I don’t want to get too personal, but I am tempted to suggest
that you own some product or products made by Alessi – products that make you
feel vaguely artistic and unique even though they are mass produced and sold to
millions of people. If you are familiar with the history of Alessi, you may
know that these products are radically different from their original collection
of serving tools for the food and hospitality industry, a classical low-margin
high-volume good with professional buyers. From the design of the Alessi good
you own – and the price – you have probably guessed that it is a high-margin
good. And you are not a professional buyer of household goods.
How did Alessi make this change in product focus? This is the
topic of an article in Administrative Science Quarterly by Elena
Dalpiaz, Violina Rindova, and Davide Ravasi. They show that, interestingly,
this move into a much more profitable and “cushy” market segment was
controversial and complex. Professional serving tools are designed differently,
made differently, and marketed differently than the artistic goods that Alessi
now focuses on, so this was a change in philosophy and in skills.
Their article explains how this was done, and how other firms
can learn from the transition, giving a full picture of how a complex change
process was done. I will just tell you one element: the role of the amphibious
coffee maker. What makes a coffee maker amphibious? It can live in two
environments, moving smoothly from kitchen, where it functions well, to living
room, where it looks good. Amphibious products, both concept and actual
product, were used internally in Alessi to explain the strategic change. They
were used externally to guide customers along the path from a set of truly
artistic (but less useful) products that were sold in small numbers in the
transitional period to the mass-produced and more useful (but still pricey)
products that Alessi wanted to sell.
This is a very important insight. Amphibious products created
a bridge in the customers’ mind between the artistic and the useful. With this
bridge in place, the customer was willing to adjust the price range paid for a
coffee maker, or an egg stand, or a wine bottle opener.
Amphibious products also created a bridge in the organization
between its origin as a maker of mass-produced serving tools to its destination
as a maker of artistic household goods. Alessi’s products were now amphibious;
Alessi was now amphibious. Truly an
interesting success story.
I read your article, I found your blog wonderful, You always write good articles.
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The definition of an amphibious coffee maker is quite interesting, the metaphor of bridge in customers' mind even more uplifting. This is the second time I have seen Alessi in your blog, last time it was an egg holder. You must be one of its loyal customer. Thanks for sharing your insights about transition, Prof. Henrich.
ReplyDeleteIf we look at another type of transition from small scale high-end Tesla Roadster to large quantity cheaper Model 3, and those bridges models such as Model S/X/Y/. We won't be so surprised to realize that the opposite transition also works.