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August 2005
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October 2005

Mass Individuals

Today I taught a class of graduate students at the University of Utah about starting a company.   What was interesting  ut of a class of 11 people, each one was unique.  They all had specific talents and strengths.  The only two things they had in common was they were pretty smart and they all had a drive to build a company.

This is the paradox of market segmentation.   While a segment overall has certain common characteristics, any individual in that segment is unique and does not fit the assumptions.   Hence the need for adaptability.   Further complicating the mix is the difference between needs and wants.  You may talk to your focus group and hear people say, "I want this and that".   So you build a product that does everything they wanted.

The product fails.   Why?   

The trick here is reading in-between the lines.  What is the underlying need they are trying to articulate?  Give them something that resonates with that root cause, and you will do well.   


Be careful what you measure

Metrics based marketing is a must.   But what metrics?   Whatever you measure will improve, but it may not accomplish your objective.   Back when I worked for a large computer company, we did a new product launch, but the sales numbers were just not there.   To gain exposure, we decided to exhibit in a major show.   The VP of sales complained these shows were useless because they would not get traffic in the booth and couldn't get leads.  If only he had these.........

Ah, a challenge.   So we hired a demonstration company, ordered cases of t-shirts and produced lead sheets.  We also approached our key partners and acquired complimentary products from them.   Every hour of every day during the show, we gave away t-shirts to all, and a complete server based networking system to one lucky winner.  Every hour.   By the middle of the first day, attendees were spilling over into the aisles, while our sales force cowered in the corner.  We developed 1,200 leads from the show.

Which were still sitting in a box two months later.   The VP of Sales explained they just didn't have the time to follow up on them.  Sad but true.   Turns out the real problem was the sales force knew how to move product through 2-tier distribution, but this product was aligned with direct distribution.   When we re-aligned to the correct channel, we moved 10,000 servers in short order.

In the end, our marketing metrics were met, but didn't accomplish any bump in sales.   Which brings me to another principle:  People don't know what they need, and whatever they tell you isn't true.   More on that in the future.


Class Assignment

Later this month I have the pleasure of teaching a graduate class at the University of Utah.  (tried to link to the program, but the link is broken.   What kind of image does that project?)  These students are interesting in launching their own company.   Should be interesting.   I don't lecture, I discuss.   

Mary hits the nail on the head about what to watch out for in your start-up.  What is the underlying principal here?


The Power of Eeyore

Diversity is a good thing when bringing a product to market.  If you surround yourself with people who are like you and think like you, big trouble is ahead.  Because when something unexpected happens outside of your normal frame of reference, there just isn't that much to draw upon.

Last week I was asked to describe a failure in any of my projects over the years, and I really had to stop and think.   There weren't any.  Pretty weird.  Yes, during the projects, various portions crashed and burned big time, but the team always got their arms around it, and we tried something different.  In the end, the projects delivered their objectives.   

This got me to thinking why this was.   Two reasons.  First, we always created a shared vision of the end goal for the team and everyone on the team was excited about it.  Next (and most importantly) it was a diverse team with an Eeyore on it.   Eeyore always kept our eye on the ball and didn't let us drift into the stratosphere with our enthusiasm.   And when Eeyore says "that should work" you can hear the collective sigh of the team.  We were golden.

So be diverse, set high aspirations, clearly communicate and listen to Eeyore.


Bringing Down the Big Dog

Sometime in your career you will enter an established market with another company who is the market leader.   What to do?  A knee jerk reaction is to compete on price alone.   Not the best strategy.   

The first thing you need to understand is how the other company is operating.  If they are a division of a large company, chances are they have moved to cash cow mode.  Their focus is on bottom line results and they depend upon market inertia to keep them rolling.

You have two choices here.  The first is introducing disruptive technology into part of the market space.   Without impacting your margins, release a product which is totally targeted at a discrete customers segment and delivers the goods at an order of magnitude better than the market leader.   Using your technology you can either deliver the same feature set at a 1/10 price point, or at the same price point deliver features which are 10 times better (installation, ease of use, etc.)

The beachhead approach can also be used.  This works where the product isn't that much different from a technical standpoint.  In this case, focus on becoming a thought leader in a specialized segment.  Pay attention to relationship management and customer service.  Make it easy to tear out the competitor's product and replace it with yours.

And when you pick that specialized segment, ensure it is adjacent to many lucrative segments.  Once you are established you can easily move into those segments and you will displace the market leader.  This approach requires great tenacity and focus.  ADD companies should not attempt this.   

Just make sure that when you become the big dog, you pay close attention to how you got there and do not become complacent.   Constantly innovate your product and your customer relations.


Cheers & Jeers after Katrina

Hats off to Google and Amazon.  After reading Doc's post on servers holding up supplying information, I took a look at the Red Cross site (having served on the board for several years).  Problem is, their site was slammed.   So I wrote a note to a colleague of mine at Google explaining the situation.  Today not only is the Red Cross up and running, but Google has a link to donate to the Red Cross running through Amazon.com.

Smart.   Amazon knows how to handle large volumes of transactions.   

There is a group of people in New Orleans keeping their data center up and running.   Quite an amazing blog which is updated all the time.  It's looking like Baghdad with lots of standing water.  This is quite the contrast to what is coming from CNN and Washington.

You must always remember to focus on your customers  and tell them how you are going to help them.   Not make excuses, like "We could never anticipate this type of disaster."   Please.   

"In an interview Thursday on "Good Morning America," President Bush said, "I don't think anyone anticipated the breach of the levees." He added, "Now we're having to deal with it, and will."

The Internet has a long memory.   Remember, this was written in October of 2004:
"The storm hit Breton Sound with the fury of a nuclear warhead, pushing a deadly storm surge into Lake Pontchartrain. The water crept to the top of the massive berm that holds back the lake and then spilled over. Nearly 80 percent of New Orleans lies below sea level‹more than eight feet below in places‹so the water poured in. A liquid brown wall washed over the brick ranch homes of Gentilly, over the clapboard houses of the Ninth Ward, over the white-columned porches of the Garden District, until it raced through the bars and strip joints on Bourbon Street like the pale rider of the Apocalypse. As it reached 25 feet (eight meters) over parts of the city, people climbed onto roofs to escape it.
     Thousands drowned in the murky brew that was soon contaminated by sewage and industrial waste.  Thousands more who survived the flood later perished from dehydration and disease as they waited to be rescued.  It took two months to pump the city dry, and by then the Big Easy was buried under a blanket of putrid sediment, a million people were homeless, and 50,000 were dead.  It was the worst natural disaster in the history of the United States.
     When did this calamity happen? It hasn't — yet. But the doomsday scenario is not far-fetched.  The Federal Emergency Management Agency lists a hurricane strike on New Orleans as one of the most dire threats to the nation, up there with a large earthquake in California or a terrorist attack on New York City.  Even the Red Cross no longer opens hurricane shelters in the city, claiming the risk to its workers is too great."

Moral of this story, people make mistakes.  It's more important to get on top of the problem and help them.