Platt Perspective on Business and Technology

Productivity and abundance, and the paradox of choice – 3

Posted in startups, strategy and planning by Timothy Platt on April 28, 2012

This is my third posting to a short series on the meaning of, and the sometimes seeming-paradoxes of choice (see Part 1 for a discussion of these issues as they arise when considering inventory selection in a bricks and mortar storefront and Part 2 for a discussion as to how this applies to the online setting of a web-based storefront.) I turn in this installment to an aspect of choice and how it is offered, that arises with equal force and importance for bricks and mortar, and for online stores: marketing.

In a larger sense, marketing is a business’ way to tell its story, as to who it is and what it does and offers. And effective marketing conveys a clear message as to what makes that business unique as it stands out from its competition. Marketing conveys a message that at least seeks to show how that business offers unique value to its customers and from their perspective and according to their sense of value.

When marketing is offered in the sense and context that I am focusing on here, marketing is also a very selective filtering process. And I turn to a business type that has been important to me for many years now in my own work: supermarkets.

A large supermarket can carry over 100,000 distinct stock keeping units (SKU’s) in its inventory at any one time, that collectively address a tremendously wide range of customer needs, desires and preferences. A supermarket circular mailed out and offered in the store itself might include marketing information that touches upon and identifies a fraction and even just a small fraction of one percent of its complete inventory-encompassing range of products.

Some of the criteria that would go into selecting what to highlight in the circular, representing the business as marketing message are obvious.

• Seasonal items that consumers would look for and want now, would obviously be included while out of season items would not be.
Loss leader items and sale items offered specifically to bring traffic into the store would also likely be included, where offered at the store at all. Or at least representative selections of such items would be, perhaps with the accompanying message that more was also going to be available at special, discounted prices.

But effective marketing also conveys a message as to what the store stands for and of its values – and particularly where they connect with and are supportive of addressing marketplace and consumer values and needs. And a big part of this, and certainly when these fliers are sent out the store’s doors is in drawing in new and first time customers, and in bringing back the occasional customer who usually takes their shopping business elsewhere. And this brings in a different set of marketing material inclusion criteria that almost by definition would be less obvious and less known.

• What can you offer to the new customer, or the infrequent customer who has not seen reason to consistently come back to shop, that would prompt them to come through your doors?
• For online stores, what could you offer through distributed online marketing (banner ads and all of the rest) that would prompt that customer to visit your web site storefront?
• This is all about marketing more widely to the available marketplace with its larger potential customer base and in that you may very well be marketing with a focus on products that are new and nontraditional to your more regular and traditional customer base.

Taking that out of the abstract, consider the supermarket that is reaching out to a new ethnic community that has begun moving into your store’s catchment area and that would seek out seasonings and spices, produce and other items that are commonly included in their home cooking and in their comfort foods. So this second short list of bullet points is all about adding in and marketing your offering of the new and novel too.

And for any dynamic community, your marketing is in most cases going to be both selective in what it includes, and with that selection seeking to find an effective balance between the familiar and standard, and the new and novel – directed toward meeting the needs of both steady and new customers and types of customer. And that flier has to achieve this complex of goals, or at least attempt to do so while highlighting less than one tenth of a percent of what your store actually has to offer, at most.

• As a basic principle, selection in what to stock and what to market, and in how you manage your product placement – these are all about the numbers and about offering the customer the right amount of choice in the right way so as convey a message of choice and abundance – but without overwhelming them with needless complexity of choice that they would not see as offering them return value.
• And finding and staying at the right balance point in this is all about understanding and accommodating change. This is a dynamic process.

I am going to post a next installment in this series, turning to consider the issues of inventory flow, turnover rate and choice selection. In Part 1 when I cited the case study example of determining how many types of ketchup to offer on a store’s shelves I focused on how many. Think of this next installment as turning to the issues of determining which ones. Meanwhile, you can find this and related postings at Business Strategy and Operations – 2 (and also see Business Strategy and Operations.) I have also included this series in Startups and Early Stage Businesses.

Productivity and abundance, and the paradox of choice – 2

Posted in startups, strategy and planning by Timothy Platt on April 24, 2012

This is my second posting to a short series on the meaning of, and the sometimes seeming-paradoxes of choice (see Part 1 for a discussion of these issues as they arise when considering inventory selection in a bricks and mortar storefront.) I continue this discussion here, turning to consider the online store with a web site counterpart to the bricks and mortar store’s isles and shelves.

Traditional bricks and mortar storefronts organize their product offerings along shelves and racks, and any one item can be displayed at any one time in at most one place in the store. Types of items can and sometimes are distributed into two or even more places in this type of store – and that can cause problems for customers and certainly if they do not arrive expecting or knowing a priori, the reasoning that the store uses in its product placement. I cited ketchup in Part 1 and the issues that arise as customers face choices to select from when buying it. Now consider a store that partitions-off organic-labeled foods of all types into a special area on its own shelf. And a customer walks in looking for ketchup and does not know that as they are a new customer to that store. So they ask a clerk where the ketchup is and in most cases they would be told where to find condiments in general – the aisle with ketchup, mustard, pickle relish and so on, and not about the organics food isle. They might or might not find what they are looking for and even if they examine every bottle on the shelves in that isle. But as a trade-off the organic food preferring customers like to see everything organic in one place.

In principle, online stores can avoid the problems and complexities of one item only sitting in one place at the store. With online search and whether menu-driven or by search query, every organic product can be included in a separate organic food area – and every item there can also be included in their correct general product category areas too (e.g. pastas and pasta sauces, breads and other baked goods, condiments with those organic ketchups included and so on.) And in fact select items can be placed in more than one general product category bucket in this, accommodating the fact that different customers might classify the same products differently as to use.

But online customers can still face real challenges looking for the items on their want list, let alone the items they would more impulse-buy. This is where an aspect of web design called information architecture comes in and I add many online stores do this badly.

• How are the items to be sold organized into web directories and sub-directories?
• How are these items and the nested directories they are placed in labeled?
• What types of details are provided about offered products to help customers make their selections?
• Are product comparison tools offered, and if so how do they work and do they offer the types of comparative information that real-world customers would want and use?
• How does all of this connect into the online tools and resources for making purchases?
• Does the business offer customers more than just one way to make purchases, with for example, online forms for making them through more automated processes, and a toll-free number for speaking with a sales representative?
• I could add a fairly long list of additional questions here but the basic point behind all of them is fairly simple and quite consistent. On the positive side this is a question of what levels of satisfaction the average customer would face. On the negative side substitute in the word frustration. How does this online business handle customer questions and resolve problems and complaints?
• How does insight offered from the marketplace in this way feed back to the store in helping it to course correct where that is needed, and to fine tune and improve in general, in making itself more competitive and effective?

Online customers can find themselves facing many of the same issues as far as choice is concerned as do bricks and mortar stores’ customers – and as both a positive value for them and with selection overload the downside of this too. Some of this can be corrected for and even with a tremendous selection to choose from, if:

• The store organizes its offerings effectively so their customers can filter and select down by searching according to the distinctions that make a difference for them.
• If they can control how many selections within a search they see at once.
• If they can fine tune or modify a search they have made and to either make it more restrictive or to make it wider in scope, to meet their needs.
• And for repeat customers if a customer relationship management (CRM) back-end support system keeps track of what types of purchases that customer makes and the site picks up on when they are purchasing according to a recognized pattern, making suggestions.
• This in practice means these systems stopping making suggestions too, if the customer indicates they do not want them by ignoring or clicking away from them. Basically, even the most automated customer-facing systems increasingly have to be able to reason and make artificial intelligence-backed decisions if the business is to remain competitive in the online marketplace.

I am going to turn in my next installment to the issues of choice and of selection offered through marketing campaigns, and finding the right items to explicitly market to draw customers into a storefront – or into a web site and its online store. Meanwhile, you can find this and related postings at Business Strategy and Operations – 2 (and also see Business Strategy and Operations.) I have also included this series in Startups and Early Stage Businesses.

Productivity and abundance, and the paradox of choice – 1

Posted in startups, strategy and planning by Timothy Platt on April 17, 2012

The immediate assumption that we all bring to a proposed increase in choice is that it is enabling and good. And increasing selection options and choice frequently is. Competition can force businesses to increased efficiency and to improve the quality of what they offer. Increased choice in the marketplace allows consumers to more carefully and fully seek out and find specific products and services that best meet their needs.

When Henry Ford first began building assembly line, mass produced automobiles he is famously noted as having said that “you can get one in any color you want so long as that is black.” This is held up as an almost archetypal example of a lack of choice and more modern auto industry offerings often center on the range of options that a consumer can select from, and not just in car color. The Toyota Motor Corporation Scion is in fact built and manufactured as a basic, core car design to which individual consumers can add a seemingly endless selection of factory-added modifications and customizations. The Scion in effect represents the far end of a spectrum of choice and selection that Henry Ford’s Model T represents the other extreme for. But increasing choice does not, on fuller examination, always lead to greater customer engagement or satisfaction or to increased sales. And it does not always mean better products reaching the consumer’s hands or increased utility or usability either. And I begin that part of this discussion at the supermarket shelf.

Consumers want choice. They demand it. But when they are confronted with more than some threshold of selections for any given product type, they actually start purchasing less of it, and across all selection options. Consumers may want to see more than one type of ketchup on the shelf to choose from but they do not want to see 317 choices to select from – this one made with heirloom tomatoes and that with specially roasted tomatoes, and those 17 over there made with their manufacturer’s variously differing secret blends of seasonings and spices.

A customer walking in that store intent on buying ketchup and just one particular brand and bottle size who finds it will probably pick that up and bring it to the cashier to purchase. But when a customer is simply thinking about picking up some ketchup and does not have an overwhelmingly great need to do so now, and does not have any particular brand or style in mind – they may very well look down this long isle of bottles and walk away. Actually, the customer seeking out that one specific brand may end up just walking away too, because they cannot find the selection they want in all of that clutter – at least before they run out of patience in their search.

• Where is that threshold beyond which increased choice passes a point of diminishing returns for the consumer?
• The answer to that will vary from consumer to consumer and depending on the context in which they approach the store in the first place. Someone rushing to get home who is simply stopping off at a store to pick up a few items they would like to have on hand, is going to hit that point of diminishing returns a lot faster than that same shopper when they are not rushed and when they are thinking in terms of a full grocery list – or that same shopper even if they are rushed but they absolutely have to bring a bottle of ketchup home with them and that evening.
• One point of distinction here that is not entirely dependent on the consumer and their frame of mind does stand out, however. Product distinctions that as a matter of explicit content really make a difference for the consumer can have the effect of simplifying the selection process for them – if, that is, those consumers can find the specific selection choices that meet the criteria that count for them. For ketchup that might mean organic ingredients only, and for some that might be further restricted and mean ketchup that is certified as being free of genetically modified organism (GMO)-derived ingredients.

That said, a vast selection range can become a marketing specialty – for the product types that are offered with that seemingly all-included choice range. And consumers who are looking for brands or types that are not generally sold in other stores will go to the ones that give the widest range of options for specific product categories. To take that point out of the abstract with a real world example, I like hot pepper sauces and there are a scattering of stores that I remember and like and go to for them for when I want more than just the most commonly offered standard brands. There are consumers like me for a wide range of products. But this approach to inventory works best as the exception and as a niche market offering – and not everywhere, where too many choices simply become that extra clutter for most.

And I have not even raised the costs here of maintaining lots of slow-moving items on the shelf with expiration date issues and the cost of keeping capital tied up in inventory that is not moving. If this set of issues affects the consumer it affects the business too.

I began this with a storefront context, and I will turn in my next posting to this short series to consider online stores and their web sites. Meanwhile, you can find this and related postings at Business Strategy and Operations – 2 (and also see Business Strategy and Operations.) I have also included this series in Startups and Early Stage Businesses.

Online store, online market space – part 21: vetting and brokerage as business expansion -2

Posted in startups, strategy and planning by Timothy Platt on April 11, 2012

This is the 21st posting in a series on building an online store as a new business (see Startups and Early Stage Businesses, postings 20 to 33, 35, 37, 40, 55 and 90 for parts 1-20.) I wrote and posted Part 20: vetting and brokerage as business expansion -1 in follow-up to a discussion with a friend and colleague who markets other entrepreneur’s businesses through her own business’ web site and both as means of providing extra value to her own clients, and in developing new revenue streams from partner businesses that she so helps with their marketing. I continue the discussion I began there, with this series installment. And I begin by picking up on a detail I mentioned more in passing in Part 20, here stating it more boldly.

Consumers have come to rely on online and crowd sourced reviews in making their own purchasing decisions. But businesses do not always simply passively stand by while the marketplace shares word about them and their competition from its collective experience. More and more often, business people seem to be reaching out to game the system of review sites, and both by posting bogus positive reviews concerning their own businesses, and at least occasionally by posting bogus negative reviews about their competition. (For information regarding negative false reviews in this context, I cite Trolls and Other Antisocial, Disruptive and Divisive Social Networkers – Part 1 and its Part 2 continuation.)

Review sites still hold value and even when they primarily post anonymously sourced reviews where a reader does not know what if any relationship the poster might have with the business under review. But it is becoming more and more important for consumers to have access to vetted, reliable sources of review insight too. And this brings me to the starting point for this posting.

Anyone can post advertising notices to sites such as Craigslist or Yelp and many, many do and every day. Anyone can post reviews online, and in this I cite Yelp and also partner business reviews for businesses that sell through sites such as There are a seemingly endless number of places where people can post or read crowd sourced reviews. And the major sites involved in this see tremendous levels of participating site visitors, many going there to post and many, many more going there to read what has been added.

• I began this discussion in Part 20 with consideration of what businesses to partner with, and market for – and with your own business, your clients and customers, and potential partner businesses and their needs in mind.
• I turn here to issues of visibility and I begin by noting that this is a situation where the Pareto principle applies and most traffic and activity go to a small percentage of the participating sites involved in supporting this type of online content. Mathematically, the distribution of crowd sourced reviews and postings online, going to specific sites in this arena follows what is called a power law.

If I were to leave this posting with this, I would be leaving it with a strong presumed message conveyed that a site in as powerful a position as Amazon or Yelp should do very well as a broker and a source of vetted insight – as they are the sites people will go to in by far the greatest numbers to read and act upon online reviews. And smaller, long tail-end of the curve sites will gain at most just nominal value from this. But that argument leaves out a very important modifying and even controlling factor: marketplace partitioning.

• When you build a business and a clientele, and a reputation built on direct customer experience and the word of mouth and viral marketing value that they bring, you create a market partition. This is bounded by your areas of expertise and experience and by what you offer in products and services that reflect that. This is bounded by the demographics and range of your marketing reach. The partition you operate in might be numerically fairly circumscribed and small – but still be fiercely loyal and reliable for repeat business. And these people will go to your site and read and respect the reviews and recommendations that you include there.
• The businesses that you partner with in posting marketing material, recommendations and links may also work within marketplace partitions that are limited in absolute size. But unless their clientele base exactly coincides with your own, brokering access to them will expand the partition reach for both your business and theirs.

And this brings me to a very important detail: reciprocal links. In principle, you could simply link to partner business sites and have that a one way relationship. But it synergistically enhances all parties when they reciprocally link to each other through their business web sites. The synergy comes in from a variety of sources, but one I will focus on here holds the potential of expanding the overall partition and effective marketing reach for all involved businesses still further. Search engine sites such as Google hold their search results prioritization algorithms as closely guarded trade secrets. But it is clear that all of the major search sites seek to give higher quality scores for any given search query to sites that meaningfully include content related to those search terms and expressions. And through iterative mathematical processes, web sites that are linked to by other sites with high content value scores achieve higher scores themselves as a result, from this inter-site recognition of quality. Reciprocally linked sites that have well written, meaningful content reciprocally improve each theirs search engine results scores for the search terms relevant to what they have content on – their businesses and what they do and offer.

So this is more about the quality of the business to customer relationship than it is about the quantity of these relationships per se, and about starting with high quality and customer loyalty – and building the numbers from there as from a strong foundation. Working in this way with partner businesses can be an effective way to do that, improving both quality and quantity of marketing reach and business scale.

I am sure to come back to the issues of online stores in future postings, adding more to this series and to other, related series as well. Meanwhile, you can find this series and related postings at Startups and Early Stage Businesses and also at Business Strategy and Operations and its continuation page Business Strategy and Operations – 2.

Online store, online market space – part 20: vetting and brokerage as business expansion -1

Posted in startups, strategy and planning by Timothy Platt on April 1, 2012

This is the twentieth posting in a series on building an online store as a new business (see Startups and Early Stage Businesses, postings 20 to 33, 35, 37, 40 and 55 for parts 1-19) and my first addition to it on over a year now. But this is also a topic area that I see as very important and it is one I have continued to think about. A recent conversation has prompted me to pick up on this again and I turn here to address a gap that I have left in my previous discussions.

Businesses exist and function in complex ecosystems with supply chain and other supportive business partners, competitors and potential competitors, colleagues and of course the marketplaces in which all of these businesses and business persons interact. Up until now I have focused in this series on the online business as viewed from within a specific single business. I turn in this posting to the larger-perspective view of how individual businesses fit into these larger systems, and with a specific goal of discussing how a business and business owner can gain value from these interactions.

I have written separately about supply chain systems per se and will continue to do so in separate series, at least for now. My focus in this posting and for this series is going to be on online brokering and developing online marketplace portals as a means of:

• Providing direct added value for your customers,
• Developing increased market share for your own business, and
• Creating new revenue streams.

I begin by noting what should be an obvious point: a broker is a middleman. And as a middleman, any value that you develop and receive for your business is going to be dependent on your capacity to meaningfully connect your website and other online visitors to the businesses you would introduce them to as a broker and intermediary. You need to know:

• Your customers and what they would look for in the larger marketplace, and particularly as those needs and interests would relate to what you do and offer.
• Businesses and business professionals in the business ecosystems that you work with who provide products or services that would meet your customers’ needs, and particularly as this expanded set of products and services would connect to what you do and offer.
• Which of those products and services would primarily compete with what you offer for market share?
• Which of them could best be seen as offering extra added value for your customers, not competing with you but rather serving as extra incentive for potential customers to buy from you?
• Here, offering more of a one-stop shopping experience can be a source of value, that customers find a connected and more comprehensive range of products and services in one location that would support some needs-set they seek to address.
• But more importantly, reliable brokers do not just list sources they know of that happen to provide seemingly relevant product and service widgets. They offer leads to providers that they vouch for as qualified, capable and reliable – they vet the references they share.

So you need to build this from a foundation of knowledge, and of both your customers and their demographics, and their demographic-level needs, and from a knowledge base of the potential business partners you could work with.

But before you do this, you have to have already built a sufficient enough reputation and customer base to be an attractive marketing option for the businesses and professionals who you would partner with. But this need not represent a steep threshold requirement and certainly if you:

• Market this side of your business as a vetted-service brokerage,
• You actively online market for both your own and your business partners’ products and services as a part of this service, and
• You both vet the businesses you work with in this way and market your brokerage service as offering access to business partners that meet highest quality standards. Simply searching online can still mean a great deal of guesswork and even with review sites as too many businesses game those sites with bogus reviews to increase their ratings scores. Ratings and quality assurance vetting from clearly identified and known sources still carry special value.
• You charge your business partners who you market and provide leads for through your brokerage service, according to the return on investment they receive with results-based fees added onto an at most minor basic setup fee.

I am going to continue this discussion turning to look at the customer and marketplace side to brokering, and I will also delve into some of the issues involved in finding the right types of businesses to connect to and market in this way. As a part of that, I will look into reciprocal linkage models and one-way linkage models and how the two can be selectively used to business advantage. Meanwhile, you can find this series and related postings at Startups and Early Stage Businesses and also at Business Strategy and Operations and its continuation page Business Strategy and Operations – 2.

Some thoughts on identifying potential marketplaces and customers in the face of novelty and innovation – 3

Posted in startups, strategy and planning by Timothy Platt on January 2, 2012

This is my third posting in a series on the challenges of truly innovative, disruptive New, and in developing it and marketing it so as to effectively reach and build a new market space for it (see Part 1 and Part 2.)

I laid out the basic issues in Part 1 of this series and the need for new insight if you are to see and build towards the true potential for a novel and marketplace-disruptive innovation. In Part 2, I at least briefly outlined two approaches to this: one with in-house control of all relevant information access, and the other more publically facing and with a focus on primarily controlling access to crucial information. My goal in this installment is to pick up on that discussion, focusing primarily on the outwardly facing and involving use of crowd sourcing. I will simply note with respect to the internal to the organization approach that:

• For some innovations, this is in fact the only route available and particularly where you would maintain your innovation strictly as trade secret protected.
• If you are actively seeking patent or related protection, or if your new innovation depends on a technology, process or device that is already under patent or patent-pending protection you are much less vulnerable.
• Though I add there, that patent protection in and of itself can be fairly illusory and particularly where someone else can develop from scratch and without using your specific technology to achieve the same product or service results.
• The history of patent law is in significant part the history of patent holders learning this the hard way as they see their own patents bypassed by alternative innovations developed by their competition.
• So there are some very significant reasons why in-house innovation and brainstorming would make sense.
• And there are consultants and consulting businesses that specialize in helping client businesses and their employees to break out of mental ruts and see innovative new ways of thinking – and both about what they do and how they do it.

But my primary focus here in this posting is on that other alternative, where partial disclosures are risked in order to gain value and insight from the crowd and from the marketplaces that you seek to bring into active form.

• I have already at least briefly discussed in Part 2, some of the considerations that would go into determining what you might be willing to go public with and what you would hold close as proprietary information, and when.
• I specifically note here that there are some significant unknowns in what you can reveal and when, as you have to assume that some of the people who would learn what you share concerning your innovation will be more insightful than others and highly motivated to act on any insight they gain – as active competitors to your business.
• But let’s assume that you have carved out areas of potential discussion that you would share. This may be because you see the most sensitive areas and aspects of your innovation as remaining safely in-house.
• This may be because you feel a level of protection from holding crucial patent rights and other legal protections that would safeguard you even if you did reveal more from in-house than you might otherwise desire.
• This may be because you see overriding value in developing market insight and market buzz, for when you launch your new innovation as a realized product. Getting the word out to position yourself as a marketplace first-mover can be a significant incentive in and of itself.
• This, I stress, can be post-product development as standard marketing campaign, but for purposes of this discussion this can also mean “going live” in conversation in at least a controlled way with public pre-release and even during product design and development. There, being able to say this product has crowd insight to make it a better fit to real user needs can be very beneficial.
• How do you filter out the valid and valuable feedback from the flow of everything else coming in, and particularly where you are only telling part of the story as to what you are doing, to preserve control over your own fundamental insight and innovation?

First of all, I want to address the value of the not-germane and unhelpful feedback that comes in from the crowd – if you see consistent patterns in that, where a lot of people seem to be making the same disconnects and sharing the same misunderstandings as to what you are doing, that can offer valuable insight too.

• Either you are simply not revealing enough to allow people in the crowd to understand what you are doing, and even just in general outline.
• Or there are gaps and inconsistencies in what you are sharing, and perhaps in your thinking and planning too that you need to know about.

But either way, you have to filter out the gems of insight from the clutter. And if you do this entirely from within the conceptual constraints you started with before you tried mining the crowd for insight, you are likely to miss spotting the real value in what you hear. So even if you do seek insight and perspective from the crowd, you probably will still want to include finding ways to open out your thinking in-house too. In this case if you do bring in one of those outside consultants to help you brainstorm, you will bring your pool of crowd-sourced feedback to the table as raw material to work with in doing that.

And through all of this and regardless of strategy or process employed for more widely imagining your innovation, the same basic dynamic prevails that you have to find an effective balance point.

• You need to balance the value of basing your innovation implementation at least in part on insight into the needs and preferences of real users and real marketplaces and coming from potential customers, and
• The fact that the more you share in this crowd sourcing, the more likely that you will gain insight of value,
• With the fact that the more you share and the earlier you do so, the more likely that you will be fostering direct and early competition for yourself too.

I have not discussed standard and sometimes very-misused tools such as focus groups here in this series and for a simple reason. Just considering that approach here, there is a lot already out there as to the strengths and weaknesses of focus groups where you in effect bring a sliver of the outside in, and in a very controlled manner.

Be creative in how you gain insight that would help you make a possible innovation a likely success and in how you filter and use any insights so gained. I add that you can also use a traditional approach such as focus groups to help you filter through more openly gathered, controlled crowd sourced insights for identifying the real sources of value in that.

• Effective, novel approaches to opening your eyes to the potential in your innovations and building better products from them can in and of itself be one of your most effective unique value propositions – and difficult to duplicate precisely because anything of this sort requires finding a working balance between conflicting needs and pressures.

I am certain that I will be coming back to this topic area for future postings. Meanwhile, you can find this and related postings at Business Strategy and Operations – 2 (and see also Business Strategy and Operations.) You can also find this and related postings at Startups and Early Stage Businesses.

Synchronizing product, market and vision – an iterative process

Posted in startups, strategy and planning by Timothy Platt on December 30, 2011

I had a conversation with an entrepreneur a few days ago, interested in building a startup in fulfillment of a long term dream and ambition. Precisely what she wishes to develop as her own unique value proposition is intriguing, but that detail is not particularly germane to this posting. This conversation did, however, prompt me to think through the issues I will be writing about here, and those issues revolve around the relationships between product or service to be offered, market where they would be seen as offering value, and vision as to what the providing business stands for and represents.

To start this discussion from a clean slate, consider a nascent startup – still in the pre-build planning stage. And there is a founder or perhaps a small team of founders who hold a vision of what they seek to accomplish.

• This vision in most situations seems to include at least two distinct parts. One is a general conception of a core product or service – and that in many cases, at least in my experience, is not even as polished as a specific conception of a product or service. This is more likely to start with a distinguishing feature or quality that a more polished product or service would imbue and that would set it apart as its source of unique value to a marketplace.
• The starting vision is at first unformed and out of any specific focus – and certainly lacking in a specific operational focus.
• The core unique value concept is out of focus and developing it in a real sense means fleshing it out and validating it in the process as it is transformed into a product or service that might be brought to a real marketplace.
• The eventual marketplace that would be originally build towards and marketed to is also going to be unformed and out of focus – as has to be the case until the product or service to be sold there is brought into practical, empirical form.

And in practice, product or service coming out of initial unique value proposition concept, and vision as to how best to realize and offer this, and marketplace all come into focus together through an iterative process of thought and action and refinement, and further thought and action and refinement.

This basic process is important for startups and early stage businesses. It is just as important for more established businesses as they seek to break out of their here and now to create disruptively new. In both cases, success requires finding a balance that works, between proceeding quickly and effectively so as to capture new opportunity, and allowing time for all of this to mature so opportunity is not lost before its possibility can even be seen.

I have posted on issues related to this a number of times and am sure I will be coming back to this again too. Meanwhile, you can find this and related postings at Business Strategy and Operations – 2 (and see also Business Strategy and Operations.) And you can also find this and related postings at Startups and Early Stage Businesses.

Some thoughts on identifying potential marketplaces and customers in the face of novelty and innovation – 2

Posted in startups, strategy and planning by Timothy Platt on December 26, 2011

This is my second posting in a short series on marketing and selling the truly innovative, and what in Part 1 I identify as emergent unique value propositions:

• An emergent unique value proposition is a value proposition that when effectively marketed becomes the basis for a new and unique blue ocean strategy.

And towards the end of that posting I outlined some of my thoughts as to the basic parameters that have to be dealt with in effectively identifying new and disruptively emergent marketplaces and customer bases, and for fine tuning your innovation to best meet their needs.

One of the approaches that I offered in that was to reach out for insight to help break out of your own pattern of thinking as to what your innovation does and who would want it, and for what end-user applications. And I pick up on this discussion at that point.

• It is easy to be caught up in your own assumptions, unexamined included, as to what your innovation actually is – with that based largely on the product or service, customer and end user application, and marketplace of the closest current offering already out there.
• But at the same time, if your innovation does hold genuine potential for creating blue ocean strategy and opportunity, this older road map cannot work for you.

And this brings me to the central conundrum that I would address here. If your idea for innovation is truly unique, you want and need to hold it and its details close and to maintain a due diligence security of confidentiality around it so others will not simply race you to the marketplace with your own innovation. But at the same time you may very genuinely need insight from others to help you break out of your current thinking. How can you bridge these seemingly contradictory needs?

An obvious answer might be found in bringing in a consultant with wide-ranging experience, and even a consultant whose expertise is in helping clients to identify and break out of conceptual ruts to find new approaches and understandings. And they would be bound in dealing with you and with regard to your innovation by legally drafted non-disclosure and confidentiality agreements – and the process of maintaining secure and exclusive ownership of your innovation while opening out the boundaries of the possible for developing it would be kept essentially in-house.

There is a second, alternative approach that could also be raised here, and my goal in the balance of this posting is to at least briefly explore that – mining social media and the power of the crowd for insight in better identifying new types of marketplace, new types of customers and new and unexpected uses for the truly emergent unique value proposition that you seek to develop. And what follows here are some thoughts as to the basic parameters for managing this so as to retain control and ownership of your core innovation.

• As a general principle, and warning, I start this list by noting a fact that should be obvious. No matter how you seek to do it you have to assume that if you try reaching out to a restricted outside crowd, whatever is discussed there will leak to the general public. And the more valuable and insightful the information developed and shared in any members-only, restricted access crowd, the more likely and the more rapidly it will leak out. So by all means, actively and proactively seek out and require discretion and protection of confidentiality for anything in the discussion threads that are carried out as you seek select outside opinion and insight. But assume that anything truly valuable will be publically tweeted, blogged, emailed, discussed verbally and otherwise posted and shared too. So any strategy for developing outside insight and information should be planned with the potential for public disclosure in mind.
• That means managing and controlling what details you share as your part of the semi-public to perhaps fully public conversation.

With that in mind I propose a very specific way of thinking about and analytically dissecting and considering your core innovation.

• Most innovations, and certainly most disruptively emergent ones begin with a single insight – a single core concept or realization. But translating that into even just an outlined, broadly considered new product or service means elaborating this single concept into a long and even very complex collection of interconnected ideas.
• Some of this cloud of thought and consideration is truly central to what makes your innovation unique and some is much more generally applicable and mostly there in the mix to flesh out realizable details.
• Perhaps more importantly, these various ideas and considerations – all of which could potentially be opened up to the (restricted) crowd – hold different confidentiality values according to a single, and at least conceptually simple basic criterion. If this specific idea A that goes into or strongly connects to the core innovation were to go generally-public, it might be useable to in effect reinvent the whole core innovation idea – but it would most likely take at least X months to do so.
• Any absolute values of X might be unknowable and for any particular piece of this knowledge puzzle – except for the pieces where you would realize that disclosure could mean immediate independent reinvention and immediate outside competition. But you may very well be able to organize potential information that you could share along a disclosure risk level X-axis with some of your ideas and core ideas far enough out there along that axis, so that helping your competition be that close to matching you would not be problematical.
• Think of what you would and would not disclose to outsiders, and even just to select outsiders, in terms of how easily that knowledge could be applied to bringing competitors up to speed with you. Then think in terms of necessary lead times to go to market and to develop first mover advantage.
• And think in terms of tradeoffs between gaining market insight that you could use for this, as opposed to leaking information – which could on the positive side mean buzz for your business and offerings, and on the negative side mean earlier competition.

And, of course, you need to be prepared to act on the knowledge and insight that you receive, and either from consultant-facilitated in-house reimagining, or from the “controlled and selectively limited” crowd.

• So any part of what you would build and develop, that you could do independently of the fine tuning insight you are seeking from the outside, you should be working on already so you can be ready to act as quickly as possible as you gather and process that outside-sourced insight.

This brings this overall discussion to a next step which I will be looking into as a next series installment – bringing crowd-sourced insight in-house, and developing from it, and with a goal of doing so as quickly and efficiently as possible so as to maximize benefits from your blue ocean marketplace capabilities.

You can find this and related postings at Business Strategy and Operations – 2 (and see also Business Strategy and Operations.) You can also find this and related postings at Startups and Early Stage Businesses.

Some thoughts on identifying potential marketplaces and customers in the face of novelty and innovation – 1

Posted in book recommendations, startups, strategy and planning by Timothy Platt on December 22, 2011

In a fundamental sense I find myself walking into the middle of a busy conversation with this posting. Much if not most of marketing is based on market identification, stratification and analysis, and in understanding the trigger points that would prompt people to buy. The rest of marketing is about developing a message that would effectively respond to this insight and understanding and to the potential customers it reveals. But much if not most of that is based on an assumption that the product or service to be marketed is fundamentally known in the marketplace. That at least in principle leaves out truly novel innovations and the unique value propositions that would underlie blue ocean strategies. That leaves off those products and services that would perform and thrive in new markets that until them had not even existed. So my goal here in this posting is not to reinvent or recapitulate a great deal of standard knowledge and practice for marketing a new variation on some already existing product or service. My focus here is on marketing when you are breaking new ground and when the public you would reach out to is not even thinking yet, in terms of what you would offer.

Unique value propositions are an important and ongoing theme that runs throughout this blog. And in this regard I would cite my postings in Business Strategy and Operations and its Part 2 continuation page and also Startups and Early Stage Businesses. For purposes of this posting I will use this term in a more restrictive sense then usual, where I more generally use it to indicate any unique source of value that would be perceived as such in the marketplace. So for clarification I will refer to the innovations of this posting as emergent unique value propositions. And more formally:

• An emergent unique value proposition is a value proposition that when effectively marketed becomes the basis for a new and unique blue ocean strategy.

A key word for this posting is uncertainty. A business that seeks to develop a truly emergent unique value proposition generally has an idea as to what their novel new product or service can do, but they generally do not know what killer app uses, real world customers will find for it – and certainly for technology products. I find myself thinking of a set of examples that would support this contention that I have cited before in this blog – next generation computer storage technologies where each one has generally found its initial success in a customer base that had never looked to computer storage technology in the past (see

• Christensen, C.M. (1997, 2000) The Innovator’s Dilemma. Harper Business.

These potential high value, high engagement customers correspondingly at least start out unaware of what is coming, or of its value to them. So this posting is about connecting the dots when both you and your customers start out without a map for doing that. And I add that what I write of here represents one of the greatest challenges that the truly innovative face.

I would like to be able to say that I have a simple and even algorithmic approach to managing and resolving this set of challenges, but at this time at least I can only outline some of the basic parameters that have to be dealt with. And I do that on the assumption that knowing what types of dots have to be connected, and planning and executing a business with them in mind is more likely to lead to success than an unplanned, completely ad hoc approach.

• Know your product, and with a view to usability that allows for greater range than just the first potential uses that you started with when designing your core innovation. Think through precisely what it is that you offer that confers unique value, and draw people into a conversation to help you identify new potential markets.
• The goal here is to not simply leave it to chance that a new type of marketplace and customer base will find you and entirely on their own.
• And as a final thought for this posting, be open to ideas and approaches to usability and user context that might go against your expectations and that you might at least initially see as the wrong approach to take. Your best market may be in an entirely unexpected industry, marketplace and user-defined need. But this may be where your business success will come from if you are to reach that at all.
• The more fundamental your insight and innovation and the more fundamental the technology involved, the more likely it is that you will see your best customers coming from unexpected places and with unexpected uses for it in mind.

I am certain to come back to this topic area in future postings and add that I see this posting simply as a foundation for further discussion. And to finish this, I add one final thought.

• The more disruptively innovative a new product or service, or a new underlying technology the more difficult it is going to be up-front to see and anticipate where it will have the greatest impact and where it will hold the greatest potential.
• But at the same time the more disruptively innovative a new product or service, the more potential it will have for building greatness for any business that does manage to connect it to the right target audiences.

This is an important challenge.

You can find this and related postings at Business Strategy and Operations – 2 (and see also Business Strategy and Operations.) You can also find this and related postings at Startups and Early Stage Businesses.

The perils of not invented here in an age of ubiquitous connectivity and communications

Posted in startups by Timothy Platt on December 21, 2011

The not invented here approach to business is an easy and quick target of opportunity for anyone who writes. I am going to write about this sometimes cartoon stereotype too, as have quite a few others. But I am going to take a somewhat different approach. I, in fact, would argue that there are times and circumstances where a not invented here approach is both valid and necessary. And the real problem is not in rejecting outside influences or sources of potential externally derived value per se, but rather in not knowing when and where that would make sense, or alternatively be damaging to do. And that is in fact the topic of this posting.

I start with the side of this issue that might appear to be less obvious, where a more insular approach to creativity and innovation can be a positive virtue – and with the unique value proposition.

• A truly disruptive and innovative new unique value proposition does more than simply open up new and unexpected possibilities and serve as a basis for opening up new market space. A truly disruptive and innovative new unique value proposition also challenges the current received wisdom, frequently by flatly denying some commonly perceived “truth” that others simply take for granted.
• The expression “to thine own self be true” (Shakespeare, Hamlet Act 1, scene 3) comes immediately to mind here and its original intent there in not pursuing foolish opportunities applies, as well as in actively pursuing good ones.
• Novelty in innovation, and particularly in truly disruptive innovation always challenges the received wisdom of the day. And it works, even as it does so in entirely new ways and directions.

When you are developing the core concept and its initial realization for your unique value proposition, listen and learn from others but build from within yourself and be true to yourself and to your vision of what can be. Then empirically test and validate and with the outside world and real world marketplaces and potential customers in mind.

“Not invented here” looses this value in subsequent steps and for any business processes that would be called for that are outside of the defining and initial-step realizing of that core innovation. That is where you do in fact want to tap into the knowledge and wisdom of crowds.

The challenge is in knowing when and where to open the doors to outside knowledge and perspectives. Not invented here is invoked as a challenge, and as a claim of observed inefficiency and ineffectiveness when it becomes the standard practice – as is too often still found.

When every business was still in effect an island oasis of knowledge and expertise for its products and services, and for its organizational processes and methods – an oasis surrounded by a void as far as relevant value was concerned, it made sense to simply focus within and on internally developed knowledge and insight.

That is no longer the case and with our increasingly interconnected business and marketplace context, businesses need to tap into outside fonts of knowledge and externally developed value to survive let along thrive.

That explains the opprobrium heaped on businesses to that simply adhere to a not invented here mentality. But this still leaves me with that initial defining moment where a business’ unique value proposition and the basis for its success come into being.

So I started with a cartoon stereotype and found myself facing something more nuanced – the usual situation when a seemingly simple stereotype is confronted and examined in detail. And I finish this posting with that thought – never take an adage or stereotype for granted. There can be real value in looking to see where they might and might not hold validity.

I could probably have placed this in Business Strategy and Operations – 2 but I have decided to include it in Startups and Early Stage Businesses as the message I seek to convey here holds with particular force there.

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