Boeing pulling plug on Connexion

Boeing's recent decision to cancel Connexion stupifies me. Not at the decision, but how did they invest $1B in such an opportunity without understanding what their revenue potential would be?

As I look at this situation from the outside, two key problems emerge:

1. They did not have the right market research


2. Their investment was way, way too high

For #2, perhaps this is just a matter of timing. They stated that it would take hundreds of thousands of dollars per plane. However, if a) they built the connectivity hardware into the plan at production, or b) got volume (any reason this couldn't also be done in cars?), then their costs would likely reduce. Seems like they should have just waited until the right cost point.

But, for #1, this just baffles me. How could Boeing not know with a pretty good idea of accurancy what the uptake would be? This is not a revolutionary product or even idea. It's a small, value-add extension of what people already do! Clearly they hosed-up the market research, or, worse yet, sought out the market research that gave them

How would I have performed the market research?

Simple, at low cost.

1. Setup a server with wifi inside some plane. Powered, of course. I would do a) cross-country US and (not red-eyes) b) international routes.
2. Print up some cards announcing the internet service. Give instructions on how to connect, price point, and that customers will need to pay by credit card.
3. When people connect to Wifi,display a page asking them to pay via credit card.
4. After credit card info, display a page apologizing for the inconvenice but service isn't working. Their CC will not be charged, and please enter your email address for a $25 Amazon Gift Certificate.

There ya go. Happy customer, real data (including price points), easy to do, and a marketing database started for when you want to pilot the real thing.

The key is to test actual consumer behavior at low investment. So much better than surveys.

And, if you wanted to do this cheaper, but with less accuracy but still close enough ballpark, just do this:

1. Count the number of people on planes with laptops.
2. Count the number of people on planes with blackberries (they love and value connectivity, after all)
3. Find out the adoption rate at airports for Wifi access, especially international terminals.

Do some back of the napkin math. There's your best case uptake. Doesn't account for cost, which is what I always think is important in surveys.

Have I mentioned I hate surveys?

We did an innovation project on a novel, new-to-market idea while I was at Whirlpool. Tested the idea in the market in a small pilot. Did the post-pilot survey. Over half the respondents said they loved the product and would pay for it. Most said they used it every day.

The problem? When we looked at the usage data, nobody used it.

Surveys indeed.

Now THAT'S insight into consumer behavior. How consumers respond to surveys, that is.

Seattle Startups

Found this Googling today... figured I'd post a link to it.

Book Review: Fast Second

A good read on a plane trip to see a customer in Baton Rouge, I was able to go cover to cover on this book in a single flight. The authors are the authors of the well-known “Colonizers vs. Consolidators” article that appeared in Strategy+Business back in 2003.

The book focuses on radical innovations – those innovations that change consumer paradigms, markets, and industries. Examples include the PCs, television, and the automobile (among many others in the book).

The authors position their theory in two steps:
• Radical Innovations are brought to the mass market not through
• What strategies companies should employ relative to bringing radical innovations to the masses.

Their key finding (at least how I interpreted their key finding) is not in colonization vs. consolidation, but in the trigger point for mass market adoption of radical innovations: the emergence of a dominant design. That’s the lynchpin for scaling up to the mass market. The authors propose that companies enter the market before a dominant design has emerged, but after an invention has been introduced. Hence the term “Fast Second” as opposed to First-to-Market or Slow Second.

Things I liked about this book:
• Layman’s term writing. Very offer economists write in econo-speak only. I found the everyday writing style easy to consume.
• Numerous examples from numerous industries from numeries time frames

The authors had a few key points:
• History has proven that consolidators, not colonizers, are the ones that bring radical innovations to the masses
• It’s not necessary for consolidators it invent new technology – let others do it
• Since its not necessary, consolidators shouldn’t try to create org structures that develop radical innovations

It’s the last line that I don’t agree with. That history has not been on the side of consolidators bringing radical innovations to market doesn’t mean there’s not a pot of gold waiting for the company that figures it out. History is rife with companies that do something that nobody else does, even in the same industry. Southwest Airlines, Toyota, Dell, are all examples of companies that buck the trend and ignore history.

I did not get the sense that the authors dug deep enough in their data to find counter examples of inventors that were successful in bringing their radical innovations to market.

I get the author’s point, and I understand that data bears out that certain companies are able to being products to the masses that smaller companies have not been able to. And for good reason: consolidators have the brand promise, distribution, financial, and support structures in place for such mass market products.

I think each company has to figure out its own strategy and its own approach to capitalizing on new ideas. AT&T Bell Labs was a research powerhouse. IBM invests significantly in R&D. Cisco buys technology companies and does a masterful job integrating them into the company. P&G invests in its own R&D and leverages external researchers for its new products.

Why can't a company be a colonizer and a consolidator? Crazier things have happened.

Audiobook Review: The Toyota Way

I grabbed this as an audiobook, as I haven’t gotten around to buying it yet despite being on my to-read list for the last couple of years. After listening to the entire thing, I am adding it to my must-read collection. I truly enjoyed it and loved the level the author documented the Toyota Production System.

I won’t describe TPS here, and the basics of lean thinking, continuous improvement, and but I will list some of my takeways:

1. Toyota wasn’t founded as a car company. It’s not even in their mission statement. Rather, they are about the good of the country, the good of the employees, and their good for society. It so happens that making cars is one way to get there.
2. IT doesn’t solve everything. I concluded this myself about five years ago, which is why I pushed to get away from IT and into software and software products. While “Does IT Matter?” tackles the issue from a different angle, The Toyota Way tackles it from challenging the difference between knowing information about what is happening and doing something about it. Toyota ensures the focus is always on execution. If you execute, often you don’t need systems/documents to identify what’s wrong (like project plans, thick requirements docs, etc).
3. Toyota’s capabilities are steeped in culture. Their processes are outputs of their culture, not inputs to their business.
4. Keep things simple. If you’re focused on execution, it’s a people business, and people need to execute.
5. Give things the proper time to incubate. Their patience in developing leaders, managers, and capabilities in the North American market is impressive. They weren’t focused on turnaround time; they were focused on building the right culture in North America. I love the author’s one comment – “the concept of green MBAs right out of school is foreign to Toyota.”

To be honest, the “granting time to incubate” is the one that is hardest for me to embed in my thinking. I’m naturally aggressive, and naturally want to get things done ASAP, often at the expense of mid- and long-term benefits like knowledge-building. After reading this, I am going to turn my products into programs, and manage them as ongoing businesses instead of short-term revenue generators.

Actionable Data

I certainly didn't invent the term actionable data, but I'm not sure where I first heard it. One of my biggest frustrations is perusing data that is not actionable. Argh! What a waste of time. I'm not interested in trivia, I am interested in getting great products to market.

In the innovation space, customer surveys are some of the worst culprits of useless data (not to mention misleading data, but that's for another post). Why? Because surveys are great at looking back in history, not about looking forward. When surveys actually monitor trends, then things start to get interesting. Now you start to have some data points that can identify behavior, which allows one to make decisions. Next time you see some data and start to collect or analyze it, ask yourself... what is it about this data that could be actionable.

Technology is the easy part

Another saying I was fond of when I was at Whirlpool. Was talking with an engineer today who was not offended by my statement... he definitely earns my respect for getting it.

Technology is easy. It's black and white. It works or it doesn't.

Products and services are hard. It's grey. Fuzzy. Hard to quantify (if you can at all).

That's why I like Product Management. It's a game. A fun one. Challenging too. You know when you win. But you don't know why.

True customer-centricism

I am all for operational excellence. I'm all for Customer-centric and Product Definition. But I'm really for the two integrated together. Often OPEX is used as justification for projects without looking at whether and customer benefit exists. Usually it does (cost savings is always passable down to the consumer); nonetheless, it should be explicitly examined on each project.

Which brings me to the point of this post: companies are either customer-centric or they aren't. That is, they either take the customer's viewpoint in everything they do, or they don't.

Here's a great example: customer surveys. How often have we seen these initiated by companies claiming to be customer-centric - that's the reasoning behind the survey, after all... to get customer data - only to ask customers a bunch of questions that offer no benefit to the customer.

Reagan's postulate: customer surveys are performed by companies that aren't paying attention to their customers! There are plenty of ways to collect consumer data, from secondary research (not all secondary research has actionable data, but some does), to monitoring consumer touchpoints, to forums, to analyzing sales behavior, etc. Customer surveys are band-aids masking problems a company has in lack.

This occurred to me recently... the companies that ask for my opinion the most are the ones that do the worst job taking care of me, the customer. Coach, who repairs their products that break without question, has never had to send a customer survey to ask how they are doing. They know - they know what customers want, they deliver it.

Perhaps that's a strategy of companies that do not focus on the customer. How low of a bar can we set? Then survey their customer base to see if they are passing the bar.

Know thy customer. And that doesn't mean send them a questionnaire to fill out...

The more difficult the challenge, the more reason to do it

Perhaps its just human nature, or perhaps it's a function of American culture maturing, but I continually shake my head when I hear "we can't do that because it's hard", "that takes a lot of effort", "man, that's a lot of work." Of course it is! Don't we love a good challenge? Don't we love to solve difficult problems for the market?

Forget the personal challenge and ego component of this. From a business perspective, I continually cite a study referenced in the book Platform Leadership that, paraphrasing, states that projects with the highest ROI. Given that piece of very actionable data, it tells me if it's hard, it's worth doing!

The corollary to that is, if it's easy, anyone and everyone can and will do it.

Toyota, in the mid-40s, post-WWII, was given a challenge by its CEO (Toyota himself): beat the productivity of Ford Motor Company. Given the size and strength of Ford, their leadership position in a high-barrier space, and the small size of the Japanese market, such a challenge ranks up there among one of the greatest business challenges of all time.

Innovation is your only sustainable competitive advantage

I've had this philosophy for a while. It was borne while I was at Whirlpool and one of the basic components we had to provide for product ideas was "sustainable competitive advantage" which was another way of saying the idea had to be protected by patents. No way. Can't do it. At least you can't do it reliably. Hope is not a strategy.

So, how to win? Always innovate. Apple. HP. Google. P&G. Wal-mart.

If you don't? Sears. Priceline (remember them?). Ford.

Are you guaranteed to win? No. Ask Maytag. Gateway. GM.

But I can't think of a single successful, long term company that has succeeded and NOT innovated.

Lean vs. Agile

Just received a book Lean Software Development: an Agile Toolkit for Software Devleopment Managers. What intrigued me when I ran across this on Amazon was that "lean" and "agile" were in the title, as if to imply the two were one in the same. At least that's how I interpretted it. Not suggesting the author is equating the two (I haven't even read it yet), but it got me thinking.

Lean is all about eliminated non value added steps in processes. Agile is about processes that adapt quickly to change. The two, IMHO, can be applied together, but are not necessarily one in the same. I can have a lean process that responds poorly to change, and I can have a process that supports change but is wasteful.

Not profound, I know, just an observation.

Speaking of agile, I continue to be struck how many teams don't "get" agile that practice it. And the teams that do get it are amazingly productive, and have adapted their process to generate highly predictive delivery schedules, even several planning cycles in advance.

Where do I see teams falling short on agile?

1. Teams that don't have a clear set of prioritized functionality
   
2. Teams that think agile means unpredictability
   
3. Teams that think agile means unaccountability
   
4. Teams that can't actually support change!
   

Enough of my soapbox. My job is to figure out a way to help these teams. I usually do so by separating "adaptive to change" from "the agile process of choice." Agile is a measure by which you can judge the effectiveness of the process. If you aren't agile, your process needs tweaking!

Is Microsoft following the right strategy?

Is Microsoft's software-as-services strategy the right strategy to pursue?

Microsoft still owns the desktop space, but they are convinced Google is heading in the right direction where the Google is establishing itself as the ubiquitous interface to software applications. So, their response is to pursue that approach - and ensure that Microsoft is the destination of choice for consumers for online applications.

Clearly Microsoft has the cache and expertise to execute the product side. But, is this the right consumer play?

I don't know, but it occurs to me that they are missing the point of Google's rise. Google got to where they are because they did something different. Not that being different is a guarantor of success, but taking on Goliath is sure suicide. Just as Microsoft set a standard, and associated their brand with it, Google has done the same.

It's an interesting paradox. Bill Gates's vision was "a PC in every home." For all intents and purposes, that's been realized. Perhaps that's why the reins have been passed from Bill to Ray Ozzie - Bill doesn't have a vision beyond his original, and as such Microsoft has struggled with the paradigm shift of the Internet. Now's it's Ray's turn to embark on a new vision. I would hope Microsoft could do something more ambitious than follow Google.

I think Microsoft would be better served looking into its crystal ball and figure out what's "beyond Google." No doubt they are doing that at the R&D level, but perhaps their corporate strategy should follow suit. After all, that's the approach that got them to their perch that they've owned for the last 15 years.

Sharpening the Saw

Ok, in my last role, I was successful in turning around a struggling product and business and getting something out the door that will generate cash for Amazon and will get significant PR. What I failed to do was keep the saw sharp. I spent all my time in spreadsheets, product requirements, marketing plans, project plans, etc (much of which was unnecessary churn created, but that's for another post), that I have not read books, blogs, articles, met people, visited customers, or even blogged myself like I should have.

That stops with my new job.

Moving forward, I must protect my saw-sharpening. More and more my value to customers and my superiors is about my knowledge, my insight, and my instinct. Already on my new team I am being looked at to make that hard, final decision on what we should or shouldn't do, and when we should do it. Such decisions have a direct impact on success, and should not be taken lightly. So, I absolutely must be the eyes and ears of the market and feed that back into the team.

How do I keep sharp? Or, how do I propose to?

1. Work 1 day a week away from the office. Go to a park. Climb a mountain. Take a boat ride. Sit in Tulley's (no Starbucks, though ;) ). Work at home. Sit at the mall for an hour. Play golf with someone new. See how fast I can drive my car in the windy roads of the cascades (ok, not that).
   
2. Post a comment on a new blog every day. Forces me to search out different sites.
   
3. Visit a customer every week (on average). Right now I am 1 behind (2 customers in three weeks), but after next week I will be caught up as I am meeting with 2.
   
4. Have lunch with someone new outside of Amazon every other week. I'm probably a little behind on this, and not sure if I can meet this goal, but I definitely want to do more than one new person a month.
   
5. A blog post every day. This is an outcome. If I do everything else, something should pop in my head and I should be able to conjur up something to opine about. And, more importantly, I must protect my time to do so (going to try and do it during the business day instead of late at night like I have been). If not, well, I am not doing my job.
   

First mover vs. Fast follower

I just received my copy of Fast Second, and I'm looking forward to reading this perspective. I completely buy the Fast Follower strategy - its well-reasoned and has a plethora of examples of late comers dominating the market. That said, I'd much rather do something first and dominate the market. I'm not interested in being first for first's sake - meaning I'm not going to trade profits for being first - but, following someone else into the market doesn't get me excited. I'd rather change the world, even if most of the world doesn't notice.

Setting aside my personal inclination to be first, it's not about betting on one strategy better than the other. It's about not choosing either as a strategy. Whether you are first, second, or a millionth, it should be about having something that meets the needs of the market and you can execute on. Period. As soon as I hear the "we need to be first" or the "let's wait until someone else does it" mantra, hairs raise on my neck. Consumers don't reward first or second; they reward on delighting them, period.

I'm looking forward to Fast Second. I generally don't read books that don't align with my thinking, but I'm pushing myself to be more open-minded. We'll see how that works :)

Whose gut to trust?

I read Blink: The Power of Thinking Without Thinking last year, but never wrote a review on it. I really should, as it is one of my favorite reads, and supports a notion that I have treasured since reading Working with Emotional Intelligence. And that is trust your gut instinct...there is a science behind it! Very difficult concept to get people to buy into. And for good reason! Random guesses and opinions are not gut reactions. And unfortunately, way too many guesses and opinions

Gut feel works because our brains have the experiences to draw upon and the mental capabilities to process those experiences. Blink shares a number of stories where gut feel pans out, and some fascinating studies behind them. As does How Customers Think... hmmm, I don't think I wrote a review of that book either. Looks like I have some catching up to do.

Anyway, what's my point? I'm getting to that. The issue is not about trusting people's gut feel - we've all met people in our lives that "get it" and seem to just know how certain things are going to play out. The question is when to trust who. Just because person A has an inclination about topic A and a history of being right doesn't mean they will have the same track record on topic B (of course, it doesn't mean they won't be right, either).

I don't have any answers, just a problem staring my in the face of one my core tenets and a driver behind much of what I do. What do I do?

And, what have I learned I'm good at? While those that know me know that I opine as if I'm an expert on most anything, the only thing I've been good at sensing is a) recognizing talent in the workplace (I know within 5 minutes of meeting someone whether they are a star or not), b) predicting the outcome of individual football plays when I attend games in person (I pretty much know within a second of snap how the play will turn out), and c) building comprehensive product roadmaps for products (time and time again people will throw out "we should consider x" only to find I already have x documented somewhere). That's it. Pretty boring, eh?