Once a week.
Subscribe to our weekly newsletter.
Make Your Commodities Stand Out – De-commoditization is the Key
No matter what industry you’re in, chances are you have a few products or services in your line that are commodities. From food and beverage items to household products to daily services, commodities are everywhere and make bottom line profits harder and harder to attain.
Companies that sell commodities typically must offer low prices and deal with slim margins. Why? Because the customers’ perception of the product or service is one of ambivalence. In the customers’ mind, the product or service is just like everyone else’s, so there’s no reason to pay more for it. Whether the item is water, car brakes, an electric utility service, copy paper, or one of the millions of other commoditized offerings, customers believe what they get from one company is identical to what they can get from another.
So what’s a business to do? The answer is to de-commoditize…but not just once…continuously!
For example, suppose you sell flashlights. To customers, a flashlight is a flashlight and you can only charge so much for one. But what if you made your flashlight last twice as long? Now you can charge more for it. However, don’t stop there. Later you can add more unique aspects to your flashlight, such as making it half the size or twice as bright. Now you can continue charging more for your flashlight.
Here’s another example: Water is water…until you put it in a bottle. Once you put water in a bottle, you can charge for it. You can then put the water in a fancier bottle and charge some more. You can also add some vitamins to it, give it a fancy name, and charge even more. Now you’ve taken a commodity and you’ve de-commoditized it.
The fact is that every product and service can be de-commoditized repeatedly. Unfortunately, most businesses don’t do this. Instead, they come up with a new product or service and they milk it. They make their money on it and let the product or service become a commodity.
Realize that the minute you come up with something new, a competitor will copy it. As they do so, your de-commoditized and innovative product or service slowly becomes a commodity. The margins get thinner as time goes on. You find yourself competing more on price and eventually remove the product or service from your line.
Here’s a better approach: Instead of letting the margins get thinner and riding them down, you can get more efficient and effective. You can think creatively about your product or service so you can repackage it, redefine it, revamp it, or somehow make it unique in the marketplace again. Following are some suggestions and examples of how to do that.
Pay close attention to the trends going on in your industry and with your customers. Based on the direction of change that you can see, what future trends can you identify? If you can accurately pinpoint where your industry or customers will be in the next few months or years (or what your customers will want), you can de-commoditize your offering and get that business.
For example, the product 7UP was a commodity for many years. 7UP and the other products like it are basically bubbly, clear flavored sugar water. For many years, 7UP was dealing with shrinking margins and lower sales. People were drinking less soda and more water and other non-carbonated drinks. Recognizing the trend for customers to want healthier drink options, 7UP de-commoditized their soda by taking out all the artificial flavorings and ingredients and making their product natural. After they launched their new “natural” campaign, sales of 7UP increased.
But, as is the nature of commoditization, over time competitors will start copying what 7UP did and the soda will become a commodity again. So instead of riding it back down again to decreasing sales and low margins, 7UP can take the next step and make all their natural ingredients organic. But rather than do what other companies do with the organic label, which is to stretch the definition, 7UP raised the bar and did organic the way it should be done. Now they’re de-commoditizing again. And as trends with their customers continue to change, so too should the soda.
No matter how mundane your product or service is, chances are people have different needs around it today than they did a few short years ago. As the world, economy, and culture changes, so do people. Their reasons for buying something yesterday may be different from their reasons today. As such, you need to always be looking at what your customers’ current and near-future needs are and then find ways to de-commoditize your product accordingly.
For example, most people think electricity is electricity. Whether you turn on your lights at home or at work, the current running through the wires is the same. Complicating the utility industry more is that in some locations, if you want to raise your rates, you have to get your customers to agree to the rate increase. So how can you de-commoditize electricity? Look at the customers’ needs.
Consider that most businesses these days have a lot of computers, servers and other equipment. They can’t afford to lose their electricity no matter how big of a storm comes through. They also don’t want the electricity to vary in voltage, as that can harm sensitive equipment. So what if the electricity company offered “digital electricity,” which never went out and never fluctuated? Yes, it would cost more, but if the need is there, people will pay for it.
That’s exactly what happened when one electricity provider started offering its business customers digital electricity. Big companies like Microsoft, Google, and Yahoo signed up. But this electricity company shouldn’t stop there. Today’s homes also have multiple computers, entertainment centers, gaming equipment, and other things connected to electricity. There’s no reason that consumers wouldn’t want digital electricity as well.
So look at your product or service and identify a new need people have. Then, put a service wrapper around the item so you can charge more for it.
Look at every product and service you have and ask, “Why is this item a commodity?” Then ask, “What can we do to make it different?” For example, look at the features and functions of your products, how things are housed, how convenient the product or service is, what the customer experience is like, how something is processed or made, etc.
With the bottled water example, could you change the bottle, filter the water more, or add flavors or vitamins to it? If you sell coffee, could you enhance the customer’s experience or change a familiar product into something unique? For example, Starbucks moved meeting for a cup of coffee from the local diner to a relaxing coffee shop. Then they took good old-fashioned coffee and transformed it into tasty coffee drinks that even non-coffee drinkers would love. Between flavoring hot coffee and blending iced coffee, they made drinking coffee an experience rather than a commodity you buy at the grocery store.
The key to really understanding and embracing this concept is to realize that every product and service can be de-commoditized. Yes, it takes some creativity, thinking, and trend watching. But the biggest thing it takes is for you to get rid of your assumption that something can’t be de-commoditized. Most of us have learned to live with commodity items. So maybe tissues are tissues, but chances are the ones you buy and pay more money for are softer, or they have aloe, or they have anti-virus ingredients, or they come in a designer box. The possibilities for changes exist for everything.
As you de-commoditize your items, remember that if you de-commoditize once and sit back, that de-commoditized item will soon become a commodity. So do continuous de-commoditization. Not only will you attain better margins and accelerated growth based on hard trends, but you’ll also find yourself positioned ahead of the competition.
DANIEL BURRUS is considered one of the world’s leading technology forecasters and innovation experts, and is the founder and CEO of Burrus Research, a research and consulting firm that monitors global advancements in technology driven trends to help clients understand how technological, social and business forces are converging to create enormous untapped opportunities. He is the author of six books including The New York Times best seller Flash Foresight.
The father of all giant sea bugs was recently discovered off the coast of Java.
- A new species of isopod with a resemblance to a certain Sith lord was just discovered.
- It is the first known giant isopod from the Indian Ocean.
- The finding extends the list of giant isopods even further.
Humanity knows surprisingly little about the ocean depths. An often-repeated bit of evidence for this is the fact that humanity has done a better job mapping the surface of Mars than the bottom of the sea. The creatures we find lurking in the watery abyss often surprise even the most dedicated researchers with their unique features and bizarre behavior.
A recent expedition off the coast of Java discovered a new isopod species remarkable for its size and resemblance to Darth Vader.
The ocean depths are home to many creatures that some consider to be unnatural.
According to LiveScience, the Bathynomus genus is sometimes referred to as "Darth Vader of the Seas" because the crustaceans are shaped like the character's menacing helmet. Deemed Bathynomus raksasa ("raksasa" meaning "giant" in Indonesian), this cockroach-like creature can grow to over 30 cm (12 inches). It is one of several known species of giant ocean-going isopod. Like the other members of its order, it has compound eyes, seven body segments, two pairs of antennae, and four sets of jaws.
The incredible size of this species is likely a result of deep-sea gigantism. This is the tendency for creatures that inhabit deeper parts of the ocean to be much larger than closely related species that live in shallower waters. B. raksasa appears to make its home between 950 and 1,260 meters (3,117 and 4,134 ft) below sea level.
Perhaps fittingly for a creature so creepy looking, that is the lower sections of what is commonly called The Twilight Zone, named for the lack of light available at such depths.
It isn't the only giant isopod, far from it. Other species of ocean-going isopod can get up to 50 cm long (20 inches) and also look like they came out of a nightmare. These are the unusual ones, though. Most of the time, isopods stay at much more reasonable sizes.
View this post on Instagram
During an expedition, there are some animals which you find unexpectedly, while there are others that you hope to find. One of the animal that we hoped to find was a deep sea cockroach affectionately known as Darth Vader Isopod. The staff on our expedition team could not contain their excitement when they finally saw one, holding it triumphantly in the air! #SJADES2018
A post shared by LKCNHM (@lkcnhm) on
What benefit does this find have for science? And is it as evil as it looks?
The discovery of a new species is always a cause for celebration in zoology. That this is the discovery of an animal that inhabits the deeps of the sea, one of the least explored areas humans can get to, is the icing on the cake.
Helen Wong of the National University of Singapore, who co-authored the species' description, explained the importance of the discovery:
"The identification of this new species is an indication of just how little we know about the oceans. There is certainly more for us to explore in terms of biodiversity in the deep sea of our region."
The animal's visual similarity to Darth Vader is a result of its compound eyes and the curious shape of its head. However, given the location of its discovery, the bottom of the remote seas, it may be associated with all manner of horrifically evil Elder Things and Great Old Ones.
If computers can beat us at chess, maybe they could beat us at math, too.
- Most everyone fears that they will be replaced by robots or AI someday.
- A field like mathematics, which is governed solely by rules that computers thrive on, seems to be ripe for a robot revolution.
- AI may not replace mathematicians but will instead help us ask better questions.
The following is an excerpt adapted from the book Shape. It is reprinted with permission of the author.
Will machines replace us? Since the origin of artificial intelligence (AI), people have worried that computers eventually (or even imminently!) will surpass the human cognitive capacity in every respect.
Artificial intelligence pioneer Oliver Selfridge, in a television interview from the early 1960s, said, "I am convinced that machines can and will think in our lifetime" — though with the proviso, "I don't think my daughter will ever marry a computer." (Apparently, there is no technical advance so abstract that people can't feel sexual anxiety about it.)
Let's make the relevant question more personal: will machines replace me? I'm a mathematician; my profession is often seen from the outside as a very complicated but ultimately purely mechanical game played with fixed rules, like checkers, chess, or Go. These are activities in which machines have already demonstrated superhuman ability.
Some people imagine a world where computers give us all the answers. I dream bigger. I want them to ask good questions.
But for me, math is different: it is a creative pursuit that calls on our intuition as much as our ability to compute. (To be fair, chess players probably feel the same way.) Henri Poincaré, the mathematician who re-envisioned the whole subject of geometry at the beginning of the 20th century, insisted it would be hopeless
"to attempt to replace the mathematician's free initiative by a mechanical process of any kind. In order to obtain a result having any real value, it is not enough to grind out calculations, or to have a machine for putting things in order: it is not order only, but unexpected order, that has a value. A machine can take hold of the bare fact, but the soul of the fact will always escape it."
But machines can make deep changes in mathematical practice without shouldering humans aside. Peter Scholze, winner of a 2018 Fields Medal (sometimes called the "Nobel Prize of math") is deeply involved in an ambitious program at the frontiers of algebra and geometry called "condensed mathematics" — and no, there is no chance that I'm going to try to explain what that is in this space.
Meet AI, your new research assistant
What I am going to tell you is the result of what Scholze called the "Liquid Tensor Experiment." A community called Lean, started by Leonardo de Moura of Microsoft Research and now open-source and worldwide, has the ambitious goal of developing a computer language with the expressive capacity to capture the entirety of contemporary mathematics. A proposed proof of a new theorem, formalized by translation into this language, could be checked for correctness automatically, rather than staking its reputation on fallible human referees.
Scholze asked last December whether the ideas of condensed mathematics could be formalized in this way. He also wanted to know whether it could express the ideas of a particularly knotty proof that was crucial to the project — a proof that he was pretty sure was right.
When I first heard about Lean, I thought it would probably work well for some easy problems and theorems. I underestimated it. So did Scholze. In a May 2021 blog post, he writes, "[T]he Experiment has verified the entire part of the argument that I was unsure about. I find it absolutely insane that interactive proof assistants are now at the level that within a very reasonable time span they can formally verify difficult original research."
And the contribution of the machine wasn't just to certify that Scholze was right to think his proof was sound; he reports that the work of putting the proof in a form that a machine could read improved his own human understanding of the argument!
The Liquid Tensor Experiment points to a future where machines, rather than replacing human mathematicians, become our indispensable partners. Whether or not they can take hold of the soul of the fact, they can extend our grasp as we reach for the soul.
Slicing up a knotty problem
That can take the form of "proof assistance," as it did for Scholze, or it can go deeper. In 2018, Lisa Piccirillo, then a PhD student at the University of Texas, solved a long-standing geometry problem about a shape called the Conway knot. She proved the knot was "non-slice" — this is a fact about what the knot looks like from the perspective of four-dimensional beings. (Did you get that? Probably not, but it doesn't matter.) The point is this was a famously difficult problem.
A few years before Piccirillo's breakthrough, a topologist named Mark Hughes at Brigham Young had tried to get a neural network to make good guesses about which knots were slice. He gave it a long list of knots where the answer was known, just as an image-processing neural net would be given a long list of pictures of cats and pictures of non-cats.
Hughes's neural net learned to assign a number to every knot; if the knot were slice, the number was supposed to be 0, while if the knot were non-slice, the net was supposed to return a whole number bigger than 0. In fact, the neural net predicted a value very close to 1 — that is, it predicted the knot was non-slice — for every one of the knots Hughes tested, except for one. That was the Conway knot.
For the Conway knot, Hughes's neural net returned a number very close to 1/2, its way of saying that it was deeply unsure whether to answer 0 or 1. This is fascinating! The neural net correctly identified the knot that posed a really hard and mathematically rich problem (in this case, reproducing an intuition that topologists already had).
Some people imagine a world where computers give us all the answers. I dream bigger. I want them to ask good questions.
Dr. Jordan Ellenberg is a professor of mathematics at the University of Wisconsin and a number theorist whose popular articles about mathematics have appeared in the New York Times, the Wall Street Journal, Wired, and Slate. His most recent book is Shape: The Hidden Geometry of Information, Biology, Strategy, Democracy, and Everything Else.
Laughing gas may be far more effective for some than antidepressants.
- Standard antidepressant medications don't work for many people who need them.
- With ketamine showing potential as an antidepressant, researchers investigate another anesthetic: nitrous oxide, commonly called "laughing gas."
- Researchers observe that just a light mixture of nitrous oxide for an hour alleviates depression symptoms for two weeks.
The usual antidepressants don't work for everyone. That's what makes a new study of the antidepressant properties of nitrous oxide so intriguing. It looks like just a single low dose of what your dentist may call "laughing gas" can help alleviate symptoms of depression for weeks afterward.
The study, from researchers at University of Chicago and Washington University-St. Louis, is published in the journal Science Translational Medicine.
Resistance to anti-depression medications
Nitrous oxide: two atoms of nitrogen, one of oxygenCredit: Big Think
According to the senior author of the study, Charles Conway, "A significant percentage — we think around 15 percent — of people who suffer from depression don't respond to standard antidepressant treatment."
"These 'treatment-resistant depression' patients," Conway says, "often suffer for years, even decades, with life-debilitating depression. We don't really know why standard treatments don't work for them, though we suspect that they may have different brain network disruptions than non-resistant depressed patients. Identifying novel treatments, such as nitrous oxide, that target alternative pathways is critical to treating these individuals."
"There is a huge unmet need," says lead author Peter Nagele. "There are millions of depressed patients who don't have good treatment options, especially those who are dealing with suicidality."
If ketamine can help, can nitrous oxide?
Credit: sudok1 / Adobe Stock
The researchers wondered if some of the anti-depression properties seen in ketamine might also apply to nitrous oxide. Nagele explains, "Like nitrous oxide, ketamine is an anesthetic, and there has been promising work using ketamine at a sub-anesthetic dose for treating depression."
The researchers conducted a one-hour session — they describe it as a "proof-of-principle" trial — in which 20 individuals with depression were administered an air mixture with 50 percent nitrous oxide. Twenty-four hours later, the researchers found a significant reduction in the participants' symptoms of depression versus a control group.
However, the individuals also suffered the unpleasant side effects that laughing gas often causes in dental patients: headache, nausea, and vomiting.
Smaller dose, longer effect
Credit: sudok1 / Adobe Stock
"We wondered if our past concentration of 50 percent had been too high," recalls Nagele. "Maybe by lowering the dose, we could find the 'Goldilocks spot' that would maximize clinical benefit and minimize negative side effects."
In a new trial, 20 people with depression were given a lighter nitrous oxide mix, just 25 percent, and the individuals tested reported a 75 percent reduction in side effects compared to the a control group given an air/oxygen placebo. This time, the researchers also tracked the effect of nitrous oxide on symptoms of depression for a far longer period, two weeks instead of just 24 hours.
"The reduction in side effects was unexpected and quite drastic," reports Nagele, "but even more excitingly, the effects after a single administration lasted for a whole two weeks. This has never been shown before. It's a very cool finding."
Nagele also notes that, despite its popular renown as laughing gas, even a light 25 percent mix of nitrous actually causes people to nod off. "They're not getting high or euphoric; they get sedated."
Delivering help to people with depression
Nagele cautions, "These have just been pilot studies. But we need acceptance by the larger medical community for this to become a treatment that's actually available to patients in the real world. Most psychiatrists are not familiar with nitrous oxide or how to administer it, so we'll have to show the community how to deliver this treatment safely and effectively. I think there will be a lot of interest in getting this into clinical practice."
After all, Nagele adds, "If we develop effective, rapid treatments that can really help someone navigate their suicidal thinking and come out on the other side — that's a very gratifying line of research."