an example of enlightened self-interest or good business practice, you’d be pressed to improve on it. But the other interesting thing is that while there are literally thousands of businesses in America that will sell you a burger and a beer, very few of them attempt to raise this product mixture to an art form, let alone a way of life. By offering the best (local) beers, premium-grade ingredients, and an unlimited number of possible combinations – the company offers several “standard” burgers, but will let you combine literally anything they have on hand in any order you want to create whatever you consider the “perfect” burger – they really are offering a product that no other company in this market has even considered. The closest thing in any local market would probably be the Five Guys burger stand, and they don’t have wine, salad, desserts, appetizers, or beer available, let alone table service. There are a few companies in the US that split the difference (they have the customizable burgers, but not the other menu items or table service), notably the Fuddruckers chain, but none of them are to be found in the Central/South Michigan market…

I don’t know how well Bagger Dave’s is going to do in the long term; their business concept appears sound, and their products appear to be superior, but I’ve seen a lot of good companies that didn’t quite make it through no fault of their own. So let me encourage anyone who might be passing by the corner of Hagadorn and Grand River in East Lansing to stop in for a burger and a beer. You’ll be doing a good thing for your friends and neighbors, or at least for my friends and neighbors, and you’ll also get an absolutely world-class hamburger out of the deal. What more do you want for lunch?

Something New

The other day, my students and I were talking about barriers to entry, and an example that came up (this being Michigan, where automobile factories used to be common) was new car companies. It’s been at least a generation since anyone opened a new automobile company in North America; the only new car companies any of my students could think of were Saturn and Hummer, both of which are General Motors nameplates. If we go back a few more years you can get into things like American Motors and DeLorean, but for the most part it has been decades since anyone made a serious attempt to start a new car company, precisely because the barriers to entry are so high – you need an inconveniently huge amount of capital, not to mention land (for the factory), trained workers, government permits, insurance, and so on. At least, that’s the way things were looking up until this week…

From our “There’s something you don’t see every day!” files comes the story of Carbon Motors, a new company based in Indiana that is marketing what it describes as the first police car ever designed specifically for that purpose. Carbon’s “E7” design includes features such as bullet-resistant door and body panels, a back seat that can be hosed out to clean it, driver-specific intelligent keys to keep people from stealing them, integrated lights, sirens and instruments, a 75 mph crash capability, a forward-looking infrared (FLIR) system and a backup camera, not to mention 0 to 60 acceleration in 6.5 seconds and a top speed of something over 150 mph and built-in ram and PITT maneuver modifications. The company insists that the price will be comparable to taking a passenger car and modifying it to have all of the same features, and that the fuel economy should be in the 28 to 30 mpg range. That last claim would be harder to believe if BMW hadn’t signed on to produce the engines, by the way…

According to this story on Bloomberg.com, BMW has won the contract to build a super-low-emission diesel engine for the E7, which will include the exhaust and transmission systems. The deal calls for 240,000 units over an unspecified number of years, and represents a huge windfall for the German car maker (it’s worth something on the order of $1.35 billion to BMW), as well as an excellent way of introducing their new, super-efficient diesel systems to the North American market. If the E7 is actually adopted by a significant number of police forces, the company should be able to start selling its own production vehicles with the same power plant within a year or two. It’s a huge win-win situation, for Carbon Motors (which stands to receive a $310 million Federal clean-energy loan) as well as for BMW. And if the cars are as effective, efficient, and clean as advertised, for the jurisdictions that purchase the cars, as well…

Of course, the real question is whether the E7 will sell, and that remains to be seen. If Carbon Motors can’t gain wide acceptance of the product among law enforcement they won’t be able to produce the cars on a large enough scale to complete their contract with BMW or pay off their Federal loan, and they’d just end up being the DeLorean motors of the 21st Century. On the other hand, if they can sell the product, they’d be the first new car company to appear in the United States in half a century or so, and there’d almost certainly be a demand for a civilian version of their product – from private security companies, security-conscious private citizens, movie stars who play lots of law-enforcement officer characters (don’t laugh; that’s where the civilian Hummer came from!) and anyone else who thinks the design is cool or interesting. In which case, they might just end up being the exception that proves the rule in next year’s strategy class…