Blogging Innovation » Innovation Enters Adolescence (Part 1)


Innovation Enters Adolescence (Part 1)

Submitted by Blogging Innovation on September 28, 2010 – 12:03 amOne Comment

by Boris Pluskowski

Following on from my previous post on the Death of the Chief Innovation Officer (and the forthcoming rise of the VP, Innovation!), I’ve had several people now ask me about the rest of the contents of that presentation I gave on the “State of Innovation” – where is Innovation today?

I personally believe that Innovation is continuing to mature – if we looked at the track of the adoption curve for Innovation as a sustainable business process, my feeling is that it looks somewhat like this:

Innovation Adoption Curve

Back in 2001 when I first got involved with Innovation and Idea Management – we were most definitely selling to the Innovators out there. They behaved in typical Innovator fashion – looking for shiny objects, reading up research to get the latest and greatest in whatever business tools are out there, very little sensitivity to risk, and generally regarded as mavericks within their companies.

What we’ve gone through in the last 7 years is the maturation of that market – and with that a change in not only who’s doing innovation, but also how they’re doing it, and what they’re looking for. It’s also signaled large scale changes in the market and how innovation is perceived and marketed by vendors.

Let’s look at the most obvious indicator – the market landscape: In 2001, there were really only a few very small vendors out there – they were highly fragmented and tended to focus on niche elements of the innovation arena. I remember speaking to an industry analyst from Forrester at the time who told me that despite the fact that they loved our product “if you don’t have competitors, you don’t have a market”. We were missionary sellers to a market that didn’t know what we had or how to use it – and when they did use it, they tended to focus on using it to replace the old school system of paper based suggestion boxes and Excel spreadsheets. It was hard to find someone who could understand the potential in what vendors were trying to sell them – and even harder to find someone willing to look at committing the time, energy and resources into making it sustainable. Only serial entrepreneurs and mad men would dare enter the market at this point (and yes, we were both ;p ) .

By 2004, several more vendors had shown up on the scene – the market became more identifiable, people began to string applications together to make more robust products that the client could understand, and I had that same analyst now tell me that “consolidation will happen in this marketplace – I know of a company who is going to buy you soon”. At this point there started to be people who “got it” on a more regular basis – although they still tended to be predominately mavericks or “movers and shakers” in the company who were out to make an impact and saw an opportunity to do something no one else had. Of course, this led to a boom and bust period for corporate innovation programs as these maverick leaders would make a big impact in the business world and then have to face the consequences – namely they would either:

  1. Get Promoted
  2. Get given more areas of responsibility in order to kibosh their rebel rousing ways
  3. Get hired by someone else in their industry who wanted the magic formula
  4. Retire (because another frequent profile of sponsor were near-retirees looking to make a last ditch impact and had nothing to lose

Innovation Enters Adolescence (Part 1)The market today is very different yet again – with a multitude of small vendors starting to flood the markets but ultimately the main market sticking to the few bigger vendors who serve defined markets but have multiple unique selling points to differentiate themselves as they try to find what the mass market that’s coming ahead really wants and needs. Financing is becoming easier because institutions are beginning to actually understand what is meant by the various terms that are used in the marketplace, and what the business proposition is. Enterprises as a whole are starting to understand – and nowadays, if they aren’t actively approaching the vendor market in some way, it doesn’t take them long to figure out how it can be useful to them. The market is rich with options – both from the software world and from the consulting world – big and small – local and global – there’s a vendor who can satisfy the market’s needs. Prices are high, but so are the rewards for sustainable innovators – and the current recession is only going to strengthen the innovation agenda (see my entry on this topic for more on recessions and innovation).

My personal feeling is that we’re about to begin tapping into the Early Majority stage of the adoption curve now having crossed the Innovator’s Chasm (the make or break point for any concept or product where you have to bridge the gap between the Early Adopters and the beginning of the mass market that is represented by the two majority groups) at the beginning of 2007.

Of course the most interesting changes are happening at the enterprise level – and there are several major trends that are also pointing to this upcoming maturation in the enterprise application of innovation tools and techniques. But that’s a story for another posting…

Boris har et interessant perspektiv på konsekvensen af, at virksomheder i stigende grad er begyndt at satse på tidligere faser i The Innovation Adaption Cycle – fra Mass market til Early adopter.

Blogging Innovation » Innovating Business Models


Innovating Business Models

Submitted by Blogging Innovation on September 29, 2010 – 12:03 amNo Comment

by Roy Luebke

Innovating Business ModelsOne area with tremendous economic potential is to create a new business model. Of all the parts of a business to develop, a business model is probably the most complicated area to create. A new business model is also the area which may create the most significant economic gain of all.

Some obvious business model innovations include firms like eBay and Amazon. Google certainly created a new business model. Ryanair has a unique aviation business model in Europe where they charge the airport to be serviced rather than the typical model of the airport charging all the fees. Ryanair has been so successful they may actually take over Lufthansa in the near future. Think also about FedEx and Dell Computers.

Too often a new business model is thought of simply as a different pricing model, but business models encompass much more than simply price. They often involve partnerships, licensing arrangements, new technology platforms, new distribution methods, anything that describes the way a company creates, delivers and extracts value. One new business model with huge potential is online education. Is it really necessary to sit in an expensive Socratic-based classroom when the Internet allows access to unlimited resources? For a good look at where education may be heading, take a look at MIT’s opencourseware site where all their course material is available for free.

One of the driving factors to enable new business models is the use of emerging technology to deliver familiar products or services in new ways. As a result of technology advances, one growing area for new business model innovation is in microfinance. Professor C K Prahalad has written extensively on the fortune at the bottom of the pyramid and should be researched in more detail to understand the scope and scale of microfinance. With billions of people living in poverty, this is one of the most fertile grounds for creating new business models.

One of the biggest crisis facing us globally is energy management. For automobiles, a new business model will be needed to allow new energy sources such as electric power to be distributed as easily as gasoline. When John D. Rockefeller cornered the market on kerosene distribution and became the wealthiest man on the planet, he did it with a combination of railroad partnerships, distribution channels, and supply chain management. How will the gasoline station distribution model need to be changed to support hydrogen, electric or other energy source distribution in the coming years?

Ultimately, a new business model allows an organization to deliver new value to its customers, or allows it to address new customers in new markets.

SABMiller is now one of the largest brewers in the world having started in South Africa in 1895. One little-known business model development from SABMiller is a new method to leverage brand expertise through a low-cost sorghum-based clear beer called Eagle Lager recently introduced into Uganda and Zambia. Both governments have given excise exemptions due to the use of locally grown sorghum and not importing barley. This initiative has enabled SABMiller to bring nearly 10,000 small scale farmers into the supply chain and provided a high quality, affordable product for local consumers. Not only has this created a new localized brand, but the company is able to increase its consumer market by creating jobs and wealth producing entities.

Creating a new business model is no easy task. The real beauty of a new business model, however is to allow a company to leverage its existing capabilities and resources in new ways. Take a closer look at your customers and how they want to live and you may find a business model change that will transform your organization and reduce your dependence on constant stream of new product enhancements.

Small Business Marketing Plan | BusinessBlogs Hub


Small Business Marketing Plan

The marketing plan of a small business reveals the ways and methods adopted to reach out to new customers and persuade existing ones to buy more of the product on offer. It contains targets and goals, and the way to reach them. Effective marketing strategies definitely revolve around a clear cut marketing plan. A marketing plan may be prepared for a year, six months or any other period considered appropriate for the small business. There are short term and long term marketing plans as well, which list the short term gains expected and the long term impact of the marketing strategy. The marketing plan is similar to a roadmap guiding the path towards higher sales, larger customer base, and finally, higher profits and growth.

The task of the marketing plan is to assist with:

  • Identifying new customers
  • Listing the customers offering the brightest prospects to the small business
  • Evaluating the market for the industry
  • Analyzing the position of the small business in this product market
  • Understanding what is required to make customers buy

The marketing plan has to provide the direction the business is heading. It has to be focused and be able to delineate clear cut goals. Above all it has to make an impact in the market by positioning the product in a manner that it can command an exclusive clientele.

The Practical Marketing Plan

A marketing plan has to be grounded and framed according to the requirements of the business. The best marketing plan may be inappropriate or inapplicable for the small business or product it is marketing. Therefore it must be practical and provide the perfect fit for the business and its market. It must have the following:

  • Product positioning is the first task that needs to be addressed and the marketing plan must elaborate on this is going to be accomplished. It may involve product promotion strategies, competitive pricing, advertising and media coverage. The aim is to place the right product in the right place at the right time and at the right price. This is the biggest marketing challenge for the small business.
  • Pricing is an essential part of the marketing plan-the pricing policy adopted must be such that does not focus on short term high sales volume, but instead, concentrates on higher profits.
  • Customer profile-the marketing plan must be customer centered, as to who the customers are, their needs, what they are using presently and how they would switch to the new product, their thoughts and perceptions about the products and so on.
  • The product strengths and weaknesses especially in comparison to the other similar products.

The Plan Draft should have the following sections:

  • A market summary with the position of the small business in it
  • The targets set to be accomplished in a specific time period covered by the plan
  • The markets to be tapped during the time
  • Strategy for various market segments
  • Expenses involved and resources available
  • Marketing channels like the materials and distribution channels to be used
  • Strategies to meet competition from rival companies and products
  • Result tracking listing the achievements of the marketing team in the past.

Once the marketing plan is ready, the job is not over, but has only begun as newer challenges in the form of new market situations appear.

Small Business Marketing Plan | BusinessBlogs Hub


Small Business Marketing Plan

The marketing plan of a small business reveals the ways and methods adopted to reach out to new customers and persuade existing ones to buy more of the product on offer. It contains targets and goals, and the way to reach them. Effective marketing strategies definitely revolve around a clear cut marketing plan. A marketing plan may be prepared for a year, six months or any other period considered appropriate for the small business. There are short term and long term marketing plans as well, which list the short term gains expected and the long term impact of the marketing strategy. The marketing plan is similar to a roadmap guiding the path towards higher sales, larger customer base, and finally, higher profits and growth.

The task of the marketing plan is to assist with:

  • Identifying new customers
  • Listing the customers offering the brightest prospects to the small business
  • Evaluating the market for the industry
  • Analyzing the position of the small business in this product market
  • Understanding what is required to make customers buy

The marketing plan has to provide the direction the business is heading. It has to be focused and be able to delineate clear cut goals. Above all it has to make an impact in the market by positioning the product in a manner that it can command an exclusive clientele.

The Practical Marketing Plan

A marketing plan has to be grounded and framed according to the requirements of the business. The best marketing plan may be inappropriate or inapplicable for the small business or product it is marketing. Therefore it must be practical and provide the perfect fit for the business and its market. It must have the following:

  • Product positioning is the first task that needs to be addressed and the marketing plan must elaborate on this is going to be accomplished. It may involve product promotion strategies, competitive pricing, advertising and media coverage. The aim is to place the right product in the right place at the right time and at the right price. This is the biggest marketing challenge for the small business.
  • Pricing is an essential part of the marketing plan-the pricing policy adopted must be such that does not focus on short term high sales volume, but instead, concentrates on higher profits.
  • Customer profile-the marketing plan must be customer centered, as to who the customers are, their needs, what they are using presently and how they would switch to the new product, their thoughts and perceptions about the products and so on.
  • The product strengths and weaknesses especially in comparison to the other similar products.

The Plan Draft should have the following sections:

  • A market summary with the position of the small business in it
  • The targets set to be accomplished in a specific time period covered by the plan
  • The markets to be tapped during the time
  • Strategy for various market segments
  • Expenses involved and resources available
  • Marketing channels like the materials and distribution channels to be used
  • Strategies to meet competition from rival companies and products
  • Result tracking listing the achievements of the marketing team in the past.

Once the marketing plan is ready, the job is not over, but has only begun as newer challenges in the form of new market situations appear.

The Facebook Generation vs. the Fortune 500 | Management Innovation eXchange


The Facebook Generation vs. the Fortune 500

The Facebook Generation vs. the Fortune 500

1

Gary Hamel will talk with HCL Technologies CEO and MIX Maverick Vineet Nayar about the challenges inherent in managing Generation Y, in an exclusive webinar for MIX registered members on Oct. 4, 2010. Plan to attend “Managing Millennials: The ‘Employees First, Customers Second’ Experiment.” 

The experience of growing up online will profoundly shape the workplace expectations of “Generation F” – the Facebook Generation. At a minimum, they’ll expect the social environment of work to reflect the social context of the Web, rather than as is currently the case, a mid-20th-century Weberian bureaucracy.

If your company hopes to attract the most creative and energetic members of Gen F, it will need to understand these Internet-derived expectations, and then reinvent its management practices accordingly. Sure, it’s a buyer’s market for talent right now, but that won’t always be the case—and in the future, any company that lacks a vital core of Gen F employees will soon find itself stuck in the mud.

With that in mind, I compiled a list of 12 work-relevant characteristics of online life. These are the post-bureaucratic realities that tomorrow’s employees will use as yardsticks in determining whether your company is “with it” or “past it.” In assembling this short list, I haven’t tried to catalog every salient feature of the Web’s social milieu, only those that are most at odds with the legacy practices found in large companies.

1. All ideas compete on an equal footing. On the Web, every idea has the chance to gain a following—or not, and no one has the power to kill off a subversive idea or squelch an embarrassing debate. Ideas gain traction based on their perceived merits, rather than on the political power of their sponsors.

2. Contribution counts for more than credentials. When you post a video to YouTube, no one asks you if you went to film school. When you write a blog, no one cares whether you have a journalism degree. Position, title, and academic degrees—none of the usual status differentiators carry much weight online. On the Web, what counts is not your resume, but what you can contribute.

3. Hierarchies are natural, not prescribed. In any Web forum there are some individuals who command more respect and attention than others—and have more influence as a consequence. Critically, though, these individuals haven’t been appointed by some superior authority. Instead, their clout reflects the freely given approbation of their peers. On the Web, authority trickles up, not down.

 4. Leaders serve rather than preside. On the Web, every leader is a servant leader; no one has the power to command or sanction. Credible arguments, demonstrated expertise and selfless behavior are the only levers for getting things done through other people. Forget this online, and your followers will soon abandon you.

 5. Tasks are chosen, not assigned. The Web is an opt-in economy. Whether contributing to a blog, working on an open source project, or sharing advice in a forum, people choose to work on the things that interest them. Everyone is an independent contractor, and everyone scratches their own itch.

6. Groups are self-defining and self-organizing. On the Web, you get to choose your compatriots. In any online community, you have the freedom to link up with some individuals and ignore the rest, to share deeply with some folks and not at all with others. Just as no one can assign you a boring task, no can force you to work with dim-witted colleagues.

7. Resources get attracted, not allocated. In large organizations, resources get allocated top-down, in a politicized, Soviet-style budget wrangle. On the Web, human effort flows towards ideas and projects that are attractive (and fun), and away from those that aren’t. In this sense, the Web is a market economy where millions of individuals get to decide, moment by moment, how to spend the precious currency of their time and attention.

8. Power comes from sharing information, not hoarding it. The Web is also a gift economy. To gain influence and status, you have to give away your expertise and content. And you must do it quickly; if you don’t, someone else will beat you to the punch—and garner the credit that might have been yours. Online, there are a lot of incentives to share, and few incentives to hoard.

 9. Opinions compound and decisions are peer-reviewed. On the Internet, truly smart ideas rapidly gain a following no matter how disruptive they may be. The Web is a near-perfect medium for aggregating the wisdom of the crowd—whether in formally organized opinion markets or in casual discussion groups. And once aggregated, the voice of the masses can be used as a battering ram to challenge the entrenched interests of institutions in the offline world.

10. Users can veto most policy decisions. As many Internet moguls have learned to their sorrow, online users are opinionated and vociferous—and will quickly attack any decision or policy change that seems contrary to the community’s interests. The only way to keep users loyal is to give them a substantial say in key decisions. You may have built the community, but the users really own it.

11. Intrinsic rewards matter most. The web is a testament to the power of intrinsic rewards. Think of all the articles contributed to Wikipedia, all the open source software created, all the advice freely given—add up the hours of volunteer time and it’s obvious that human beings will give generously of themselves when they’re given the chance to contribute to something they actually care about. Money’s great, but so is recognition and the joy of accomplishment.

12. Hackers are heroes. Large organizations tend to make life uncomfortable for activists and rabble-rousers—however constructive they may be. In contrast, online communities frequently embrace those with strong anti-authoritarian views. On the Web, muckraking malcontents are frequently celebrated as champions of the Internet’s democratic values—particularly if they’ve managed to hack a piece of code that has been interfering with what others regard as their inalienable digital rights.

These features of Web-based life are written into the social DNA of Generation F—and mostly missing from the managerial DNA of the average Fortune 500 company. Yeah, there are a lot of kids looking for jobs right now, but few of them will ever feel at home in cubicleland.

So, readers, here are a couple questions: What are the Web-based social values that you think are most contrary to the managerial DNA one finds inside a typical corporate giant? And how should we reinvent management to make it more consistent with these emerging online sensibilities?

Understand the “Freemium” Business Model – BusinessWeek


Understand the “Freemium” Business Model

Posted by: Today’s Tip Contributor on September 24, 2010

The “Freemium” business model is based on companies offering their basic services for free while charging a premium for advanced features. With a lack of available comparison sets, Freemium startups often do not know how they’re really performing, and they sometimes aren’t sure how to measure their performance. Metrics differ, depending on the industry and offering. For example, some industry experts say businesses need a 10 percent conversion rate from free to paid to be viable. Some Freemium service companies, however—such as publicly traded LogMeIn—are successful with conversion rates of barely 1 percent. Skype’s recent filing reveals a 6 percent to 7 percent conversion rate of active free users. Below are a few tips on running your Freemium business successfully and measuring its success:

1. Don’t get bogged down in the numbers. If your business has 15 million registered users, does that really help you monetize better? Not necessarily. And who’s to say what the best conversion rate is? Public companies do well with a 1 percent conversion rate, whereas others need a much higher rate to survive.

When you sign up your first customers, you need to think about what it will cost to serve them, the costs of acquisition, and what you must do to keep them engaged. If it costs you $50 to acquire a customer who only pays you $2—something’s wrong. Make sure you can quantify these things as early as possible.

2. Consider the full picture. To measure the success of your Freemium business model, ensure you’re taking everything into consideration, even the little things. For example, cost-to-serve goes beyond storage and bandwidth costs. At YouSendIt, we take into account everything from credit-card fees to depreciation when calculating a true cost-to-serve.

3. Square pegs and round holes. Not every business is built to survive the Freemium business model, and learning if it will work for you is crucial. First, if free customer acquisition is not in your DNA, it’s likely you’ll end up as roadkill; it takes experimentation to figure out all the levers in your conversion funnel (acquisition costs, price sensitivity, churn rate, etc.), and constant optimization is a must. The most successful Freemium companies serve very large and very horizontal markets and are masters of filling the top of the funnel.

4. Take your time, do it right: Keeping free users engaged is essential to converting them to paying customers down the road. Many businesses try to extract value within the first 30 days and then bail out without realizing that they’re carrying a huge potential of lifetime value they will realize only by creating value over multiple engagements. You need to give the right offers to the right customers at the right times to be successful.

Once you have some basics squared away, you have a better shot at running a successful Freemium business, and measuring its success will become second nature.