Last week I was invited to lecture at U.C. Extension by my respected colleague, Gary Katz, CEO of MO Partners www.mopartners.com.   I enjoy these opportunities because I am able to test some of my latest ideas. Most students at U.C. extension are college graduates who work full-time in Bay Area businesses.  They are continuing their studies to remain current with the latest trends in their field.  

Sharing ideas with the students not only enables the class to explore intriguing new ideas, but provides a terrific real-world perspective outside of my client network. 

A Student Question on Product Porfolios:

After the class a student e-mailed me:

Thank you for your presentation last night.  You mentioned that when the engineering group presents 120 products to the marketing group, the marketing group needs to sort out the product category and marketing priority.

In my experience, the engineering group's goal is to provide the product that meets the functional requirement provided by the marketing group based upon the market inputs. Therefore, the marketing group shall have known about the marketing priority of the products and have guided the product production forecast and new design requirement. It seems to be contradictory to your example. Would you please explain?

My Response:

To answer your question on product priorities, many large companies have more than 100 products and services in their portfolio.  Although marketing may define the requirements for each product or service upfront, the entire offering portfolio must be prioritized in relation to market priorities.  These priorities may have shifted from the time that the original requirements are created and by how engineering executes the offering based on the market information.

Product releases may include:

• minor releases (e.g. a 2.01.01 bug fix and features)
• a major upgrade (from 1.0 to 2.0 version)
• brand new products

Marketing needs to differentiate the marketing investment between these different types of releases. For example, product launch investments may be categorized as "A", "B" or "C" priorities.  The market investments associated with each varies.  An "A" launch may be at a big event with all hands on deck.  A "C" launch may only include an announcement on the website and combination with other "C" launches into an installed base e-mail communication.

Several companies that I work with differentiate these priorities not only by the type of release but also by whether the offering is an extension to an existing market or penetration into a new market.

An acquisition complicates such priorities. Product and services in the new company must be prioritized in terms of markets and products relative to existing products so marketing knows what types of campaigns to launch and how much to spend.  Marketing cannot afford to execute 100 campaigns and needs to define relative priorities.  We've helped client with models to determine these priorities. 


Prioritizing the Product Portfolio is Important

Prioritizing the product portfolio enables marketing to focus investment on products that will provide the greatest ROI and not over invest in cash cow products.    Although marketing is in involved in prioritizing individual product requirements, attention to the product portfolio is also important.

 

        

By Adrian C. Ott

I was invited to speak at this year's Strategic Planning Annual Conference in Marina Del Rey, California.

While attending the conference, I had the opportunity to sit in and listen to presentations by other strategic thought leaders.  Although I was unable to attend every session, key topics in this year's conference were:

1) How to increase the pace and quality of decision making
2) How value chain analysis can result in better customer understanding
3) The role of the Chief Strategy Officer
4) How technology innovation is more predictable than you might think.

I will write about these topics and my thoughts on implications in subsequent postings.  In addition, I will share information about my presentation on Customer BehaviorNets.  You will hear more about this in the coming months.

        

by: Adrian C. Ott




On January 16, I was invited to moderate a Chief Alliance Officer meeting of twenty-one senior executives of some of the largest firms in the Silicon Valley.  Participants included Senior VP, VP and Sr. Director Representatives from firms such as IBM, Paypal, Cisco, BEA, BMC, Symantec, Cognos, Philips Electronics, Oracle, Symantec, Borland, Informatica, Intel, and others. 

This annual event was sponsored by the Association of Strategic Alliance Professionals (ASAP) Silicon Valley Chapter.  This was an open dialogue between the executives to share the latest trends and best practices.

Below are a few insights we uncovered:

• Silicon Valley Alliance Executives see major change ahead caused by enterprise software industry consolidation and new business models such as Software as a Service (SaaS) and IPTV. 

          80% of the attendees characterized the level of change occuring in their alliance ecosystem to
          be "significant" over the next three years.

          20% see "moderate change."

          None of the executives saw "no change."

• Business Ecosystems Are Becoming More Diverse Making Strategic Bets More Difficult 
• SaaS (Software As A Service) Dis-Intermediates Existing Business Models and Creates New Paradigms 
• Technologies such as e-communication and behavioral targeting offer promise to managing increasingly complex global partner ecosystems 
• Approximately 30% of alliance and partner organizations are adopting some form of social media and community technologies like blogging and virtual tradeshows,  but most are "wait and see."

For our free white paper that shares more detail on trends, best practices and our assessment of the implications, please click here: http://www.exponentialedge.com/autopub/siliconvalleychief.html 

        

Our senior strategy team at Exponential Edge had the opportunity to collaborate on what we see as salient trends and opportunities for our clients and community in the coming year.  Here are the ten (not in order):

1. New Platforms Take Hold
2. Customer Behavior Trumps Traditional Market Approaches
3. Digital Demographics Become Increasingly Important for All Industries
4. Privacy is the New Green
5. Marketing and Sales Redefine Themselves to Adapt to Dramatically Changing Customer Relationships
6. Remote Monitoring and Testing Proliferates
7. Business Ecosystems Become Increasingly Diverse
8. Selecting Technology to be Incorporated into Offerings is more than an IT Vendor Decision
9. Strategic Planning is Becoming More Frequent and Intensive
10. Mining the Internet

If you would like a Free White Paper that describes these trends and opportunities in more detail, please click here www.exponentialedge.com/toptentrends.html  to download a copy.

        

By Adrian C. Ott



This week I attended the Harvard Business School (HBS) Centennial Gala at the Computer History Museum in Mountain View.   About 400 Bay Area HBS alums attended.  Many of whom are notable VC's, and senior executives. It was great to catch up with old colleagues and classmates.

Dean Light gave an interesting presentation on the future of HBS.  He spoke about setting direction for the school's research for the next 50 - 100 years.  Key directions he cited were:

• More research on the Health Industry.  This is an industry that clearly needs help with business models
• More research in Science Industries.  Innovation is a key theme for selecting this area.
• Teaming with the Kennedy School of Government on Green and Social Enterprise

He also articulated that although the research content will change, many processes such as the case method and teaching classes in Boston (vs. remotely) will remain the same.

Indeed, the school has the enviable position of taking a long term (50 year) view on its strategic direction and processes.  This is a result of its strong worldwide reputation (brand) and limited perceived competition.  Very few businesses I know can do the same.  Industry disruption is causing businesses to hold strategic reviews more often.  This results in frequent course corrections to process and business models.  

        

By Adrian C. Ott


The WSJ recently wrote about the role of automobiles as digtal devices.   For the first time, automobile manufacturers will be participating in a major way at this month's CES show with a hall dedicated to advancements in this area.


Microsoft and Ford SYNC (tm)




What is clear is that the automobile is becoming a mobile platform on its own. With the addition of safety and communication devices such as GM Onstar, mobile TV, GPS devices, and internet access, the automobile is transforming from a consumer product to an intelligent mobile platform. 

As a captive audience,  customers must spend time in their car.  Whether they realize it or not, the automakers own a Share of Customer Day (tm); the automakers have a strategic opportunity to capitalize on their existence as a gatekeeper to the customer. 

To capitalize on Share of Customer Day (tm), the auto manufacturers are building their own Customer Value Networks (tm) (CVNs) to serve passengers with digital innovations such as GM Onstar.  These provide an opportunity to extend their relationship with the customer and thus monetize the opportunity.  (for more on CVNs, please contact me for a white paper that describes this phenomenon.)   

As the car designer, they have an opportunity to take the role as Leader in this Customer Value Network (tm).  Consequently, they have the power to determine what companies play and what companies don't play in their cars.

It is apparent that Microsoft sees this opportunity as they recently signed a deal with Ford to embed Microsoft Auto Software in Ford vehicles named Ford SYNC (tm).  I will write more about Ford SYNC tm in a future post.

Strategically, how will the automakers approach the development of their Customer Value Networks (tm) in the future?

1. Who will the auto manufacturers partner with in the technology industry?  Will these relationships become proprietary and exclusive? or will they open their automobiles to serve as a platform to encourage as many players as possible in the Customer Value Network?
2. Will the automakers learn and adapt from the computer hardware and software industry?  How about the communications carriers that enable access without revenue benefit by Google and others?  Will the automakers make the same mistakes?
3. As Leaders of this CVN platform, will the automakers monetize such relationships?   Unlike the communications carriers who historically were limited by regulations, the auto companies do not have such precedents over content and pipes.  For example:
• Mobile promotions and advertising as the vehicle gets in close proximity to restaurants and gas stations. 
• How will the revenue from such relationships evolve?  Will they allow Google or Microsoft to take all of the revenue from searches? or will there be a revenue split based on the ability to gain access to their customers? 
• Will the auto companies create proprietary content?
• Will communities evolve such as messaging, games or interaction for people traveling in a caravan?
4. How will aftermarket and substitution opportunities emerge?  If the automakers become too greedy or are too proprietary, how will this evolve? What are the control points?  How can the auto industry entice customers to alter their behavior and build digital automobile tasks into their daily habits to gain preference over their competitors?
5. What types of customized business application opportunities emerge?  i.e. Sales force enablement.
6. What types of consumer applications opportunities emerge? e.g. download audio books on demand, up-to-the minute gasoline prices, gaming.
7. What kinds of infrastructure services will be available for security, privacy, SPAM control, and continuity with other mobile devices as one enters and leaves the car?
8. What are the implications for the traditional PC hardware suppliers such as HP, Dell, Apple, and Lenovo?

Just as the digital home presents a myriad of opportunities, the digital auto represents a New Road to Revenue complete with its own set of opportunities...and potholes.


Food for Thought: Is partnering with the auto industry on your strategy radar?


Full Disclosure: Microsoft is a client of Exponential Edge Inc. however all references to Microsoft is our opinion based on external news sources and our general experience with the industry.

copyright 2008, Exponential Edge Inc., All Rights Reserved

        

By Adrian C. Ott



A CEO of a public Silicon Valley firm said to me last week, "Customers don't want to buy the drill anymore. They want to buy the hole." Although simply stated, this comment was very insightful.  Customers have changed.

Consider how busy our lives are today.  Do you get innundated with information?  Do you try to multi-task in order to accomplish more each day?

Below are our observations as to how customer behavior has changed:

• Customers want the problem solved.  They are not interested in the how. They want it to work, right out of the box...with as little explanation as possible.   When I received my first iPod it was very easy to get up and running.   Prior to that,  I had an MP3 player that never made it out of the box; I didn't have time to figure it out.   
• Customers are digitally savvy.   Consider your cell phone and internet usage.  Did you have these in the early 1990's?  Almost everyone these days is connected in some way.  We even see images in major magazines of camel drivers and cowboys chatting on their cell phones. 
• Customers are mobile.  Once the domain of the upper-class, cell phones, notebooks and digital devices are pervasive.  Wireless technologies are a reality.  Most airports, hotels and coffee shops enable connection.
• Customers are more educated on what they buy.  With the advent of the internet, never before in the history of markets has so much information been available to buyers.
• Customers want a two-way dialogue on product and services that matter to them.  The rise of blogs and communities enable discussions that were not been possible before.
• Customers want to save time.   Anything that saves time has high value.  As one of my colleagues say, "Their hair is on fire," particularly around the holidays. 

Plus, one thing that hasn't changed:  Customers want to save money.

This is more than just making more advertising noise.  In fact a recent study indicated that roughly 60% of early adopters are "sick of advertising." 

What stands out, will be those offerings that fit better into a customer's hectic day.  As with any change, opportunities to innovate new product and service concepts abound.  They simply need to be found. 

Businesses need to change their mindset to Share of Customer Day(TM) in order to manage in today's landscape.  Although utilizing customer behavior is not new, the need to understand the context of customer lives is more salient in today's connected economy than ever before.  Stories make sense out of our crazy lives.  They put our products and services in context.  They place everything into a topic that we can digest.

Is your organization responding to these trends? 
Are your products and services keeping pace with what buyers want? 
Have your operations changed to adapt to these new realities?

        

        

          Point product brands have a harder time breaking out of that paradigm. 

• Merchandise must support the brand.  Pierre Cardin failed primarily because his firm licensed to shoddy merchandise that detracted from the luxury brand.   The firm diluted the brand.

• Brand context must be considered. The new offering must fit the context for which the brand is known.  Would you ever see Disney licensing their characters out of the context of families?  Pirates of the Caribbean shaving cream.  Never!  Disney clearly understands the lifestyle and activities of its customers.

Point to Ponder: Is your brand about customer lifestyles and activities?  or is it about your point products? Do you have a brand platform that leads to you new markets?  Or will fail when a point product declines?