International sales increased an even faster 30%. The company also reported a record profit of $857 million during the second quarter and accelerated expansions ...
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Fast-forward to 2006. Hoffman and Novak now were empty-nesters, having sent their son off to Oberlin (Novak’s alma mater). There was no reason to stay in Nashville, and the fast-growing University of California at Riverside, among many others, was wooing them. People and location played major parts in making the decision to move to sunny California.
For one thing, the campus’ ethnic and economic diversity made it an appealing lab for their ongoing interest in digital-divide issues. “Lots of people here are the first in their family to go to college,” Hoffman says. And when it came to location, being nearer to Silicon Valley and some of the biggest names on the Internet also had its appeal. So during the summer Hoffman, Novak and the Sloan Center moved lock, stock and barrel to California.
Now that they’ve had a few months to settle in, they’re working on eLab 2.0, a beefed-up version of the center’s original panel, and on the launch of eLab eXchange, a set of “prediction markets” that lets consumers bet on how online retailing will unfold, or give their opinions on certain aspects of retailers’ web sites. Also, one of Hoffman’s pet projects at the moment is the study of “haptics”-how to compensate for the impossibility of actually touching a physical product on the Internet. “A lot of people need to touch and not being able to can inhibit sales,” she says.
Surprise, surprise, surprise
Such forward-thinking research has defined the Sloan Center, and its predictions coming true has validated staff. But the husband-and-wife team do get perplexed and sometimes find some predictions do not pan out.
For example, despite the rapid evolution of the commercial Internet, Hoffman is surprised at how slowly the art of online advertising is developing. “Now everything’s focused on search engines, which is a big improvement over banner ads,” she says. “What’s frustrating is advertisers still are applying the TV mindset-‘Let’s show them a car commercial!’ At least we’re moving toward pay for performance. I wrote a paper begging people to move away from cost-per-thousand and toward pay for performance. But the move has been taking too long.”
And the couple’s Y chromosome admits to mistakes. Novak originally had predicted that consumers would have much more control in an online market, and that the balance of power would shift from retailers because of the availability of information, the ability to compare prices and product features, and the tremendously magnified effect of word of mouth. That has come true. But some aspects of his vision proved incorrect: He didn’t expect, among some other things, big players in bricks and mortar would be online giants as well.
“My original virtual utopia was that all manner of new-to-the-world firms would dominate online shopping and the web would be an exciting place full of surprises,” he says. “But much online shopping behavior has turned out to be fairly basic and practical: researching product information online before you buy, checking availability, checking store hours, buying from the web site of a multi-channel retailer because you trust them since you’ve shopped with them in the physical world, and grinding through holiday shopping, though in record time. I underestimated the practical, everyday value the Internet would have for consumers.”
On another note, Novak still is frustrated by the challenges presented by search engines. “Consumers expect instant gratification from search,” he says. “But if you’re trying to use the Internet to figure out, say, why your TIVO is making a strange clicking noise when you watch certain channels, you probably won’t find the answer. Speed is one of the paradoxes of the Internet. It’s both a way to quickly find information and a way to spend hours never quite getting the answer you’re seeking.”
Through the Sloan Center Hoffman and Novak got the answer they were seeking when it came to career plans. And Novak says there’s not too much they would change if they had it to do all over again, though he is quick to admit one major modification: “There are certain companies that will go unnamed whose stock I would not have purchased.”
Elizabeth Gardner is a Riverside, Ill.-based freelance business writer