Noun to Verb

Web 2.0 is one of those hotly debated new Internet terms. Was the web always meant to be 2.0 - we are just getting there now? It is a state of technology or a state of mind/thinking? Regardless, it is important for all business's to keep on eye on it, and understand how it is and will change their business for better or for worse.

Joi Ito recently joined in on the topic with this very interesting piece discussing YouTube and its place in Web 2.0-land. It also references back to a great general description from Tim O'Reilly a little over a year ago, discussing the difference between 1.0 and 2.0 apps. Debates now are mostly around nuances, that mostly matter to technical people.

The best way to think about it is that Web 2.0 turns the web from a being a noun to a verb. Simple, but I think tells the story. Users now are getting the tools to be truly in the driver seat.

Timeless Management Thinking

Leadership and management guru, Tom Peters recently posted a interesting list of management ideas from his experience over the past 30 years. All are thought provoking - here are 3 to wet your appetite:

• failure = normal = good. ("Reward Excellent failure. Punish mediocre success." "Fail Faster. Succeed sooner." "Fail.Forward.Fast")
• Survival = PSF/Professional Services Firm "mindset". Goal#1: Enable clients to become successful beyond their dreams!
• The "right thing" is the profitable thing

Not sure if they all apply in every situation, in the new economy, but nonetheless they will make you think about their application in your organization, and likely also about your current company culture. Have a conversation about how they are applicable in your business and whether you agree or disagree - in the end, they still stimulate a conversation, and therefor worthwhile.

The Trust Factor

We all know the importance of trust in business, and especially in leadership, but have you ever thought about much impact there is when it's not there? Last week I went to the first event for the new Boise Young Professionals Association, and Stephen M.R. Covey spoke for close to 2 hours on the topic of trust, based on his new book "The Speed of Trust". I found it to be an engaging discussion on a topic that most would consider obvious, but as is often the case, the more obvious the topic, the less stellar we all are at it.

Stephen talks about how the trust can actually be quantified in terms of speed and cost. When trust goes up, speed goes up and cost goes down. When trust goes down, speed goes down and cost goes up. Think about your organizations. There are many not-so-obvious signs of low trust... beurocracy, red-tape, office politics are all examples of mistrust.

So what can we do about it? He has come up with what he calls the 5 waves of trust (think about the ripple effect metaphor) starting from the center and moving outwards, that we all have the power to influence. Self Trust > Relationship Trust > Organizational Trust > Market Trust > Societal trust.

His talk focused primarily on Self Trust. Stephen breaks this into the 4 cores of credibility: Integrity, Intent, Capability, Results. The first two deal with a persons character and the second two deal with competence, but the important point is that all 4 are required. Think about people you work with - ones that you trust and ones that you don't. For example, I worked with someone once that was very competent, had integrity, but failed in the 'intent' department. People perceived that he had personal motives and agenda, and this simple fact overwhelmed all of the integrity, capability and results that he had to offer. Unfortunately mistrust in personal character is also the hardest to change. Competence and results can be improved with training and mentoring, and people are often very willing to help a person in this area, but if someone doesn't have integrity and or good intentions it doesn't really matter what else they bring to the table, and it can stay with them for a long time. Often in business it is character trust that has the highest costs in an organization.

This concept of trust really intrigued me, and so I bought the book to read further (effective, authentic marketing at work!). I have also become much more cognizant of this in the organizations that I deal with or ones I read/hear about, and the frustrations that others have with a lack of trust. Look at this post and this post recently by Seth Godin, both on the same day!

The great think about trust though is that it starts with us. Make these principals part of your life (both business and personal), and business will shift with it. Re-think how important trust is to the success of your business - its big.

Defensibilty and Web 2.0

Yesterday I participated in a Start-up Speed Dating event. In this case, it was about getting feedback on improving our pitch. If you are unfamiliar with the concept ours went like this - the start-up gives their pitch for 5 minutes and then the investor gave 5 minutes of feedback. The entrepreneur then moved to the next table, and we repeated this 10 times. Extremely intense but very exhilarating, and a great way to get feedback. Highly recommended for any entrepreneur. A common question that gets asked during this type of exercise is 'how defensible is your business', or 'what are the barriers to entry'. Patents tend to be what people focus on in this area, but as Guy Kawasaki points out in a recent blog post there are many different options on how to answer this question, relying on patents isn't necessarily the way to go.

Since my start-up falls into the Web 2.0 category, I found this post particularly interesting, as defensibility always comes up. Although I do like Guy's first response to such a question: “Defensible Web 2.0 company” is an oxymoron, I tend to use Guy's #9 option or a slight variation on it, with a little of #10. Additionally, we are trying to avoid falling into the patent diversion at least for the time being and focusing on building the product and finding a customer.

In the end Guy summarizes with the following communication goals as an outcome:

• You’re street wise, so you know that you can’t depend on patents.
• You understand that very few companies are truly defensible for reasons other than because they either achieved critical mass or had a nine-month head start.
• You have domain expertise, connections, and what you’re doing is hard.
• You’re not the only team that can do this, but you’re in a better position than most.
• You believe that you can build a business better than anyone (a little cockiness is necessary for an entrepreneur to survive).

Technology/Sport Mashups Are Just Beginning

Right now the cool thing is embedded Mp3 players, and iPod connectors in sporting goods but as Jim Carroll says - this is just the tip of the iceberg, its about more than iPod's, and its not about accessorizing, and its about redefining the product. Technology will further converge with the sporting goods industry.

He talks about 'Gen-connect', and how they expect stuff to do stuff. They are wired and connected and they want to link with everything around them. Gen-Connect think links because that is what they do, and companies need to re-think about their products in the same way. To be effective at this, I think companies need to find ways put themselves in the shoes of their customers, and most importantly not enforce their values, or perspective on that of their users. The way to do this is to really listen to them without judging, but easier said than done.

The other take away that I took from this article, which I have also been researching for some time, is Jim's concept of sporting good extensibility. Sporting goods users are often passionate and regular users of their products, they are quick to tell you (based on real experience) about how the product could be better, and often they will do this themselves. Think about how people modify bikes, skateboards or kayaks to suite their needs. Jim talks about the concept releasing 'platforms' instead of products to allow for users to modify and make them better.

I find this concept of tech/sports mash ups extremely exciting and feel there is a lot of untapped territory here, but besides having some creative R&D staff, and likely some product users within your company, I think that companies need to come up with some new methods on how to harness that creative energy, and create more authentic connections with their user base so that it can be channeled it back into growing the business. This is more than market research, or product development. Its about bringing these two often separate disciplines together.

Coke (finally) Sees the Benefits of Viral Marketing

This week Coke finally inked a deal with Grobe and Voltz who created the exploding soda video (dropping mentos into diet coke) that became so popular during the summer. Mentos, parent company jumped on board pretty quickly to capitalize on the publicity. Coke took a more 'wait and see' approach. This week Coke unveiled a new challenge called "Poetry in Motion" which calls coke drinkers to create interesting or entertaining videos using run-of-the-mill household objects.

Coke finally realized the power of viral marketing. As online public relations expert Steve Rubel states: ""Somebody hijacked their brand and turned it into a worldwide phenomenon". They are a large company, and a little slower to move, but they still did it which is a big step for them to see how different techniques such as this can be used as proving grounds for potential marketing efforts all without the high prices and low creativity of today's professional add agencies.

Customer Value Stream Thinking

Michael Porter first came up with the concept of a value chain framework as a model to help analyze specific activities through which a firm can create value and competitive advantage. Value creation however is often vague ... value to whom, or from what perspective? In a world focused on customer value, we should be thinking about a customer focused value stream. But how do you do that?

1. Define your customer. With many companies today, the term customer is used very broadly. Robert Simon says in his book Levers of Organizational Design "By labeling everyone as a customer, the organization becomes confused about its purpose and whom it is designed to server". He states that organizations can be effectively designed to only serve one master. I like his definition of a primary customer as a group that routinely transacts with the company through open markets (and therefore has choice), and two, finds value in the firms outputs. Although other groups are important, having one primary customer allows the firm to make appropriate trade offs.

2. Now that you know who your primary customer is, think about the typical value chain where you have inbound logistics (inventory, receiving etc) at the beginning and Marketing, and Service at the end. Then, try flipping it around, where you may have your customer facing components at the beginning of your stream instead of at the end. This will help you think about your value stream in terms of a pull model (based on customer needs), instead of the traditional push model.

3. Think about your value stream components in terms of if, and how they deliver value to your customer. To do this, first use some LEAN principals to understand value-added processes - Suppose your customer had a complete view of all processes carried in your company... which ones would they be willing to pay for as part of the end product cost, and which actually contribute to the value (product or service) delivered. Next, think about an objective statement for each of the components. Often companies think about process objectives from an internal perspective, so try and shift your thinking to that of a customer. For example, lets take a typical value stream component such as 'marketing'. A traditional objective for this component might be "Sell products to our customers". Flipping the value stream in reverse as noted in #2, you might think of marketing as "Identify and Stimulate Demand". This is better, but still an internally focused objective. What might be a customer focused objective for marketing? Possibly something like "Effectively communicate offers (product & price) that are relevant and the appropriate to my needs".

This task can often be challenging. For instance, I once worked for a business unit in a large financial institution where we focused on offering unique products to customers for paying down bad debts. These customers would often rather not pay at all if given a choice, so trying to think about customer objectives on debt collection processes was an interesting exercises, but one that gave us a new perspective on the 'value' we were offering our primary customer. I might also point out that we were not only market leaders in the debt recovery space, but also had customers who were often happy about paying down their debt. I attribute this highly to customer focused thinking within the organization.

So let me present an example of what I have just talked about. I was doing some business strategy work for a friend who owns a small financial services business, and started to think about a potential value stream for him with customer focused objectives. To the right you see the sample value stream model I created. It is more than a one-time thought exercise. It can also help instill the right kind of thinking in your organization, and act as guidance when decisions are being made, and trade offs being evaluated as the organization carries out its business. Does what you do meet your customer objectives?

Customer Dis-service

Earlier this year my HP desk jet told me that the color cartridge was empty. I bought a replacement. It then told me I had a faulty cartridge. I got another replacement. It continued to tell me that so I using the printer troubleshooting options, which failed to resolve the issue. I checked the manual, and still no solution. Plus notably there was no apparent customer support phone number. I then went online to see about contacting customer support. Again no apparent option for phone support, however they had online chat, which I tried, and once connected, no one ever came on. Still no further ahead. The next day to my amazement I received an email survey asking about my online chat support service. I responded with some constructive feedback, and also requested some help. This was back in June of this year (or possibly earlier, since the email is long gone). On October 10, I received the following email:

Recent HP chat support experience (KMM15217737V81510L0KM)
HP DeskJet E-mail Support deskjet_support_en@mail.support.hp.com
Hello, this is James from HP,I am writing to you in response to your recent communication with HP in which you indicated that you were dissatisfied with HP's service performance. I'd like an opportunity to better understand the issue and see if we can address it for you. If you respond to this email by sending me your phone number, then I will call you promptly to discuss the matter.

It would have almost been better if they had never responded. The use of the phrase 'recent communication' made it obvious that they have no concept of response time. At this point I responded just to see how ludicrous this might get. It is now October 23, and still no response, but given their liberal use of the term recent, I can't really expect much from statement 'call you promptly to discuss'.

It is unacceptable these days for companies to not understand the importance of customer service. Whats more they must understand that every touch point with the customer is a marketing opportunity. Maybe if HP put their customer service group under the direction of the CMO, they might have some better luck. For all their advanced technology such as online chat, automated surveys, etc they obviously still don't get it.

Startup Mistakes - just for Startups?

Another list of startup mistakes, this one by Paul Graham. Although Paul has 18 items on his list, he sites a single mistake that trumps all others: not making something users want. Unfortunately I think this mistake is universal to all companies... the only difference being that if a startup makes it they do not have the resources to recover. Companies that make this mistake can absorb it or ignore it for a while, however it eventually catches up to them as well.

I think if large companies challenged themselves to look at these types of lists and put themselves back into a startup-style of thinking some very costly mistakes could be avoided. Some obviously don't apply, but other mistakes that he cites such as derivative ideas, Obstinacy, hiring bad programers, slowness in launching, and sacrificing users to support profits are very applicable. Others could be flipped around for larger companies to help avoid pitfalls. If a startup can fail from attempting to support a marginal niche, large companies can suffer from spreading themselves too thin, or having no solid vision.

Netezza Data Warehouse Appliance Blue Ocean

I have been reading Blue Ocean Strategy by Kim and Mauborgne, and wanted to share yet another example of this concept in the data warehousing industry. It has to do with a disruptive business model called the data warehouse appliance model first developed by Netezza Corporation. Although this concept is probably not new to anyone in the warehousing space, and there are at least 2 others trying to play in this space now with different technology, it is still a great illustration of a blue ocean, and one that Netezza continues to push the envelope on.

Note: Although the high end data warehouse space, Oracle is not really considered in the same league, I have added them for comparison since they have such high penetration in data shops.

The following is what I consider to be a reasonably close strategy canvas for Netezza.
The following are my thoughts on value proposition factors and short descriptions as to why Netezza stands out.

Price - The price customers will pay for a roughly equivalent system: Netezza has developed a way to bring the scale and performance at a much lower cost making it much more feasible for companies that do analytical heavy lifting that used to require a much more expensive alternative.
Scale - Data volume that the system can handle: Netezza is still proving themselves in the area of very large data sets, however their systems are proving that they can scale to the likes of Teradata, and maintain performance
Performance - Query performance on unstructured questions/queries: In benchmarks Netezza has been shown to outperform all equivalent RDBMS vendors (sometimes by 10-100 times) and has even shown performance equivalent and wins over Teradata.
Features - The feature set included to build applications: Although Netezza probably doesn't have the complete feature set of its competitors, it has all the key features needed to build a highly functional data warehouse (eg - materialized views). They are specifically built for high performance data warehouses.
Simplicity - The number of FTE's and skill to set up, support, tune for performance etc: Netezza is called an appliance, because of a customers ability to plug it in and be up and running (well within a few days), as compared to a much longer time frame with competitors. Also, the system architecture and intelligence almost eliminate the need for tuning. Due to this appliance model this reduces the need for support FTE, and skills required, freeing up DBA's to do actual data analysis work instead of always needing to monkey with the engine.
Customer Service - The skill level and quality of customer support: Considered superior at Netezza. They do not hire low end customer support staff - rather, their customer support seems to consist of seasoned database resources with DBA and database developer knowledge. This may make for a more expensive CS team, but it is a small price to pay for reference-ability with existing customers.

Innovative Thinking

The Innovation Zen blog has an interesting post on how to think about future innovation by looking at current products or services, and think about how someone will look back and laugh at this item in the future, when it will be obsolete, similar to the way we would snicker when we look at a teletype machine and think of it as innovative.

This gives some ever so slight structure to innovative thinking over coming up with random thoughts based on tech trends, it helps focus on user needs, and is very simple to use. I just tried it out on a couple of items sitting on my desk and it worked very well. For example take my iPod sitting here: Why will I laugh at this device in the future?

• I actually needed to plug the headphones into the device to listen to it, and the headphones didn't sense my ears and automatically turn on
• I worried about battery life
• I was concerned about running out of space or shifting some content off, as I start to put music, books, pictures and movies on it (I only had a 30GB)
• I couldn't bookmark my audio books or put voice comments and tag them to specific pieces of text
• The figures and pictures from the audio books, or the slide decks from the keynote podcasts were not automatically displaying in the window
• I had to connect it to a pc to move content onto it
• It did not have a wireless connection to the Internet
• and on and on...
  

This took about 2 minutes to write these comments down, all from just a slight shift in the way you think.

Cheaper = Red Ocean Strategy

Seth Godin points to an angry note from a reader who was upset when she asked him to help persuade her bosses that the best way to grow their resort was to lower the prices, and he responded that she might better raise her prices and create a remarkable experience.

Seth's view from a marketing perspective: Cheaper is the last refuge of the person who is not a good marketer.

My view from a business strategy perspective: Cheaper, by itself, is admitting that you are competing in a commoditized market; Cheaper says that you are willing to accept smaller and smaller margins; Cheaper says that your customers only care about cost. Cheaper says that you want stay in a red ocean, and admitting that you have no vision to create a blue ocean strategy for your company.

Cheaper can be part of a disruptive business model and strategy if it is a component of an overall customer value proposition that is often combined with 'better' and 'faster'. If you find yourself thinking about the cheaper strategy, its time to re-invent your business or move on.

Emerging Business of SecondLife

It never ceases to amaze me how innovation happens. The online virtual world Second Life is a great example to watch this take place. Born in 2003, and expected to reach a million users this year, Second Life is not a game, but more like the next evolution of the web - the web in 3d, where you enter and navigate the world with your own virtual avatar (virtual self). A few innovative people are already making a successful living inside this world such as Chinese-German businesswoman Ailin Graef who reported made over over 100k USD last year. (See previous blog) People make, sell and trade land or items within this world. A new enterprising company profiled in 'Wired' is shifting this in reverse, by moving from the virtual world to the real world. Fabjectory is a start up by Michael Buckbee that will make and sell real objects customer created from the digital items by users inside Second Life.

[from Wired] "Buckbee is the first to get his service off the ground. The virtual designer creates a three-dimensional model of a client's avatar using screenshots taken in the world of Second Life. He uses an open-source design tool known as the OpenGLExtractor by Eyebeam OpenLab. After tweaking the model to make sure that there are no overly fragile parts -- hair has been a big worry -- Buckbee sends the design to the client for final approval. The digital file is then turned into reality using a 3-D printer made by Z Corp. The final price? Typically less than $100."

Although intriguing, what I find more interesting however are the people starting to utilize Second Life to model real-world problems, like the logistics of distributing aid after a disaster, or studying how efficient the layout of a proposed office building will be. (see article) I suspect that this will continue to blossom into an entire industry on its own, where companies can offer simulation to help organizations with all types of situations from team building exercises to advanced virtual meeting spaces. If it can be used to do something better, faster, cheaper then it has a place in business and people will find a way to use it.

Innovation Abuse

Futher evidence of innovation and its buzzword status in business, through its usage and mis-usage? Scott Berkun is working on a new book on this topic and shares some of his survey results.

Patent Review Crowdsourcing

I am continually amazed at the amount of knowledge one must posess to become a successful entrepreneur. Intellectual property is something that all new entrepreneurs know is important, and often crucial to securing investments. But like every other aspect of entrepreneur-ism, there is a ton of information to understand, and since you don't have the money to pay an expert, you must become an expert yourself.

This morning I attended a seminar put on by a local law firm on intellectual property - trademarks, copyrights, trade secrets, and patents. Very informative, but after hearing about the patent process from patent filers, legal professionals, backed up by previous research on my own, I think this process needs an overhaul. Although not stated explicitly, I feel like the general consensus of the crowd was that the process is a bit of a joke. Unfortunately, like other inefficient government monopolies, there isn't much choice and besides, it keeps patent attorneys busy. Some of the interesting comments raised were:

• 'patent pending' = 'copy it quick',
• it can often take 2 years to even get a patent looked at,
• the pace of technology (for which many patents are filed) is too fast for the patent process. (eg. - a shrewd business could copy a patent, get in, make some money and get out before the patent is completed),
• general debate around what does 'non-obvious' mean.

I would propose that the patent office look at opening up patent review to the masses (ie. Patent Crowdsourcing). This would allow the community, or many skill communities to filter the patents among other things, against the 3 standards for useful, novel, non-obvious. Now, of course this would often require that the crowd be 'skilled in the arts' of the patent, but understanding the skills of the individuals could be part of the registration process. Yes some would a higher level of expertise than others, but that is why crowd sourcing is effective, in that over a period of time with a large number of people weighing in, ranking, commenting etc, it will give the patent process a jump start. The patent database is already available to the public. All that is lacking is the right tool to facilitate this process. Now, given that web 2.0 collaboration tools are starting to come into their own, these tools could be assembled into a simple application that sits on top of the patent database. This brings forward a wealth of possibilities, making the data much more useful. For example, allowing users the ability to using tagging techniques dynamically bookmark patents they find during their research tagging what they consider similar patents, user generated folksonomies etc. However useful the data is for people scanning the database, in the end, this is about customer satisfaction, with the customers being the companies and individuals filing the patents. I feel that this would not only reduce the patent process cycle time but also allow better decisions to be made about valid and invalid patents. This would be similar to the type of community that supports wikipedia, and although some say that wikipedia is a one-time phenomenon in the pure user content community (with no apparent incentive), I think this could be another example that would work on this model. Yes, by the nature of our society, lawyers will still likely be required, however this offers a relatively free way to make a broken process more effective.

Note: After writing this, I quickly googled 'Patent Crowdsourcing', and low and behold, another person has had similar musings a couple months back as well as more recently. Great minds think alike I guess... This also brings to bear another truism of the entrepreneur - 'Never be naive enough to think that someone else isn't also working on a similar concept, however in the end its about execution - not the idea' :) I wonder if someone has filed a patent for this yet?

Real Innovators

Innovation is one of the newest industry buzzwords, but often easier to say than to develop in a companies culture. Here is a great list of Eight Truths of Real Innovators, from Futurelab that could be applied to any company - large or small in how they think about innovation.

Truth #1: Stop equating innovation to R&D
Truth #2: Pay people to fail
Truth #3: Treat everyone as an innovator
Truth #4: Kill bad ideas quickly
Truth #5: Launch first, worry about the shortcomings later
Truth #6: Don't believe what your customers tell you, dig deeper
Truth #7: Don't try radical innovation, buy it
Truth #8: Mix elements that shouldn’t be mixed

Some additional comments:
#2 & # 4 - Combining these two into a mgmt philosphy - Its OK to fail - just fail quickly.

#6 - I believe this is true but stated with an incorrect focus. Current mechanisms available for customer 'listening' are inneffective. In the book Blink by Malcolm Gladwell, he talks about the pros and cons of 'thin slicing' or 'snap judements'. I believe this is a case where current listening techniques create snap judgments, and hence why this often translates into perception by a company that you shouldn't always believe what the customer tells you. So although true on the surface - maybe the more accurate statement is 'build a deeper connection with your customer, for more effective innovation'.

#1 - An important factor in a company is the relationship between marketing and R&D. Depending on the company product and industry, there is often drastic differenences on how innovation is driven. In general the more technical the company (and its products) is, the more that R&D controls/drives innovation. The more a company produces consumer products, it rolls up through marketing. However in the end they often both miss the mark since the customer is still often many times removed from the actual innovation. I read a great quote in an article about innovation at Kelloggs from earlier this year - Marketing Lays out the hunting grounds for R&D. I think this mentality definitly gets a company closer to the right kind of innovation, but I would suggest taking it a step further... Marketing lays out the hunting grounds for R&D, but let the customer be the hunting guide.