INNOBLOG

Frequent travelers and Anglophiles will delight at Londons newest market disruption, Yotel. A blend of traditional western hotels and Japanese "bullet hotels, the Yotel likens itself to a private airline cabin, and charges an astonishingly low 25 per night. The first Yotel will open this year at Londons Gatwick airport.

In true disruptive fashion, the lodging service offers all the best of western hotel design, while stripping out unnecessary amenities like extra floor space, chintzy wooden furniture and even windows. Target consumers should not feel compromised by the honed-down design though, as each room still offers a private washroom, wifi, work desk, and flat screen TV. Yotel has gone to great lengths to make each guest feel special; with tasty room service guaranteed in less than five minutes, extended check in, and easy online booking.

All this is well and good, but the ultimate reason we believe this concept is destined for disruptive success is because it is positioned squarely on an important and highly unsatisfied job to be done. Nightly rates are wonderfully low, but Yotel pods can also be booked by the hour. Flight delayed for a number of hours or cancelled for the night? Yotel. Next time you have a long layover in London thats not quite long enough to get into the city, instead of checking into a full priced and full service airport hotel for a partial stay or trying to make yourself comfortable by spreading out on an airport bench or the floor, you can turn to Yotel for rest, privacy, and working space.

With the dollar at an all-time low against the pound, this bargain may be hitting a much underserved market and encouraging Americans to head back across the pond. If only they could do the same with airfare prices!

For more information, check out www.yotel.com.

Over the weekend the Wall Street Journal celebrated "10 years since the blog was born by inviting twelve commentators (a spread of folks including politician Newt Gingrich, actress Mia Farrow, and SEC Chairman Christopher Cox) to write about what blogs mean to them.

They didnt ask me. And Ill spare the personal perspective. But blogs are worth writing about here because they fit so many of the classic patterns of disruption:

Blogs provide better performance along some dimensions (customizability, timeliness of information, focus) while sacrificing performance along others (accuracy).

Early on, blog creation required a significant amount of technical know-how, meaning that blogs took hold first with a small number of users who had the knowledge to use them the internets tech savvy. But the base of those creating and reading blogs, and the number of topics blogs cover, has expanded as the technology has become more accessible. Blogs are gaining popularity in all spheres where traditional print media plays, including sports, politics and entertainment.

Blogs also go where traditional media cant into the realm of social networking, allowing friends, families, and others to share their lives through print, pictures and (increasingly) video, online.

Many in the traditional media dismiss blogs, focusing on their deficiencies. This is a classic error right out of the Innovators Dilemma. Of course, their criticisms have some merit, many blogs offer low-quality content, poor writing, and inaccurate reports that circulate rumors. But many disruptions start out this way, and then improve until they are "good enough for the mass consumer.

Blogs are already moving upmarket and improving. The term "Professional Blogger is no longer an oxymoron. Some in the traditional media realize this ESPN, for example, recently purchased the popular basketball blog TrueHoop.com to complement its other online news offerings.

And I think that blogs still have a lot of disruption left in them. Many Americans still dont know what a blog is, and most dont read them even fewer create and maintain them. But the numbers, as shown (appropriately) on this blog, show that growth is strong. (There are many neat graphs tracking the blogosphere there, I suggest you take a look).

As a final irony blogs here, here and here point out that the Wall Street Journal didnt get its facts quite right, blogs are more than a decade old.

The New York Times reported yesterday that mobile phones are opening up banking opportunities in developing countries. The article focuses on how mobile-based devices are allowing microfinance institutions to extend their reach and how mobile phones can be used as platforms for a disruptive payment service.

Microfinance is itself a disruptive innovation that weve mentioned in the Innoblog before. (You can find Josh Suskewiczs entry on microfinance here). What Id like to focus on is the potential for disruptive, mobile-based, payment services. The story of how Vodafone went from developing one innovation (a microfinance service) to another (the payment service M-PESA) is a great example of how disruptive innovations are developed and refined through trial-and-error.

In 2005, Vodafone and the UK Department for International Development jointly funded a project to develop a mobile-based microfinance solution, and partnered with Faulu Kenya, a local microfinance institution, to do so. Vodafone used the six-month pilot to study, essentially, consumer jobs to be done. The results surprised them.

"The idea was to reduce the cost of loan disbursal and recovery, said Nick Hughes, Vodafones head of international payment services, "but what we found is that customers were using it for person-to-person transfers.

This learning allowed Vodafone to refocus the service on customers jobs to be done. At launch, M-PESA allowed customers to deposit cash at a local agent (an affiliated mobile phone dealer, gas station, supermarket or other shop), to send and receive money from other mobile phone users by SMS, and withdraw cash at any agent. M-PESA turned potentially any shop into a bank and eliminated physical barriers to cash transfer. Breaking down barriers to consumption enabling access in new contexts, catalyzing the decentralization and democratization of critical services is a key hallmark of disruptive innovations that signals massive opportunity.

Vodafone has had incredible success in Kenya (through a jointly-owned subsidiary, Safaricom). Three months after launch, M-PESA had 175,000 customers and was signing up 2,500 a day. Over 7.5 million dollars was moved over the service during this period and Safaricom is counting on M-PESA to help it continue its record profitability. Vodafone is now looking to take the service international. The Consultative Group to Assist the Poor (CGAP) estimates that more than five billion of the worlds people live without a bank account, but more importantly for Vodafone, two billion of those unbanked have mobile phones. Based on those numbers, it looks like this disruption has considerable upside potential.

Yesterday Google announced the acquisition of GrandCentral Communications, a California-based "telephone management company that promises simple solutions for those underserved by current telecom offerings.

The idea is simple: GrandCentral links all of your voicemail boxes and telephone numbers together. You get one number. You have one voicemail box. You lose the limitations imposed by location.

A call to your new GrandCentral number rings any or all of your phones work, home, or mobile (their website allows you to set up rules that control how calls are routed). And you can bounce calls between phones, if say, for example, you want to keep a conversation going while you leave work, hop in your car (switch to your mobile) and arrive home (switch to your landline to save on airtime). The service offers a plethora of other features too including visual voicemail (one of the iPhones touted features). David Pogue of the New York Times wrote an excellent review of GrandCentral not too far back, you can find it here.

GrandCentrals service is disruptive on its own it pushes voice services to a new level of convenience and offers useful services that have been largely unavailable previously. But if Google can combine GrandCentrals features with its own Gmail and Google Talk offerings, an integrated "GoogleCom service could position itself very well on the disruptive edge, offering innovative communications features even to those who lack any shred of tech savvy.

The recent business week article on 3M discussed an interesting point about tension between Six Sigma and Innovation. James McNerney, former CEO of 3M rolled out six sigma after taking over 3M. The stock market rewarded his initiative but many feel that the company lost its innovative touch. The basic question is " Can six sigma and innovation co-exist in an organization?"

On the surface, there is an inherent tension between Six Sigma and Innovation. Six Sigma aims to take any uncertainities (variability) out of a process while innovation by definition induces uncertainities.

However, six sigma and innovation are both essential for an organization. Six sigma impacts the bottomline while innovation grows the top line. Big companies like P&G and GE have gone on record saying that they are looking for 4-6% organic growth (~growing revenues by billions of dollars every year). They are not going to do this by compromising on process efficiency (six sigma). Can you imagine GE moving away from Six Sigma?

Companies will have to manage both going forward. One has to create different process, structure and culture within a company to efficiently manage both. A recent HBR article by Michael Tushman of Harvard and Charles O' Reilly of Stanford acknowledges the paradox of exploitative versus explorative efforts. Their conclusion is that successful companies are able to separate innovation efforts from continuous improvement efforts.

I do think that a company has to master the art of managing both six sigma and innovation to be competitive.