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Context
 
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Context

Posted in [Strategy] By Mike Jones

I was in Tokyo this week. It is always interesting to see how context affects products. For example, look at this parking lot:

Parking Garage

The building is over ten stories tall, and lifts the car up into the building. When you back out, a round disk on the ground rotates the card so you are pointing towards the street. As a side benefit, you don't have to worry about theft, as long as you trust the operator.

The product is a perfect match to a city with very high land prices due to lack of space. This would never work in my home town in Colorado. Land is cheap; cars are big. Another example is this gas pump. The station is very small, and getting in and out of the street dangerous. The pull down nozzle can reach the tank from any direction the car parks. This prevents turning around to get the car in the right position. Gas is pumped for you by the attendant, so you don't have to worry about managing the hose.

Gas Pump

More subtle tradeoffs like this exist. For example, a company I am on the board of directors of sells capital equipment. Some customers care about overall economic benefit. Because the equipment is connected to another machine that costs 4 times as much, it economically better to make our equipment faster, even if if the costs goes up, because it lowers the over all cost of the combination. However, some countries in Asia are very sensitive to initial capital outlay, and willing to accept a lower initial cost, even if it is not a economic maximum due to lower performance. Knowing the market allows us tune the product and business model to match.

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