Platt Perspective on Business and Technology

Building a startup for what you want it to become 7: adding in disruptively innovative products and product portfolios 2

Posted in book recommendations, startups by Timothy Platt on September 19, 2015

This is my seventh installment to a series on building a business that can become an effective and even a leading participant in its industry and its business sector, and for its targeted marketplaces (see Startups and Early Stage Businesses, postings 186 and loosely following for Parts 1-6.)

I began my discussion of highly innovative new products and services, as addressed in the context of this series, in its Part 6. And I cited the ongoing progression of new content formats and of new hardware technology that supports it for multimedia players, as a source of working examples for how introduction of innovation to the marketplace, plays out. And in the course of that discussion, I at least briefly touched upon the issues and challenges of successfully, successively launching videotape cassette players, digital versatile disk (DVD) players, Blu-ray players, and now streaming media players and for both their key enabling content formats and for this succession of player hardware innovations too.

Then at the end of Part 6 I stated that I would continue its discussion here, turning to consider:

1. More general principles that enter into the diffusion of innovation into a marketplace, at least as they arise and present themselves in a new business context.
2. And as part of that, I said that I would pick up on two key disruptive technology transitions, that I only noted in passing in Part 6 in its working examples: the transition from tape format storage to disk format, and from disk format to cloud storage based streaming media.
3. And following through on those working examples, I added that I would at least briefly discuss some of the issues of format and hardware that would be used in presenting and accessing content, and of content ownership and licensing control over it, as content owner’s become key stakeholders in determining which data formats and the hardware technologies that they play on, succeed or fail.
4. And looking further ahead, I added that I am leading up in all of this discussion, to consideration of product portfolios and of how product portfolios can help balance risk and benefit as a core due diligence requirement – where for purposes of this series that means focusing entirely on how a portfolio approach would and would not work in the initial startup and early business stages of a new enterprise, and I add here, for a business that has just transitioned out of those first initial-step development stages and into profitability.

I have already been actively exploring a range of issues here, that enter into innovation development and diffusion in general, and as a fundamental thread of discussion that has run throughout this blog from its beginning. Setting aside the issues of developing new sources of innovative value per se for now, and just considering how its acceptance diffuses out into a marketplace, I begin this stage of this series by briefly recalling a basic and I add well known innovation diffusion model that I will be referring to here and that I have cited and taken recourse to before:

• Acceptance and use of the truly novel begins with the decisions to buy and try, that pioneer and early adaptor consumers make.
• And when these earliest users become active acceptors and even active viral marketing advocates for a new technology, its acceptance and use spreads out from them to include more middle-stage adaptors.
• And then with time, late and even lagging adaptors begin to purchase and make use of an innovation too – and with that last group only jumping on board after a new innovation has actually reached a point in its adaptation curve where it can no longer still be considered to be a new innovation at all, as it has by now become essentially entirely mainstreamed.

To cite three reference postings from this blog, and one book citation that I have found useful on this diffusion model and its processes per se, I recommend:

Social Networking, Community and the Pace and Shaping of Innovation – 1,
Social Networking, Community and the Pace and Shaping of Innovation – 2,
Developing Critical Infrastructure from a Human and a Societal Perspective 6, and
• Rogers, E.M. (2003) Diffusion of Innovation, 5th edition. Free Press, an imprint of Simon & Schuster.

And with that noted, I start addressing the issues and challenges posed by the process constraints of innovation diffusion and acceptance, as touched upon in my above-repeated model, and as these factors play out in a new business context. And I do so by listing some of the potential pros and cons that new enterprises face as they build out towards becoming product and marketplace innovators as their primary goal:

• Startups and early stage businesses, essentially by definition have very little in the way of liquid resources, and certainly from within that they can fall back upon. But they are starting with what is likely to be a blank slate as to name and reputation. They are not attempting to become a known and acknowledged marketplace innovator from a foundation of name recognition and organizational momentum of only offering more standard, mainstream fare. This means they can build from their beginning as innovators.
• And with social media-based and other gorilla marketing channels available, they can specifically plan and market with a goal of getting their message out inexpensively to themselves,
• And certainly if they can achieve some early-stage social media based marketing buzz.
• If a business itself is new but one or more of its founders are serial entrepreneurs or otherwise known for being innovative, they can start out with a lead in this by leveraging the value available to them from their already established reputations and social media reach,
• But even a new and still unknown founder can use social media to gain a measure of name recognition and certainly if their goal is one of explicit brand building and for their venture and what it would offer, and they are willing to be creative in ways that would catch the attention of likely pioneer and early adaptors.
• This means, among other things, doing their homework so they know who these people are and what they are like and what they look for, and a key to that can be found in the way that most early adaptors now actively identify themselves as such through social media from the way they post about new and emerging developments.
• New businesses that launch towards success always start out with an initially small already-realized and immediately likely customer base that would buy into them early. What can you do to engage these people in conversations, and in ways that would prompt them to retweet, reblog, repost and otherwise share of this with others in their social networking reach? Small can be a real problem here and certainly if a realized customer base remains small, but if you can bring in active widely connected social networkers such as hub networkers, small beginnings can take off and grow (see Social Network Taxonomy and Social Networking Strategy for its discussion of active and passive networking and of types of networkers and social networking strategies.)

Yes, essentially every new startup and early, pre-profit stage business begins small. And yes, this can create special challenges for these new businesses when they primarily seek to become marketplace innovators, with the special limitations that they start out with as to the maximum size of their immediately available early-stage marketplace audience, with that primarily oriented towards pioneer and early adaptors. But this means planning and developing a business model that is oriented towards solidly capturing that market segment, and in ways that can lead to more rapid and sure diffusion of interest into larger demographics – and with their social media driven viral marketing help.

And I have written this entire discussion here in terms of the business and its immediate customers and potential customers. I will turn back to my multimedia technology example of Part 6 to this series, to consider Points 2 and 3 from my to-address list from the top of this posting. And then I will proceed from there with its Point 4 and the complex of issues that go into developing an initial product portfolio for a still very new innovation-driven business.

Meanwhile, you can find this and related material at my Startups and Early Stage Businesses directory.

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One Response

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  1. vic fortezza said, on September 20, 2015 at 6:08 pm

    Dr. Platt: You gave me your card today while I was selling books on 7th Av. in front of John Jay. Your blog is impressive. It’s not dumbed-down, unlike so much of what is offered these days, perhaps my own work included. All the best.
    Vic Fortezza


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