An Afternoon With Don Norman In Bengaluru

Are you building products for the everyday user? Is it becoming harder and harder to manage complexity while maintaining usability? How do you design a sustainable system for a complex multi-stakeholder environment? How do you teach a user to use your product with good design? How do you reinvent an established business model in light of rapidly evolving markets and technological possibilities? How do you design a product to be truly human-centric?

If any of these questions sound relevant to you, here’s an opportunity to seek answers on 22nd February in Bengaluru! 

About Don Norman

Dr Don Norman is a living legend of the design world having operated in the field for over 40 years. He has been Vice President of Apple in charge of the Advanced Technology Group and an executive at both Hewlett Packard and UNext (a distance education company). Business Week has listed him as one of the world’s 27 most influential designers. Dr Norman brings a unique mix of the social sciences and engineering to bear on everyday products. At the heart of his approach is human and activity-centred design, combining knowledge of cognitive science, engineering, and business with design.

Presently, he is Director of the recently established Design Lab at the University of California, San Diego where he is also professor emeritus of both psychology and cognitive science and a member of the Department of Electrical and Computer Engineering. He is also the co-founder of the Nielsen Norman Group, an executive consulting firm that helps companies produce human-centred products and services.

ProgrammeTalk

Don will share valuable insights about his interactions with Indian people, products and experiences.

Fireside Chat

An informal discussion with Don about his learnings and experiences spanning his long and illustrious career.

How to participate?

We’re inviting engineers, product managers, designers and everyone else who is building for large scale impact.

If you would like to further your understanding of human-centric design and hear straight from the horse’s mouth, please register here by 18th February. (An invite will be sent out to selected participants by 21st February)

Why social networks that pay you may be a bad idea

One of the most common questions I get asked, while talking about platforms, relates to the issue of labor on platforms. Facebook and Twitter, among others, get a lot of value from their users and make billions of dollars, but the users don’t see much kickback.

The economics of free-labor platforms

Social networks like Facebook and Twitter leverage free labor from a global talent pool to deliver a business that has near-zero marginal costs of value creation. A mouthful of words but it essentially means the following.

In traditional Pipe models, every act of value creation has an associated marginal cost associated. There are fixed costs of running the pipe’s infrastructure (i.e. the factory, personnel, equipment etc.) and there are marginal costs associated with the production of every new unit of a good or service in that Pipe business. While most Pipe businesses have a good handle of fixed costs, a lot of optimization work focuses on reducing marginal costs, as that directly helps the company scale. If you can produce more units at less cost per unit, your margins improve and your business scales.

This is where free-labor platforms like Twitter and Facebook becomes interesting. They drive marginal costs of value creation to zero. Facebook incurs practically no marginal costs associated with the creation of a new status update. YouTube, likewise, has no marginal costs associated with creation of a new video. It may incentivize the creation of some videos for a variety of reasons but the video creation cost isn’t borne by YouTube.

This allows such platforms enormous leverage. Coupled with the network effect, that creates a natural pull for value producers (in case of YouTube, video uploaders) as the network scales, this model of free labor is guaranteed to create a form of scale, hitherto unprecedented.

These platforms then monetize the value created (in the form of attention, data etc.) but do not pass back any proceeds to these value creators. YouTube, unlike many other platforms, does share some money back with some producers, but most other platforms are run on free labor.

As a result, one of the common criticisms often leveled against such platforms is the argument that they live off free labor and should logically/ethically/morally ‘do the right thing’ and pass some of the kickback back to the users.

That’s a good idea, right? Think Network Effects

When it comes to platforms, the good ideas are typically the ones that strengthen the network effect and the bad ideas are the ones that weaken it.

Is paying value creators a good idea? Only if it leads to desirable interactions on the platform, that in turn, strengthen the network effect.

Every networked platform needs to structure the right incentives for its users. These incentives may be organic (fun, fame, fulfillment) or inorganic (fortune). But platforms need a balance of incentives that leads to the right types of interactions.

Paying someone to use Facebook or LinkedIn may, for instance, possibly encourage the most undesirable interactions. Teenagers in need of some quick money may fill up a professional network. Even when structured on a model that rewards quality, users would tend to game the system. If higher votes mean more money, entire alternate markets could get created to game the system, buy votes and make money. Such markets already exist for gathering fake fans and followers (and votes, actually).

Essentially, shifting the balance of incentives towards inorganic incentives may often lead to unforeseen governance issues.

The problem gets compounded when you realize that higher governance leads to inordinate friction for new users. What sets apart platforms like Wikipedia and Reddit is their reasonably high quality despite the fact that they are open. But this comes at a cost. New users find it very difficult to break through the hierarchy of the Wikipedia and Reddit communities. But conversely, that hierarchy and tight control over actions is exactly what ensure these communities create quality output.

Any platform that functions well on organic incentives may face issues with weakening network effect and frictional governance when moving to inorganic incentives.

The Poverty Line on Platforms

The other issue with paying your users is that it isn’t actually as good an idea as it sounds. Most platforms rely on social feedback as a measure of quality. Votes, likes, ratings, followers etc. typically indicate quality. If platforms were to reward their users, they would likely reward them on the basis of some such parameter that signifies social feedback.

A curious issue with social feedback is the fact that it makes the rich richer and the poor poorer. If I already have more followers on Twitter, I find it easier to add a few more. If my videos are already popular on YouTube, I am likely to have more subscribers making it easier for every subsequent video to also become popular. As a result, platforms develop a poverty line. Users below this line languish in oblivion hoping for their 15 minutes of fame.

The challenge with any form of monetary incentivization is that it would award the rich (in terms of social feedback) way more than it would avoid the poor. This, in turn, discourages the poor (again, in terms of social feedback) all the more from participating further. A feedback loop sets in and the poor start to abandon such a platform. We already see this in Twitter’s challenge in engaging new users who have just been on boarded.

Summary

This leads us back to the original debate. Is it a good idea to build a social network that rewards its users? If it can do that without harming the network effect, creating clunky governance, or disincentivizing certain types of users, it possibly is a good idea. But more often than not, we see things work out the other way.

Hence, the entire hue and cry about Facebook not sharing money with its users when it makes some $x per user, is too simplistic an argument to be judged purely on ethical grounds. And platforms that take the moral high ground on launching in competition with free-labor platforms often realize that they completely messed up the balance of incentives.

There is a reason why platforms which cater to organic incentives well, perform better than the more transactional ones.

Tweetable Takewaways

Social networks that pay users often fail when they end up weakening network effects. Tweet

Platforms with high friction discourage new users from coming on board. Tweet

Platforms reward some users disproportionately owing to the rich-becomes-richer feedback loop. Tweet

This article was originally published on Sangeet Paul Choudary’s personal blog Platform Thinking – A blog about building early stage ventures from an idea to a business, and mitigating execution risk.

Just Imagine

Today is India’s 66th Independence Day and the environment around, seems, to be generally shorn of excitement, energy and optimism. However, as is customary on such occasions, a call to the people – all of us – is, well, called for: to galvanise us all to action, to put our shoulders to the wheel of policy making that will make economic activity explode.  Such calls for action and indeed, the action, itself require us all to imagine an India that is radically different from the one that we see and experience each day around us.

Nandan Nilekani wrote “Imagining India” in 2008 and one of the things he imagined has since been actualised in the form of the Aadhar / UID project that provides an Identity card and number to every resident of India. Over 600million people would be recipients of this card by next year, 2014. In and as of itself, this would have been a gargantuan exercise, amongst the very largest in the world. But that by itself wouldn’t be as interesting as what the prevalence of the Aadhar infrastructure can enable.  Identity is a fundamental pre-requisite for any kind of financial transaction and the Aadhar project enables that.  “Know your customer” ( KYC) norms can now be easily done for all kinds of activities eg. From opening a bank account to applying for a gas connection to a phone to availing a loan to purchasing insurance. Hundreds of millions of people who operated in the informal or extra-legal financial services market will now come under the more benign, formal, organised and recognised regime.

Much earlier in the 1980s, Sam Pitroda imagined an India transformed with the creation and establishment of a nationwide telecom infrastructure.  Today, we all are witness to the remarkable benefits that this imagination has brought about. Over 900 million phone subscribers in just over two decades.

Even earlier, in the 1960s Dr Verghese Kurien imagined a young country that would be self-sufficient in milk. Operation Flood made India, formerly a milk deficient country, the world’s largest producer of milk accounting for over 17% of global output with an entire infrastructure, from rural to urban, tradition and technology to markets and branding.

Each of the above examples showcases the huge long term national benefits of creating big platforms – Unique Identity, Telecom, Milk Production and Distribution – through the sheer power of imagination, entrepreneurial energy, policy making, political will and savvy marketing. Platforms are soft and hard infrastructure – policy, rules of engagement and collaboration, co-opting of existing stakeholders, creation and harnessing of technology, innovative processes and business models. Such platforms while usually created and established by the government to serve public good, interest and national security, it is the subsequent entry of private entrepreneurs that enables the proliferation and development of additional technologies and services. For example, the mother of all platforms today, the internet, had its origins in the US Department of Defence Advanced Project Network.

So as we enter our 67th year as a nation, what is it that we can imagine? Indeed, what should we imagine? Very briefly,

i)               Education: In the age of MOOCs and Wikis, why cannot India have a national programme for education using and deploying the latest technologies? Video based learning, local languages with local examples, with the best teachers, with online testing? This will require the creation of a massive technology backbone, co-opting of existing institutions, training, establishment of processes and rules, financial incentives, payment and collection mechanisms for the entry and exit of private entities.

ii)              Healthcare is another area that requires enormous intervention along the lines being discussed. Telemedicine, remote diagnostics, new innovative low cost devices for self testing and medication, education and awareness, mobile clinics, logistics for moving patients and equipment, innovative payment systems, policy, regulation and oversight are areas that have to come together.

iii)            A marketplace for logistics providers – air, land and sea – across the value chain, integrated with warehouses, C&F agents, insurance providers, payments and settlements, processes for transparent pricing. Can be very useful for agriculture and industry.

There obviously are many more possibilities (viz. defence and space) and initiatives that can be imagined that will help all of us Indians and India. Can we set the ball rolling and start the process of engagement with various stakeholders – government, industry bodies, entrepreneurs and others – to help create platforms that can create a new India? Can we create and curate ideas for platforms that have the immense potential to fundamentally transform India.  Just Imagine.

The secrets of succeeding in the Indian SME Market – the iWeb Story

ProductNation caught up with Akshay Shah, founder and COO of iWeb Technology Solutions to understand how they have been successful in serving the Indian SME market. Akshay says that the ability of their company to provide customizable business solutions at affordable prices is what has led to their success. Read on…

What was the main trigger to start the company? 

The journey leading up to starting iWeb in 2005 is quite interesting. I come from a family of chartered accountants. I was well on my way to pursue CA as my occupation, after my B.Com. While preparing for my CA intermediate exams, I had some free time. During this time, as a hobby, I started following the dot com boom in the US and developed an interest in how Internet was impacting businesses and people.

Around that time, I happened to meet the CEO of a well accomplished IT business firm in one of the conferences. He heard about my interests and checked if I could help his company out in consulting with customers to deploy SAP solutions on a part time basis. The offer seemed interesting to me and I started to work part time. As I started interacting with customers and understanding the product, I very quickly realized that there was a huge disconnect between the features offered by the vendor and the price points at which they were being sold. I understood that there was an unmet need, particularly among the SMEs who wished to automate their business processes using IT.

This was the trigger for me to start thinking of starting iWeb. Along with Ketan Trivedi, my father’s friend, who also is a CA, we tried executing small projects for customers who we obtained from our contacts. The chemistry between Ketan and I seemed to work well. Also the initial work seemed to validate our thought process. Hence we started iWeb in 2005 formally to offer business solutions to customers.

The ERP products/solutions space is usually perceived as a mature and crowded marketplace. How have you managed to build a scalable and sustainable business in this area? 

This perception holds good for VCs and investors who are looking at exits and non-linear growth in a relatively short time dimension. However, in the long term, this will be a very lucrative business, if you play it right. If you analyze the SME market in India today, you will notice that effectively only 5% of the market is automated. So, there is a large scope for many vendors, including the big players to go after the rest.

The issue is not about the availability of market, or access to it. The key challenge in addressing the reminder of the untapped market is to be able to provide customizable solutions at affordable price points. It is here that we believe we have been able to crack this puzzle.

Can you elaborate on how you solved the puzzle? What mistakes happened during the process and how did you overcome them? 

From the beginning, we were pretty determined to build the entire ERP suite. In this zeal, we started to develop all the required capabilities of the product in parallel. However, we soon realized that during the startup phase, we could not manage development as well as customer acquisition with equal ease. We had bootstrapped ourselves and had no external capital infusion till last year. Hence we started selling only the CRM module to begin with, and over time, as we obtained a level of maturity in implementing it out for a few customers, we started paying attention to developing and selling the reminder of the modules.

As our customer base increased, our experience in understanding their requirements also increased. We realized that in the SME segment, business processes across enterprises would not be standardized. So, to be able to still get them to buy our solution and benefit from it, we had to build our product to be customizable to their requirements, and be affordable at the same time. These requirements led us to develop a powerful differentiating capability through our AgilewizTM framework that helps us deliver customized multi vertical and horizontal application solutions across different business lines with minimal amount of deployment time.

The beauty of this approach is that even a non-techie can use and configure a solution of his requirement. This approach helps us eliminate the requirement of highly skilled IT professionals needing to deploy solutions to customers. Customers benefit from it, since it reduces the cost of acquisition of our solution. In summary, over these years, we have evolved our product line and built sustainable business by focusing on providing customizable solutions at affordable costs to the SME segment.

What role have channels and partnerships played to help your sales?

You could say that the biggest asset for iWeb today is the partnerships we have built with other companies and individuals. They are a key factor in scaling the business, specifically for our country that has diverse customer requirements. It is also a relationship that we have built by valuing their domain skills. We are very transparent in all our dealings with partners. We strive to make our partners successful by sharing best practices of implementation through our network. As an example, one partner in Indore may reuse the artifacts developed by another partner elsewhere, reducing his time to deployment. This collaborative nature of relationship has helped us to a great extent in obtaining customer wins.

You have recently announced that you are diversifying as a software services provider, offering SaaS / PaaS type of solutions. What is the thinking behind this move?

The intent to diversify from being a pure product/solution company and enter into providing services via the SaaS / PaaS route is driven by two considerations. Firstly, we want to leverage the benefits of emerging technology and pass the benefits to our customers. Secondly and more importantly, moving to a Saas / PaaS based platform will help us provide better support to our existing set of customers. So you could look at this as our play to retain existing customers and build further to address their other needs.

On a different note, iWeb as a company and you as its founder have received multiple accolades internationally and at national level. What does this mean to you as a person, and how does this help your company?

Recognition from various forums such as the MIT TR35 or being selected as one of the top 50 emerging companies by NASSCOM certainly motivates self and the company in a big way. Firstly, it validates your belief and play, paving way to many business leads. Sales cycles will get much simpler because your prospect now sees you as being credible. Secondly, at a personal level, it is a huge confidence booster, and energizes you to go further your ideas to the next level. I would say that most of our largest breakthroughs in terms of customers or partners’ acquisition have happened on account of this.

What message would you like to give to potential product development entrepreneurs? 

Off late, I see youngsters, specifically those graduating out of MBA colleges taking to entrepreneurship primarily because they see it as a cool factor or as a style statement. They do not seem to be prepared for the long haul. So, my advice to any entrepreneur thinking of getting into a software product business is to do so, only if he or she has a burning desire to solve a real problem – a problem which is causing him or her to have sleepless nights. One needs to understand that the journey of entrepreneurship is not a bed or roses, and you get to do everything else other than what you wanted to do. One should be mentally prepared to face these uncertainties and ambiguities – and be passionate about the idea, have the patience and perseverance to take it to a logical conclusion, come what may. Only then, it makes sense to go this route.

Platforms and Verticals—What to Build on and for Whom

An important decision is about development and deployment platforms. If your product is targeted for a specific operating system, the choice is obvious. When the solution has to be platform neutral, or if the deployment will be controlled by you (SaaS model), then the common options are Open Source (Linux) and Java or Microsoft Windows. Always keep in mind the Total Cost of Ownership (TCO) for the customer.

Open source in theory benefits from the availability of a huge number of re-usable components and tools contributed by an army of individual programmers. While open source is technically free, limited support and inter-operability between different open source products may lead to higher cost of development and support.

Microsoft now offers free development tools to start-ups for 3 years under their BizSpark program, but licensing cost of servers and other software for product deployment, may be high.
Other issues may impact platform choice. An implementation which is tightly integrated with specific platform features and interfaces will limit your ability to go cross-platform. Conversely, leveraging the tight integration and inter-oper-ability of various servers on a specific OS can substantially increase the product’s value and ease of use.

Web 2.0 ventures and CIOs have new options to develop applications with minimal investment. Salesforce.com is promoting the platform-as-a-service (PaaS) concept, which it says represents the start of Web 3.0. Called Force.com, it enables companies to build and deploy enterprise applications on-demand without having their own infrastructure. Core business applications, such as enterprise resource planning (ERP), human resource management (HRM) and supply chain management (SCM), can be developed in just 5-10% of the time that is normally required for custom development, and deployed almost instantly.

Your OS decision should be driven by business potential. If a specific platform dominates or is acceptable to a majority of your potential buyers, then opt for it. Spend your engineering bandwidth on providing maximum compatibility and inter-operability with other applications on this OS, to improve total value to clients.

Why Business Models Fail: Pipes Vs. Platforms

Why do most social networks never take off?

Why are marketplaces such difficult businesses?

Why do startups with the best technology fail so often?

There are two broad business models: pipes and platforms. You could be running your startup the wrong way if you’re building a platform, but using pipe strategies.

More on that soon, but first a few definitions.

PIPES
Pipes have been around us for the last 400 years. They’ve been the dominant model of business. Firms create stuff, push them out and sell them to customers. Value is produced upstream and consumed downstream. There is a linear flow, much like water flowing through a pipe.

We see pipes everywhere. Every consumer good that we use essentially comes to us via a pipe. All of manufacturing runs on a pipe model.  Television and Radio are pipes spewing out content at us. Our education system is a pipe where teachers push out their ‘knowledge’ to children. Prior to the internet, much of the services industry ran on the pipe model as well.

This model was brought over to the internet as well. Blogs run on a pipe model. An ecommerce store like Zappos works as a pipe as well. Single-user SAAS runs on pipe model where the software is created by the business and delivered on a pay-as-you-use model to the consumer.

PLATFORMS
Had the internet not come up, we would never have seen the emergence of platform business models. Unlike pipes, platforms do not just create and push stuff out. They allow users to create and consume value. At the technology layer, external developers can extend platform functionality using APIs. At the business layer, users (producers) can create value on the platform for other users (consumers) to consume. This is a massive shift from any form of business we have ever known in our industrial hangover.

TV Channels work on a Pipe model but YouTube works on a Platform model. Encyclopaedia Britannica worked on a Pipe model but Wikipedia has flipped it and built value on a Platform model. Our classrooms still work on a Pipe model but Udemy and Skillshare are turning on the Platform model for education.

BUSINESS MODEL FAILURE
So why is the distinction important?

Platforms are a fundamentally different business model. If you go about building a platform the way you would build a pipe, you are probably setting yourself up for failure.

We’ve been building pipes for the last few centuries and we often tend to bring over that execution model to building platforms. The media industry is struggling to come to terms with the fact that the model has shifted. Traditional retail, a pipe, is being disrupted by the rise of marketplaces and in-store technology, which work on the platform model. 

PIPE THINKING VS. PLATFORM THINKING
So how do you avoid this as an entrepreneur?

Here’s a quick summary of the ways that these two models of building businesses are different from each other.

USER ACQUISITION
User acquisition is fairly straightforward for pipes. You get users in and convert them to transact. Much like driving footfalls into a retail store and converting them, online stores also focus on getting users in and converting them.

Many platforms launch and follow pipe-tactics like the above. Getting users in, and trying to convert them to certain actions. However, platforms often have no value when the first few users come in. They suffer from a chicken and egg problem, which I talk extensively about on this blog. Users (as producers) typically produce value for other users (consumers). Producers upload photos on Flickr and product listings on eBay, which consumers consume. Hence, without producers there is no value for consumers and without consumers, there is no value for producers.

Platforms have two key challenges:

1. Solving the chicken and egg problem to get both producers and consumers on board

2. Ensuring that producers produce, and create value

Without solving for these two challenges, driving site traffic or app downloads will not help with user acquisition.

Startups often fail when they are actually building platforms but use Pipe Thinking for user acquisition.

Pipe Thinking: Optimize conversion funnels to grow.

Platform Thinking: Build network effects before you optimize conversions. 

PRODUCT DESIGN AND MANAGEMENT
Creating a pipe is very different from creating a platform.

Creating a pipe requires us to build with the consumer in mind. An online travel agent like Kayak.com is a pipe that allows users to consume air lie tickets. All features are built with a view to enable consumers to find and consume airline tickets.

In contrast, a platform requires us to build with both producers and consumers in mind. Building YouTube, Dribbble or AirBnB requires us to build tools for producers (e.g. video hosting on YouTube) as well as for consumers (e.g. video viewing, voting etc.). Keeping two separate lenses helps us build out the right features.

The use cases for pipes are usually well established. The use cases for platforms, sometimes, emerge through usage. E.g. Twitter developed many use cases over time. It started off as something which allowed you to express yourself within the constraints of 140 characters (hardly useful?), moved to a platform for sharing and consuming news and content and ultimately created an entirely new model for consuming trending topics. Users often take platforms in surprisingly new directions. There’s only so much that customer development helps your with. 

Pipe Thinking: Our users interact with software we create. Our product is valuable of itself.

Platform Thinking: Our users interact with each other, using software we create. Our product has no value unless users use it.

MONETIZATION
Monetization for a pipe, again, is straightforward. You calculate all the costs of running a unit through a pipe all the way to the end consumer and you ensure that Price = Cost + Desired Margin. This is an over-simplification of the intricate art of pricing, but it captures the fact that the customer is typically the one consuming value created by the business.

On a platform business, monetization isn’t quite as straightforward. When producers and consumers transact (e.g. AirBnB, SitterCity, Etsy), one or both sides pays the platform a transaction cut. When producers create content to engage consumers  (YouTube), the platform may monetize consumer attention (through advertising). In some cases, platforms may license API usage.

Platform economics isn’t quite as straightforward either. At least one side is usually subsidized to participate on the platform. Producers may even be incentivized to participate. For pipes, a simple formula helps understand monetization:

Customer Acquisition Cost (CAC) < Life TIme Value (LTV)

This formula works extremely well for ecommerce shops or subscription plays. On platforms, more of a systems view is needed to balance out subsidies and prices, and determine the traction needed on either side for the business model to work. 

Pipe Thinking: We charge consumers for value we create.

Platform Thinking: We’ve got to figure who creates value and who we charge for that. 

BUT… PLATFORM THINKING APPLIES TO ALL INTERNET BUSINESSES
If the internet hadn’t happened, we would still be in a world dominated by pipes. The internet, being a participatory network, is a platform itself and allows any business, building on top of it, to leverage these platform properties.

Every business on the internet has some Platform properties.

I did mention earlier that blogs, ecommerce stores and single-user SAAS work on pipe models. However, by virtue of the fact that they are internet-enabled, even they have elements that make them platform-like.  Blogs allow comments and discussions. The main interaction involves the blogger pushing content to the reader, but secondary interactions (like comments) lend a blog some of the characteristics of platforms. Readers co-create value.

Ecommerce sites have reviews created by users, again an ‘intelligent’ platform model.

THE END OF PIPES

In the future, every company will be a tech company. We already see this change around us as companies move to restructure their business models in a way that uses data to create value.

We are moving from linear to networked business models, from dumb pipes to intelligent platforms. All businesses will need to move to this new model at some point, or risk being disrupted by platforms that do.

Note: I intend to use some/all of the ideas here as part of an introductory chapter to the book I’m working on and would love to have your feedback and comments.

This article was first featured on Sangeet’s blog, Platform Thinking (http://platformed.info). Platform Thinking has been ranked among the top blogs for startups, globally, by the Harvard Business School Centre for Entrepreneurship

Top 10 things to look for a digital marketing roadmap.

Today the biggest challenge for any of us as entrepreneurs is not to build kickass products or services but to reach out to the relevant target audience. Many of products fail not because they were not awesome but because of poor marketing strategies. I have myself made terrible mistakes which costed me and my company a lot but it’s just part of a learning experience and entrepreneurial curve. Lot of people think digital marketing or social media marketing is free or easy but I fell it’s the make or break for any company whose customers are online. It needs the same amount of attention and effort you had put in while building your product / services. It needs a lot of thinking, prioritization, knowledge and off course a lot time investment. Today there is so much noise on digital mediums that you need to be remarkable to stand out or youwill be just one out of many. Here are my top 10 learnings from the many digital campaigns I ran.

  1. Map your efforts to the end goal: Most of the time startups do not have a clear end goal in mind and they map the entire campaign to a wrong goal. What is you end goal? Drive traffic? What is your KPI which will make you successful this quarter? Does your organization’s goal is to drive sales or build user base for this quarter. Once you decide on your KPI for this quarter do not change it. Stick to it. Do everything to achieve your goals, tweak strategy to achieve it but not the goals.
  2. Don’t be scared of spending: Most of the digital campaigns are bound to fail. Just that one of your campaigns failed doesn’t mean that platform is not good for you. It just takes a fair amount of money and time to optimize your campaigns and make them successful. I have typically spend around 2Cr. on Facebook platform in last 4 years and still may of my campaigns fail today. If you want fast results hire an expert of the platform.
  3. Don’t put all your eggs in one basket: Diversify your mediums to generate leads or traffic. Typically any medium should not drive more than 20% of your sales. It becomes really lucrative to go deeper and deeper into a medium when we taste success on it. I have learnt this hard way. There was time when Thrillophilia was driving 80% of the traffic through Search engines and then suddenly the website was hacked by Chinese hacker who did lot of artificial link building. We realized this 3 months later when we got penalized by Google and traffic dropped to 1/10. We had a nightmare on sales side and had to diversify in hurry which really isn’t the best approach.
  4. Build smart email lists: Emails are still going to exist for next 10 years so it’s a good idea to invest on them. The more you know your customers, what they want and better segregated your email lists are, the lesser you will spam your consumer and the more leads you will generate. Keep a close eye on subscription/ unsubscribing and see what drives them.
  5. UI is the key: Drive emotions. Lot of impulsive buying happens over internet. People get carried away with emotions, drive them to do what you really wanted them to do. A good visual can be 5 times more powerful than an average one. No other thing can have such an effect on your campaigns. I again say drive emotions. It can be anger, humor, inquisitiveness etc.
  6. Have a short term strategy and a long term strategy: Your short term strategy could be have a good user base to feed your platform or generate leads to feed your sales team. Paid advertising might be really helpful in doing that. Your long term strategy should be to build a sustainable long term engine based on active user base, repeat customers, reviews or organic traffic.
  7. FANS and no fans: When I talk to many startup friends they ask for tips of building fan base seeing that we at Thrillophilia have done a good job in building a 32000+ Fan base on Facebook. It’s just the most false metrics to look at. We have never ever done a single campaign to increase our Fanbase. It’s not going to take you anywhere unless you plan to sell your company to a not so tech guy. A better metrics could be active users on page, virality of posts or traffic on website from Facebook.
  8. Keep a close eye on 24 hour results: It’s very imp to know what the world is thinking about your company at this point of time. I am just addicted to 24 hour results of keyword “Thrillophilia” on Google. A simple way to do it is go to Google and type in your brand name. In Search tools select in “Past 24 hours” This will show you the results of your brand in the last 24 hours over net indexed by Google. It will help you to identify if some is talking negative about your brand or if you just had a fake review from a competitor. Also set you your key Google alerts.
  9. Lessen up the dependency on other platforms: Let’s say today your 80% of the traffic is driven by Google and Facebook. How can you bring it to 50%? Building better email lists, having more repeat traffic, people who love you and are addicted to your website, affiliates etc. You never know if Google of FB will exist after 5 years but I assume you are building a company that probably will.
  10. Build relationships: Nothing works better than this. Start helping people in your ecosystem. If you design T-shirts design it for free for a NGO, a startup or for a big company. If you run a blog, give links to other good websites. Take your vendors for a dinner. Soon your 24 hours result will start getting better. We recently did a camp for Make a Difference, and yesterday they posted a Video on Youtube with our special mention – Let people talk good about you and enjoy the ride. In the end you were here to disrupt something and build something better.
Guest Post by Abhishek, Co-Founder of Thrillophilia.com, the biggest activity travel website of India and comes with 6+ years of digital marketing experience. Before Co-Founding Thrillophilia he has helped national and international companies like Biocon, Flying machine, Discovery Channel to build their digital marketing presence

The Great Facilitation ballgame of Multi-sided Business Platforms

Let me start with a simple question. What is common among these, as of 2006 (and, for that matter, even as of today)?

– Visa
– Sony Playstation
– Orbitz
– NASDAQ
– Microsoft Windows

All of these are known examples of facilitation based multi-sided business models. These are not just products or businesses; these are platforms, in the true sense of the word. These platforms have, some even in industrial and so called traditional businesses, created value by “facilitating interactions & transactions” among various groups involved. They depend on network effect to kick in, and then thrive big time.

The concept of the two-sided markets is not new. In fact, the newspapers might have been among the first to exploit it, through low-priced subscription subsidized by the sponsors paying for advertisements.

Networking Events and conferences have been a great example of a non-tech two-sided platform, and they are sold on the same direct benefit as well. The sponsors subsidize the participants’ fees, and hence get presumably higher visibility. Participants get to network; sometimes get direct information or sales leads; and pay for it unless in some cases, fully subsidized by the sponsors.

However, these business models, as represented by the examples above, were still very few & far in between until few years back.

The business world, since, has changed. And, drastically so!

Google and Apple have become the most valuable brands in the world. Amazon, that revolutionized the Books & Publishing market through the e-Commerce strategy, has since transformed itself into a Platform company. Facebook, Twitter, Instagram, and recently Pinterest have become the household names, beyond the tech world. Travel, Hospitality & Commute have become well-integrated platforms driven businesses – driven through online technologies and ground-level operational integration.

HOW SONY FALTERED, AND HOW APPLE & GOOGLE PROPELLED

Let’s take an example of two companies that seem to be very similar on products stack otherwise. Apple and Sony. Sony actually brought upon the concept of music that you could carry, with its revolutionary Walkman. Apple came in very late, with iPod. Sony has had a premium quality tag in computing machines (with Vaio) for a long time, while Apple’s Mac slugged it out in its own creative/designer/geek space. Sony even had the earliest starts with its Reader as long back as in 2006! They even had a great idea of Reader being the platform, and got the leading publications in Japan to take note that time. Sony, a very relevant company even today in tech world with the quality and huge brand image to boot, (interestingly, it has had at least one product in platforms category in Playstation) has fallen to 31-Year lows. They continued selling products in silos on their own standalone benefits. They are a product company, still a great one, but that doesn’t seem to be enough!

On the other hand, Apple had an iPod – as a standalone “take your music with you device”, around 2001-02. With iTunes, it took the first steps into a platform around 2003. However, it has since transformed into a true platform company, with its formidable all-integrated business strategy that brings together computing, entertainment, and business. iTunes is a comprehensive AppStore, and not just a music store. Apple is a multi-dimensional company at its best – it brings multiple beneficiaries together in this multi-facets products business. iOS developers and Applications users. Musicians, music companies and Music lovers. Local or global businesses and their customers and fans. We’ve even started seeing the serious Enterprises making Apple devices the central to their CoIT (Consumerization of IT) and collaboration strategy. iPod, iPhone, iPad, Mac, iCloud – they sell products but they’re a platform! And, in Feb 2012 Apple became the most valuable company in the world!

Google is an obvious name in the multi-sided platforms strategy. They took forward the newspaper ads model and applied it to search beautifully. And now, with the Enterprise businesses as well as their ever-growing list of vehicles – in GMail, Google Apps, Android, Chrome, Maps, Drive, and so on – have established themselves as an formidable Multi-sided platform. At this time, there doesn’t seem to be a limit on what vehicles Google can choose to drive their platform strategy. Microsoft is now fighting it out on its own turf while Google and Apple make inroads into its huge Enterprise foothold. (This also points to another trend that I’m planning to write about – the blurring of lines between Business & Personal Technologies).

SO WHAT?!

This era clearly belongs to the multi-sided Platforms based business. It’s important, however, to not confuse this with the traditional definition of platforms in technology space. The true business platform is the one that is driven by facilitation and network effect, and which actually has multi-sided business model in the sense of heterogeneous set of beneficiaries that are not directly connected to each other. It is also important to note that this disruption has been caused not only by technological evolution, but also the interlinked effect of the other disruptive patterns such as “Long Tail” and “Free”, both terms made popular by the very respectable Chris Anderson. I will touch upon these in the next couple of posts as noted in my cover post on Game-Changer trends.

If you’re in a business – whether technology or not, whether e-commerce or not, whether products or services – don’t ignore this trend. Think about how you can leverage on this model, or be part of this ever-growing multi-cog machine that benefits all its gears. But, if you really think details, it’s not just a marketing gimmick, and it’s not just a tweak in the product. It should become the foundation of how business of your product is conceived, strategized and operationalized.

PS: This post originally appeared on my blog, but I thought it’s worthwhile to post it here. Very relevant, hope you find it too!

New age platform. What it could be?

We have multiple definitions of platform, but in today’s world where reaching out to people is so easy and absolutely free, one can argue that in today’s context a platform is a vehicle to extend people’s voice beyond the ears closest to you. The channels that we use to have were very expensive – all required expertise, money or both whereas the new channels are over internet – mostly free. This is a fundamental change in the way culture is unfolding in our age. The cost of conversation is almost zero.  The time people spend is largely in creation of content, moving it through the channels, making a connect and building a relationship.

That the channels are free, doesn’t mean it’s without other costs. It requires time, creative efforts, lot of nurturing and applying yourself. It has a lot of human element involved to make it a success. It is about delivering information that’s useful to the people you hope to reach and to build relationships that lead to value. Do you have time and this skill? Does businesses has time and this skill? Do they even need it in-house? We will come back to it.

Hierarchy of needs theory by Maslow ranks human needs as physiological, safety, love & belonging, esteem and self-actualization. I believe that I can safely assume that people who are using the new channels are looking to satisfy needs at love & belonging and higher level. People in this group has emotional needs to have friends, intimacy, respect and to be valued. We have examples where people are ‘famous for being famous’ like Paris Hilton by effectively using the power of channel platforms. Even in India, people like Amitabh Bachchan and others are very active on social media.

It is obvious that business has a need for reaching out to people through the low cost channels (power of network) and on the other hand we have people having  esteem and self-actualization needs.  The new age platform will be the one that provide value for both businesses and people.

Education sector which is at $1,332B market size (source: NeXT Knowledge Factbook 2010), has been waiting for a major disruption for decades.  I am not talking about TV or a projector in a class room or a web interface for questions and presentation sharing here. I am talking about a major disruption in the way people learn; questioning the fundamentals of traditional ways of education where teachers are not just giving lectures (monolog), but supporting students individual needs.  A system which assist student to learn at her own pace, subjects of interest, allows to interact and collaborate with peer group, teachers, publishers and experts from across the globe. A preference based, self directed, collaborative personalized learning platform that helps in better organizing learning, flipped class room, group projects, expert guidance, mentoring and so on. A ecosystem of  students, teachers, publishers, mentors and parents working towards a common goal of education by leveraging new age education platform.

Interactive marketing a new way of marketing, riding on the availability of new digital communication channels is enjoying a double digit growth rate (source: Forrester Research) and is expected to grow even rapidly in the near and coming future. A flood of new tools have emerged and would continue to emerge to assist marketers with leveraging new emerging digital channel technology. These channels are mostly free, but the challenge is effectively using the various different channels available and also the enhanced focus on content creation, curation and interaction with customers and influencers. A new age platform which can bring people and business together on a common marketplace where business can market themselves through the current customers to attract potential customers and people share ideas, content to fulfill her higher needs.  A ecosystem of business, customers, freelancers and other business all working together to meet mutual aspirations.

A Platform Thinking Approach to Problem Solving

Business is about solving customer problems. It’s been claimed that business is primarily about beating the competition or about maximizing shareholder returns but if the successes (and failures) of the past decade are anything to go by, the primary goal of business is solving customer problems. If you think about the approach that businesses take to solving these problems, three broad patterns emerge.

THE ‘STUFF’ APPROACH

The approach of the industrial age to solving customer problems has been to create more stuff. If there’s a customer problem out there, you set up factories and build some stuff. And once consumers have got their needs satisfied but you’ve still got all this excess production capacity, you put in some marketing and convince consumers that they want more stuff. The default model for solving business problems has been the ‘stuff’ approach. If you’re dealing with goods, you’re churning out more goods while if you’re a services-based company, you’re putting more people on the job. The approach to scaling a solution has been creating more.

Most problems do not need to be solved by throwing stuff at them. Most problems are, actually, information problems. In reality, most problems are currently solved inefficiently because of a lack of information needed to make a decision. We’ve been solving problems by creating more stuff largely because we didn’t optimize distribution and access to the stuff that already existed.

THE ‘OPTIMIZATION’ APPROACH

Enter algorithms. You have stuff out there which is sub-optimally distributed. Here’s a two-step approach to solving the problem:

1. Aggregate all the information on the stuff out there

2. Leverage algorithms to optimally match the right stuff with a consumer’s desire

Google built one of the fastest growing companies of all time applying the optimization approach to the world’s information problem. Most internet businesses create value through optimization. Computer science, as a field of study, is itself based on solving optimization problems.

THE ‘PLATFORM’ APPROACH

Platform Thinking adds one more step to the optimization approach. Instead of merely aggregating information on stuff out there (Step 1 above), it enables creation of more inventory without creating more stuff. That sounds paradoxical but that is exactly what Twitter does to news. The media industry has a limited number of journalists. Twitter enables anyone out there to become a source of news without having to become a journalist. YouTube increases the inventory of content without setting up new media houses. eLance allows companies to get work done without having to hire people to do the job.

The ‘stuff’ approach creates supply, the ‘platform’ approach uncovers new sources of supply. The goal in this case is not only to optimize but also to redefine the input (inventory) that you are optimizing.

IN ESSENCE…

Every consumer problem out there can be solved in one of three ways:

The ‘stuff’ approach: How can we create more stuff whenever the problem crops up?

The ‘optimization’ approach: How can we better distribute the stuff already created to minimize waste?

The ‘platform’ approach: How can we redefine ‘stuff’ and find new ways of solving the same problem?

THE ACCOMMODATION PROBLEM

Problem: I’m traveling to city X and I need to end myself some accommodation.

The ‘stuff’ approach (Sheraton): Create more stuff. Build more hotels, set up more BnBs. If there are fewer rooms than tourists, buy some land, put up a  hotel and create more rooms.

The ‘optimization’ approach (Kayak): There are a lot of hotels out there but travelers do not necessarily have all the information to make the choice they want to. Let’s aggregate this inventory and create a reliable search engine. Let’s build review sites to help make the right decision.

The ‘platform’ approach (AirBnB): How can we redefine travelers’ accommodation? How about enabling anyone with a spare room and mattress to run their own BnB?

THE TRANSPORTATION PROBLEM

Problem: I need to figure out a reliable and safe way of getting from point A to point B whenever I want to.

The ‘stuff’ approach (GM, Toyota): Create more cars. The greater the number of people with this problem, the more cars you need to create.

The ‘optimization’ approach (Avis, Cab Aggregators): There are many taxi operators but consumers aren’t aware of all the choices. Let’s create a search engine and help them figure the best route to their destination and the modes of public transport that will take them there.

The ‘platform’ approach (Lyft, ZipCar, ZipRide): Let’s redefine the problem space. What if we drastically expand the number of cars available to choose from for commuting from point A to point B?

Interesting aside: Avis is acquiring ZipCar, announced a few minutes back.

THE COMPUTING PROBLEM

Problem: I need a mobile phone with all the bells and whistles but every mobile phone has a different feature set and I can’t figure the best one for myself.

The ‘stuff’ approach (Nokia): Create more phones and more models. Conduct your market research, figure out what consumers want, bucket them into groups and design new models for these groups.

The ‘optimization’ approach (Comparison shopping): There are a lot of phones out there. Why don’t you enter your parameters and we will spew out the best phone models that satisfy your needs.

The ‘platform’ approach (Apple): Let’s rethink the phone. We can’t build everything. What if we just built out the tools that others could use to build apps that consumers could then use to extend the functionality of their phone?

THE NEWS PROBLEM

Problem: I need to know about what’s happening around the world.

The ‘stuff’ approach (NY Times): Put more journalists on the job, churn out more content and get the news out to more channels.

The ‘optimization’ approach (Google News): Rank news stories and serve readers with the matches closest to what they’re looking for.

The ‘platform’ approach (Twitter): Redefine the journalist. Everyone can create and distribute news now.

CHALLENGES

The platform approach is new. Much of this problem solving has come up only in the last five years and few solutions have demonstrated the kind of success that the ‘stuff’ approach and the ‘optimization’ approach have. Hence, one might be tempted to dismiss this as a fad.

While execution challenges continue to exist, they are, by all means, solvable.

Inventory: When you redefine inventory as AirBnB or oDesk does, you need to ensure you have a clear strategy for encouraging users to create the inventory. This often leads to a chicken and egg problem as producers won’t create inventory unless there’s a ready market of consumers and consumers won’t participate without inventory to consume. I’ve written a lot about how to solve this problem in earlier posts.

Quality: When an entirely new set of producers gets created, quality control can be a problem. Platforms need to have robust quality control mechanisms to separate the good from the bad.

External forces: We need new regulations for these new models. Über has already had problems with regulations. We need to solve for trust in the virtual world. Airbnb has already come under the scanner on this count.

Platforms, though, are here to stay and redefine the way business is conducted.

Wish you all a successful 2013! More power to you and your business as you leverage the power of platforms to change the world!

This blog was first published at Plaformed.info

5 Key Considerations for Platform Approach

Platform mean different things to different people depending on who you ask. It is not just related to software or computer hardware industry but is also very relevant and prevalent in other industries also. It is an entity that bring things together, mask complexities, is a enabler to build/create on top of it, help foster innovation and is a ecosystem enabler. Over the period governments, companies and individuals have used it to energize economy, create a long term competitive advantage, growth opportunities, etc.   In software context some relevant examples are operating systems, virtual machines, Apple iTune, App Stores,  Google Apps, IBM Websphere, Programming Tools, Database platforms, Cloud Platforms (IAAS, PAAS) and so on. Many organizations have leveraged these technology platforms to created niche, domain and vertical market platforms for their market segments like ERP, CRM, Data Quality, Financial and others. Advent of new technology platforms bring opportunities to create platforms to solve current business problems in a new way and also solve new business as well as consumers problem.

Studies suggest  accelerating change in the rate of technological progress throughout history, which may suggest faster and more profound change in the future. If you as an entrepreneur is considering solving customer problem and is interested in taking a platform route, you must consider below mentioned aspects:

  1. It has to be sticky: Build a portfolio of product and solutions around your platform. Create connectors to complimentary and supplementary products, solutions and platforms to both competitors and partners. API and a framework approach is essential to be able to create communities which make your platform sticky with your customer/consumers. Why innovate alone?
  2. Long term (2 to 5 years) prospective: Platform approach is suited when you are sure of building a portfolio of product and solutions around the platform. Take a close look at your current target customer segment and also possible future customers. Also review technology trends, prediction and its adoption in your target market segments. Also, don’t build technology platform, instead choose technology that is right for you. Remember, you are solving customer’s problem.
  3. Agile and Lean approach: Now that you have a set of product and solutions defined around platform, should you build it end to end? Absolutely no. Prioritize the product/solution that you would like to build on the platform. Now define and build the minimum viable product (MVP) workflow that you would take to your customer for feedback. The platform is built in agile fashion as the portfolio of  product and solutions are built.  A solid platform architecture, design constructs definition, right technology selection, generic interfaces, etc. and a skilled team is of paramount importance for success.
  4. Built solution for market not for a customer: Deeply understand the target market and their needs.  In the beginning you may be working with one customer, but don’t get carried away and implement customer specific features in the product/solution, instead focus on building a generic set of capabilities that can easily be consumed in customer environment. Remember, API and framework approach for stickiness with your product portfolio, with products found in customer environment and ability to extend base capabilities.
  5. UX based interaction design for consumer facing interfaces: People interacting with your system are important. Right. Your success depends on how people feel interacting with the system. Does it provide value? Is it easy to use? Is it pleasant to use? How do you draw users’ attention? How to communicate solution value to the users? How can I draw on users’ intuition to get them to the next step? and so on.

Platform Play Versus Product Play in an Indian Scenario-Part 1

From the beginning, we at Ozonetel had always wanted to build a platform. Initially, we did a VXML platform with off the shelf hardware. But VXML was not sexy enough and there were not a lot of takers. So in 2010, we did a pivot and built our own custom hardware( PRI cards) and built KooKoo and top of it. KooKoo was our attempt at Telephony Platform as a Service play. Once KooKoo was opened to the developers it took off and we got good traction. A lot of innovative telephony apps were built on top of KooKoo and telephony became cool again.
After 6-8 months, we started to think about building products and do a product play. A couple of things influenced our decision to do a product play. First was that though innovative telephony apps like connecting experts, water alerts, appointment reminders etc were being built on KooKoo, core telephony apps like PBX systems and call centers were not being built and there was a huge market opportunity. Second was that, being a bootstrapped company, market forces made us to look at alternative sources of revenue as the customer turnaround time in a platform play is longer. They have to first build their apps, market them, make money and then only they pay us 🙂
So with that, we separated out a product team in Ozonetel who would go on to build two core telephony products, a PBX on the cloud called asBizPhone and a full featured cloud call center product called as Cloudagent. So now that I have seen both the scenarios of a platform play and a product play, I thought I would share some pointers in both(no particular order).
Platform Play:
  1. Patience: You should have a lot of patience. Developers will take their own sweet time in building the application and marketing it. Many times, you will want to get in and help them develop. But that is not scalable. Though it will take time, it is better for them to figure out the solutions on their own as in the long run that will mean lesser support.
  2. Documentation: This is the most important part. You wont believe the amount of support calls that are reduced by having some decent documentation. Unfortunately, this is one area where we still have to improve and thats why we still get support calls.
  3. Logging: Your platform should explain what is happening behind the scenes to the developer through logs. It will help them in debugging the issue themselves before they reach out to support.
  4. API: Think through what and how you want to expose your API. Because, once you open it to the public and they start using it, it will be really hard to take back and you will end up supporting multiple versions.
  5. Evangelize: You should have a team of evangelists who should go to events, do live coding, help hacking communities etc to drive adoption. This is the hardest part, convincing developers to invest their time in learning your platform. It is much harder in India as the hacker community is in a nascent stage(though growing very very well).
  6. Star products: Every platform should have some star performers. They are the ones which will help in people believing in your product. Identify your star products and put all your efforts in making sure they succeed.
  7. Mashups and Blog: Build mashups on your platform yourself to showcase the capabilities. You know your platform best, so you will have to build very innovative and fun apps. After building mashups, blog about them and spread the word. Again, in India, its hard to build mashups with content from an Indian context. Till last year, we did not have a lot of APIs for Indian content. But now a lot of companies like Zomato have started opening up APIs and phone mashups can easily be built.
  8. Support: This will make or break your platform. Developers have very little patience. If they send a mail to support, they better get a response within 5-10 minutes. Otherwise, they will end up Googling for another platform which will solve their platform. Luckily, so far at least we have been able to keep our developers happy with our support. Support does not just mean technical support. Many times we have actually had to mentor a lot of startups building on our platform. You should be willing to listen to their problems and suggest advice if you have any.
  9. Developer events: You should conduct developer events and hackathons so that the new developers get to know about your platform. Unfortunately, being bootstrapped, we have not yet had funds to do this 🙂
  10. Sponsor events: In addition to conducting events, another way of getting mindshare of developers is to sponsor events. We are continuous sponsors of Startup Weekend events in India and have also sponsored hackathons in colleges like BITS where students have built very innovative applications.
In the next part I will discuss my observations on the product play.

How far should you go with Professional Services in your product business?

Turning on a giant switch

For any products company, product support is a given, and part of the products business fabric. However, almost all Enterprise Products Companies end-up offering the professional services beyond basic product support. These services could range from simplistic implementation support, to integration, to solutions-building, to architectural consulting, to IT advisory support. The decision to perform professional services could be driven by customer-demand, or by the intrinsic need of the product being sold, or even driven by the business strategy itself to generate peripheral revenue.

It’s important to understand where the boundaries lie, and what goal does a certain type of professional services serve. The decision to commit to a particular type of professional services needs to be driven by a conscious thought process. This is important because the time & resources required to build various skills & operating models for serving the various flavors, change dramatically from one to the other.

Professional Services in Products Business

1. Product Support

This is the core to the products model and serves as just that – support to the main products revenue, and to ensure customer satisfaction. While the core strategy for any product should be to make it so good that it requires minimal support, there’s always a need for support – offline and real-time for the customers.

2. Implementation Services

An ideal product is ready-to-use off-the-shelf, however, in case of Enterprise products the need to configure & customize could wary. Most times, customers demand for an implementation service packaged in the license deal initially, in order to ensure success. Most times, products businesses have to employ this mechanism also to close sales cycle and to ensure a consistent source of post-sale revenue from such services, and also indirectly to ensure expansion of the product usage through consistent personnel presence on the customer premises.

3. Integration Services

This is where it starts going slightly further away from the core skills that the organization may possess organically. Integration with the existing IT systems and other products at the customer premises would require the skills & management practices beyond the core areas of the organization. An extra source of revenue is one of the temptations, but there are also scenarios where integration of the product is critical to the success of the product, making such services mandatory. This is especially true if the product interfaces are not built with open-standards, and require the integrators to know the details of how the product is built internally. The correct approach would be to build the product interfaces in a way that doesn’t force the business into such compromise to induct professional services for integration. There’s an indirect impact of diversion of core product resources to such integration projects unless such professional services are pursued by design, and resources built accordingly.

4. Solutions & Consulting Services

This is where the game gets strategic, and resources expensive. And the reasons to do this are not any more intrinsically important, but strategically targeted to higher value to the customers and hence, access to the larger pie of the wallet. However, this is easier said than done. Unless there’s enough scale & case in the existing business to allow the focus on such services, strategic, and by design, a business is better off focusing on building the core products business stronger by investing resources there. This makes sense for the products, which are more like Platforms that provide larger leverage than in a Point-solution product.

5. Advisory Services

This is important for the products that are targeted for larger ticket sizes and are built for Enterprise-wide deployments. The IT strategy alignment as well as the strategic positioning of the product becomes important, and it also requires much larger IT leadership level involvement. For Enterprise Platforms, or even for departmental level strategic investments, this approach to professional services can bear fruits. However, building it into a business line requires the core product business to be strong, ready for the leap.

So what?

While the Businesses can look at starting off with the lower scale of Professional Services and build up over time, the decision is very strategic and long term. Professional Services, while offering additional top-line, could actually be a resource-intensice and money-draining proposition if not built properly. The mindset that governs the professional services line of business is drastically different from the product side of business. The operational efficiency is paramount, & profitability can very quickly take a hit. Even more importantly, professional services are more intensely people-driven and the skill sets required to build and sustain this business over long term are not trivial. Look, think, and think hard, before you leap.

PS: There are other considerations on Professional Services that directly or indirectly impact the core product business. I will cover in those in the next post. Until then, hope this helps! 🙂

How to Build a Great Product by Removing Barriers to Usage

Product creators often tend to think of products in terms of features. I’m not talking about the traditional myth of “more features is better” that got debunked a long time back. Product creators still think of features because they try to deliver a certain functionality. Instead, a product should actually be visualized as an answer to a pain point. Users don’t use products because they need certain features. Users use products because they have been trying to do something but were facing a barrier while doing it so far and the product helps lower the barrier.

A pain point can often be stated in the following terms:

I am a <USER DESCRIPTION>

Trying to <DO XYZ>

But I’m unable to do so because of <A BARRIER>

Products that lower (or completely remove) the barrier to getting something done tend to create entirely new market segments that had never existed earlier.

The Skill Barrier

Lack of skills is one of the biggest barriers to getting something done. We hire the carpenter, plumber etc. to get stuff sorted owing to the skill barrier. Products that help ‘unskilled’ users do something they couldn’t have done before break the skill barrier and open up a new segment of users.

WYSIWYG website creators and editors enable creation of landing pages and websites without the need to know HTML. WYSIWYG editors help non-coders launch landing pages with little effort and create a new market in the process.

Instagram lowers the skill barrier required to create arty pictures that earlier required photoshop prowess.

In all such cases, the lower barriers lead to greater adoption than would have come through direct competition. A me-too Photoshop competitor, even if it was free, would never have gained the adoption that Instagram did.

The Time/Effort Barrier

People are strapped for time. A value proposition based around time savings or lower effort is an attractive one. Bloggers needed to invest time and effort to write posts that would stand out. Twitter brings down that barrier and allows publishing with very low investment of time and effort. Since everyone has the 140 character limit and given how democratic the real time feed is, there is no humungous effort required to stand out anymore.

Another common theme that disrupts the time/effort barrier is aggregation. Platforms that aggregate multiple providers often provide a compelling value proposition as a one-stop entry point. In the early days of the web, Yahoo provided value as the home page of the web. As the web grew and portal-based navigation grew clumsier, Google emerged as the one-stop solution to accessing anything on the web. Meta search engines (e.g. Adioso) act as the one-stop entry point and allow a user to search across multiple providers, thus drastically reducing the time to get her job done.


The Money Barrier

Online services are increasingly trying Freemium offering a basic level for free to the more amateur producers with limited needs. These tools were only available for a fee earlier. Having them available for free creates an entirely new market. Users from the existing market also deflect towards a free alternative. Over time, some of them migrate to a paid tier. While lower price has never been a sustainable competitive advantage, completely free has the potential to disrupt an existing market.

Unbundling is another way the internet brings down the money barrier. Music was traditionally sold as albums. Users would have to buy an entire album even though they liked only 1-2 songs in it. iTunes disrupted this market by allowing per-song billing. In doing so, it made the market a lot more efficient and consumers who would ordinarily not have purchased an entire album to get a particular song also ended up buying the song.

The Resource Barrier

Let’s take an example closer home. Entrepreneurship has become mainstream like never before. There are several reasons that contribute to this phenomenon but one of the most important is the drastic reduction in the resources required to get a company up and running. One of the many contributors to this change is the rise of Amazon Web Services which lowered the resources and upfront investment required to get your service up and running. While a startup would have had to get a minimum level of infrastructure upfront earlier, it can now dip into Amazon’s vast resources on-demand.

The Access Barrier

Platforms often disrupt gatekeepers by allowing producers direct access to potential consumers.

Most media businesses (publishing, performing arts etc.) are industries with gatekeepers determining which producers get market access. Platforms like Amazon Kindle Publishing, YouTube, CDBaby disrupted these industries to varying degrees by allowing producers direct access to a market of consumers tho whom they could market themselves.

This applies equally well to marketplaces. The long tail of sellers on online marketplaces wouldn’t have existed in the real world as they wouldn’t have had access to the niche market that would be interested in their product. eBay created a large segment of sellers which never existed previously by lowering he access barrier.

The investment community (angel investors, VCs etc.) is not necessarily an equal-access community and the right connections and introductions can open many doors that would otherwise not have existed. Kickstarter seeks to democratize access to investment by allowing anyone to set up a project, state funding requirements and raise money online.

These examples repeatedly demonstrate the fact that lowering barriers to get something done creates new markets for the product. Competition on the internet is no longer about fighting tooth and nail over price or features as was the case with traditional businesses. In today’s age, competition is about offering a value proposition that is offered by no one else and creating an entirely new market of consumers who had a latent need but no readily available solution to solve that need. Companies that do this effectively win.

The post first appeared on platformed.info