July 23, 2007 by Robert Kozinets.

Revolutionary times happen in every industry as technocultural change keeps on keeping on. Everyone knows that the Internet has seriously deflated the traditional adult entertainment industry. Adult entertainment once upon a time made major profits printing airbrushed pictures of beehived babes on dead trees. Along came videocassettes, along came cable, and then boom, along came the Internet as a major challenge. How those brands have adapted and not adapted to the changes wrought by technoculture might provide some food for thought for all media companies facing major challenges from rapid technological change among their consumer bases (and that’s just about everyone in the media).

A few years ago, I did an interview with BusinessWeek magazine about the Playboy brand (see the article here). I said that the brand and the bunny icon had some residual appeal, however, a kind of kinder and gentler sexuality that had some kitsch appeal. I thought at the time that a positioning around playful sexuality made sense for Playboy, and indeed, with the Hefner name attached to Playboy, it seems like they can’t move too far from their emotional roots. Playboy is like Adult Disney, it isn’t particularly threatening, dangerous, or perverse. Once it moves into Hustler’s terrain, the brand is, um, screwed.

That’s where the marketing insights of Christie Hefner really seemed to shine. Playboy followed the lead into all forms of New Media–they’ve had to. Although Playboy is the mainstream brand, Playboy Enterprises has built its Spice brands into a hardcore heavyweight. Catering to divergent needs with different brands, Playboy is able to maintain a mainstream corporate brand that offers porn to the masses (and the masses are loving, it by the way, as this recent popular machinima YouTube video attests). And with Spice, they also have a complete range of offerings to satisfy many adult tastes. Diverse tastes, legitimacy concern, multiple brands. I called it “decoupling” in the BusinessWeek article, and Christie Hefner called it the use of a flanker brand. Whatever you call it, it made good sense to me.

The results seem to bear out that this strategy makes sense. I see the Playboy brand around, adorning women’s jewelry and clothing, more than ever. Although we don’t often acknowledge it, sexual repression is alive and well in our contemporary society, and it inspires resistance. Clearly the brand’s meanings of an open, guiltless, approach to sexual pleasure have resonance with young and old.

Penthouse’s brand hasn’t been doing nearly as well. Entering Hustler’s space, Penthouse went hardcore and its sales suffered. Channels closed up, and in 2003 its publisher filed for bankruptcy. As Abram Sauer writes in an interesting online posting about the brand for brandchannel.com, Penthouse has been restructured and re-launched into the same mainstream segment that Playboy occupies. Like Playboy, Penthouse now features only “tasteful” full nudity and now has at least 11 international editions and a circulation around 350,000. There is little doubt that this brand is struggling, and Sauer opines that Penthouse needs to find its proper customer segment. Which group of people, which set of needs, is the brand going to appeal to?

But I think my initial observations paid far too little attention to the revolutionary changes that technoculture–the combined impacts of technology and culture–has brought. How do adult entertainment brands find and create meaning today in such a rapidly changing, high-demand, instant access, everything available, porn, porn, everywhere world? Consider first some alternatives, like the Suicide Girls, Burning Angel and SuperCult web-sites that spotlight a different type of young woman, exposing a grittier and more realistic, more 3-dimensional view. As you can see in the quick posterview comparison in the graphics above, sites like these seem to cater not only to a different target but to a different aesthetic thank Playboy and Penthouse, and I think that’s important (BTW, I don’t mean to ignore or bypass the many important and worthwhile alternatives to mainstreamy straight porn in this blog, I just don’t have the bandwidth to deal with everything in a focused way this time).

But I think what is going on simultaneously is something even more fundamental than a particular target’s needs not being served. What if parts of the porn industry are shifting, just like parts of so many industries are shifting, into a more communal and do-it-yourself (DIY) model. What if increasing numbers of people don’t have the same taste for professional porn that they once did, and prefer the amateur variety?

What if the porn industry is becoming wikimediated the same way that Star Trek and other media properties are, the same what that YouTube is democratizing the media, and blogs are engaging the news? What if a rising tide of people (yes, people, male, female, and every possible combination) is actually *enjoying* the combination of voyeurism and exhibitionism that they can only get by DIYing their porn?

There are many business models out there for monetizing this trend and its activity. Go check out RedClouds, WhatBoysWant and YuVuTu web-sites, for instance, to see adult entertainment brands that brand themselves around user-generated content. And there is an awful lot of room for free content out there. People seem much happier consuming their porn rapidly on screens rather than slowly on dead trees. What works and what doesn’t in the adult entertainment industry is going to be an interesting lesson that is going to help us understand the nature, appeal, trends, and business models of user-generated content across many other new and old media industries.

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July 19, 2007 by Robert Kozinets.

I’ve been fascinated by the theory and practice of innovation for years, having taught and developed the New Products course at the Kellogg School of Management for seven years. My recent blog entry on the Conference Board’s critique of Canada as a stagnant cesspool of unimaginative copycats has spurred my interest in this area even further.

The more I personally experience of Canada’s business climate, the more despondent I become. The Canadian economy is an American business clone living in a different political-social-cultural ecosystem. The supermarkets are all-American styles, but the service and stocking systems are pathetic. Same for all the franchised “services”? All-American style, but with the Canadian spin on “service.” Is there a unique Canadian cuisine? Canadian health care advances (American style, but without the budget or the service orientation)? Canadian rituals and customs? Uniquely Canadian brands (you mean President’s Choice?)? Almost everything manufactured is Made in China and consumers here don’t seem to really care: Made in Canada seems to signify nothing in any sector of the economy. And why should it?

No wonder Canadian national wealth is based on the hewing of trees and the dredging of oily tar sands. Oh, and tourism. Camping, fishing, hunting and skiing. It is a patchwork economic system based on raw material exports, exploiting land mass, and a plethora of professional services based largely on (watered down) imitation (of course there are notable exceptions, like Research in Motion, but far too few of them). It needs more.

Many of these critiques could also be leveled at the American economy. It isn’t nearly as apathetic as Canada’s, but its design and innovation orientation are slipping. What does Made in American signify anymore? In which sectors (besides Hollywood, weaponry, and high-tech) does it matter anymore? American and Canadian, heck, the rest of the world too: these are challenging times requiring immense innovation. We can all do better.

I recently came back from a magnificent trip to Italy and Switzerland as part of the European Association for Consumer Research conference (Stefania, Cele and Mary Ann put on the best conference I’ve ever attended…bravissimo!). While I was on that trip I spent a lot of time with my colleague Diego Rinallo at Bocconi University in Milan, and we spoke about the topic of innovation, and creating innovative industries. I can’t say enough about Bocconi, by the way. It is the #1 University in Italy, it has a gorgeous campus and, best of all, it is chock full of brilliant scholars doing cutting-edge, important work in the areas of consumer culture and marketing, people like Antonella Caru, Bernard Cova, Stefania Borghini, Stefano Pace and of course Diego.

So let’s talk fashion. Milan is chock full of important and innovative designers: Prada, Armani, Versace, and Dolce & Gabbana are households names around the world. There are many others: Emilio Pucci, Navarra, Cavalli. Somehow, I was under the impression that Italy and in particular Milan had always been important fashion centers, that their innovation in clothing design had been long-standing, like maybe from the Roman ages when togas were all the rage. But Diego’s recent historical studies set me straight.

Amazingly, given its international influence and renown, the Italian fashion industry is actually only 56 years old. That’s pretty amazing. Before February 12th, 1951, there was no Italian fashion industry as such. Italian dressmakers were simple copycats. They looked to Paris for design, creativity, novelty. Paris dictated fashion. Milanese and Italian dressmakers built it. Doesn’t that sound familiar?

Then along came Giovanni Battista Giorgini. He was originally a buyer of handcrafted leather goods (and much more) for a set of American department stores, a guy in touch with markets and marketing, who knew how the fashion industry worked at the level of merchandising and retailing. With some hard work, he convinced thirteen important Italian dressmakers to present their own designs and collections in Florence, at the beautiful Sala Bianca of Pitti Palace, in front of a selection of American buyers and journalists.

And the rest, as they say, is history. The idea caught on, Italy became a center for design, and a major high-value-added Milanese and Italian industry was born.

I think that major case studies of how innovative industries and companies begin and work is of immense value to managers, educators, and policy-makers. I’d love to work with Diego on building a more rigorous examination of Giorgini’s Milanese success story into an article about creating innovative industries.

Here are Five Initial Principles for Creating Innovative Industries that we can learn from the Creation of the Milanese Fashion Design Industry. Without wanting to personalize them too much (because I believe and assert that we can definitely learn from what he has done, and others can do it again in other industries), I call them “The Giorgini Principles.”

1. Code-Switching: The innovative industry “movement” was led by Giorgini, a man with cross-continental experience, a fluent translator who spoke fluent American-English, fluent Italian, fluent business/marketing lingo, and fluent fashion. He was a perfect ambassador.

2. Histori-Localization: Giorgini maintained and emphasized the Italiano aspects of design. He talked about how Italian collections would have particular lines, cuts and portability that drew from the Renaissance artistic tradition. Locating the critical “First Italian High Fashion Show” in the 15th century Palazzo Pitti was brilliant and highly symbolic of this historical-national connection. We now find that historical and local connections are read as the harbingers of authenticity by consumers of all kinds (this goes for B2B buyers as well). There was no real historical continuity between these Renaissance designs and the current Italian fashion industry. It, too, was manufactured. And fairly recently.

3. Tuning: Giorgini not only initiated creative ideas, he knew how to sell them, by first learning, building connections, tuning in and customizing for the relevant market, which was the American (and Canadian) market, through his connections with major retailers like Bergdorf Goodman, H. Morgan, Tiffany, Bonwit Teller, and Sakowitz. Staying in touch with American buyers and customers meant that Georgini was balancing multiple needs. He was managing the creative market-driving of designers, but also matching and directing it to be market-driven by the needs and responses of the American markets. That opportunity to bring in a fresh perspective and listen exists for every entrenched market.

4. Rupture Opportunism: The timing was no accident. Paris had been battered by WW2 and Hitler had misunderstood the value and placement of the Parisian fashion center and tried at one time to move it to Berlin. Paris’s dominance as a fashion center had been challenged and weakened and the time was right for a strong challenger to step in. Giorgini’s genius was to recognize this, get the timing right, and implement perfectly.

5. Pattern-Breaking: Giorgini planned the fashion shows to occur immediately after Paris held their own fashion shows. This left the designers with no time to imitate French fashion designs. They were forced to be innovative and unique.

I think that this story and these principles can be an inspiration for Canadian companies, industries, educators, and policy-makers to wake up and find an industry to claim (or reclaim) as its own. I think that industry should be in that oxymoronic necessity of environmental “technology.” I use the word “technology” loosely, to also denote new changes in techniques, procedures, practices, and ways of living, as well as in complex machines. Canada still has a natural (as in close-to-nature) “brand” meaning for the rest of the world, especially Europe and the USA (they buy Canadian mineral water for this reason). Will the world attune to our new technologies and systems to help form a more sustainable future?

What will the future cities of the world look like? Europe is ahead in innovations in this area, but with its environmental challenges, its educated workforce, and its access to capital, I think that Canada could become a quick study. The first step is that we are going to need major public and private players who recognize that the oil-and-trees boom is going to go bust very soon.

Who will be Canada’s green tech Giogini? Will someone please step up? You will need to be

• An excellent code-switcher, attuned to the realities of global environmental markets
• Aware of local and historical backgrounds, and able to build a strong case for the basis and value of Canadian ingenuity and design in this area
• Tuned into international opportunities and sales/consumption networks
  Able to take advantage of the ruptures caused by the general lack of green technology or emphasis, particular in the current Bush-led America
• Capable of devising ways to break Canadian thinkers, engineers, students, educators, policy-makers, and companies out of their intellectually lazy imitative funk, and able to motivate them to create novel products and procedures for a world that needs them

Canadian industry needs a new direction. Merely talking about “commercialization:” (the current buzzword, even worse than innovation) or “innovation” is far too general. Canada needs a specific sector or sectors where a small country like Canada can sustainably focus its “resources” literally and figuratively into particular kinds of investments and risks, portfolios of places that lock together into the kinds of microclimates and ecosystems we see in places like Silicon Valley or Hollywood/Burbank, where expertise builds on top of expertise, instead of single isolated bubbles of technology.

We have the beginnings of some interesting innovative clusters: hydrogen in BC, handheld devices in Waterloo, theater in Toronto. So how can we use the Giorgini Principles to get the geographical clustering that will attract diverse but focused talent (a la Richard Florida’s very important Creative Class work), build communities of interest and concern that functional alongside the economic practicalities of workaday culture, lead to an easy informational marketplace that aggregates ideas and companies, and lead to centers of excellence that get funded and richly pay out their investments? That’s a big question, but it’s well worth getting our finest minds tgo start thinking about it.

In Canada, for sure. And everywhere else.

Posted in Innovation & Creativity, Green marketing | 1 Comment »

June 22, 2007 by Robert Kozinets.

Just a quick follow on post to my prior post on innovation.

My good friend, Department Chair, and colleague Eileen Fischer emailed me a great comment that I’m going to incorporate here.

She has a bone to pick with the way that the Conference Board measured innovation for its report. They measured innovation as proxied by two things. One was patents and the other was scientific journal articles, both measured per capita. There are many problems with both measures. Patenting in America and a few other places is out of control because people are making a lot of money on legal challenges (as witness the recent debacle that nearly shut down Research in Motion, and ended up making their legal aggressor plenty rich). The second measure, journal publications, seems to have a whole host of problems. Are we talking good quality journals? Only hard science journals? What do publications have to do with innovation, really? What to we mean by innovation then?

As I think about Eileen’s great points, it seems we are desperately in need of better measures of innovation.

And those improved measures need to start with better definitions of innovation. My friend Gerald Haman of Chicago’s SolutionPeople brainstorming company defines innovation as a practically applied idea or invention. That’s a solid start. We’re not just talking about ideas, but applied ideas, commercialized ideas.

I’m also thinking that we need to be much more open-minded about the kinds of innovation that matter now and that are going to matter in the future. And the kind of cultural systems—local, familial, regional, national, and global—that are going to support them.

Measuring patents, Nobel Prizes, and hard science journal publications smells to me like a smokestack economy. Is that all that we’re really after here? New products only? New flavors of potato chips and new squeezy things for our toothpaste containers? Or are we also looking for major changes in lifestyle, in thinking, in doing, experiencing. The kind of innovation that we should be looking for are innovations on a cultural level, as well as including a material goods and services component.

I think the kinds of creative thinking we see in the entertainment industry, in the software industry, in themed retail, and online in the so-called Web2.0 economy are highly significant. Richard Florida’s Rise of the Creative Class sorts of innovation. Seen in that light, I’ve been studying innovators and innovation my entire research career and I think we’re seeing major changes across society in the way we “do” innovation.

What might be some good measures of cultural innovation to add to the list? Per capita percentages of bloggers, wiki-participants, and content adders? Percentage of tinkerers? Of fans? Amount of Do-It-Yourself stores in a neighborhood? Prevalence of basic HTML literacy in the population? Percentage of people who start their own small businesses? Percentage of people who had one or more entrepreneurial parents? Tax rates on small business and small business owners? Amount of general risk-taking propensity in the culture?

If we don’t come up with better measures and definitions, we’re not going to get what we really need.

Next week, I’m going to talk about one of the most innovative places on Earth: Burning Man. And I’m going to examine the controversial sell out that its organizers made this year, a sell out that a lot of good people fear will destroy much of what is good about it.

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