Venture Design, part 6: Beating the Commodification Monster

Most business magazines would have you believe that a big, nasty monster called "commodification" really does live under the bed.  Or perhaps in the closet. This view of world believes that dwindling margins, shrinking revenues, outsourcing to China, and the great sucking sound of WalMart are all inevitable parts of doing business circa 2005.  The monster is going to get you...

Hogwash.  Creating cool stuff that matters is the best way to avoid the commodification trap, and cultivating the ability to create that cool stuff in a cool way makes things even sweeter.  To illustrate this point, I'd like to point you to economist Virginia Postrel's recent NYT article on American Leather, a furniture manufacturer using lean manufacturing, enlightened employment practices, and a modular design philosophy to create (and claim) real value in the marketplace.  In an industry rife with cost and price pressures, American Leather's sales are growing 17% per year year.  And their products are pretty nifty.

Not that it's been an easy ride for the firm.  Its co-founder Bob Duncan came from an engineering background, which enabled him to implement the innovative manufacturing culture that defines American Leather, but that training didn't prepare him for what it really took to get something to market.  Says Duncan:

At the end of the day, you have to sell the stuff.  You can have the coolest products. You can build it in 20 minutes and deliver anything you want. But if nobody buys it, it's irrelevant. As an engineer, the biggest thing I've learned in the whole process is how hard it is to sell things.

I love what American Leather has done and what they stand for.  Designing your venture to create the products people want in the way they want them is the best way to beat the commodification monster.

Comments

[Amy Nathan]

I love the fact that you're talking about "beating the commodification" of our society. There's actually a new word floating around called "microstige," which is characterized by companies like American Leather. This is an emerging consumer trend of loving the process of manufacturing and development as much as the final product. It's a backlash against masstige"--creating luxury products for the masses. The new discerning consumer is striking back against the conglomeration of America. With the consolidation of Federated and Mays Department Stores there will be even less competition and variety in products and brands. I join you in urging society to look for cool stuff, search out the products made with love and care, and fight against this tidal wave of commodification!

[Diego from Metacool]

Microstige.. Masstige... cool words for interesting ideas!

Thanks!