Posts Tagged ‘innovation’

Brave New Business World!

“Build from what the customer wants to buy, not what you do well.”

“Always work backwards from where you want to be, not forward to where you want to go.”

“Successfully sell your offering before it is finalized – when it’s just barely useful – and get customer feedback.”

“You are in the relationship business. Build what customers think is worth having. The product is merely the method to build marketable relationships with customers.”

Marketing words of wisdom from serial entrepreneur Tony Grass, currently founder & President of a new kind of service that help clients find customers worth having – e-Market Intelligence – at last evening’s NYTECH event on “Long-Range Planning for the Successful Sale of a Company.”

Excellent insights were also provided by moderator, Paul Ellis, principal of the Paul Ellis Law Group, and co-founder of NYTECH, and his knowledgeable panelists, all focused on today’s new new exit environment and the importance of building towards an exit from the company’s early days in order to assure a smooth process when the time comes.

What factors build value in the last couple of years before exit? The two most important:
• Reputation, credentials, brand – the brand will be worth 30% of the exit value.
• Recurring revenue – based on distribution for product sales and on recurring need for services from delivering a unique bottom line advantage to B2B customers, “enjoyable value” to B2C customers.

I was especially struck by just how different today’s exit environment has become.

  • The traditional discounted cash flow (DCF) value is not that useful anymore because of accelerated change. Today a lot of value derives from possibilities a company’s assets can lead to in time – the future use potential.
  • Even the traditional structured auction is no longer typical because the same technology has different uses and values for different buyers. It’s all about the individual value proposition.

And because the environment is getting more and more complex, professional advisors have grown enormously in importance – investments bankers familiar with complexities of a company’s industry as well as accountants and attorneys specialized in specific areas of relevance. (Say goodbye to your husband’s best friend who’s a generalist lawyer!)
To begin at the beginning today means knowing the end game from the outset. As the Cheshire cat said to Alice, where you want to go depends a good deal on where you want to get to. If you don’t know where you’re going, it doesn’t matter which way you go.

Even Bigger than the Internet

The cloud is changing everything.  The change is even bigger than the change we saw from the Internet.  It will change how every business operates.  That’s what a cloud computing expert told me – Roger Krakoff, founder and managing partner of Cloud Computing Partners, a venture capital firm that invests exclusively in cloud computing.  I didn’t get it.  How could this be?  Then I had a second conversation with Roger.

An HBR Analytic Services white paper gave me the core of a cloud computing definition I like:  “enables access through the Internet to a shared pool of computing resources (hardware, software, etc.) that can be tapped on demand and configured and scaled up or down as needed.”  But it stops there.  Thanks to Roger I could now add “by any computing device.”  That was the missing link.  It’s the mobile implications that make cloud computing transformational – not merely evolutionary.   Aha!

But then came an e-mail exchange and Roger’s P.S. “better to think of cloud computing as dial-tone or electric power.  It is there when you need it.  Pay by the unit and it just works.”  Bingo!  The cloud is the new utility – like electrical power or water or the Internet!  One source of its power to transform businesses is what happens when it handles business transactions.  And this is already happening in a really big way. 

On May 17th, IBM released the following stats about its enterprise SmartCloud services customers:   one million enterprise application users working on the IBM Cloud.  More than $100 billion in commerce transactions a year in the cloud.  4.5 million daily client transactions conducted through the IBM Cloud.  And that’s just one major vendor of cloud services! 

What’s more it’s just the beginning.  TopCoder, the world’s largest open innovation community, with 400,000 developers is moving to the IBM SmartCloud Enterprise.  From this we can expect an exponential increase in innovation, as these developers support the organizations for which they work with the entire innovation process – from ideation, software engineering and analytics to implementation, testing and support.

At YouTube (http://www.youtube.com/ibmcloud) I found the moving story of how the cloud has transformed the Bari fishing industry – and made life better for the fishermen and their families with a new business model.  Until recently, the fishermen caught too many fish.  They exceeded market demand, Thanks to cloud computing, they can now communicate how many fish they are catching in real time and a virtual market can sell the fish before the boats dock.  Now they catch only as many fish as the market consumes, their income is up 25 percent and the time to market is down 70 percent.  Wow!  That’s innovation that matters!

A Time for Transformation, not Mere Change

By Eleanor Haas

Once upon a time – about a year ago – traditional publishers fell in love with the colorful screens of mobile devices as a solution to their battle with the popular assumption that information on the Internet wants to be free.  Here at last was a way to once again produce a unique product, charge traditional single copy and subscription prices and restore profit margins. 

Jason Pontin’s describes the rude awakening in “Why Publishers Don’t Like Apps,” Technology Review, 5.7.12.  (http://bit.ly/JgoAAm)   

Today, most tablet machines are Apple, and publishers have to pay Apple to sell their products – which means actually losing sales on individual issues.  Most serious, when they sell through Apple, they lose direct connection with their readers – the lifeblood of magazines and newspapers.

Technical problems also made adapting print publications to apps challenging.  Many publishers ended up with five digital versions of their products to accommodate diverse devices, viewing options and ordinary website HTML pages.  And they found the unbudgeted cost of app development both expensive and time consuming.  Without their own digital readers, they had no audiences to sell to advertisers and so insufficient incremental revenue to offset the app development cost. 

Worst of all, publishers discovered their stories in apps in fact disappointed reader expectations because the stories do not link; they live in walled gardens, closed off from other digital media.

The outcome?  Most mobile device owners read news and features on publisher websites, now coded to adapt to smaller screens or using glorified RSS readers.  “The paid, expensively developed publishers’ app, with its extravagantly produced digital replica, is dead,” pronounces Pontin.

What happened?  Publishers tried to impose old print formats on digital channels – to make an adaptive change, not a transformation.  “I hated every moment of our experiment with apps, because it tried to impose something closed, old, and printlike on something open, new, and digital,” writes Pontin.

One aspect of transformation is to go back to basics – to understand the essence of the product and release it from traditional trappings.  Barnes & Noble made a major change with its superstore bookstores containing pianos, coffee shops and sofas.  Amazon achieved transformation by eliminating the bookstore altogether. Pontin’s solution, like that of Financial Times is to launch an HTML5 version of its website, optimize it for devices, incorporate many applike features and functions and, ultimately, kill the app.  What will the new revenue model be once digital content is free?  That’s yet to come. Innovations evolve.  You don't always get all the answers at once.

As author/futurist Daniel Burrus has said:  “There are two primary uses for technology by business and government. The first is to accomplish more with less―to be more efficient and productive. That's how most people use technology, and it's a good use of it. But the second major use of technology―and it's not that common―is to use it to create new products, services, markets and careers.”  

Learning to accomplish more with less is an important first step – and it's still happening.  But more and more of us now understand enough about technology to create the new, to innovate – that’s transformation, not mere change!