Exponential Revenue

What VCs Want: Insights from Silicon Valley's Harvard Business New Venture Contest

2010-05-20T00:10:00Z

I recently attended a business plan competition sponsored by the Harvard Business School Alumni Association of Northern California. This event is part of an activity that is being staged in nine cities across the globe by the Harvard Business School Arthur Rock Center for Entrepreneurship.

Seventeen new ventures competed, presenting their concepts to an esteemed panel of 15 judges from the VC industry (such as IVP, NEA and Mayfield Fund) as well as a few corporate VC execs (Comcast and BMC) and angel investors. Another set of promising startups showcased their wares to more than 200 attendees at this successful event.

What I found most intriguing were the questions the team of Sand Hill Road VCs and other investors asked that revealed interesting insights about what they were seeking, and the inner workings of the Silicon Valley. Here's what I heard:

Herd mentality can work in positive ways: VCs have often been criticized for chasing the same idea. Although it causes pain for the VCs (and investors) that bet on the wrong entrepreneur, it is good for innovation. As one attendee said to me,"When you run a 100x multiplier on an idea, where start-ups are iterating different product and business models based on customer feedback, you will innovate faster. With all the money flowing into Silicon Valley, where else can you run multiple projects in parallel and see which one succeeds after only a few years?" I wonder what other problems this type of parallel innovation could solve (we're seeing a bit of this in green tech).
Being the first to disrupt an industry is not always a good thing: Although the VCs and angels were seeking disruptive opportunities, they are inherently investors balancing risk and reward. Being the first to disrupt can be expensive especially if it involves working through expensive legal and government approvals or if the market needs to be evangelized and primed. There is a large real estate development in Northern California where the initial developer spent millions gaining zoning and fighting environmental battles. They ultimately went bankrupt in the process. A second company took over the unfinished eyesore with approvals in place and much of the expensive grading complete. They profited handsomely from the development. The tech landscape is littered with failed first movers that were too early for broad customer adoption, but their efforts ultimately educated the market and paved the way for the successes we now think of as "first" through our revisionist memories (early social networking sites, MP3 players, touchscreen interfaces).
"Frictionless" customer adoption essential: Even for large established brands gaining the attention and time of busy customers is difficult. For an unknown start-up, adoption spells the difference between success and failure. I frequently heard from the VCs ...

Six Ways to Prevent Corporate Tunnel Vision

2010-05-13T00:08:00Z

Success breeds complacency. Business school case studies are chock-full of innovators that truck along, and Pow! in comes a new player and customers are suddenly gaining value from somewhere else. Such formerly high-flying firms default to the approaches that brought them initial success, even when markets change.

Such upheaval is evident everywhere in the business world today. Did you know that big-box retailer Walmart now competes with Comcast, and Netflix for movie streaming on TVs? Or that a business-to-business network equipment giant Cisco now competes with Kodak and Sony for consumer camcorders?

Most market incumbents stick with their current products, business models and industry for their entire existance, such that they don't see opportunities to move--or the risk of new entrants. Such tunnel vision presents a tremendous opportunity for savvy executives looking outside their current base to grow revenue or maintain leadership.

To Win, Look B.E.Y.O.N.D. Business Boundaries

My work with large corporate clients has uncovered a set of six questions that can uncover hidden risks and opportunities--I call these questions the B.E.Y.O.N.D.™ evaluation (Business Models, Encroachment, SimplifY Products, Overall Customer, Next Wave,and Distribution).

Business Models: Can a competitor come in with a new business model and explode the economics of your industry? Industry players often cluster around a fixed group of business models or pricing structures. Automobile manufacturers, for instance, all earn revenues from a combination of sales and interest on loans and leases, but does it have to be that way? Could a competitor create a free or near-free car and charge for mileage, the way cellular service companies give away phones and charge for minutes? (Electric car company A Better Place is looking into it.) The point is that inside many companies the incumbant business model can feel like the "way things are done" right until someone else comes and shows a different way. The key is to rethink your options before someone else does.
Encroachment: Do you evaluate the same competitors now as you did three years ago? Digital convergence, globalization, and the battle for limited consumer time and attention are causing businesses to expand beyond traditonal industry boundaries, as Walmart has expanded from retail CD and DVD sales into streaming video. Industry landscape analysis must take these shifts into account. Remove the industry blinders.
SimplifY: Can your category be simplified? Is "good enough" at a lower price sufficient for most customers? Companies ranging from Japanese automakers, to Southwest Airlines, to Costco have built their success by simplifying or providing lower cost options within existing categories. Who is doing the same in yours?
Overall Customer: How well do you evaluate the broader ...

If Money Were No Object, Would People Shop More? [Stats]

2010-05-06T00:05:00Z

In a prior post, I shared research that senior executives, if given an extra hour each week, overwhelming say they would spend the time either with friends and family or engaged in a hobby (such as exercise). It turns out that a preference for leisure is not unique to ultra-busy executives. When my firm, Exponential Edge, asked the same question of other groups(managers/individual contributors, business owners, and people not employed outside the home), friends and hobbies still won out. Only 6.3 percent of the 570 U.S. respondents surveyed said they would use the extra hour to shop online or in a store.

But what if money were no object? Would the answers change?

The Majority (74%) Would Not Shop More

Seventy-four percent of respondents said they would not spend more time shopping no matter their financial situation.

Money changed the priorities for a quarter (26%) of respondents as indicated in the chart below. Of this group, 41 percent would spend the extra time shopping either on-line (16%) or in a retail store (25%). Further analysis of the underlying detail reveals that the bulk of respondents that favored shopping were either in the manager/individual contributor or not employed categories. With the exception of retirees, these respondents were younger and less-affluent, so more wealth may conjure for them opportunities to acquire a backlog of items they cannot yet afford.

Several respondent remarks provide insight into the findings:

"Love my work, but the best time of my life is with family and friends and getting away from my office and my computer. I will always treasure that most."

"Balancing between stuff that needs to be done for work, the house, kids, etc.... no time for me."

"The @#!$ [expletive] computer sucks up all of my free time."

We all know that the best of intentions do not always translate into behavior. This is nonetheless a good barometer of attitudes pertaining to the tradeoffs between time and money.

About the data: Findings were collected from 570 adults (age 18+) via a nationally representative online questionnaire for the groups surveyed in the U.S. by Exponential Edge Inc (www.exponentialedge.com) from September thru November 2009.

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Adrian Ott has been called, “One of Silicon Valley’s most respected, (if not the most respected) strategist” by Consulting Magazine. As CEO of Exponential Edge® Inc (www.exponentialedge.com), she helps businesses gain market advantage in today's turbulent economy. Follow her on twitter at @ExponentialEdge

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The Rise of the Inattention Economy

2010-04-15T00:02:00Z

Have you ever paid for a subscription service and forgotten to cancel it? Have you ever purchased a product with a rebate but forgot to file it because the rebate form was buried under a pile of papers on your desk? Welcome to the inattention economy.

The attention economy has gotten plenty of, ahem, attention. Competition for limited attention spans has led many companies to get louder, either literally, or figuratively via social media, deep discounts or misguided attempts at technological differentiation. No doubt, the attention arms race has escalated - but this has been to little avail as customers have found ways to tune it out.

Information Overload: 82% of Social Media Customers Connect with Fewer than 10 Brands

It is estimated that the average American is exposed more than 1600 advertising impressions and comes in contact with hundreds if not thousands of products every day. If you spent every waking hour devoting attention to the products you use, and spent just ten minutes per product, you would only be able to interact with 96 products.

More realistically, combined with work and family demands most people can only devote serious attention to a single-digit number of products each day - a scarcity that drives time-onomic decision-making. A report by ForeSee Results indicates that 61% of U.S. Online Shoppers who use social media only follow, friend or fan five or fewer brands.Another 21% (totaling 82% surveyed) follow, friend, or fan ten or fewer brands. The bottom line is that only a select set of brands will get the attention and ongoing social media conversations that companies desire.

Rather than competing in a red ocean of attention, some companies have turned to the inattention economy. Take banking, telecoms or insurance as an example. These are all products most consumers consider "important", but that still doesn't mean they are willing to devote attention to the products. People just want them to work - precisely because they don't want to pay attention. Companies that succeed in these categories aren't the ones yelling the loudest, they're the ones who are staying quiet.

Do You Honestly Want a Social Media Conversation with Your Insurance Company?

When low attention priority companies over-communicate with customers they annoy. Do you really want to have a continuous social media conversation with your bank, insurance company, or utility software provider if the service is working? Such companies best serve customers by not making a lot of noise but by prudently communicating high value, providing a fair deal, and by providing responsive, personalized service when customers demand it.

This approach can be lucrative. According to Javelin Strategy & Research only 11% of customers in the U.S. switch banks every year. For most people this is not an economic decision - their current bank doesn't necessarily offer them the best ...

Walmart Wants Access To Your TV

2010-04-07T23:58:42Z

This article was originally posted on Fast Company.com where Adrian is an expert blogger. Walmart's intention to acquire VUDU's on-demand video service may seem like a curious move for a big-box brick-and-mortar retailer. Although eroding DVD category sales is a culprit, my sense is that this move is more strategic and could be more far-reaching if they succeed. Walmart is making a bid to own the customers' zone of attention (and ultimately wallet) through their TV. Despite the proliferation of the Internet, consumers in the U.S. spend far more time watching TV (both live and recorded) than surfing the Internet or participating on social networks.If they are successful, the substantial position Walmart enjoys today by controlling shelf space in the retail store could extend to the online video world. VUDU connects a library of more than 16,000 titles directly to internet-ready TVs or Blu-ray players. Through VUDU,users can rent or purchase movies without the need for a cable/satellite service. No doubt, this market is crowded and complex. The Walmart/VUDU combination competes with the likes of TV cable providers such as Comcast who offer their own on-demand video services (and now content) through triple-play bundles (TV, phone, Internet). A slew of digital content delivery services also compete here. A Shift from Resell to an Integrated Digital Customer Experience What I find interesting about Walmart's pursuit of this market is a shift in their business model from traditional retail/e-commerce. Perhaps competing with Apple in the digital music category has taught Walmart a thing or two about the need to offer an integrated customer experience.Walmart.com's digital music store frequently offers lower prices than Apple, but it has not put a dentin Apple's dominant U.S. market share (did you know Walmart has been selling MP3s for 4 years?) The instant gratification of an integrated iTunes/iPod experience seems to outweigh the dimes and nickels saved on sites like Walmart.com - time-onomics over economics. If VUDU gains broad customer acceptance, Walmart would own the customer's primary interface to video content. This would earn it not only earn a greater share of customer time and attention, but would also give the retailer access to a treasure trove of information about customer preferences and behaviors. If used well, this information can drive greater share of wallet for content, and make Walmart properties even more attractive to advertisers. Walmart has already tested the waters in advertising space by offering its Smart Network on TVs in its retail stores as well as selling advertising space on Walmart.com. We should also not rule out the impact this move might have on other parts of the value chain. As a major consumer electronics retailer, Walmart could leverage its relationship with TV suppliers to gain preferential placement for VUDU inside the television sets and devices it sells. By placing itself above Netflix and Amazon.com's Video on Demand, it could gain greater attention and customer adoption, just as the top items listed ...

Where Would CMOs Like to Spend More Time? [CMO Poll Results]

2010-03-31T23:44:00Z

In my prior post, I explored how senior executives would prioritize their time between leisure and work if they had an extra hour of time. Unsurprisingly, these executives overwhelmingly chose leisure.

But what if you had extra time to work?

The CMO Club, (www.thecmoclub.com) asked executives in their group what they would do if they had an extra five hours a week to work. Would it be spent with the marketing team? Peers? Agencies? Customers?

Out of 120 CMO's that responded almost half (43.7%) would spend more time with customers and another third (36%) would spend more time alone thinking and planning. Only 14.1 % would spend it with the marketing team. And only 3.1 percent would spend time with C-Level peers or agencies.

"Every week I feel like I haven't spent enough time with our customers. Five extra hours would help me solve that problem." stated one CMO respondent.

Another CMO responded, "I need to put down my Blackberry, get off email, stop sitting through update meetings and think and plan. That's where I can really make a difference."

Tools that enable CMOs to focus more time on customers and avoid distractions will clearly be a welcome addition.

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Adrian C. Ott has been called, “One of Silicon Valley’s most respected, (if not the most respected) strategist” by Consulting Magazine.As CEO of Exponential Edge® Inc. (www.exponentialedge.com) she helps businesses gain market advantage in an exponential economy. Follow her on twitter at @ExponentialEdge

Adrian is the author of the forthcoming book The 24-Hour Customer: New Rules for Winning in a Time-Starved, Always-Connected Economy (HarperCollins, August 2010).

This article reflects the author's opinion and does not represent those of clients and affiliates

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How Would Senior Executives Spend An Extra Hour a Week? [Stats]

2010-03-24T23:28:00Z

From senior executives to soccer moms, it seems that everyone is overbooked and overwhelmed. But what would you do if you had an extra hour of time? Would you catch up on your inbox? Start a new project? Relax and play more?

This is precisely the question we asked of C-level/VP and Directors of major U.S. corporations: if you had an extra hour, how would you spend it? Although we always think of executives as hard-charging, globetrotting workaholics, only 2.8% indicated that they would catch up on work.

Of the 135 senior executives we surveyed, more than 70% would spend the extra hour in leisure. Specifically, almost 40% would spend it with family or friends. Another 37% (36.6%) would spend it exercising or with a hobby.

Although there is considerable buzz about social networks in the news, senior executives still prefer more traditional forms of networking. More than a third (33.7%) indicated that they would engage with family or friends in person or on the phone while only 6% would engage with their family and friends on-line through social networks or other on-line communications.

Of course, the best of intentions do not always translate into behavior. However this is a good barometer of where busy senior executives would prefer to spend their extra time. Here's how their responses were distributed.

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Adrian C. Ott has been called, “One of Silicon Valley’s most respected, (if not the most respected) strategist” by Consulting Magazine. As CEO of Exponential Edge® Inc. (www.exponentialedge.com). She helps businesses gain market advantage in an exponential economy. Follow her on twitter at @ExponentialEdge

Adrian is the author of the forthcoming book The 24-Hour Customer: New Rules for Winning in a Time-Starved, Always-Connected Economy (HarperCollins, August 2010).

This article reflects the author's opinion and does not represent those of clients and affiliates.

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Tablets and Smartphones: Pawns in a Land Grab for Customer Attention?

2010-03-17T23:24:00Z

iPad? Kindle? Nook? Nexus One? iPhone? There's no shortage of discussion and comparison of the suddenly crowded e-reader/tablet/smartphone markets.

Yet, the feature comparisons about the hardware devices are a red herring.

Perhaps all of these devices are pawns in a quest for the ultimate prize: customer attention. The real goal of all the players is to capture limited attention via a direct route to an application store ecosystem. Whoever controls customer attention will be in the best position to gain default control of the customer's wallet and industry profits.

Consider how Apple developed a sizeable lead with both its App Store and iTunes. According to the NPD Group iTunes downloads comprise 69% of all U.S. legal digital music download with Amazon trailing at 8% during the first half of 2009. Once a consumer starts using an application store ecosystem inertia takes hold--users no longer take the time to even consider whether there are alternative options, much less exploring and comparing those options. Although music can be purchased from other sources, it is simply more expedient to buy it in iTunes. Instant gratification and inertia are powerful competitive forces in today's hectic world.

Customer Choices Today Are More Important Than You Think

We usually think of technology markets as very fluid--today's winners are tomorrow's losers. But when it comes to customer time and attention, the stakes are very high. In a well-designed customer ecosystem switching costs are quite significant--not in dollars but in time.

Figuring out what is portable from one device to another (say via switching from a Kindle to an iPad) and learning a new system are all quite costly in terms of time. And therefore few customers will be willing to change. Who wants to fiddle with migrating movies and eBooks to a new ecosystem when family, work, and personal pursuits demand so much of our attention? In a Time-Value Tradeoff the odds are always in favor of the incumbent.

The cold (though increasingly hot) war between Apple, Amazon and Google is all about gaining a foothold in a larger land-grab for customer time and recurring revenue streams. The iPad is yet another way to expand Apple's share of customer entertainment time--which is exactly why Amazon and Google are desperate to counteract it.

Viewing the world through scarcity of customer time and attention, we can understand why so many players are jumping into the application store game: Blackberry, Nokia, Microsoft, as well as Amazon and Google (including the curious Google Wave App Store). Who wouldn't want to own the toll-road to the customer?

There are ...

The Apple iPad: So Many Devices, So Little Time

2010-03-10T23:19:00Z

My back-ordered Kindle DX finally arrived a few days ago, well over a month after I ordered it. But instead of opening it, I set it aside. Why? Because the hype over Apple's iPad was running at fever pitch. Maybe, I thought, the Kindle DX was about to become hopelessly obsolete—and I should just ship it straight back to Amazon.

So, I tuned into the live Apple announcement with baited breath. While watching the glitzy Apple introduction on-line I was impressed – it had color, it worked with iPhone apps, it played movies and music and I could read books and newspapers from the big screen. This was a slam-dunk – who wouldn’t want all of that?

Then I heard more.

A Change in Digital Routine

Apple went on to talk about iWorks, using the device for presentations, keyboard accessories, 3G connectivity, and storage. My head started spinning. Not because of the features and functions - after 20 plus years in the tech industry I am quite comfortable with speeds and feeds. Because such a multifunctional device raised many questions about how it would fit into my digital life and routines.

I’m not without gadgets. I already own a laptop, a Blackberry, an iPod (and now a Kindle, at least temporarily). If I added an iPad to the horde how would I make all of this work together? How would I sync my files? When and for what would I use my laptop, the iPad, and my smartphone?

With the Kindle, the fit with my digital life is relatively straightforward; no conflicts with my laptop or my smartphone. I could take it to the beach and not worry about where my work files were located. I wouldn’t have to think about it much. Like most people I’ve got more important matters on my mind.

With the iPad (or a netbook for that matter), I need to plan for where my data would be stored and when I would use each device. It was all getting so complicated. I started to ask: am I willing to take the time and alter my routine for this new device? Is the value of the iPad greater than the time it will take me to reorganize my life to accommodate it?

Apparently, I’m not alone. A poll conducted by Gadget Lab indicates that 71% of those who would not buy an iPad already own a laptop and a smartphone and they already felt covered.

Time-Value is a Key Driver in Customer Decision-Making Today

The lesson here for innovators and marketers is this: we need to factor customer time into decision-making. Consumers already own devices, they have software. They want their digital and personal lives to run seamlessly.

So the ...

Is Customer Loyalty a Thing of the Past?

2009-06-24T18:05:00Z

By Adrian C. OttWhile attending a recent presentation on customer loyalty, a question from a member of the audience sparked my imagination. "Do Millennials care at all about loyalty? Does loyalty to products and brands still exist?" When I looked around the room, there seemed to be a mood of skepticism about the topic of customer loyalty. Another woman responded, "It is hard to be loyal because there are so many options out there today. There are always new products that seem interesting."Are they correct? I remember my parents unquestioningly buying Ford automobiles, or insisting on filling up at "Herb's" corner gas station. Are loyal customers an endangered species in the business world - soon to join the fate of the dinosaur? or the typewriter? Are executives and marketers deluding themselves?Only 2.5% of Consumers are LoyalNo doubt, our relationships with brands have significantly changed. The Financial Times cites a two year analysis of 685 brands using data from 32 million consumers that in 2008 the average brand lost a third of its most highly loyal customers. These customers were lost to price and promotions from other brands - something brand marketers considered improbable in the past.B-to-B executives constantly complain about pricing pressures and reverse auctions as vendors are deemed as replaceable. Even products and services that were considered fortresses of differentiation reach commodity status at a record pace.The CMO Council and Pointer Media Network study further reveals that 80 percent of brand sales are attributed to only 2.5 percent of shoppers - not 80/20 as previously thought. Searching for traditional brand loyal customers is like looking for a needle in a haystack. These figures suggest that such customers could be considered as endangered species.Tilting at Windmills of Unwavering Customer AllegianceAccording to Merriam-Webster's Online Dictionary, "loyalty" is an act of unswerving allegiance. Synonyms are: faithfulness & fidelity. These terms connote an unquestioning devotion - an effect on our emotions that drive our actions. Analogous to a marriage where using competing products constitutes a terrible act of adultery - something to be avoided at all costs.Consider the products and services you use personally and for business. How many of those items truly stand out for you? How many would you drop if something better, (or cheaper with equivalent quality), came along? Rather than tilting at windmills in pursuit of unwavering allegiance, a more pragmatic and fresh approach is needed. Let's stop focusing on diminishing returns of 2.5% of customers and think about the rest of the 97.5% of customers out there. Don't they have money to spend?Customer engagement today is different because there is a greater risk of distraction. Time is limited. We multitask as we juggle different types of technology. The Internet and globalization have enabled a plethora of products and services that vie for our time and attention. We can buy products and services from across the globe. Consider a teen ...

It's Time to "Cowboy Up!" on Innovation and Creativity

2009-04-21T14:59:00Z

By Adrian C. Ott Not far from my home are the grounds to a large western rodeo. Dusty pick-up trucks drive around town sporting bumper stickers that say, "Cowboy up!" "Cowboy Up!" means that when you fall off the horse you have to get back up, dust yourself off, and keep trying. It is a shift in attitude from "can't" to a positive "can-do" with confidence. It is a non-complaining spirit that becomes contagious. Indeed, the economy is rough right now. If we are not hurting personally, we have family and friends that are experiencing pain. We are suffering the consequences of lost jobs, lost income and lost opportunities. Businesses are suffering as well.Employees and the media whine about why things don't work...and then we wonder why they don't. Have you ever heard of a situation being solved by whining? During tough times, it is far easier to lay low, burrow into deep trenches and say "No" rather than having the courage to say, "Yes, let's try to make this work.' But we have the power to change all of that. The U.S. is the most entrepreneurial country in the world today. The Silicon Valley specifically is renown for fast-paced innovation. Gains are not made by abiding by rote learning, and hard and fast rules. Winners thrive on change and flexibility to act. When a start-up, or new technology or new market doesn't work, we learn from it and move on. We should not let fear of the economy keep us from pursuing risks in penetrating new markets, and higher-potential opportunities. Risk-taking is a wild ride even in good times. Let's not hobble our employees, entrepreneurs and venture capitalists with more rules, more taxes, and more reasons not to contribute. Take a look at your product and service portfolio for your business. Is it comprised entirely of safe bets and low reward product extensions? Or do you have a portion of your new offering pipeline invested in a few high risk, high reward opportunities? Now is the time to "Cowboy Up!" on innovative market opportunities, lest we stay on "safe" ground and get kicked in the head by our competitors.(c) 2009 Exponential Edge Inc. All Rights Reserved ...

Why Customers Want Less Social Media

2009-04-08T17:47:00Z

by Adrian C. OttI hate to do things twice. Re-work, system crashes and "do overs" are very frustrating. Why? Because they take precious time that could be spent elsewhere. We all want to do things once and move on. With the proliferation of social media platforms we are hitting a saturation point - Facebook, Ning, Twitter, LinkedIn, MySpace, Biznik, Plurk, corporate networks, industry communities and others . My head is spinning. My colleagues and clients are telling me this as well. How many communities can we participate in and still have a life? In 2007, we predicted in Fast-Forward 2010: Social Media Shake-out that people will make decisions as to where they will spend their precious time. Once social media is understood, customers will avoid duplicating efforts. Customers will strive to be more efficient with their time by consolidating their regular social media interactions to a number of favorite communities. Customers will gravitate toward communities that give them the biggest return and highest value for their time. Critical mass (or what economists call "network effects") plays a key role because the value of social networking lies in locations where others congregate. If we need to reach John, do we need three social networking sites to link, friend or follow John? One will do nicely thank you. This scenario is beginning to play out as customers are flocking to sites like Facebook and Twitter. Mark Zuckerberg of Facebook recently stated that they have more than 200 million users. If Facebook were a country it would be the fifth largest in the world. Indeed, a few mega-communities will dominate, however I don't envision a one-size-fits-all. We have different dimensions to our lives and sometimes we like to keep things separate (e.g. work and personal). What I foresee is:Customers will belong to one to three mega communities. These will house our master profiles. For example, Facebook for friends. LinkedIn for business. Customers want to manage a limited set of profiles. This is why we see many sites with system generated user pictures in the members list. Most people don't want to bother setting these up multiple times. Customers will belong to a limited number of niche communities: Customers will focus on a few communities that offer unique value-add to their life and interests. For example, a professional industry community, a personal hobby community, a civic service community etc.. Certainly everyone has niche preferences, that's what makes us all different and special. We expect that most people will participate somewhere in the range of 2 - 10 niche social media communities. Note: This is not in the hundreds or thousands, therefore not every company will be able to build an active community. Let's not confuse customer service with an emotional customer attachment. Certain niche communities will reside inside a mega community: This enables companies to ...

Silicon Valley Senior Executive Roundtable 2009

2009-03-31T03:13:00Z

by Adrian C. Ott I recently moderated the 2009 Silicon Valley Chief Alliance Officer Roundtable that was hosted by Cisco. This was my second year moderating this annual event that was organized by the ASAP Silicon Valley Chapter. Twenty-seven VP and C-level senior executives responsible for alliances and channels from firms such as Intuit, Adobe, HP, Microsoft, EBay/PayPal, IBM, SAP, Oracle, Cisco, Seagate, LinkedIn, Salesforce.com, Capgemini and others attended this meeting. The executives represented an excellent view of trends and best practices shaping the technology and alliance landscape. "The companies represented today, contribute $464 billion to the U.S. Economy. With a total combined market cap of $859 billion, these companies not only shape Silicon Valley's economy but also the world's high-technology landscape," welcomed Jim Chow, President of ASAP Silicon Valley.According to Steve Steinhilber, VP of Strategic Alliances at Cisco, "As we have seen in the last few months, markets can change overnight. Sharing ideas and best practices in meetings like this is vital to staying on top of today's fast-paced environment." The topline findings are: A majority of executives view strategic alliances as more important in a downturn, but several challenges to growth such as regaining momemtum after cost reduction, and overcoming business risk confidence issues impede forward progress. Executives are continuing to invest in disruptive technologies (e.g. Cloud Computing/Software as a Service (SaaS)) and new market penetration opportunities. New business models such as SaaS are changing the role of channel partners. This will result in new compensation and services models for the channel in line with these new models. Most companies are re-evaluating their alliance portfolios but also changing the measures by which they value and resource the relationships. For example, evaluating the financial viability of even the largest partners and customers has become a necessity. The need for new partner evaluation criteria is surfacing as new partner models such as talent-swapping emerge. Partner metrics beyond revenue are evolving that are increasingly tied to profitability and "Forensic Accounting." Internally communicating the value the partner organization remains a key priority in light of downsizing and cost reduction. Current macro-economic shifts in wealth distribution in the U.S. and abroad are expected to impact the partner portfolio mix. As best summarized by Erna Arnesen, VP of Global Services Channels and Alliances at Cisco, "What we are seeing right now in this time of economic crisis is a more engaged and frank dialogue across the strategic alliances community....This will put all of us in a unique position to increase our focus on joint revenue, contribution, and investment returns." To access our white paper with complete findings and our analysis of this event: http://www.exponentialedge.com/sv_chief_alliance_summit.html ...

Five Ways to Thrive in a Market Downturn

2008-10-24T17:06:00Z

By Adrian C. OttThe recent credit market crisis causes us all to reflect about how we approach our businesses. We’ve undoubtedly encountered staff reductions and realized evaporating sales opportunities as companies and consumers retrench their spending. Worst of all, many of us have realized losses to our personal investment portfolios, Although painful, the bright side is that these changes offer an upside for businesses seeking growth – to take advantage of this, we need to reset our thinking to visualize opportunities in this new landscape. Below are five approaches that help you to not just survive, but thrive in an economic downturn: As markets dissipate, new industries emerge. Although spending is curtailed, businesses and consumers still need to purchase goods and services. What has changed is that they are spending differently. Adapting to new markets that emerge during these times is pivotal to success in this new market climate. Although real estate mortgages are imploding, foreclosure, and credit counseling services are booming. Print and media advertising is declining, but internet advertising is growing – Google’s recent strong financial results are a testament to this transition. Alternatively, offering products and services that help companies to downsize or reduce costs could be a vital new revenue source. Rather than further entrenching into your existing market that is going nowhere, consider new market green fields. Are you shifting investments in your offerings and marketing campaigns to reflect the realities of economic down cycles? Consider shifting your offerings to reflect buyer realities. Assisting companies to outsource software as a service instead of implementing in-house creates a lower entry point, fewer staffing requirements, and less stress on capital budgets. Can you offer services that help customers achieve greater ROI on existing assets rather than buying new equipment? Can you help them make existing employees more productive? Can you reduce organizational disruption to reduce stress on remaining employees. Can you make your offerings less financially stressful and easier to digest for your customers? Avoid peanut butter budget cuts. Rather than cutting expenses by 10% across the board, use this as an opportunity to “prune the tree” by eliminating less desirable programs in order to focus growth and energy on a few key areas. Use this as an opportunity to rethink what you are doing. Your competitors are also cutting back…and are distracted. Markets that seem impossible to penetrate during strong economies present opportunities as competitors curtail efforts. This may evoke a strong entry opportunity that can take hold when markets turn upward. The key is to be poised to take advantage of it. If you can execute a focused strategy quickly while your competitors are consumed by organizational changes and loss of employees to execute, you will achieve the upper hand. Start Executing. Although we often want to lick our wounds with corporate change, getting ...

My Recent Lecture at University of California Extension

2008-09-29T15:48:00Z

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 Association of Strategic Planning Annual Conference

2008-02-24T16:08:00Z

By Adrian C. OttI 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 making2) How value chain analysis can result in better customer understanding3) The role of the Chief Strategy Officer4) 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. ...

Silicon Valley Senior Executives Speak on Trends, Share Best Practices

2008-02-10T17:09:00Z

by: Adrian C. OttOn 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 ...

Ten Trends and Opportunities to Watch: 2008

2008-01-27T15:01:00Z

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): New Platforms Take Hold Customer Behavior Trumps Traditional Market Approaches Digital Demographics Become Increasingly Important for All Industries Privacy is the New Black Marketing and Sales Redefine Themselves to Adapt to Dramatically Changing Customer Relationships Remote Monitoring and Testing Proliferates Business Ecosystems Become Increasingly Diverse Selecting Technology to be Incorporated into Offerings is more than an IT Vendor Decision Strategic Planning is Becoming More Frequent and Intensive 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. ...

HBS Centennial Gala: SF Bay Area

2008-01-13T00:18:00Z

By Adrian C. OttThis 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. ...

The Automobile: A Mobile PC Platform with Wheels?

2008-01-04T14:13:00Z

By Adrian C. OttThe 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 Time (tm); the automakers have a strategic opportunity to capitalize on their existence as a gatekeeper to the customer. To capitalize on Share of Customer Time (tm), the auto manufacturers are building their own Customer Behavior Networks (tm) (CBNs) 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. As the car designer, they have an opportunity to take the role as Leader in this Customer Behavior 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 Behavior Networks (tm) in the future? 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? 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? 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? How ...