L2 hosted last week the Digital Leadership Academy, a two-day clinic covering various topics across mobile, social media, and video. After her session on digital strategy, NYU Stern professor Sonia Marciano answered a few questions from attendees:

What do the flat sales of iPhones portend?

A few factors combine to suggest slower sales for the foreseeable future:

  • Apple has likely already sold a phone to most customers who want one and can afford one
  • The incremental features are currently not exciting enough to get people to upgrade
  • Apple no longer seems infallible in terms of meeting/beating the expectations of analysts and customers

Apple’s reaction is key. Will they respond in a short-sighted way (raising prices, trimming costs) or will they take the long view?

The long view understands that it’s natural for a product category like phones to reach a plateau. There will be a new mountain to climb, so in the meantime, it’s better to invest in customer relationships rather than exploit their base by charging $90 for a new laptop charger or shitty Beats earbuds. I represent a focus group of one, but I think Apple’s pricing on accessories is mercenary and my commitment to Apple is diminishing each day.

Do you see a role for VR with brands or is it all gimmick?

Yes, if VR is the best channel for customers to interact with the product. Otherwise, it’s a gimmick.

Professor Marciano's talk

How has the increased complexity of Lego kits affected sales and loyalty of buyers?

Complex LEGO sets appeal to a subset of AFOLs [adult fans of Legos]. But pieces that are unique to a few sets drive costs through the roof. If the company can satisfy the whole spectrum of LEGO customers without escalating the number of elements, that is a win for LEGO.

That being said, complex sets should not dominate physical shelf space. The majority of LEGO buyers are not interested in these sets.  Put enough complex sets in the stores to pique interest – then send these buyers online.

Do companies without a technology team at their heart have a future?

This is the classic “make or buy” decision.  There is a set of competencies that are complementary to the business you are in – call it ad technology.  Should ad technology be done within the firm?  Or can the firm instead rely on an external provider?

Doing it yourself has a few benefits:

  • Less risk of renegotiation or IP theft after the fact
  • Firm benefits from superior understanding of market trends, increasing its ability for “broad” innovation and thus improving the customer experience

But it also has some downsides:

  • Less efficient production costs. A firm who focuses on just tech is likely better at it.
  • Lower intensity in innovation within a component, and less “narrow and deep” innovation. That is, a firm focused on this particular tech would do it better.
  • The more disparate the activities of the firm, the messier its organization and incentive system risk becoming.

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