Today's blog post is an assigned topic dealing with leadership. The topic in particular is below:
How do you interact with others? What is your leadership style? How does that affect the team around you?
How Do You Interact With Others?
In my professional life I have always striven to embody the traits I most admire in others. Politeness, helpfulness, openness, analysis/thoughtfulness, and confidence are the attributes that I strive to emanate in professional settings. These attributes are applicable to every level of enterprise and would be the foundation for my leadership style.
What is Your Leadership Style?
To answer this question, the optimal approach going to be one that breaks down the aforementioned attributes and applies them to potential future leadership positions.
Politeness:
While this should go without saying, in my somewhat brief career I have already witnessed firsthand rude/boorish behavior from people in positions of leadership. The best leaders do not make subordinates feel like subordinates. A glowing example of this is my current CFO. This guy is basically the 2nd most powerful person in a gigantic corporation and he always says "hello" and makes you feel like a valued employee/contributor/person instead of a peon. If he can be polite there is no reason why anyone up and down the ladder in this company or other companies can not manage it as well.
Helpfulness and Openness:
I combined these two because they kind of go hand in hand as one typically needs to be open in order to be helpful and vice versa. I can see helpfulness being less prominent as one ascends the proverbial corporate ladder as actually helping individual people becomes harder to do as more people end up under your leadership umbrella. Openness however never has to have its role diminished. Being transparent with decisions and thought processes, being approachable, and willing to engage with others are all forms of openness that can permeate all levels of leadership. Again, I must cite my current CFO as a beacon of openness. First he opened himself up to email questions about finance, then he not only answered my specific email question but also invited me into his office for a brief meeting to go over the answer in more detail and give me the proverbial bird's eye view of the financial machinations of my company.
Confidence:
Genuine confidence is the confluence of several factors which give a good leader that intangible "leader" quality, as opposed to simply being an excellent worker/team member. When the confidence is derived from having qualities, experience, knowledge, and skill that surpasses one's peers, then the confidence is justified and the leader belongs in his position of authority. When the confidence is derived from being in a position of authority, then it is a hollow and unfounded arrogance and one of the most poisonous traits a leader can possess. A confident leader will own what he says, confident that his prior work, experience, and knowledge helps ensure that what he says is correct. An arrogant leader waffles on what he says or outright disowns it in an effort to save face. Confidence begets another "virtue" and that is accountability. If you are confident in your words or your work, you will hold yourself accountable for them, if you lack confidence you will attempt to shield yourself from accountability.
Analyses/Thoughtfulness:
The other attributes are probably universal and applicable to any good leader. Where my personal style originates, or in other words, how I differentiate myself as a potential leader is through my analytical approach to the world. I essentially operate under following assumptions; first, there always is an answer and second, the answer can be known through analysis. Data mining, statistics, big data, predictive modeling, Monte Carlo Simulation, and any other unmentioned analytical and mathematical tool all form the basis for my decision making processes. Analysis (breaking things down) allows for synthesis (building things up) which allows for innovation. My innovative contributions to my current employer have all come from combining disparate analytical tools to create new processes and methods.
How Do These Attributes Affect The Team Around Me?
While it would be tempting to align myself with like-minded individuals who placed emphasis on analysis, I think the best team members would be light on analytical affinity. The best team would bring other talents and disciplines to the table so that we all serve in a complementary role to each other. So my ideal team would have me and perhaps another one or two members handling the heavy lifting on analytical and technical endeavors while the deferring to our counterparts on less analytical tasks. While there is a cliche that analytical and intuitive mentalities tend to clash, I counter that apprehension with the other tenants of leadership. Clashes/conflicts can be very productive when the engaged parties work together to resolve issues and make forward progress. This is best brought about though openness, politeness, helpfulness, and confidence.
Friday, November 23, 2012
Wednesday, November 14, 2012
One Goal Console Value Story
Recently the class was tasked with creating a story for our products that demonstrated their value proposition. This is my rendition of two stories. The first is from the perspective of two medical providers. The doctor, who was unaware of the OGC and the nurse, who was intimately familiar with it. This little clip tries to demonstrate the value of the One Goal Console to medical providers as a way to consolidate and monitor medical device data in real time. The second video is from the perspective of a patient that was hooked up to the OGC but did not know what it was. This is to show how the quality of care is improved for patients as a result of hospitals adopting this technology.
I hope you enjoy the videos (they are a little silly, but I'm not a marketer...).
I hope you enjoy the videos (they are a little silly, but I'm not a marketer...).
Sunday, November 4, 2012
Market Cuts and One Goal Console
This blog assignment deals with market cuts and how they may pertain to my group project, The One Goal Console.
Demand
The impetus for this project/product was two fold. The first was to make nurses' and doctors' lives easier by aggregating real time medical data on patients. The second was to improve clinical outcomes for patients by reducing response time, errors, and anxiety. Conceivably, the demand for this product would be any medical care facility that needs to monitor vitals. This would include day surgery centers (outpatient/ambulatory surgery, extended care centers (hospice, nursing homes), and inpatient medical centers and emergency rooms (hospitals). The technology could help but would probably be less useful to clinics, urgent care facilities, Minute Clinics, pharmacies, case managers, and specialist offices (e.g. dermatologists).
Using a conservative estimate, this would probably give us one-third to about half of medical care providers in a perfect world. It could conceivably be more, but given the push by plan sponsors to early intervention through office visits and other lower cost health delivery settings like Minute Clinic and urgent care centers, I think my estimate is in tune with future developments in how care is provided in America.
Addressable Market:
The addressable market is going to be very close to the maximum demand, since there is no reason to believe that any one center or hospital is dramatically different than another. In other words, there is no reason to believe that once the product successfully gains a foothold in the ambulatory surgery center market that it can not spread out across the USA and reach all ambulatory surgery centers. The only subsets of the maximal demand that would probably be considered unaddressable are markets where Kaiser Permanente has a strong presence. The reason for this assessment is Kaiser's dedication to technology and innovation. They may wish to buy this product and become a customer, but the smart money is on them competing or already having their own similar product for their own facilities. This severely limits TOGC's ability to target the California, Georgia, Maryland, and D.C. markets, for example. Kaiser only has a significant presence in about 10 or so states, but it would have to be monitored as each state it "takes over" becomes a market that the TOGC may not be able to penetrate and win.
Realistically, as a start up, the most viable addressable market to get the product launched successfully would be outpatient surgery centers in the northeast region of the USA. This would allow our team to interact in person with prospects and customers while slowly growing our foothold in the healthcare industry.
Realistic Opportunities vs Competition:
To the best of my knowledge there is no serious player with this objective. That does not mean that we are immune to competition. The following would be the biggest threats as competitors:
As stated above, the most "winnable" market segment is probably the ambulatory or outpatient surgical centers. These facilities have many of the same concerns that inpatient facilities face but tend to deal with, on average, far less intensive cases with far fewer devices. This market allows us to reduce the number of devices we would have to consider for compatibility issues while also being able to penetrate a growing medical care delivery market. As inpatient care continues to become more expensive and as more and more surgeries become outpatient the number of outpatient surgical centers in the USA is only going to rise. By targeting these less complex but integral settings we establish a customer base that will grow as we grow.
The smaller size of these operations also dramatically shortens the sales cycle which would allow us to get established more quickly as the longer sales pitches to hospitals and hospital systems could only create more opportunities for deals to fall through.
In terms of geography, since the team is based in the northeast region of the USA, the ideal winnable target market would thus be outpatient surgery facilities in MA, CT, RI, VT, ME, NY, NJ, and NH, with a special emphasis on MA due to its population density and ease of access for our team.
Demand
The impetus for this project/product was two fold. The first was to make nurses' and doctors' lives easier by aggregating real time medical data on patients. The second was to improve clinical outcomes for patients by reducing response time, errors, and anxiety. Conceivably, the demand for this product would be any medical care facility that needs to monitor vitals. This would include day surgery centers (outpatient/ambulatory surgery, extended care centers (hospice, nursing homes), and inpatient medical centers and emergency rooms (hospitals). The technology could help but would probably be less useful to clinics, urgent care facilities, Minute Clinics, pharmacies, case managers, and specialist offices (e.g. dermatologists).
Using a conservative estimate, this would probably give us one-third to about half of medical care providers in a perfect world. It could conceivably be more, but given the push by plan sponsors to early intervention through office visits and other lower cost health delivery settings like Minute Clinic and urgent care centers, I think my estimate is in tune with future developments in how care is provided in America.
Addressable Market:
The addressable market is going to be very close to the maximum demand, since there is no reason to believe that any one center or hospital is dramatically different than another. In other words, there is no reason to believe that once the product successfully gains a foothold in the ambulatory surgery center market that it can not spread out across the USA and reach all ambulatory surgery centers. The only subsets of the maximal demand that would probably be considered unaddressable are markets where Kaiser Permanente has a strong presence. The reason for this assessment is Kaiser's dedication to technology and innovation. They may wish to buy this product and become a customer, but the smart money is on them competing or already having their own similar product for their own facilities. This severely limits TOGC's ability to target the California, Georgia, Maryland, and D.C. markets, for example. Kaiser only has a significant presence in about 10 or so states, but it would have to be monitored as each state it "takes over" becomes a market that the TOGC may not be able to penetrate and win.
Realistically, as a start up, the most viable addressable market to get the product launched successfully would be outpatient surgery centers in the northeast region of the USA. This would allow our team to interact in person with prospects and customers while slowly growing our foothold in the healthcare industry.
Realistic Opportunities vs Competition:
To the best of my knowledge there is no serious player with this objective. That does not mean that we are immune to competition. The following would be the biggest threats as competitors:
- Kaiser Permanente - This medical system could conceivably grow into more states, which makes us getting a foothold an almost insurmountable challenge, in addition to growing oraganically, Kaiser's embracing of technology and clinical outcomes could lead to it building and marketing its own version of TOGC, which could also provide formidable competitive challenges as they would be a major name in the industry with a significant clout and bankroll.
- Medical Device Manufacturers - Assuming TOGC begins to get adopted, what would prevent device makers, especially larger ones that cover a wide range of devices, from developing their own fully integrated device data solution? This seems more strongly tied to whether or not they would want to branch out of their core competency than anything we could do but this could be a downstream threat as device makers compete with each other rendering TOGC a casualty of war.
- Regarding Kasier - As I stated above it given the colossal challenge that would come with selling a solution like this to Kaiser coupled with their almost uncanny ability to create new technology themselves it just does not make sense to try to engage Kaiser directly in any of their markets. We may be able to co-exist peacefully in adjacent but non-overlapping markets, but until TOGC has the clout and the resources to try to compete any attempt to compete with Kaiser would be foolish. I would fully expect Kaiser to have their own proprietary analog to TOGC, however, as far as I know they do not typically sell their proprietary solutions to other medical systems so while they most likely would not attempt to muscle us out of any markets we enter I truly believe any market they have is theirs to keep. This is not all doom and gloom as resistance to HMO models exists in many states so it is not as if Kaiser could take all 50 states into their network.
- Medical Device Manufacturers - While a big manufacturer could attempt sell complete solutions, I do not see them attempting to leave their core competency to compete on this axis with each other. This could perhaps lead to a small handful of competitors but not a huge market where each entrant has approximately no influence on the whole market. Where I see this type of competitor being a real headache is when TOGC tries to penetrate hospitals and hospital networks (e.g. Lifespan in RI). The big device manufacturers would have working relationships with hospitals and may be slightly faster at coming to market with a comprehensive device data solution as they would have all or almost all of the necessary devices in house for R&D purposes. Considering we would be growing up from the ambulatory and hospice segments of the healthcare market prior to attempting to enter hospitals we may end up becoming the "gold standard" for these facilities but also end up being the "proof of concept" that helps huge established device manufacturers beat us into getting entrenched in the hospital market. However, hospitals are a long long term goal and emergent competition hinges upon these companies taking a step out of their comfort zone, which can be very difficult for large companies.
As stated above, the most "winnable" market segment is probably the ambulatory or outpatient surgical centers. These facilities have many of the same concerns that inpatient facilities face but tend to deal with, on average, far less intensive cases with far fewer devices. This market allows us to reduce the number of devices we would have to consider for compatibility issues while also being able to penetrate a growing medical care delivery market. As inpatient care continues to become more expensive and as more and more surgeries become outpatient the number of outpatient surgical centers in the USA is only going to rise. By targeting these less complex but integral settings we establish a customer base that will grow as we grow.
The smaller size of these operations also dramatically shortens the sales cycle which would allow us to get established more quickly as the longer sales pitches to hospitals and hospital systems could only create more opportunities for deals to fall through.
In terms of geography, since the team is based in the northeast region of the USA, the ideal winnable target market would thus be outpatient surgery facilities in MA, CT, RI, VT, ME, NY, NJ, and NH, with a special emphasis on MA due to its population density and ease of access for our team.
In or Out? (Marketing)
Today's blog seeks to dig into two marketing paradigms; inbound and outbound marketing. Inbound marketing is marketing that is designed to cause potential customers to reach in to you. This can be done with search engine optimization, blogging, or other methods that entail giving potential customers information or samples that get them excited about your product or service. In a way, it is advertisement via providing value to prospects. Outbound advertising is more disruptive in that it reaches out to customers and attempts to get their attention and move them through the prospect to customer life cycle.
So Why Not Inbound Only?
Just as man can not live on bread alone, a company can not successfully market itself with a marketing strategy that is solely inbound. The reason that inbound marketing alone is flawed is that it lacks outreach. Compare a venus flytrap with a cheetah,the flytrap has to make itself attractive to insects and wait for one foolish enough to land on its maw. A flytrap's success is predicated on a chain of events in which it is only a passive participant, it must bait its trap and then it must successful capture flies that choose to land upon it. Contrast this with a cheetah. Cheetahs have to go out and capture their prey, cheetahs are active participants in the chain of events that determines their success. A company with the best site, the more interesting articles, the most fascinating videos, the most informative white papers, and so on can not draw in the prospects unless they somehow become aware of them. A company that that is solely dedicated to inbound is like the flytrap that makes itself irresistible to flies, the problem is, the plant is located in one room and the flies are in another. The flytrap is unable to move into position to capture the flies' attention, it has to wait passively and hope that some curious flies happen to fly by and notice the irresistible trap. A company that heavily leverages outbound marketing, like the cheetah, would bolt from room to room until it found its prey. In this animal example, the cheetah is much more likely to feed, even if it has to go through a ton of rooms to do so.
Taking a step out of the animal kingdom, the drawback to inbound marketing is its core appeal, and that is the passivity. Success does not come knocking, and if it does, it may take a long time to get there. While the upsides of inbound marketing are numerous, e.g. less cost per acquisition, it is the passive nature that makes those acquisitions take longer and renders them less predictable. If the average mail campaign converts 2% of recipients, then you know for certain that you can print 100,000 mailers and convert 2,000 customers on average. You can also observe that a blog converts approximately 5% of its viewers into customers, thus you would only need 40,000 viewers, but how do you get those viewers? Sure you could try to use search engine optimization, but so can your competitors. Mean while the outbound direct mail approach has concrete metrics, you just need addresses. With databases and "big data" the failure rate of outbound marketing is going to improve, again this is proactive research and refinement that is much harder to accomplish with inbound marketing since the customers are not necessarily identified until they are already at the mouth of your "customer funnel", since by definition any effort to lure people towards the funnel starts to become outbound marketing.
Why Outbound Marketing?
Outbound marketing is proactive. A huge outbound campaign can function on its own with a best estimate success rate or it can catalyze your inbound marketing's prospect awareness. Imagine our hypothetical company above that has the perfect inbound marketing campaign but does no outreach. Now imagine this company doing something aggressive like a billboard in Time Square. This outreach immediately forces an awareness, this awareness allows the inbound marketing elements to "go viral". Word of mouth is the most critical element of marketing, you need a way to get your brand, your "word" into some mouths, outbound marketing is a critical element of this.
Just as Inception dealt with injecting ideas into people's subconscious so too can your outbound marketing inject an awareness of your company into the masses' collective subconscious. Once your foothold is established, then the inbound elements can lure people in and convert them.
Alternatively, outbound marketing can be utilized as a closer. The metaphor of the customer "funnel" is particularly apt here. The inbound elements provide value to prospects, they come to learn from your site/blog/etc and these lessons cultivate a rapport, a trust, and a curiosity. These three elements help get your prospect to enter the funnel. Once in the funnel there are two outcomes, conversion or non-conversion, falling through the funnel or escaping the funnel. Why not grease the walls of the funnel with outbound marketing once a prospect has willfully entered? There is a difference between being passive and appearing apathetic. How many potential customers are really going to climb down the funnel intentionally? How many are that desperate to buy your product or service that you can sit there and wait for them to wave their check books in your face? Is your product or service that special? Is your value proposition that powerful? Chances are there is nothing that is so good that passivity as a primary strategy can work in perpetuity, so why continue to be passive? Once a prospect reaches in, e.g. signs up for an email list, they are signalling a willingness to consider your product. Chase them down! This is like a gazelle sauntering up to a cheetah, it wants to be eaten but it certainly is not going to put its neck in the cheetah's mouth.
It's The Combination!
In another class I had to view a lecture series by Dr. Ackoff who stressed the importance of managing interactions, not actions. This is a perfect way to encapsulate the role of both outbound and inbound marketing. A company that solely focuses on one and not the other is losing out on the synergy, on the interaction. Further applying this lesson, a company that does both but does not integrate the two is also wasting resources. The ideal marketing strategy combines both inbound and outbound, not as two disparate entities, but as a cohesive one-two punch at both ends of the prospect-customer spectrum. Lure them in and close the deal, inject yourself into their subconscious and get them to wander up to your funnel, and so on.
So Why Not Inbound Only?
Just as man can not live on bread alone, a company can not successfully market itself with a marketing strategy that is solely inbound. The reason that inbound marketing alone is flawed is that it lacks outreach. Compare a venus flytrap with a cheetah,the flytrap has to make itself attractive to insects and wait for one foolish enough to land on its maw. A flytrap's success is predicated on a chain of events in which it is only a passive participant, it must bait its trap and then it must successful capture flies that choose to land upon it. Contrast this with a cheetah. Cheetahs have to go out and capture their prey, cheetahs are active participants in the chain of events that determines their success. A company with the best site, the more interesting articles, the most fascinating videos, the most informative white papers, and so on can not draw in the prospects unless they somehow become aware of them. A company that that is solely dedicated to inbound is like the flytrap that makes itself irresistible to flies, the problem is, the plant is located in one room and the flies are in another. The flytrap is unable to move into position to capture the flies' attention, it has to wait passively and hope that some curious flies happen to fly by and notice the irresistible trap. A company that heavily leverages outbound marketing, like the cheetah, would bolt from room to room until it found its prey. In this animal example, the cheetah is much more likely to feed, even if it has to go through a ton of rooms to do so.
Taking a step out of the animal kingdom, the drawback to inbound marketing is its core appeal, and that is the passivity. Success does not come knocking, and if it does, it may take a long time to get there. While the upsides of inbound marketing are numerous, e.g. less cost per acquisition, it is the passive nature that makes those acquisitions take longer and renders them less predictable. If the average mail campaign converts 2% of recipients, then you know for certain that you can print 100,000 mailers and convert 2,000 customers on average. You can also observe that a blog converts approximately 5% of its viewers into customers, thus you would only need 40,000 viewers, but how do you get those viewers? Sure you could try to use search engine optimization, but so can your competitors. Mean while the outbound direct mail approach has concrete metrics, you just need addresses. With databases and "big data" the failure rate of outbound marketing is going to improve, again this is proactive research and refinement that is much harder to accomplish with inbound marketing since the customers are not necessarily identified until they are already at the mouth of your "customer funnel", since by definition any effort to lure people towards the funnel starts to become outbound marketing.
Why Outbound Marketing?
Outbound marketing is proactive. A huge outbound campaign can function on its own with a best estimate success rate or it can catalyze your inbound marketing's prospect awareness. Imagine our hypothetical company above that has the perfect inbound marketing campaign but does no outreach. Now imagine this company doing something aggressive like a billboard in Time Square. This outreach immediately forces an awareness, this awareness allows the inbound marketing elements to "go viral". Word of mouth is the most critical element of marketing, you need a way to get your brand, your "word" into some mouths, outbound marketing is a critical element of this.
Just as Inception dealt with injecting ideas into people's subconscious so too can your outbound marketing inject an awareness of your company into the masses' collective subconscious. Once your foothold is established, then the inbound elements can lure people in and convert them.
Alternatively, outbound marketing can be utilized as a closer. The metaphor of the customer "funnel" is particularly apt here. The inbound elements provide value to prospects, they come to learn from your site/blog/etc and these lessons cultivate a rapport, a trust, and a curiosity. These three elements help get your prospect to enter the funnel. Once in the funnel there are two outcomes, conversion or non-conversion, falling through the funnel or escaping the funnel. Why not grease the walls of the funnel with outbound marketing once a prospect has willfully entered? There is a difference between being passive and appearing apathetic. How many potential customers are really going to climb down the funnel intentionally? How many are that desperate to buy your product or service that you can sit there and wait for them to wave their check books in your face? Is your product or service that special? Is your value proposition that powerful? Chances are there is nothing that is so good that passivity as a primary strategy can work in perpetuity, so why continue to be passive? Once a prospect reaches in, e.g. signs up for an email list, they are signalling a willingness to consider your product. Chase them down! This is like a gazelle sauntering up to a cheetah, it wants to be eaten but it certainly is not going to put its neck in the cheetah's mouth.
It's The Combination!
In another class I had to view a lecture series by Dr. Ackoff who stressed the importance of managing interactions, not actions. This is a perfect way to encapsulate the role of both outbound and inbound marketing. A company that solely focuses on one and not the other is losing out on the synergy, on the interaction. Further applying this lesson, a company that does both but does not integrate the two is also wasting resources. The ideal marketing strategy combines both inbound and outbound, not as two disparate entities, but as a cohesive one-two punch at both ends of the prospect-customer spectrum. Lure them in and close the deal, inject yourself into their subconscious and get them to wander up to your funnel, and so on.
Tuesday, October 23, 2012
Less is More (Article Analysis)
Today's article is written by Matthew May and is from the HBR (article link) and it deals with the concept of less is more as a way to optimize innovation.
This article provided three ways to promote innovation, the first was elegance, the second was "loose reins", and the third was meditation. Of the three, elegance was the one that spoke to me most powerfully so I will focus on that, it is also the topic most strongly tied to entrepreneurship.
Elegance
Elegant has a few definitions but they all basically lead to a sort of refined excellence. This is close but not quite what the author means, as the author is using it more in line with how Mark Rosewater uses it in his seminal article on the topic (Article). The objective of elegance in design is in essence maximizing the impact while simplifying the delivery. This sounds simple and yet it can be extremely difficult to achieve, especially in an environment where inspiration leads to ideas leads to feature creep, bloat, and an eventual loss of clarity/purpose.
In an extremely competitive business landscape the temptation to add features and functionality seemingly ad nauseum in an effort to differentiate or maximize consumer perceived value is almost irresistible. Yet it is those who are able to resist this proverbial siren's call that actually get to market. Think of some of the biggest launches in recent history, how many of them are "elegant" versus "all-encompassing"? Instagram (mentioned in the article) does one thing and does it well, the iPad only performs certain computer functions but not others, the iPod originally only played mp3s, and so on. These services and devices did not attempt to be all things to all people, or to bombard the potential users with functionality. Sure you could conceivably add an email-like client to Instagram, perhaps add a real time instant messaging function, add video sharing support, and so on, but when you do so you dilute the product. The iPad does not come with productivity software, sure one could probably view documents and presentations but why would you want to do complex spreadsheet design or type out a 10 page paper on a tablet.
The Connection to Entrepreneurship
If entrepreneurship is about solving problems, then elegance is about making your solution focus on the problem you want to solve in a way that does not overwhelm customers. As the author states, elegance allows your value proposition to shine most clearly. If you continue to bury your value proposition under value adds that may or may not be germane to the problem you are solving, how will your customers find the value proposition? If your customers can not easily identify your value proposition, how do you convert them into patrons and users? Elegance is in the delivery, you want maximum punch with the optimal amount of leanness. Perceiving the problem is the first step, designing the solution is the second step, and delivering that solution in a succinct form that highlights your value proposition, that is elegance, and that is the crucial third step to entrepreneurial success.
This article provided three ways to promote innovation, the first was elegance, the second was "loose reins", and the third was meditation. Of the three, elegance was the one that spoke to me most powerfully so I will focus on that, it is also the topic most strongly tied to entrepreneurship.
Elegance
Elegant has a few definitions but they all basically lead to a sort of refined excellence. This is close but not quite what the author means, as the author is using it more in line with how Mark Rosewater uses it in his seminal article on the topic (Article). The objective of elegance in design is in essence maximizing the impact while simplifying the delivery. This sounds simple and yet it can be extremely difficult to achieve, especially in an environment where inspiration leads to ideas leads to feature creep, bloat, and an eventual loss of clarity/purpose.
In an extremely competitive business landscape the temptation to add features and functionality seemingly ad nauseum in an effort to differentiate or maximize consumer perceived value is almost irresistible. Yet it is those who are able to resist this proverbial siren's call that actually get to market. Think of some of the biggest launches in recent history, how many of them are "elegant" versus "all-encompassing"? Instagram (mentioned in the article) does one thing and does it well, the iPad only performs certain computer functions but not others, the iPod originally only played mp3s, and so on. These services and devices did not attempt to be all things to all people, or to bombard the potential users with functionality. Sure you could conceivably add an email-like client to Instagram, perhaps add a real time instant messaging function, add video sharing support, and so on, but when you do so you dilute the product. The iPad does not come with productivity software, sure one could probably view documents and presentations but why would you want to do complex spreadsheet design or type out a 10 page paper on a tablet.
The Connection to Entrepreneurship
If entrepreneurship is about solving problems, then elegance is about making your solution focus on the problem you want to solve in a way that does not overwhelm customers. As the author states, elegance allows your value proposition to shine most clearly. If you continue to bury your value proposition under value adds that may or may not be germane to the problem you are solving, how will your customers find the value proposition? If your customers can not easily identify your value proposition, how do you convert them into patrons and users? Elegance is in the delivery, you want maximum punch with the optimal amount of leanness. Perceiving the problem is the first step, designing the solution is the second step, and delivering that solution in a succinct form that highlights your value proposition, that is elegance, and that is the crucial third step to entrepreneurial success.
Wednesday, October 3, 2012
Big Companies Can Totally Innovate!!!! (Article Analysis)
The last post dealt with an article that stated that big companies can not innovate. In my previous post I argued against this thesis along a few axes and this blog post adds some fuel to the argument. This article is also from the HBR and was written by Ron Ashkenas and can be found here (http://blogs.hbr.org/ashkenas/2012/10/kill-your-business-model-befor.html) the title of the article is "Kill Your Business Model Before it Kills You" or liberally translated as "innovate or die".
Innovate or Die?:
While the US Postal Service is a complex creature to analyze to support a thesis of "innovate or die", the article thankfully provides more examples of companies that missed the innovation boat and subsequently crashed and burned. Kodak is an excellent example of such an enterprise, rather than use their photography expertise to work with or take over digital camera and photo printing they stayed entrenched. Perhaps their shareholders did not want precious cash in hand being diverted to R&D and (ironically, like I said before) their short-sightedness may have cost them future share growth and dividends. This is contrasted with IBM, a colossal firm, that innovated in a big way (selling off its PC unit, switching to services) and ultimately succeeded in a big way, after what I am sure was a bit of a rocky period on the street. Had IBM stayed in its proverbial comfort zone it may have faltered or struggled like HP and Dell do today. The innovated and survived, Kodak did not innovate and have all but officially died.
Does Size Matter?:
IBM has been regarded as big almost as long as it has existed, yet it successfully innovated. CVS was big before it merged with Caremark (also big) and has successfully innovated and continues to do so. There are two simple examples of innovative big companies that have thrived as a result of their innovative endeavors. Apple was down to ~$50 per share when Steve Jobs returned and had several years of tremendous innovations (iPod, iTunes, iPhone, etc) and are now worth over $670 per share a mere 3-4 years later. That kind of growth is incredible, and has landed it a spot in the Fortune 20 for 2012. Staples innovated in its marketing strategies, using the internet and targeted catalogs to drive both top and bottom line growth, Staples is king of the hill while Office Max and Office Depot are but memories. All large companies, those that innovated grew and survived, those that were complacent died.
Tie in to Course Material:
An alternative way to read this article to see changing an established business plan/model as a pivot! Persevere, Pivot, and Perish do not have to be delegated to lean start ups, hypothesis driven management and strategy can be just as valuable to a blue chip multi-national as it is to a 2 man start up operating in someone's garage.
Bottom Line:
Innovate or die; if you do not innovate you do not move forward. A lack of progression is regression in an environment as competitive as business. This is the natural Darwinism of capitalism. Entrepreneurs' creations live and die by their innovation, the solutions to society's problems are born from innovation, after all if the solutions could be found without innovation they would exist already! Embrace innovation, embrace agile thinking and ideas can become solutions, solutions can become start ups, and start ups can becomes successful enterprises.
Innovate or Die?:
While the US Postal Service is a complex creature to analyze to support a thesis of "innovate or die", the article thankfully provides more examples of companies that missed the innovation boat and subsequently crashed and burned. Kodak is an excellent example of such an enterprise, rather than use their photography expertise to work with or take over digital camera and photo printing they stayed entrenched. Perhaps their shareholders did not want precious cash in hand being diverted to R&D and (ironically, like I said before) their short-sightedness may have cost them future share growth and dividends. This is contrasted with IBM, a colossal firm, that innovated in a big way (selling off its PC unit, switching to services) and ultimately succeeded in a big way, after what I am sure was a bit of a rocky period on the street. Had IBM stayed in its proverbial comfort zone it may have faltered or struggled like HP and Dell do today. The innovated and survived, Kodak did not innovate and have all but officially died.
Does Size Matter?:
IBM has been regarded as big almost as long as it has existed, yet it successfully innovated. CVS was big before it merged with Caremark (also big) and has successfully innovated and continues to do so. There are two simple examples of innovative big companies that have thrived as a result of their innovative endeavors. Apple was down to ~$50 per share when Steve Jobs returned and had several years of tremendous innovations (iPod, iTunes, iPhone, etc) and are now worth over $670 per share a mere 3-4 years later. That kind of growth is incredible, and has landed it a spot in the Fortune 20 for 2012. Staples innovated in its marketing strategies, using the internet and targeted catalogs to drive both top and bottom line growth, Staples is king of the hill while Office Max and Office Depot are but memories. All large companies, those that innovated grew and survived, those that were complacent died.
Tie in to Course Material:
An alternative way to read this article to see changing an established business plan/model as a pivot! Persevere, Pivot, and Perish do not have to be delegated to lean start ups, hypothesis driven management and strategy can be just as valuable to a blue chip multi-national as it is to a 2 man start up operating in someone's garage.
Bottom Line:
Innovate or die; if you do not innovate you do not move forward. A lack of progression is regression in an environment as competitive as business. This is the natural Darwinism of capitalism. Entrepreneurs' creations live and die by their innovation, the solutions to society's problems are born from innovation, after all if the solutions could be found without innovation they would exist already! Embrace innovation, embrace agile thinking and ideas can become solutions, solutions can become start ups, and start ups can becomes successful enterprises.
Why Big Companies Can't Innovate (Article Analysis)
Today's blog post grapples with Maxwell Wessel's HBR article "Why Big Companies Can't Innovate", available here (http://blogs.hbr.org/cs/2012/09/why_big_companies_cant_innovate.html).
The Irony:
When reading the article I had a few observations that could best be summed up as "ironic". A big company, due to its size should be in a superior position to innovate relative to a start up. What they lack in agility they most certainly can make up for with pure firepower. A large company would have more cash, more talent, more means of production, more distribution channels, more branding, more advertising, and all of the other things anyone could ever need to detect a problem, engineer a solution, and bring it to fruition. So they most certainly CAN innovate, they are just told not to, and this only compounds the irony. The shareholders and "the street" want large companies to stay safe, to grow revenue, protect/grow margins, and generate earnings per share. The reason this is ironic is that the population [uniquely] positioned to reap the biggest rewards from innovation are actually the shareholders who are discouraging it. This reinforces the argument made in a Whole Foods article that I analyzed earlier about customer focus. Whole Foods has gotten away from "shareholder focus" and embraced "stakeholder focus", with customers as a key stakeholders and the highest priority. If firms were less beholden to "the street" then they could conceivably usher in new growth opportunities once their investments start to yield returns. One of the tenants of American Capitalism is that it takes money to make money, and innovation usually takes money, so why not use the money to make more of it?
The Flawed Premise:
Part of the allure of the article's thesis is that it is extremely seductive to our intuition and dare I say to our naivete. There is a tremendous amount of appeal to the notion of a scrappy underdog overcoming the odds and growing into a powerhouse. Alternatively, one may view a start up as "untainted" by "the street" and able to perceive actual problems beyond the annual report to shareholders. Last but not least, also appealing is the intuitive notion that a young and small firm can be more adaptive and more experimental in its approach and as a result more innovative. All of these are valid reasons why a small firm or a start up may be innovative, but the most compelling reason is also the simplest; a start has to be innovative in order to survive and eventually thrive. Amazon, Apple, Google, Oracle, Microsoft, Facebook, and so many more companies that are inspirational to start ups and entrepreneurs were once small shops that perceived a problem and proposed a solution (the core of entrepreneurship). If you do not have the critical innovation necessary to entice venture capitalists and take your target market by storm how in the world does your business plan ever become a multi-national blue chip on the Fortune 500? Barring anomalous circumstances, a start up can not hope to compete (and win) based upon price so it must offer something that competitors can not, especially new entrants into established industries. That something that the competition does not have is the fruit of innovation.
So if small companies innovate because they must not because they can where does that leave big companies that want to innovate? Mr. Wessel used a single example (Gerber) to forge his axiom so I will use a single example to not only counter it but also demonstrate how a company can succeed if it surmounts the resistance generated by the irony explained above. My employer, CVS Caremark, is by most definitions a big company, and yet it is an innovative one. Back in 2007/2008 CVS Retail merged with Caremark a PBM to create the world's first retail pharmacy-pharmacy benefits management hybrid company. This was a grand experiment and until recently "the street" was no fond of the conglomerate and encouraged it to revert back into two distinct enterprises. The street was only concerned with financials and metrics, it was not interested in new pharmacy benefits and synergies like "Pharmacy Advisor", "90 Day At Retail", "Maintenance Choice", and so on. The street was transfixed on comparing CVS Caremark to Express Scripts or Walgreens, not realizing that neither comparison was valid, since CVS Caremark could do things that neither of those companies could hope to accomplish, as we like to say, "CVS Caremark is an industry of one". In short the street was more concerned with next quarter's cash flow instead of the long term prospects and ROI for this risky (innovative) venture. Now the shareholders are excited and now the street wants to see what we do next as we continue to innovate pharmacy and healthcare, as we continue to "help people on their path to better health". Tom Ryan (former CEO) once said in a speech that he eventually wanted people to look at CVS Caremark and say that "CVS 'gets' pharmacy, that CVS 'gets' healthcare", it's taken about 4 years but I think people are starting to finally say that.
CVS is currently in high gear for innovation. The entire company has been challenged by our current CEO, Larry Merlo to innovate. So here is CVS, 18th on the Fortune 500 with innovation not being considered a nice pet project, but an integral component of its multi-year strategy. That is just a single example, but there are more all the way up and down the Fortune 500 and beyond.
Gerber and the Entrepreneurial Lesson:
Gerber's innovation did not fail because Gerber is a huge company, Gerber's innovation failed because it did not innovate hard enough. You can not pour baby food into a larger jar and call it adult food, that is not even innovation that is laziness. Had Gerber attacked the adult food market with actual adult food it could have leveraged its massive resources to go toe to toe with Swanson in the pre-made dinners market. Gerber would have been known for wholesome and nutritious, after all who would feed their baby nutritionally void garbage right? If Gerber was good enough for your child it would certainly be good enough for you. Instead of making real adult food Gerber made bigger jars of baby food, completely missing the point of both products. Babies do not have refined palettes or teeth so they need liquified food, adults have teeth and refined palettes so they do not want mush, this is so obvious it is painful to type. I have no idea why the author decided to use this as the for why large companies can not innovate, this is a much better piece of evidence for do not innovate lazily.
While the author's point about bureaucracy, infrastructure, and "the street" can certainly add inertia and friction to innovation one example of one failure at one company does not an axiom make. I am going to take this thesis in a completely different direction and apply to entrepreneurism; go big or go home. Gerber is a warning about failed innovation not because Gerber was big but because Gerber was simply not innovative enough. Aspiring entrepreneurs try solve problems, successful entrepreneurs solve them with viable and desirable solutions. Gerber perceived the problem but delivered a terrible solution, so the axiom that I would extract from the Gerber story is to innovate thoroughly and deliver a desirable solution. Do not give the market more baby food and call it adult food; get out of your comfort zone, get outside of the box, shift those paradigms and solve problems the market has with solutions it actually wants! That is the axiom here; that is the lesson for entrepreneurs, the lesson is not that big companies can not innovate. Not only are they perfectly capable of doing so, but they are extremely well equipped to do so.
The Irony:
When reading the article I had a few observations that could best be summed up as "ironic". A big company, due to its size should be in a superior position to innovate relative to a start up. What they lack in agility they most certainly can make up for with pure firepower. A large company would have more cash, more talent, more means of production, more distribution channels, more branding, more advertising, and all of the other things anyone could ever need to detect a problem, engineer a solution, and bring it to fruition. So they most certainly CAN innovate, they are just told not to, and this only compounds the irony. The shareholders and "the street" want large companies to stay safe, to grow revenue, protect/grow margins, and generate earnings per share. The reason this is ironic is that the population [uniquely] positioned to reap the biggest rewards from innovation are actually the shareholders who are discouraging it. This reinforces the argument made in a Whole Foods article that I analyzed earlier about customer focus. Whole Foods has gotten away from "shareholder focus" and embraced "stakeholder focus", with customers as a key stakeholders and the highest priority. If firms were less beholden to "the street" then they could conceivably usher in new growth opportunities once their investments start to yield returns. One of the tenants of American Capitalism is that it takes money to make money, and innovation usually takes money, so why not use the money to make more of it?
The Flawed Premise:
Part of the allure of the article's thesis is that it is extremely seductive to our intuition and dare I say to our naivete. There is a tremendous amount of appeal to the notion of a scrappy underdog overcoming the odds and growing into a powerhouse. Alternatively, one may view a start up as "untainted" by "the street" and able to perceive actual problems beyond the annual report to shareholders. Last but not least, also appealing is the intuitive notion that a young and small firm can be more adaptive and more experimental in its approach and as a result more innovative. All of these are valid reasons why a small firm or a start up may be innovative, but the most compelling reason is also the simplest; a start has to be innovative in order to survive and eventually thrive. Amazon, Apple, Google, Oracle, Microsoft, Facebook, and so many more companies that are inspirational to start ups and entrepreneurs were once small shops that perceived a problem and proposed a solution (the core of entrepreneurship). If you do not have the critical innovation necessary to entice venture capitalists and take your target market by storm how in the world does your business plan ever become a multi-national blue chip on the Fortune 500? Barring anomalous circumstances, a start up can not hope to compete (and win) based upon price so it must offer something that competitors can not, especially new entrants into established industries. That something that the competition does not have is the fruit of innovation.
So if small companies innovate because they must not because they can where does that leave big companies that want to innovate? Mr. Wessel used a single example (Gerber) to forge his axiom so I will use a single example to not only counter it but also demonstrate how a company can succeed if it surmounts the resistance generated by the irony explained above. My employer, CVS Caremark, is by most definitions a big company, and yet it is an innovative one. Back in 2007/2008 CVS Retail merged with Caremark a PBM to create the world's first retail pharmacy-pharmacy benefits management hybrid company. This was a grand experiment and until recently "the street" was no fond of the conglomerate and encouraged it to revert back into two distinct enterprises. The street was only concerned with financials and metrics, it was not interested in new pharmacy benefits and synergies like "Pharmacy Advisor", "90 Day At Retail", "Maintenance Choice", and so on. The street was transfixed on comparing CVS Caremark to Express Scripts or Walgreens, not realizing that neither comparison was valid, since CVS Caremark could do things that neither of those companies could hope to accomplish, as we like to say, "CVS Caremark is an industry of one". In short the street was more concerned with next quarter's cash flow instead of the long term prospects and ROI for this risky (innovative) venture. Now the shareholders are excited and now the street wants to see what we do next as we continue to innovate pharmacy and healthcare, as we continue to "help people on their path to better health". Tom Ryan (former CEO) once said in a speech that he eventually wanted people to look at CVS Caremark and say that "CVS 'gets' pharmacy, that CVS 'gets' healthcare", it's taken about 4 years but I think people are starting to finally say that.
CVS is currently in high gear for innovation. The entire company has been challenged by our current CEO, Larry Merlo to innovate. So here is CVS, 18th on the Fortune 500 with innovation not being considered a nice pet project, but an integral component of its multi-year strategy. That is just a single example, but there are more all the way up and down the Fortune 500 and beyond.
Gerber and the Entrepreneurial Lesson:
Gerber's innovation did not fail because Gerber is a huge company, Gerber's innovation failed because it did not innovate hard enough. You can not pour baby food into a larger jar and call it adult food, that is not even innovation that is laziness. Had Gerber attacked the adult food market with actual adult food it could have leveraged its massive resources to go toe to toe with Swanson in the pre-made dinners market. Gerber would have been known for wholesome and nutritious, after all who would feed their baby nutritionally void garbage right? If Gerber was good enough for your child it would certainly be good enough for you. Instead of making real adult food Gerber made bigger jars of baby food, completely missing the point of both products. Babies do not have refined palettes or teeth so they need liquified food, adults have teeth and refined palettes so they do not want mush, this is so obvious it is painful to type. I have no idea why the author decided to use this as the for why large companies can not innovate, this is a much better piece of evidence for do not innovate lazily.
While the author's point about bureaucracy, infrastructure, and "the street" can certainly add inertia and friction to innovation one example of one failure at one company does not an axiom make. I am going to take this thesis in a completely different direction and apply to entrepreneurism; go big or go home. Gerber is a warning about failed innovation not because Gerber was big but because Gerber was simply not innovative enough. Aspiring entrepreneurs try solve problems, successful entrepreneurs solve them with viable and desirable solutions. Gerber perceived the problem but delivered a terrible solution, so the axiom that I would extract from the Gerber story is to innovate thoroughly and deliver a desirable solution. Do not give the market more baby food and call it adult food; get out of your comfort zone, get outside of the box, shift those paradigms and solve problems the market has with solutions it actually wants! That is the axiom here; that is the lesson for entrepreneurs, the lesson is not that big companies can not innovate. Not only are they perfectly capable of doing so, but they are extremely well equipped to do so.
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