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Harvard Case - Quirky: A Business Based on Making Invention Accessible

"Quirky: A Business Based on Making Invention Accessible" Harvard business case study is written by David Hoyt, Michael Marks. It deals with the challenges in the field of Entrepreneurship. The case study is 27 page(s) long and it was first published on : Aug 7, 2013

At Fern Fort University, we recommend Quirky adopt a multifaceted strategy to address its challenges and capitalize on its strengths. This strategy involves refining its business model to enhance profitability, expanding its product portfolio through strategic partnerships and acquisitions, and building a robust brand identity that resonates with a wider customer base. We believe these actions will position Quirky for sustainable growth and success in the evolving consumer product market.

2. Background

Quirky, founded in 2009, aimed to democratize invention by connecting creative minds with manufacturers and consumers. Its innovative platform allowed users to submit product ideas, vote on them, and ultimately see them developed and sold. The company?s unique ?community-driven? approach attracted a passionate user base and generated buzz in the design and tech communities. However, Quirky faced challenges in scaling its business model, managing its complex supply chain, and achieving profitability.

The case study focuses on Quirky?s journey from its early success to its eventual acquisition by GE in 2015. The main protagonists are Ben Kaufman, Quirky?s founder and CEO, and the company?s team of engineers, designers, and marketers.

3. Analysis of the Case Study

Strategic Analysis:

  • Disruptive Innovation: Quirky?s business model represented a disruptive innovation in the consumer product industry. By leveraging the power of crowdsourcing and online communities, it challenged traditional product development processes and opened up new avenues for innovation.
  • Business Model Innovation: Quirky?s initial business model, relying heavily on product sales and royalties, proved unsustainable. The company struggled to manage its complex supply chain and ensure consistent profitability.
  • Growth Strategy: Quirky?s growth strategy focused on expanding its product portfolio and user base. However, the company lacked a clear roadmap for achieving sustainable growth and profitability.

Financial Analysis:

  • Venture Capital Funding: Quirky raised significant venture capital funding, but its high burn rate and inconsistent profitability raised concerns among investors.
  • Profitability Challenges: Quirky struggled to achieve profitability due to high operating costs, complex supply chain management, and the need to invest heavily in product development.
  • Acquisition by GE: The acquisition by GE provided Quirky with financial stability and access to resources, but it also marked a significant shift in the company?s direction and identity.

Marketing Analysis:

  • Brand Identity: Quirky?s brand identity was initially strong, leveraging its community-driven approach and focus on innovation. However, the company struggled to maintain its brand consistency and appeal to a wider customer base.
  • Marketing Strategy: Quirky?s marketing strategy relied heavily on online communities and social media, but it lacked a comprehensive approach to reach new customer segments.

Operational Analysis:

  • Supply Chain Management: Quirky?s complex supply chain proved challenging to manage, leading to delays and inconsistencies in product delivery.
  • Manufacturing Processes: The company faced difficulties in scaling its manufacturing processes to meet the growing demand for its products.
  • Organizational Structure and Design: Quirky?s organizational structure, while initially agile, became increasingly complex as the company grew, hindering its ability to make quick decisions and adapt to changing market conditions.

4. Recommendations

  1. Refine the Business Model: Quirky should transition from a pure product sales model to a more diversified approach. This could include:

    • Subscription Services: Offer subscription boxes featuring curated collections of Quirky products, providing recurring revenue and customer engagement.
    • Licensing and Partnerships: License its intellectual property to other manufacturers, generating revenue without the burden of production and distribution.
    • Product Development Services: Provide product development services to other companies, leveraging Quirky?s expertise in design and innovation.
  2. Expand Product Portfolio Strategically: Diversify product offerings through strategic partnerships and acquisitions.

    • Partnerships: Collaborate with established consumer goods companies to develop and market co-branded products, leveraging their existing distribution networks and brand recognition.
    • Acquisitions: Acquire smaller, innovative companies with complementary product lines and technologies, expanding Quirky?s reach and product offerings.
  3. Build a Robust Brand Identity: Develop a clear and consistent brand identity that resonates with a wider customer base.

    • Target Audience: Identify specific customer segments and tailor marketing efforts to their needs and preferences.
    • Brand Messaging: Develop a compelling brand message that highlights Quirky?s unique value proposition: making invention accessible and empowering creativity.
    • Marketing Channels: Utilize a mix of traditional and digital marketing channels to reach new audiences and build brand awareness.

5. Basis of Recommendations

These recommendations are based on the following considerations:

  • Core Competencies and Consistency with Mission: The recommendations align with Quirky?s core competency in product design and innovation, while also expanding its business model to ensure long-term sustainability.
  • External Customers and Internal Clients: The recommendations address the needs of both external customers seeking innovative products and internal clients, including inventors and designers, by providing them with new opportunities for collaboration and success.
  • Competitors: The recommendations position Quirky to compete effectively in the evolving consumer product market by differentiating itself through its community-driven approach, diverse product offerings, and strong brand identity.
  • Attractiveness: The recommendations are expected to enhance Quirky?s profitability by diversifying revenue streams, reducing reliance on product sales alone, and leveraging partnerships to expand its reach.

6. Conclusion

Quirky?s acquisition by GE marked a significant turning point in its journey. While the acquisition provided financial stability and access to resources, it also signaled a shift away from its original community-driven model. By implementing the recommended strategies, Quirky can re-establish its unique identity, expand its product portfolio, and achieve sustainable growth in the consumer product market.

7. Discussion

Alternatives:

  • Focus solely on product sales: This approach carries significant risk due to the challenges in managing a complex supply chain and achieving profitability.
  • Remain a purely community-driven platform: This approach may limit Quirky?s growth potential as it relies heavily on user contributions and lacks a clear revenue model.

Risks and Key Assumptions:

  • Market Acceptance: The success of the recommended strategies depends on the market?s acceptance of Quirky?s expanded product offerings and brand identity.
  • Partnership Success: The effectiveness of partnerships hinges on finding suitable partners with complementary strengths and shared goals.
  • Acquisition Integration: Integrating acquired companies effectively is crucial to ensure a smooth transition and avoid potential challenges.

8. Next Steps

  1. Develop a detailed business plan: Outline the specific steps and resources required to implement the recommended strategies.
  2. Identify and evaluate potential partners and acquisition targets: Conduct thorough due diligence to ensure compatibility and strategic alignment.
  3. Refine branding and marketing efforts: Develop a clear brand message and marketing plan to reach target audiences.
  4. Implement new business models: Pilot subscription services, licensing agreements, and product development services to assess their effectiveness.
  5. Monitor progress and adapt strategies: Continuously track key performance indicators and make adjustments as needed.

By taking these steps, Quirky can position itself for long-term success in the dynamic and competitive consumer product market.

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Case Description

Ben Kaufman founded Quirky in 2009 to enable anyone with a product idea to access an online network of people to help evaluate and improve the idea, and potentially bring it to market. By the end of 2012, Quirky was shipping 74 products, and had many more in development. Its products were sold in 35,000 stores worldwide. Each week, the company took three products into the research and development process, out of more than 1,000 submitted online. It paid 10 percent of third party sales, and 30 percent of direct sales, to its community members based on their participation in developing products-more than $2 million in 2012. Despite these signs of success, the company faced substantial challenges. Margins were low, and had to be dramatically improved before the company would become profitable. The product development model, using both online participants and internal staff, was stressed by the ever-increasing number of products being developed. The supply chain, relying on external manufacturing, had to adapt to a continual stream of new products. And retail partners were not well suited to the Quirky model-retailers focused on a few high-selling products. This case describes the business model used by Quirky, and challenges students to address the unique challenges facing the company.

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