Anecdotal Market Research for the Start-Up

Innovators often begin their process of innovation with inspiration from some experience they have had or observed. Keen observation can be very powerful for identifying opportunities, but it's also easy to go wrong and draw bad conclusions from faulty logic. I had this experience myself this week when my phone went wrong not once, but twice.

By way of background, let me begin my story by saying that I use Windows 7 and 8, have an Android tablet and Samsung S3 smartphone, and was very happy with my previous smartphone, an iPhone 4.

But being happy with a technology does not necessarily mean that it was reliable. I went through three iPhone 4s in my first six month of ownership because for some, never explained reason, two of my phones decided not to permit phone calls unless I also had 3G data turned on as well. Support people speculated it was a cell tower software problem, but my third phone did eventually work and be reliable. Now you may conclude that I might be upset with my carrrier AT&T or Apple, but I was not. I thought the service of the Apple store was superb and there was never any hesitation about replacing the phone on which I had purchased an extended warranty. And I am guessing that AT&T deserved some credit for fixing the cell tower.

This week my Samsung phone suddenly took upon itself to become erratic in terms of charging. After being charged all night, it only showed 7% power. And the problem showed up with different batteries, cables and chargers. Searching the Internet, I found this was not an uncommon problem. The local AT&T store acknowledged the problem and referred me to their maintenance center, where pleasant and friendly technicians handled me well. I ended up with a new phone, which promptly exhibited a pattern of switching itself off for no good reason, something I had also read about on the Internet. Returning the following day, AT&T acknowledged the problem and gave me my third Samsung Galaxy 3. It's annoying wasting several hours, but I have to say that AT&T's service was excellent and very friendly.

Because I write about technology, I took the opportunity to ask other customers waiting, what phones they had and what kind of problems they were having.

The first clear observation was that they all seemed to have Samsung phones. One person had a one week old Samsung Note 2 and all his phone calls were going to voice mail so he was getting no calls. A second person had a Samsung Galaxy S4 and the screen was unresponsive. A third person also had a Samsung Galaxy S4 and his screen had a defective column of pixels that only showed up in some screen color backgrounds.

So, what conclusions should I draw? I first caught myself thinking that Samsung seems to have a lot of quality problems, but then the error of my thinking occurred to me. Most people who have an iPhone will take it back to the local Apple store if there is one nearby. So any conclusions about failure rates will be biased for non-Apple phones in any area like Silicon Valley with multiple Apple stores.

Second, it's worth remembering that Samsung is on a tear and having huge success with its smart phones and phablets like the Galaxy Note. And given that all electronic devices have failure rates, the more you sell, the more units will come back with problems. It's just a percentage issue.

So, here is a lovely example of where anecdotal research is likely misleading without additional confirmation. There is data out there on the failure rate of phones, e.g. http://blog.fixya.com/pr/feb2013/smartphone-manufacturer-report.html and studies that purport to assess breakability for example, e.g. warranty vendor SquareTrade.com, http://squaretrading.wordpress.com/2013/05/08/how-breakable-is-the-new-samsung-galaxy-s4/ but that old stalwart of product ratings, Consumer Reports does not provide any useful information on reliability.

But it's worth pointing out that hidden assumptions about observational research need to be checked at every turn. This blog posting has said nice things about my interactions with both the AT&T store where I bought my phone and the service/support store. Consumer Reports is less favorable about AT&T. Its ratings are available at http://www.consumerreports.org/cro/electronics-computers/phones-mobile-devices/cell-phones-services/cell-phone-stores-ratings/ratings-overview.htm for subscribers. JD Powers in contrast, rates AT&T highest in overall satisfaction, e.g. http://www.pcmag.com/article2/0,2817,2422645,00.asp

So, what are my take-ways.

First, it's easy to leap to conclusions without realizing your logic may be faulty.

Second, observations should be backstopped with additional data. Small samples are pretty much meaningless.

Third, in fast changing markets, market research can get old very quickly. Past performance of a competitor is not necessarily predictive of their rate of improvement.

Fourth, customer perceptions of reliability are often affected by content that may or may not be accurate, significant or relevant. For example, one of the five odd reasons I switched from Apple to Samsung was a series of reports about paint chipping from iPhone 5s. It was not the key reason, but it did contribute to my decision.

Why Wargaming is Useful. The Bankruptcy of Detroit.

One of the major impacts of inexpensive computers is the ability to simulate and game business situations. If you have ever played, SimCity, an early success in the consumer gaming business, you may well have attempted to manage some of the cities that came predesigned in the game. Detroit was one of those cities. I have to admit I was never able to figure out a way to save the SimCity version of Detroit. But playing SimCity certainly honed my interest in and my understanding of urban planning.

Over the years, I have designed and delivered a number of simulations. My largest and most successful was a simulation designed to teach telecom executives about how to compete in a converging world, where fixed line, mobile, broadband data, broadband wireless and video were overlapping. An unusual wrinkle in the design was the idea that in a large corporation, it's not enough to compete with external competitors, you also need to cooperate with internal stakeholders. And just as importantly, you need to understand the different leads and lags that individual functions in the business operate under.

Surprisingly, even managers with long experience in an industry will often underestimate the impact of planning cycle differences. And it's very common for managers to underestimate the range of outcomes possible.

This need to push managers to consider wider extremes is one of the reasons that scenario analysis is talked about so much. But there is theological split in the world of scenario creation and use. Some scenario consultant are quite adamant that scenarios should be stories not numerical models. These professionals are reacting against the phenomenon that spreadsheet sensitivity analysis is sometimes confused with scenario analysis. The use scenario analysis to drag resistant managers kicking and screaming into considering the unthinkable, the Black Swan, and the fat tailed distributions or risk.

But if that battle has been won and managers now understand the vocabulary of  and the differences between sensitivity analysis and scenario analysis, then there is a next generation modeling opportunity, i.e. to translate the stories of a scenario into the impact upon a business.

The impact upon a business may like the wargame reveal not just the sensitivity changes under different scenarios, they may also imply more complex differences in states, e.g.

- what portfolio of IT projects works best over multiple different scenarios
- investments that need to be made before a contingency plan kicks in (as in "We needed to have done that yesterday or last year.")
- business investments that can be thought of as options on a capability, customer group, market or R&D.

In effect, the availability of low cost computing, modeling software and scenarios gives companies the ability to maintain an enterprise and market model as well as providing a vocabulary of stories about possible futures.

New Reviews of Innovation Zeitgeist by James Lau, Founder of Movesandshakes.com, and Vint Cerf, Google's Chief Internet Evangelist

Innovation Zeitgeist Reviewer Comments

Latest reviewer comments on Innovation Zeitgeist includes new comments from Australian James Lau, CEO and founder of the new startup, movesandshakes.com and Vint Cerf, VP and Chief Internet Evangelist at Google. Vint is sometimes referred to as the father of the Internet.

"Innovation Zeitgeist is a marvelous creation.  I love what Alistair Davidson has done.  I enjoy most the narrative style (feels more like a weekend read) and yet it is packed with facts, ideas, authority. There is more content here than an entire MBA course.  It's an MBA on digital" - James Lau, Founder movesandshakes.com

“Innovation Zeitgeist is thoughtful, pragmatic and comprehensive in its analysis of digital product and service opportunities. The business advice it offers is understandable, even to an engineer like me!” Vint Cerf, VP and Chief Internet Evangelist, Google

"Alistair Davidson has written an ambitious, encompassing, and down-to-earth treatise on the current digital transformation.  It’s the best description yet of the digital transformation engulfing us and what we should do about it, written in plain language and illustrated with his own photographs and questions for the reader after every chapter. An iconic, original contribution to the literature on digital transformation that is hard to put down. There is good advice and commonsense written on every page.  Must reading."  Stanley Abraham, Professor of Strategy and Entrepreneurship (Emeritus), Cal Poly Pomona University, author of “Strategic Planning: A Practical Guide for Competitive Success”.

"Innovation Zeitgeist is essential reading for any venture capitalist or startup. It forces the reader to consider what they are doing and what they must continue to do that is different than their many domestic or international competitors, a critical issue for successful startups and for high growth companies." Norm Fogelsong, General Partner, Institutional Venture Partners

“Alistair Davidson has produced an insightful analysis of innovation in the digital era.  This book is a must read for executives seeking survival and success in today's challenging competitive arena.” Robert Allio, founding editor of Strategy & Leadership magazine, former Dean of Rensselaer School of Management. Author of “Seven Faces of Leadership”.

 “A.T. Kearney's clients are all facing the issue of their business being transformed by digital technology.  Innovation Zeitgeist is a great resource for helping our Digital Business Forum clients understand how important it is to actively scope and manage the changes to their business, organizational structure, acquisition strategy, business model and required innovation approaches.” Michael Roemer, Partner and International Co-head of A.T. Kearney Digital Business Forum

“Mr. Davidson has a knack for bringing the thirty-thousand foot practice of strategy down to earth. His discussion of strategic considerations leads directly to an actionable planning structure. Strategy, then, can form a tactical plan. The benefit of the book is twofold: food for thought and a framework for action.” Bruce Rosebrugh, President, VPQ Scientific

"In Innovation Zeitgeist, Alistair zeroes in on many of the key issues we see our market research service-industry clients facing - rapidly changing customer expectations, the need for rapid service introductions, more competition, a need to rethink business models and the types of innovation pursued." Jim Hollingsworth, VP Finance and Security, Pacific Consulting Group

“Bravo! Innovation Zeitgeist offers deep yet pragmatic ideas to address today’s business challenges. Alistair Davidson’s depiction of trends dramatically altering the competitive landscape such as technology overabundance and customer attention scarcity hits the nail on the head.”  Adrian C. Ott, author, “The 24-Hour Customer”; CEO, Exponential Edge Inc.

 Press Release: 

Innovation Up, But Success Elusive

INNOVATION ZEITGEIST, a new book by Silicon Valley guru Alistair Davidson guides managers through a world where everybody is inventing the same products at the same time.

Business is entering the era of continuous innovation. Managers are under pressure to launch a perfect new product or service almost overnight. Many companies are doing it wrong.

As a result, by some measures the business environment is worse for innovation today than ever before. With so many companies making lots of little innovations customers are being overwhelmed by technologies that demand too much of their attention and don’t meet their needs.

Davidson’s guide for managers, Innovation Zeitgeist: Competing in a World With Too Many Competitors, Amazon Kindle, June 2013, offers startling insights.

It’s easier to innovate than ever before, but it’s harder to be successful. Current research suggests that 3 our of 4 venture capital investments don’t return the original investment to the VCs; as few as 1 in 10 meet the VC return goals, and only 6-7% of CEOs make it to the IPO or being acquired.

Most companies underestimate the number of competitors developing similar products. The strongest predictor of success is offering a differentiated high value product. Me-too products don’t cut it in a world of hyper-competition where innovation is taking place in both developed and developing countries.

Many so called innovations are just small improvements or uncreative reactions to customers’ “points of pain.” Competitors are likely rushing a duplicate product or service to market. The resulting net competitive advantage: zero.

Products may be seductive to people like engineers and programmers, but services and solutions are more likely to be money makers for many companies.

Companies that  ‘spec’ a new product and throw over the wall to developers, are going to become extinct. Your customers and their customers won’t actually know that they want until they use it, so you better involve them in the development process from the beginning. ‘Waterfall’ is out. Agile is in.

With so many copycat competitors, you better make sure that customers love and trust you. The top strategy for the rest of the decade will be acting on behalf of the customers, not selling them more features they don’t use. You can’t sell useless bells and whistles or behave badly to customers in a world where customers are tweeting, blogging and rating you.

Embedded device, appliance or platform – it’s a critical choice as Nokia and Blackberry have found. Misjudging the shift can blow your strategy apart.

While individual product owner may think their product is simple to use, the reality is that consumers are drowning in information, accounts, passwords, spam and malware. Think “Simplify!” or you will lose your customers to those who do.

If you are selling digital content (video, e-books, music, software, games), the new frontier in marketing is figuring out what rights and services to bundle or unbundle with the content. You used to buy a one-time right to download a piece of music. Today, when you buy music, it can be bundled with the right to download any time or stream from the cloud.

Inheritance is a big problem for digital content. Most consumers don’t realize that their huge MP3, e-book, audio-book, software and games are not transferable. Think upset consumer when a parent dies and their book collection is not transferable.

He identifies ten approaches to privacy that a company can select from to create a better relationship with customers and win them away from the competition.

The next round of privacy issues are going to make the current problems looks small. Big Data means that companies can not only know about what you have done, but can predict what your secrets are and what you will do in the future. That may be OK for what restaurant you are going to, but not so much if they can deduce your involvement in something taboo or embarrassing.

The Internet is so important to business and personal life today, that we can expect new ways of making the anonymous authenticated. He speculates that owning a certified identity, being part of a ‘Tribe of Trust’ will be critical for the Internet to remain useful.

Alistair Davidson consults on strategy and business development. He’s a veteran Silicon Valley entrepreneur who has built and commericalized numerous software products including planning, innovation and strategy tools. He is the author of four books on strategy and technology, and a contributing editor at Strategy & Leadership magazine.

                                                                                      

Alistair Davidson Contact Information:                      

Phone: +1-650-450-9011

E-mail: Alistair@eclicktick.com

Web site: www.eclicktick.com

Innovation Zeitgeist Amazon web page: http://www.amazon.com/Innovation-Zeitgeist-Transformation-Competitors-ebook/dp/B00DBCQC3I/ref=sr_1_2?s=books&ie=UTF8&qid=1372344844&sr=1-2

Amazon author web page: http://www.amazon.com/Alistair-Davidson/e/B000APSDS6/ref=ntt_dp_epwbk_0

Reviewer Comments

"Alistair Davidson has written an ambitious, encompassing, and down-to-earth treatise on the current digital transformation.  It’s the best description yet of the digital transformation engulfing us and what we should do about it, written in plain language and illustrated with his own photographs and questions for the reader after every chapter. An iconic, original contribution to the literature on digital transformation that is hard to put down. There is good advice and commonsense written on every page.  Must reading."  Stanley Abraham, Professor of Strategy and Entrepreneurship, Cal. State. Polytechnic University, author of “Strategic Planning: A Practical Guide for Competitive Success.

"Innovation Zeitgeist is essential reading for any venture capitalist or startup. It forces the reader to consider what they are doing and what they must continue to do that is different than their many domestic or international competitors, a critical issue for successful startups and for high growth companies." Norm Fogelsong, General Partner, Institutional Venture Partners

“Alistair Davidson has produced an insightful analysis of innovation in the digital era.  This book is a must read for executives seeking survival and success in today's challenging competitive arena.” Robert Allio, founding editor of Strategy & Leadership magazine, former Dean of Rensselaer School of Management. Author of Seven Faces of Leadership

A.T. Kearney's clients are all facing the issue of their business being transformed by digital technology.  Innovation Zeitgeist is a great resource for helping our Digital Business Forum clients understand how important it is to actively scope and manage the changes to their business, organizational structure, acquisition strategy, business model and required innovation approaches. 

Michael Roemer, Partner and International Co-head of A.T. Kearney, Digital Business Forum

"In Innovation Zeitgeist, Alistair zeroes in on many of the key issues we see our market research service-industry clients facing - rapidly changing customer expectations, the need for rapid service introductions, more competition, a need to rethink business models and the types of innovation pursued." Jim Hollingsworth, VP Finance and Security, Pacific Consulting Group

                                   

                                                                                                                                                                         

Techniques for Spotting Plagiarism

More discoveries about plagiarism. Well, having discovered one silly teenager (she goes by Ali Renee Royster or Alianna Rene'e on Facebook, and by Alianna Renee on poetry.com) who has been plagiarizing my poems, I have now discovered the big leagues of plagiarism -- Baidu.com and China.com. They have wholesale importation of content.

I have tried out a number of tools for plagiarism tracking, but the simplest and least expensive approach is to just pick a sentence with an unusual combination of words and search on it in Google. It also suggests to me the advantage of having some unique word in your text that you can search on, perhaps in a reference where it might be less obvious.

http://mashable.com/2012/08/29/plagiarism-online-services/ lists some tools for detecting plagiarism.

I enclose an example plagiarism search on the title and first stanza of the opening poem in Silicon Valley Poems, California Weaving using the metasearch engine ixquit.com

First three results

Poems 2000-1 - Alistair Davidson's Personal Web Site
www.alistairdavidson.com/poems_2001.htm - Proxy - Highlight
And grass turned golden against the bluesky. ... summerblossoms, the greentreesoasis-likein the goldenhills. The almostperpetualbluesky.
Silicon Valley Poems

www.alistairdavidson.com/SiliconValleyPoems.pdf - Proxy - Highlight
It beginswith the beauty Vegetation Grass, the springflowers, summerblossoms, the greentreesoasis-likein the goldenhillsThe almostperpetualbluesky.

Weaving <3, by Alianna Renee
www.poetry.com/poems/317063 - Proxy - Highlight
It begins with the beauty Vegetation Grass, the spring flowers, summer blossoms, the green trees oasis-like in the golden hills The almost perpetual blue sky.

Privacy as Product Differentiation

In past times, the amount of information that businesses held about an individual was relatively small. Today, the amount of information held about a user can be astonishingly large. Location information alone gives detailed granular information about somebody’s life and travels. In a hypercompetitive world, differentiation on the basis of privacy policies represents a range of positioning that can be used to gain competitive advantage and also to claim (and presumably deliver) different levels of ethical relationships with customers. 

Roughly speaking one might imagine companies in a market pursuing ten alternative strategies:

1. Lie about what information is collected
2. Don’t reveal what information is stored about the user
3. Reveal policies and superficial description of information stored about the user
4. Reveal partial information about what is stored
5. Reveal all raw information stored about the user
6. Reveal all raw and evaluative information stored about the user including connections to other users
7. Allow editing and export of privacy information by user
8. Pay user to use their stored information
9. Make the information stored useful to the user
10. Make the information stored useful to the user and charge for it as a service

Today, few companies have been aggressive in their use of privacy information as a differentiator. Though some are now beginning to realize that government surveillance experience may influence customer attitudes. Perhaps an early sign of competitive use of privacy as a marketing weapon is an internal 2013 video developed by Microsoft (http://youtu.be/-Cr6AgUo764 ). Now leaked outside Microsoft, the video’s theme is that Google tracks everything you do so that it can make money off you. While it may not have been intended as an external marketing weapon, it does illustrate the kind of marketing campaign that might be pursued by aggressive companies in the future.

One can easily imagine that in a highly competitive market, where differentiation is hard to achieve, or when a smaller player wishes to gain on a larger player, that trumpeting premium privacy policies might switch customers. The Dutch search engine, IxQuick.com differentiates on privacy in a market dominated by Google. In banking, one of the oldest information businesses, privacy has been a key product attribute for decades, if not centuries. And it is also reasonable to expect that those that collect information from customers will make counterarguments around collected information making the service more useful or permitting the service to be free.

Two other factors make it likely that privacy will become a more important marketing issue. First, governments have put in place, Freedom of Information (FOI) laws. In 2013, the US Federal government is being required to make the default for government files a machine readable open format to increase the transparency of government information and decisions. In the US, the Obama administration has suggested a Privacy Bill of Rights which includes

• Individual Control: Consumers have a right to exercise control over what personal data companies collect from them and how they use it.
• Transparency: Consumers have a right to easily understandable and accessible information about privacy and security practices.
• Respect for Context: Consumers have a right to expect that companies will collect, use and disclose personal data in ways that are consistent with the context in which consumers provide the data.
• Security: Consumers have a right to secure and responsible handling of personal data.
• Access and Accuracy: Consumers have a right to access and correct personal data in usable formats, in a manner that is appropriate to the sensitivity of the data and the risk of adverse consequences to consumers if the data is inaccurate.
• Focused Collection: Consumers have a right to reasonable limits on the personal data that companies collect and retain.
• Accountability: Consumers have a right to have personal data handled by companies with appropriate measures in place to assure they adhere to the consumer-privacy bill of rights. 

Second, even if businesses in particular countries are able to prevent or modify legislated requirements for disclosure, market forces will, albeit slowly, move competitors to reveal more, and aggressive competitors to test and subsequently expand increased disclosure.

Increasing intelligence located in the “network” raises ethical issues in the same way that science fiction writer, Isaac Asimov raised them in thinking about the relationship between human and machine intelligences with his Three Laws of Robotics.

1.      “A robot may not injure a human being or, through inaction, allow a human being to come to harm.

2.      “A robot must obey the orders given to it by human beings, except where such orders would conflict with the First Law.

3.      “A robot must protect its own existence as long as such protection does not conflict with the First or Second Laws.”

In a sense, when businesses choose to store massive amounts of information, they take on a new responsibility not to damage the lives of those they serve. The responsibility is likely not merely ethical, but rather also a legal one. In the same way that we have slander and libel laws, and restrictions on disclosing medical records, unauthorized disclosure of private information will increasingly be exceptionally costly in terms of both legal suits and company reputational damage.

Even more thought provoking is the idea that a company may acquire, model or infer information that allows it make predictions about a user. Disclosure of such evaluative or predictive information, e.g. about financial condition, health, life expectancy, job prospects, political views, gender preference, proclivities around a taboo might be exceptionally damaging in some societies, a topic raised by another science fiction writer, Robert Heinlein as far back as 1939 in his short story, ”Life-Line”.

Copyright Alistair Davidson, alistair@eclicktick.com 2013, all rights reserved. Phone:  650 450 9011

Alistair Davidson is technology strategy consultant based in Silicon Valley. He is the author of four books on technology strategy, his latest being Zeitgeist Innovation: Digital Business Transformation in a World of Too Many Competitors, Amazon Kindle, June 2013 on which this article is based.

Brief Review of Extreme Trust by Don Peppers and Martha Rogers

Having just finished a book called Innovation Zeitgeist that suggests many people have the same idea at the same time, it should be no surprise to discover another pair of authors with similar ideas. In this case, the authors are the well known pair of Don Peppers and Martha Rogers who have written 10 books between them, primarily on the idea of one-to one-marketing, the concept that initially made their names famous.

The thesis of their book is that a high degree of customer trust, what they call "Extreme Trust" is a new requirement for success. The idea which is very similar to the notion of customer primacy or acting on behalf of the customer described in Innovation Zeitgeist shows very similar values for both books. Religions tend to have the rule: "Do unto others as you would, they would do unto you."  Both Extreme Trust and Innovation Zeitgeist share this core belief, whether you talk about it as a customer-centric perspective, an Outside-In perspective, or the role of a Chief Customer Officer/Chief Digital Officer.

Acting on behalf of the customer, Peppers and Rogers point out, is no longer optional in a world where bad behavior will get surfaced on social networks and via ratings. Practices that may be legal may not be adequate in a world where failing to meet customer expectations, gouging a customers or providing poor service is easily called out on Twitter, Facebook, rating sites and other social networks.

It's fascinating as an author to see how a different pair of writers, perhaps inspired by similar experiences, consulting projects, research data and observations can reach similar conclusions from different places and perspectives. I felt an immediate sense of intimacy with Extreme Trust, and admired the smoothly flowing writing and breadth of supporting research. In a subsequent phone conversation, Don and I hit it off immediately. It was a pleasure to meet an author whom I had followed since his first book.

All in all, I definitely recommend reading the book. Before or after Innovation Zeitgeist, it does not matter. The books have differences. Innovation Zeitgeist is more technology oriented, but the values, message and assessment of a digitized world have more in common than they have differently.

Blurbs: Reviewer Comments on Innovation Zeitgeist So Far

Part of the fun of publishing a book is getting feedback from readers for the back cover or page two in the Kindle edition. So here are the blurbs so far:

"Innovation Zeitgeist is essential reading for any venture capitalist or startup. It forces the reader to consider what they are doing and what they must continue to do that is different than their many domestic or international competitors, a critical issue for successful startups and for high growth companies." Norm Fogelsong, General Partner, Institutional Venture Partners

“Alistair Davidson has produced an insightful analysis of innovation in the digital era.  This book is a must read for executives seeking survival and success in today's challenging competitive arena.” Robert Allio, founding editor of Strategy & Leadership magazine, former Dean of Rensselaer School of Management. Author of “Seven Faces of Leadership”.

“A.T. Kearney's clients are all facing the issue of their business being transformed by digital technology.  Innovation Zeitgeist is a great resource for helping our Digital Business Forum clients understand how important it is to actively scope and manage the changes to their business, organizational structure, acquisition strategy, business model and required innovation approaches.” Michael Roemer, Partner and International Co-head of A.T. Kearney Digital Business Forum

“Mr. Davidson has a knack for bringing the thirty-thousand foot practice of strategy down to earth. His discussion of strategic considerations leads directly to an actionable planning structure. Strategy, then, can form a tactical plan. The benefit of the book is twofold: food for thought and a framework for action.” Bruce Rosebrugh, President, VPQ Scientific

"In Innovation Zeitgeist, Alistair zeroes in on many of the key issues we see our market research service-industry clients facing - rapidly changing customer expectations, the need for rapid service introductions, more competition, a need to rethink business models and the types of innovation pursued." Jim Hollingsworth, VP Finance and Security, Pacific Consulting Group

“Bravo! Innovation Zeitgeist offers deep yet pragmatic ideas to address today’s business challenges. Alistair Davidson’s depiction of trends dramatically altering the competitive landscape such as technology overabundance and customer attention scarcity hits the nail on the head.”  Adrian C. Ott, author, “The 24-Hour Customer”; CEO, Exponential Edge Inc.

"Alistair Davidson has written an ambitious, encompassing, and down-to-earth treatise on the current digital transformation.  It’s the best description yet of the digital transformation engulfing us and what we should do about it, written in plain language and illustrated with his own photographs and questions for the reader after every chapter. An iconic, original contribution to the literature on digital transformation that is hard to put down. There is good advice and commonsense written on every page.  Must reading."  Stanley Abraham, Professor of Strategy and Entrepreneurship (Emeritus), Cal Poly. Pomona University, author of “Strategic Planning: A Practical Guide for Competitive Success”.

Innovation Zeitgeist book now available on Amazon Kindle

Innovation Zeitgeist: Digital Business Transformation in a World of Too Many Competitors is now up and downloadable for $2.99 at Amazon as a Kindle book. I have also reformatted my first Kindle book, Silicon Valley Poems.

The genesis of this book was actually quite surprising to me. It was customer demand driven as opposed to author driven. I participate in a MeetUp group on Product Management run by Francis Kurupacheril. I put together a presentation on strategic product management (available at http://www.eclicktick.com/Davidson%20Strategic%20Product%20Management%20Presentation.pdf ) which I presented on April 9, 2013.

A friend, Jeremy Hill read the presentation and immediately suggested that I should turn it into a book and so two months later, it is published. Innovation Zeitgeist is my fifth book, four of which have been around strategy, technology and innovation. In some ways it's the most interesting because it represents a progression from my earlier books. My first book, Seizing the Future, dealt with the importance of technology in changing strategy and policy choices. My second book, Riding the Tiger, addressed the narrower question of information management strategy. It was particularly authoritative because one of the three authors, Harvey Gellman had been the first person to buy a computer in Canada, while my partner, Mary Chung and I had been doing interesting work in strategic planning tools and artificial intelligence. My third book, Turn Around! was focused on software development and business development choices for software companies.

Innovation Zeitgeist is more encompassing than Turn Around! or Riding the Tiger. It was triggered by a number of observation that I had made working with clients and startups over the past decade.

The first observation was that it was increasingly difficult to do a startup or develop a next generation product in a large business without running into the problem that many other organizations were developing similar products.

The second observation was that if you try to choose a product or service, increasingly it's a very challenging task. There are just too many to evaluate.

The third observation was that engineers and developers are often a poor model of a potential buyer. In many product categories, customers care little about the features that developers have sweated over. In many cases, the customer would prefer a service or a solution rather than buying a product.

The fourth observation, which I borrowed from Joe Pine, author of Mass Customization, is that for some product categories, experiential marketing is the most powerful way of influencing customers. REI offers courses to teach you about a sport and let you try out equipment. That's likely to be far more affecting than seeing a piece of equipment in a store.

The fifth observation was based upon research by Bob Cooper (McMaster University, author of Winning at New Products). His research has suggested over several decades of work that the most important predictor of new product success is offering a differentiated high product. Yet differentiation is the single most difficult task in a Zeitgeist world. New methods of differentiation need to be though about.

Innovation Zeitgeist: Digital Business Transformation in a World of Too Many Competitors, Amazon Kindle book released this past week.

It's not often I get to announce a book on my blog. This week I released my fifth book, Innovation Zeitgeist: Digital Business Transformation in a World of Too Many Competitors. It's my fourth business book.

The thesis of the book is actually quite simple. We are living in a age where many people are attempting similar innovations at the same time. As a result, entrepreneurs and product managers have to think more carefully about their strategies. 

A key take-off point for the book is the research of Robert Cooper (Winning at New Products), whose research suggests that the strongest predictor of innovation success is offering a differentiated high value product. The two ideas raise the central problem that the book addresses: "How do you achieve high value differentiation if lots of people are offering similar products?"

Innovation Zeitgeist attempts to answer that question and provide help to entrepreneurs and products managers who want to avoid having a me-too product.

In the book, I propose a number of ways of thinking about the problem. For example,

1. Instead of automatically thinking "product innovation", many companies need to think about migrating from product to service, from service to solution, from solution to experiential selling.

2. Instead of thinking only about selling a product, managers need to think about different ways of monetizing a product. The range includes sales and licensing, rental, subscription, advertising supported, sponsored and product placement as potential means of monetization.

3. In a digital age, many content products can have different rights and services attached to them than were attached to the physical version of the product. For example, you used to purchase music in an MP3 format with the right to download the music once. Now, many MP3 sales include cloud storage and streaming for the music purchased. Book content can be bought as a physical book, e-book, audio book or sometimes rented, or sometimes borrowable under a subscription program such as Amazon Prime. Even more interestingly, Amazon now offers some books in both Kindle and audio format with the ability to synchronize both media so that if you wish to continue listening to a book you have been reading in the car, you can switch seamlessly from visual to audio versions.

4. In an accident of timeliness, I also discuss who privacy can be used as a source of differentiation.

Innovation Zeitgest is priced at $2.99. Please read it and because it is published electronically, I plan on incorporating new content as suggestions and examples from readers are submitted to me.

The Death of the Father of the Daleks

Obituary in The Economist: http://www.economist.com/news/obituary/21572725-ray-cusick-designer-daleks-died-february-21st-aged-84-ray-cusick/email

Three amusing Dalek cartoons:

"Well, this certainly buggers our plan to conquer the Universe."
http://www.punchcartoons.com/product_info.php?products_id=1667

"My boyfriend paid for them."
http://cdn.spectator.co.uk/wp-content/uploads/2013/01/Daleks.jpg

Dalek march of progress
https://encrypted-tbn3.gstatic.com/images?q=tbn:ANd9GcScuVKT9PjDe7qJHSqAgLesVkZMewbOeN56OegFsEcQdPUZltvo8A

Working at Home

Yahoo's recent announcement about banning working at home has inspired many comments, many of which take a single view of the this multi-faceted problem.

I bring three sets of experience over the past twenty years to the question.

First, as a CEO of a software company, I increased the productivity of our development team by 20X over a three year period. There were, as one might expect multiple reasons for the performance improvement. We improved the quality of the development team by hiring better people. We changed tools and development methodologies which allowed up to build more robust code and eliminate about half of the work preveiously required. We moved to a solid object oriented development approach increasing configurability and reuse.

We also recognized that concentration matters. Every developer had an office and their productivity as a result increased. At their request, we let them work at home several days a week, which permitted them to avoid long commutes on those days. We believed that an interruption to a developer when they were deep in a problem might cause them to loose 40 minutes of time as they re-engaged with their problem and train of thought.

All in all, it was a successful approach in a small firm where output or lack of output was easy to see.

Second, as an associate of a large international consulting firm, I like many of my colleagues did significant amounts of work at home or at client sites. I would have to say, that for me, someone who had not grown up in the firm, it was difficult to make connections with such a mobile workforce. All in all, it was a difficult, and I would say an unproductive environment.

Third, as someone who frequently works at home for projects with clients today, I find a consistent client problem is distraction. In contrast, when I work at home developing e.g. a thought leadership piece or a report on a consulting project, I typically find myself developing material so quickly, I have to force myself to slow down and not send the material to the client until I have slept on it. Often I develop material in three hours that my clients would take three weeks or more to develop because of their distracted state.

So, my conclusion about working at home is three fold:

1. Dedicated teams with specific goals benefit significantly from the ability to isolate themselves. Cubicles don't really make isolation easy.

2. Group activities, social cohesion and innovations driven by formal and informal interactions are almost impossible to create with email, conference calls and video conferencing.

3. Using "at home" resources or people who can isolate themselves can be a powerful way of obtaining deliverables quickly.

Having done turnarounds,I have sympathy with Yahoo's new CEO, Marissa Mayer. She needs not only to make active change in the company, she also needs to use symbolic actions to signal the change.

In my limited experience with Yahoo, I found the organization unfocused and difficult to deal with. Yahoo has a track record of delivering interesting technology and then letting it flail in the wind. As a company, it appears to have been weakly managed and led in the past. It seemed to have suffered from a lack of strategic vision and focus, but also from a lack of day to day management. Introducing such elements into a company is not a small task and a tactical decision to ban working at home may well be needed to refocus the company.

Scale, China and the US

For some time, I have pointed out to clients that the rapid growth of the Chinese economy calls into question a fundamental assumption of American business advantage - scale.


Historically, one of the reasons that American businesses did well was because of the sheer size of the American market. It was typically the case that American companies could achieve economies of scale, and descend learning curves faster than companies operating out of smaller markets.


Even internationally scale of US multinationals mattered. In the 1960s, Servan-Schreiber wrote in his book, Le Defi Americain or The American Challenge in English that American companies were exploiting the integrating European market to achieve superior scale to nationally oriented European competitors. Scale matters.


The rapid growth of the Chinese market and the emergence of a large Chinese middle class raises for some industries concerns about scale. For example, the current policy of the Chinese national government is to build over 300 million units of housing in order to handle the migration from rural to urban locations. Put that in context, this figure is equivalent to the population of the US. But the plan is for building over ten years. Whether achieved or not, the consequence will be the emergence of local suppliers in hurry and potentially large internationally competitors.


The same has happened in technology. Lenovo, admittedly with a minority IBM ownership is now the third largest PC vendor in the world, primarily based upon its strong sales in China.  In January 2013, IDC reported that Huawei and  ZTE and Huawei arethird and fourth in mobile phone shipments, after Apple and Samsung. (http://www.informationweek.com/mobility/smart-phones/huawei-becomes-third-largest-smartphone/240147003).


Many companies see China as an opportunity for growth. Apple in its latest announcements broke out China as a separate business for the first time. But there are another reasons for being in China - to preempt unchallenged growth by potential Chinese competitors, to track their progress and product development, and to make sure that a Chinese competitor does not surprise the international competitor.

Why people matter and so does the shape of your office

https://www.mckinseyquarterly.com/Strategy/Innovation/Innovation_lessons_from_Pixar_An_interview_with_Oscar-winning_director_Brad_Bird_2127  (registration required)

The McKinsey article, Innovation lessons from Pixar: An Interview With Oscar-Winning Director Brad Bird, struck me as the rare business article that has value.

In my own experience of managing teams and developers, I have believed that morale counts. Involving teams and creating enthusiasm is magical in its impact. I recall talking with a friend, John Plank, who has directed over 50 Broadway and off-Broadway shows. He commented to me that, "Direction is not about telling people what to do. Rather it is about assembling the right team. With the right team magic happens." This is an insight that most people miss. A CEO's role is typically more about assembling and motivating the right team. Nowhere is this more true than in high tech companies where judgment about highly specialized and changing technologies needs to be integrated with changing market needs.

Like any good CEO, Bird has the experience to look at problems from many perspectives. A good CEO must not run from technology. He must relish it and he must understand how technologies are developed, how features are prioritized and traded off against other features.

Other writing about Pixar have suggested that it was located in Emeryville to keep the notoriously hands-on (some would say interfering) Steve Jobs from wrecking the company. But the interesting insight from this interview is the role of the office space and architecture. Unsurprisingly to me, but surprisingly to many in Silicon Valley, giving private offices to developers increases productivity (research suggests that interruptions to a developer when he is deep in a problem may cause a 45 minute or more delay before he or she can return to the same level of involvement in the problem space). But importantly, mechanisms such as creating traffic to a central location and creation of interactions with others is also important. Cross training in apparently irrelevant skills to a current task also has both short term value (creating interactions with different skilled people) and long term value (creating more interesting, skilled and capable people as employees), besides the obvious benefits of exciting employees, keeping them involved and growing.

Curious commentaries on Apple's new mini iPad

In roving the Internet, I am sometimes astounded at the comments people make.


A case in point: with yesterday's announcement of the Apple mini iPad, there have been many comments by pundits, columnists and regular people about the relative merits of the mini iPad, the larger iPads and the iTouch, and their relative positioning vs. Android phones and tablets.


What seems to be missing in all these analyses is a simple strategic observation: as markets become bigger, there are more opportunities for segmentation. Reading on an e-Ink reader from Amazon addresses a different set of needs than a more video oriented tablet. A tablet used on the go requires a different form factor than one that does not travel off the couch.


And as prices go down, the propensity of people to have more than once device goes up.



And given that tablets, phablets, music/internet devices such as iTouches and iPods, and smart phones can be supported by different business models, pricing is likely to be difficult to analyze unless you take into account the full life cycle profitability of the relationship. Smart phones are subsidized to the tune of $200-400, but may generate a service revenue of $1500-2400 over the life of the phone. Low end tablets may generate advertising revenues in the case of Google and product/service purchases in the case of Amazon or Barnes & Noble.


As a result, many of the discussions assume that everyone has similar needs, or makes similar trade offs. That seems like a bad assumption.

Untitled

Data Movement and the Cloud

http://connectedplanetonline.com/business_services/news/Cisco-Global-data-center-traffic-to-quadruple-by-2015-1129/

In a nutshell, Cisco's surveys of Internet and data traffic usage in recent years have had a simple message. Video. Video. Video. Not suprisingly, video is taking more and more of the traffic on the Internet. It's not a surprise when a music file might run 10 meg, an audiobook might run 100-300 meg., a movie for a portable device might run 1 gig, an SD movie might run 2-3 gig. and an HD movie in the 4 gig. or more range.

But today's report suggests a different insight. Roughly three quarters of data traffic happens within the datacenter. Such a statistic supports Cisco's move into the data center with its UCS product line that combines both blade servers and routing within the data center.

The other insight that over half of data will occur in the cloud is perhaps less interesting, given that cloud computing is used to describe private clouds, public clouds and hybrid clouds.

Crazy about keyboards

People sometimes think I am obsessed with keyboards because I have strong views about them. So, let me put my views up front.

I like good keyboards.

I have always liked Thinkpad/Lenovo keyboards. And I typically use an external keyboard even with a laptop when in my office - the reason: I am a big fan of ergonomic keyboards such as the Microsoft ergonomic keyboard. It's the one with the hump in the middle so your hands are turned slightly up in the center, and even more importantly, it has a raised wrist rest.

Along with my ergonomic keyboards, I like my vertical mouse. It's a traditional mouse rotated 90 degrees so your wrist is not twisted. I learned about it from a programmers whose RSI was so bad, he had to give up programming.

More recently, I have purchased the rather elegant Logitech keyboard for Acer Android tablet. It's not a great keyboard in the sense that the Microsoft ergonomic keyboard is. But it is dramatically better than typing on the glass of a tablet. It's softer on the fingertips. It's faster. And even more importantly, it uses its case as a stand, so suddently you have low cost laptop for taking notes in meetings. Combine the keyboard, the case as stand with a $14 stylus and you have quite a useful little device. In many ways more useful than a tablet.

And because the distance between your torso and the tablet is short, there is little sense of having to over reach with the stylus. The whole combination works well. I even use the stylus on the keyboard and have gotten accustomed to using it my phone when the stylus is easily available.

You can, of course, pick up the tablet and use it with your fingers or the stylus, but those who I have influenced to add these apparently needless accessories (there is also a version for iPad), have had, as I have had, the sudden and unexpected realization of how much more useful they become.

It perhaps also explains the popularity of the ASUS Transformer which combines the form factor of a notebook with the detachable tablet.

How good is TV without a cable subscription?

With lowered disposable income, many Americans are looking at ways of cutting their monthly expenses. Examples include:
1. Substituting Skype for long distance costs.
2. Cancelling land lines and using a cell phone as the only carrier based service.
3. Substituting WiFi whenever possible for 3G services to minimize the use of data plans.
4. Using fixed cost services such as Netflix rather than variable cost rental of movies.
But one important area, as measured by the amount of time, people spend watching TV is the cable bill.
So, over the past two months I have been experimenting with alternative approaches to cable. The big message is that I have been surprised at how little I miss cable TV and how many alternative ways of accessing programming exist.
The most useful services and web sites that I have found are as follows:
1. Hulu.com: upgrading to Hulu Plus gives you access to more TV, but the free service is till invaluable.
2. Netflix.com: at around $8 a month for streaming, it's an absolute bargain. While it does not have everything, it remain a superb value.
3. Over the past year, the major network sites have also become a useful source of free programming: abc.com, cbs.com, fox.com, nbc.com to list just the major sites. While they are a bit erratic in what they make available on-line and their user interface can be sometimes a little confusing, most recent shows can be viewed on demand.
4. Specialty channels:  these vary more widely in their offering, but typically recent shows can be found on sites like KQED.org (e.g. Masterpiece Mystery), and other specialty channels such as syfy.com.
5. Sports is a more difficult area and perhaps the one area that holds back many sports-crazy viewers from cutting the cord. But even here there is hope: ESPN3 provides sports, often delayed relatively to the event by 24 hours.
6. Amazon Prime is probably justifiable if you order goods from Amazon, and so the access to thousands of movies and TV shows is a relative bargain as a result. However, Amazon does tend to duplicate what is available from Netflix and Hulu Plus so the increase in choice is not large.
7. Rentable streamable TV shows from e.g. Amazon or iTunes. I have not found it necessary to pay for shows as the availability from subscription or free resources is so rich.
8. Proxy servers: there are a number of proxy servers that allow you to access shows in other countries, e.g. the UK. These are typically free or low cost services. But typically you have to have a severe addiction to a show you cannot obtain easily in North America. M15, Dr. Who and Torchwood seem to be shows that have inspired their fans to expand their sourcing.
9. A Roku box is a relatively painless way of using WiFi to hook up most Internet delivered shows to your TV, but the most reliable way, better than Roku, tablets, WiFi enabled DVD players remains a general purpose computer hooked up to your TV.
10. I have not tested the usefulness of game players such as Xbox or the Sony Playstation for streaming video yet.
Conclusions
So, the conclusion is that having no cable is no impediment to watching most TV. But you still may have to have a physical DVD rental service on Netflix or at the shrinking number of movie rental stores to see premium programming from HBO. And you will have to wait a season.
Perhaps the biggest challenges is that it is more complex to figure out where and when a show is available, given the leads and lags, and changing policies of networks. For that a service such as Clicker.com becomes useful.

Ultrabooks and the Shifting Value Added in Laptops

The most interesting thing about an ultrabook is not that it will finally provide an instant on feature - matching the major advantage of a tablet. What I find particularly interesting is that an ultrabook's value added profile looks very different than past laptops.

Consider the following costs:

Intel has three processors commonly used in the latest processors: the Core i3, i5 and i7. The least expensive versions of these processors are listed at $127, $184 and $294 as of November 14, 2011.
(http://files.shareholder.com/downloads/INTC/1531543009x0x517569/A19EA566-3E97-43C9-B73C-66BBE6F438F2/Nov_14_11_Recommended_Customer_Price_List.pdf). While there exist faster processors, there's a good argument that putting your money into a solid state drive or SSD will produce better performance for most people.

Ultrabooks are specified to have an instant on capability. While hybrid SSDs can be used to cache regular hard drives to lower the cost of instant on capabilities, the evolution is towards pure SSD devices. If we take a typical SSD sold today as likely in the 120 gigabyte range, we have the interesting situation that the cost of an Intel SSD is around $295. And of course, if you try to match a more typical storage capacity of laptop, you can easily spend $550 to get the storage up to 300 gigabyte.

Now clearly, the price of ultrabooks has to come down for them to more attractive to buyers, but we can expect a classic experience curve to drive costs down.

In other words, while the world sees Intel as a microprocessor company, in terms of value added, Intel has moved to capture even more value in the storage subsystem at least in the leading edge category of ultrabooks.

Now, traditional hard drives are not going to disappear. On a cost per gigabyte basis SSDs cannot compete with traditional hard drives. But given that Intel has had a hard time of diversification in the past, it's interesting to see how they are attempting capture more value in laptops.

And of course, AMD has been going down the same road of increasing its value added and share of components with its purchase of the graphics company ATI.

As usual in tight margin businesses, vertical integration looks attractive.

A Cool Steampunk App for the iPhone

Yesterday, I downloaded one of the coolest apps for my iPhone. The 99 cent Farnsworth communicator app provides a 19th century interface on a video communicator. Right now it only provides video and audio messaging, not video communications as the characters in the show, Warehouse 13 obtain.

Perhaps the coolest part is the notification. It seems the antithesis of sounds chosen by modern phones.