New Roads to Revenue
Bypass Competitive Gridlock. Capitalize on New Market Opportunity in the Connected Economy
New Roads to Revenue

My Recent Lecture at University of California Extension

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.

 

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The Association of Strategic Planning Annual Conference

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.

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Silicon Valley Senior Executives Speak on Trends, Share Best Practices

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 

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Ten Trends and Opportunities to Watch: 2008

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.

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HBS Centennial Gala: SF Bay Area

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.  

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The Automobile: A Mobile PC Platform with Wheels?


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

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Customers Have Changed: Are You Keeping Pace?

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?

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Meeting with Dan Nye, CEO of LinkedIn

by Adrian C. Ott




Yesterday I had the opportunity to attend a meeting with Dan Nye, CEO of Linkedin.  Also presenting
was Allen Blue, one of the founders and currently VP of Product Strategy.

According to Dan, the key benefit of their community is their demographic namely:

White collar Professionals
Average age: 41
78% college graduates 
Avg. Household income  $106,065

With over sixteen million members today, Dan indicated that they are growing at 1 million members
per month.  Indeed the demographics of this community are impressive. 

After listening to this presentation, what is also clear to me is that the strategic moves they make in
the next year will be a key to their survival.  Here's why:

Linkedin's professional demographic presents an opportunity and a challenge.  

Professionals are ADHD.  Between work and family, professionals have the most demands
on their time. College and High School students don't necessarily have such constraints.  Professionals 
shift their attention and energy to a community only if they see significant return.

Today, Linkedin enjoys limited Share of Customer Day (tm).  Although sixteen million professionals
are listed, it is just that.   Dan referred to it as "Resume 2.0."  This is an accurate term. Most people
I know are too busy to go beyond that,  many users tend to be passive  "It is a handy backup if I need to find
a contact," stated one of my colleagues. 

The attraction factor for key communities are:

           Linkedin - Professionals seeking new jobs or sales relationships
           FaceBook - Dating, Social
           MySpace  - Dating Social, Small business
           Plaxo - Address book

Facebook and MySpace hold higher Share of Customer Activity (tm) because there is an emotional tie to
meet with friends.  It keeps bringing people back.  The average time spent per day on these sites is incredible.

Professional image is everything on Linkedin.  Everything is arms-length.  Why?   Potential employers are
there.  Executives with the ability to promote are there. 

Key question is whether Linkedin can move its audience up  the participation ladder while
maintaining trust that hopes, fears and weaknesses shared among friends and colleagues won't be shared with potential employers.  It is not clear if the two can successfully mix. 

Bottom Line: Linkedin needs a killer application that creates higher Share of Customer Day (tm). 


Linkedin should explore different kinds of applications to attract professionals and differentiate their offering.
I am not talking about stock quotes, calendars and clocks.  It must be bigger than that to hold such an
ADHD audience.

To accomplish this, LinkedIn needs an open development platform and strategic partnerships- yesterday. 

It will be difficult for Linkedin to envision and execute this on their own.  Entrepreneurs and corporations
need to be empowered to build Customer Value Networks (CVNs) to serve this valuable demographic
community.   An open platform does that.

Facebook has built CVNs with WalMart, Facebook and Amazon with their open platform.
These companies are carrying them into market spaces and new roads to revenue that would have
been difficult to reach on their own.

Google OpenSocial is interesting. Will this be available soon enough and with the right functionality
and performance? It seems that the move to Google OpenSocial was a defensive move by many in the
industry.  Dan Nye stated, "We have recently signed on.  There is a lot that still needs to be figured out." 

Most promising is that Dan indicated that they are partnering with companies like SalesForce.com and
the Wall Street Journal.  They may be developing Customer Value Networks that serve customers
with the same demographic.  

To manage their limited resources and to ensure the right value proposition, LinkedIn should engage in 
detailed customer activity mapping to identify customer touchpoints, valued brands, and gaps for their
customer segments.  Once mapped they can identify solutions and ideal partners that serve this
highly-sought-after community to create a killer app. 

Increasing Share of Customer Day (tm) is key to their survival.   It is easy to move a resume. 
It is hard to move an active social community to a new service. 

I appreciated the meeting with Dan Nye and his team.  I wish them all the best in their journey next year.
 


Food for Thought: What are you doing to increase Share of Customer Day (tm) for your corporate
communities?  Is there attraction that brings them back?

[Full Disclosure: Exponential Edge offers Share of Customer Day (tm) behavior mapping and strategic alliance services.]  
 

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Brand Platforms: What Works and What Doesn't

By Adrian C. Ott

There is an article this week in the Wall Street Journal about brand partnering and brand platforms.  
WSJ: Like our Sunglasses? Try Our Vodka    It provides branding licensing examples such as Ralph Lauren's foray into into items such as paint and candles. 



The question arises: When does a brand go too far?  How do you know when a license is a fit?

My Key Observations:

  • Customer activity and lifestyle are key.  Ralph Lauren and Calvin Klein are successful because their brands are about lifestyles rather than a particular point product line.  They strive for Share of Customer Day (TM).  As long as the offering fits within the lifestyle and activities of the customer segment. it works.  If you like Ralph Lauren's design style, it is natural that you would want to extend it to your home.  Paint makes sense when you view it in that way.

          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?


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Interview with SmartMoney

by Adrian C. Ott


                                                                                                                                


In October, I was quoted in SmartMoney about how smaller companies can partner with larger companies to grow their business.  

Here is a link to the article:

SmartMoney: How Small Businesses Can Land Big Contracts



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