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Web research tool

I just released a new web research tool http://research.run that you may find useful. Take a look. Let us know what you think.

– Niraj

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Creativity Hacks

From McKinsey article:  http://bit.ly/hVa5fA

Create visceral and personal experiences. This gives you food for thought and a new perspective. e.g. go see your competitors store, visit a customer in their work environment, order your own product, call your own customer service. Bring the execs along if you can.

Pretend to be someone else. This also gives you a new perspective. e.g. Ask – What would Apple do ? Or Southwest, or Google, or Disney, or a kid, or a startup.

Impose a big new constraint. This also gives you a new perspective that can spark ideas. e.g. you can only sell the product online, one hand is tied behind your back etc.

Perceiving a reality that is new to you is the essential precursor to creating a solution that is new to you. To get a new idea, get a new perspective.

Improving B2B Sales Success

Interesting brief from McKinsey on B2B sales.

While customers claim that price drives decisions, their real behavior is different. When customer’s get value through the sales process that experience becomes the driver for choosing your product.

To improve conversion do the following:

Manage customer contact frequency. Strive/plan to deliver high value at each customer contact. Don’t waste their time. Consider a scheduled biannual business review to go over needs and issues.

Improve product/application knowledge. Centralize content development to have a clear, consistent message for value proposition. Get hands on experience with your product and competitors product.

Delivering value is the key both for success in the sales process as well as success in new product development.

Market size and income distribution

Looking at US income distribution data from here on a distribution plot was informative. The question was:

What would the market size be if we targeted individuals above $100k of annual income ?

We see that the answer is ~ 5.5% of income earning individuals which turns out to be about 12 million folks. It is interesting to note how quickly the market size drops off if the product is designed and priced to target higher income levels.

Annual Income  % Individuals
Above $25k          47%
Above $50k          21%
Above $75k          10%
Above $100k          5%
Above $200k          1%
Income Distribution Chart
Income Distribution Chart

TECHNICAL TRIVIA : The shape of the curve fits the exponential function quite accurately. This means that the whole curve is defined by a single number (the mean income) along with the formula:

F = exp[I/I_m]
F - fraction of people above a certain income level
I - income level
I_m - mean income of population

Knowing the mean income (~$32k) you can calculate the fraction of people with income above any level with the above formula. Interestingly, the exponential distribution is also used for predicting failure rates of light bulbs and electronic components. How many bulbs will glow for say 100,000 hours can be calculated simply from the average life of a bulb.

POLICY IMPLICATION : This makes me wonder if fiscal and tax policies that favor the middle class or favor the rich may be exactly equivalent. The whole income distribution curve moves in a related way. In other words, if the mean income goes up, the number of millionaires goes up correspondingly. More millionaires will also result in an exactly corresponding increase in mean income. Think about it.

Three Steps to Improve Innovation Success Rate

SCQA
Product flops are painful…and too common. New product
success rates range from  10% to 50% depending on the
market segment. The question of how you measure success
is a topic for later. In a broad sense, business success
amounts to a correspondence between prediction and
reality.
As a development team, we set out to build a superior
product. We are creative and keen to design features we
believe are likely to deliver customer benefits. However,
profits are hit-or-miss. The failure of products in the
marketplace results in needless dissipation of human
effort and corporate finances.
The fundamental need is one for greater efficiency.
Widget makers focus on manufacturing productivity,
farmers on  crop yield. Likewise, innovation-driven
companies need a focus on improving their batting average
with product development.
Development cost, time to market, and the evolution of
revenue and profitability over time have to be
predictable. To succeed at innovation, companies must
ensure that the ideas they choose to implement will
actually end up creating value in practice.
Giving this problem further attention, could help move
the needle in a meaningful way for an innovation economy.
So the question is, what are the critical success factors
for the practice of innovation?
There are many elements to this, of course, covering each
of the linked steps in the innovation process. But, the
greatest inconsistency in results still seems to come
from inadequate pre-development activity. The initial
steps can determine the course of a project.
From the reading so far, the things that ring true for me
can be captured in three factors.
Be thorough in understanding real user needs. Break down
user activity into stages so that you can look at ways to
improve efficiency in each stage. Speak with users in
their work environment. Grasping the user’s yardstick of
value is key. Matching product features to areas of
strongest unmet needs gives greatest value creation. Our
tendency is to shape a product around our own initial
presumptions of user needs. Get good information first,
then develop ideas.
Take the time to create a detailed functional description
of the product. This allows you to think through the
different aspects of a product before investing any
development dollars. Discuss this with customers as a
validation and use the functional specification as a
basis for building technical specifications. It helps
reduce project delays and frustration caused by feature
creep.
Build over time a trustworthy system for value estimation
of a product concept. Forecasting may be inexact but is
necessary for investment decisions. Calibrate your
financial model against appropriate benchmarks like the
history of a similar product in your company. NPV
calculation and the Bass Diffusion model are two useful
things to have in your toolkit.
That’s it for now. I hope to develop these three points
in more detail and post some usable tools, spreadsheets
etc.

Product flops are painful…and too common. New product success rates range from 10% to 50% depending on the market segment. As a development team, we set out to build a superior product. We are creative and keen to design features we believe are likely to deliver customer benefits. However, profits are hit-or-miss.

Improving innovation efficiency can pay big dividends. To succeed at innovation, companies must ensure that the ideas they choose to implement will actually end up creating value in practice.

The initial steps often set the course for a project. A solid front-end process is a critical success factor.

1) Be thorough in understanding real user needs. Break down user activity into stages so that you can look at ways to improve efficiency in each stage. Speak with users in their work environment. Grasping the user’s yardstick of value is key. Matching product features to areas of strongest unmet needs gives greatest value creation. Our tendency is to shape a product around our own initial presumptions of user needs. Get good information first, then develop ideas.

2) Take the time to create a detailed functional description of the product. This allows you to think through the different aspects of a product before investing any development dollars. Discuss this with customers as a validation and use the functional specification as a basis for building technical specifications. Build software wireframes and 3D renderings for hardware if possible. This helps reduce project delays and frustration caused by feature creep.

3) Build over time a trustworthy system for value estimation of a product concept. Forecasting may be inexact but is necessary for investment decisions. Calibrate your financial model against appropriate benchmarks like the history of a similar product in your company. NPV calculation and the Bass Diffusion model are two useful things to have in your toolkit.

Here are links to 3 articles that I found useful.

Turn Customer Input into Innovation (PDF) : The ideas here are proven and make a solid case for taking a detailed approach.

Bass Diffusion Model (Wikipedia): Reputed to be the most popular model in the field of marketing. Lots of paper on this topic if you search Google Scholar.

Success Factors in Product Innovation (PDF) : Another great article to tap into the wisdom of an experienced practitioner and researcher.

Product Needs Analysis – Part 1

Innovation should begin with good quality information. One key factor in product success is how well it meets the real needs. Early steps in product realization are critical because they can set the course. Begin with good information before moving to idea generation. Good information provides the basis for reliable results.

The first and simplest step is to connect with different organizational functions within a company. This helps quickly synthesize a 360° view before moving on to customer interactions. Companies have easily accessible internal knowledge of the markets, customers and the competition. But it does take effort to explicitly go out and tap into the multiple perspectives. Product development efforts often get underway with a lopsided view that is dominantly driven by one perspective.

Here are some org functions to connect with and types of information to seek out.

  • Service & Support : Ask about common reasons for customers calls, biggest complaints, requests, types/categories of customers encountered, ways in which the current/related product is being used in practice, connectivity or compatibility needs.
  • Sales & Dealers : Ask about competitive situation in the marketplace, unique selling points for us and for competitors, new trends in industry practices, special needs for distribution channels.
  • Overseas Offices/Dealers : Ask about differences in global markets, different standards, languages, compliance needs, local product service approach.
  • Engineering : Technology landscape and emerging trends, cost-performance tradeoffs,  development speed tradeoffs, team’s preferences, patented or patentable capability that could be leveraged
  • Marketing : Attractive market segments, market needs, user types, use cases, pain points, market trends and growth rates, channel needs, promotion mechanisms used.
  • Manufacturing : Current issues faced in production, capabilities in-house, external partners in use, things to watch for in designing for manufacturability
  • Executives : Ask about strategic direction, benchmarks for project success, acceptable risk boundaries, investment metrics needed for project evaluation.

Taking advantage of the unique vantage points that each person has, is a very simple and effective way to look at the issue from multiple perspectives. Condense your interview notes into a snapshot by categorizing and combining your findings. The next part of this article will cover interaction with end-users and customers using what’s been learned so far as a starting point.

The take away : Making the effort to systematically ask around within the organization is a quick way to synthesize a preliminary view of what’s needed.

Get PDF : Product Needs Analysis Part 1

Synthesis

Synthesis is the combination of existing elements into a new, more complex whole. It is the formation of a new proposition from existing ideas. Synthetic thinking involves the simultaneous application and integration of several principles, skills or perspectives.

People synthesize information naturally. Seeing new connections makes the integrated information more useful. This leads to learning and could lead to creation of new value. Synthesis can resolve contradictions and bring harmony in the face of conflicting goals. Here is what Wikipedia has to say,

The term synthesis (from the ancient Greek σύνθεσις σύν “with” and θέσις “placing”) is used in many fields, usually to mean a process which combines together two or more pre-existing elements resulting in the formation of something new.

Synthesis 360 seemed to fit as a name, since this innovation resource has a lot to do with synthesis of a new proposition by combining elements from a 360° view. So here it is.