Recently, I was at a conference speaking to entrepreneurs and product managers and when asked if innovation is one of the key functions product managers should also own, quite a few entrepreneurs agreed to it. As per them, product managers need to think innovative and importantly, own the innovation piece in the company.
And that’s a wrong expectation. Expecting product managers to hustle through growth hacking is a good short term bet, but will backfire in the long run. And here is why.
#1 : Let’s Define Innovation.
“Innovation is the application of new solutions that meet new requirements, inarticulate needs, or existing market needs. This is accomplished through more effective products, processes, services, technologies, or ideas that are readily available to markets, governments and society. The term innovation can be defined as something original and new that “breaks in to” the market or into society.” [wikipedia]
From a product management point of view, it could be an out of turn idea that makes its way into the product roadmap. Or needs to make its way into the roadmap.
Now, let’s be honest. Who is actually innovating in your company? The tie-and-suit class (i.e. everything but engineering) OR the jeans-and-tee one (geeks)?
Chances are that the geeks are coming up with more crazy (and weird) ideas than your sales/marketing team. After all, there is a reason why growth hacker is an engineering/product role and NOT a marketing function.
#2 : Does Your Startup Always Need Innovation?
Businesses primarily need to deliver appropriate quality, consistently and affordably. There’s many a business that’s doing a great job of that without a fundamentally new product or idea, or even in a very crowded market.
“Innovation” as usually referred to is not always critical for you to be able to do that. Sure, there’s lots of innovative thinking in delivering solutions, in pricing, in managing customer relationships, etc. But honestly, that and a lot more boils down to great execution more than to something pathbreaking. Indeed, the pathbreaking needs to be sold harder!
Innovative products or solutions might indeed – in some cases – be the core of an offering, but it’s important to remember that their pain point getting solved is what customers care about. Consistently, reliably and at the right price, of course.
After all, how many innovative features has Dropbox launched over the last 1 year? The beauty of the service is that IT WORKS. Ditto with Youtube. Ditto with Facebook.
An essential attribute of a PM is leadership. In most cases, PMs deal with teams which do not directly report to them. He has to -
a) Convince the team of the product idea
b) Get a buy in and commitment from the team for its implementation
c) Work with the team to set deadlines and adhere to the overall timelines
d) Do the overall monitoring and check on quality.
That is, mostly a product manager owns the product and decides on features that impacts the stakeholders.
What about innovation?
Well, innovation has to have a tangible impact to the product/business. Be it improved user experience to improvement in performance, innovation cannot be a product/business on its own.
And it’s the product manager who has to evaluate and understand the valueof innovation and how to sell it to different stakeholders (especially when it’s out of turn and you have to convince engineering, marketing and operations team to fit-in a new feature).
The PM (and founder when official PM is missing) role is about channelizing innovation and shouldn’t be looked upon as the one who is responsible to come up with innovative features. In fact, a lot of innovative product suggestions will come from customers if the PM is listening carefully. Who channelizes that? Who validates that?
That’s your product manager. Call him/her the growth hacker, but for sure it is not the most “innovative” role out there, and shouldn’t be.
So Google is killing Google Reader and suddenly, there is a rush of activity among competitors to grab those users.
While Feedly has been trying to maximize the play, launch of AOL/Digg reader makes me ask a few questions.
Is RSS feed really that big an opportunity? RSS is dead. Not the technology, but consumerism of RSS feeds is a story that never happened. However, RSS continues to survive as a backend infrastructure.
So why is everybody trying to jump the RSS wagon again, now that Google sees no opportunity in this space?
For AOL, it’s a way to sound cool.Hip. After all, how many of us visit AOL sites (yes, you might be visiting some of their network sites, like Engadget, Techcrunch, Huffpo etc), but that’s by virtue of those brands and AOL has got nothing to do with it.
For AOL to build a reader, it means either one of the two:
1. The market is really big and AOL believes that they can get a lot of users from Google to start moving to AOL. Maybe, first touch point for AOL products.
2. AOL and others just want to ‘sound cool’.
We have got atleast 3-4 emails from startups/product companies talking about the launch of their new RSS reader. And frankly, while it’s okay to develop for the coolness of it, the truth is that there is hardly any money to be made in RSS readers.
If you think ads/CPMs will work, then you are better off starting a *ollywood (replace * with H, B, K etc) entertainment site (mass consumption, SEO traffic, pageviews – you know the beat, right?)
Going back to an important rule of Product development, there just isn’t a market big enough for RSS readers* yet.
Don’t believe me? Well, take a look at falling search traffic for the keyword (RSS reader).
*Missing the BIG Picture
Most of the Google Reader Alternatives are actually playing on same semantics as Google Reader – i.e. upload your OPML/XML file etc etc. The truth is that there is a BIG play in monetizing the reading behavior and the market has already evolved, thanks to the likes of Flipboard, Pocket (and Feedly).
Creating a look-a-like Google reader is not the most optimum approach. In this case, replacement isn’t what (most of the) people are looking for. Google Reader was a great start – Flipboard and others took content consumption to new levels and AOL/Digg, in my opinion should have focused on competing with Flipboard (and not Google Reader).
Matching up to Google Reader should have been done 3 years back. The world has moved on to newer consumption models and companies need to evolve.
What IF : Google Decides to NOT Kill Google Reader
So What if Google decides to NOT kill Google Reader on July 1st? Will these companies have enough dough to justify the effort spent in development of their RSS reader?
I bet NOT.
While this could be a great product extension strategy for existing companies like Digg, startups are better off thinking beyond RSS.
Warren Buffet, the greatest investor who ever lived, succinctly describes his investing strategy as ‘be long term greedy, not short term greedy’ in his autobiography. Even though his advice would have been related to investing in assets with a long term view the same applies to eCommerce in India which is expected to grow between $ 125 billion and $ 260 billion by 2024-25. When you are long term greedy you will try to treat the customers in the best possible way at each touch point so that you build a long term relationship with any customer who shops with you and it creates a virtual cycle where people comes back to shop with you again and again.
Nobody has championed this thought better than Jeff Bezos the founder and CEO of Amazon.com who detailed out on a paper napkin the value of superior customer experience which will help in increasing traffic, attracting more sellers and increasing the selection available to the customers helping to achieve lower cost structure and prices finally benefiting the entire ecosystem in E-Commerce.
If you look at this stage of growth of E-Commerce in India , the competition is on price in any commodity category. The good thing about lowest price is that there will always be takers for lowest price, especially with price conscious value seeking customers in India. The bad thing about lowest price is that in the long term, it’s a very difficult to build any business on low margins and below par customer experience.
That is why it is necessary that you sell not the product, but the complete experience to the customer who shops online.
Unfortunately ecommerce is one of the most competitive industries in the online space, so a good understanding of the customer experience in ecommerce is vital for improving the customer journey in order to reduce marketing costs and improve revenue for this you need to view each sale as the foundation stone for a long term relationship and not a one night stand. Most E-Commerce companies are structured in such a way that no single department is responsible for overall customer experience . Each department has their own goals. Marketing wants more traffic, Sourcing team wants more revenue, Product Management wants the “wow moments” within the product, Engineering wants to build stable scalable systems for long term, merchandising wants more product discovery and visual options, Delivery teams want systems that will help to deliver fast with real time tracking and delivering and so on. When the objectives of various departments compete with each other to get resources, it is natural that priorities collide there are breakages in customer experience funnel creating long term revenue losses and the whole organisation may miss the chance to learn from customer behavior — to create a virtuous cycle of repeated customer purchases and improved revenue performance in long term.
A good starting point is to look at the key areas of the customer experience journey so you can plan your resources accordingly and the customer experience map below has been adapted for E-Commerce and inspired by the customer experience map model created by Chris Risdon of Adaptive Path.
Planning & Product Discovery Stage
Customers will start considering your site only if it comes through a strong recommendation or if there is a compelling offer driven through a marketing channel and the focus in this stage, should be to drive customers to your site and engage with them. Site structure and content should be optimised to improve traffic from organic search but, before investing heavily, consider whether more traffic is really what you need.
Transactional ecommerce sites should ideally convert at least 2 percent+ of web traffic that should increase over time. If you’re not achieving this you may be wasting money on paid media (search and display) and should instead think about optimising site content and user experience rather than attracting more traffic. The conversion rates will vary from category to category and product to product based on seasonality and offers. Conversion rate is usually high for low involvement products like pendrives and books while it is very low for high involvement products like smart phones and DSLR cameras. Traffic from Google may have a very different conversion rate than traffic from a price comparison website like mysmartprice.com or a forum like desidime.com and you need to track each of these sources differently over time to check how well these are performing.
Detailed information points in product description, reviews and recommendations etc are almost hygiene now and going forward to help users you need to harvesting your efforts in creating a community through gamification, online reviews, ratings and recommendations play. This will play an increasingly important role in the decision-making process at this stage and and can help build trust for the site. But how will you decide whether to showcase a negative review or not which again boils down to the fact on whether you are long term greedy or short term greedy. Customers now expect you to engage with them on their terms so, rather than social/email-spamming fans when running a Facebook promotion campaign, make use of available customer information from their social profiles to personalise offers and improve the experience on the site. In fact, personalisation can have a major impact on conversions throughout the user journey. Collating user information is a priceless tool for marketers, as this information can then be used to increase sales through personalised targeting.
Implicit data such as user location, age and location can be used to tailor products based on demographics, whilst explicit personalisation, based on past purchases and searches for example, can be employed once you’ve been able to capture who they are. A personalised customer experience, where the site adapts to the visitor, – can give them confidence that you can deliver what they are looking for. If this stage is planned well any site can have a customer’s trust (and wallet) for life. One of the common mistakes that organisations make in this stage is to focus too much and do major monthly iterations on visual UI but as Steve Jobs once said Design is not just what it looks like and feels like. Design is how it works. In this stage customers will engage with you if it gives them pleasure and takes away the pain and any element that gives customer the pleasure of discovery is what you need to focus on to take the customer to the next stage.
This stage of customer experience starts once the customer has clicked the Buy button of any product, typically the customer has shown the purchase intent and is ready to share a part of the wallet . This stage provides the lot of opportunities for for revenue maximisation .At HomeShop18 this is a stage that we concentrate a lot and changes in the form design and interaction has generated additional monthly revenues in eight digits. The simple way to optimise this stage is by figuring out modifications that can help in taking more customers to the next stage in the ordering process . The famous case study of USD 300 million button was in this stage of customer experience. Abandonment Tracking as well as Upsell and Cross sell if done intelligently can also help in adding more revenue at this stage.One of the best experiences in this stage has to be amazon.com and may be vistaprint.com is a great example for for upselling. Here are some fundamental guidelines for checkout flow design if you are interested in optimising this stage.
Product Shipping and Delivery
This is the most difficult stage to manage the experience , primarily because the customer has already shared a part of wallet with you and any experience bloopers in this stage may destroy the relationship. Timely Alerts, Fastest possible delivery time and delivering the exact goods ordered for are hygiene factors that can help in generating the trust in customers and one of the most difficult aspects of this stage is that the moment of truth when the product is delivered to the customer is typically owned by a third party like a courier service which makes it even difficult to manage.
Returns & Refunds
This is final stage which is a grey area that customers are exploiting by returning the products after usage within 30 days and none of the companies currently in India has been adventurous enough to offer a policy like Zappos.
India is still waking up to the potential of E-Commerce and the potential in disrupting offline business is huge. All online businesses are not even 1% of the offline businesses and still a large percentage of customers research online and buy offline. This will change with time and the leaders will emerge who follows the same strategy as Warren buffet- ‘be long term greedy, not short term greedy’.
The ladder goes something like this : Software Engineer -> Senior Software Engineer -> Tech Lead -> Project Manager -> Development Manager -> Senior Development Manager -> Group Manager -> ok you get the idea, don’t you? Some even do the startup thing and get funky tags instead (this ‘whiz’, or that ‘guru’), or jump to being CTO!
But once in a while (and more and more often these days) a techie decides to check out something else to do in life. Perhaps a sales role, or at least a marketing one (and perhaps even discovering in the process how they differ!). Possibly entrepreneurship. Maybe start a restaurant! Or get into design and creative avenues such as T Shirt design. Or organize events, start a travel portal, help create courseware, start a social enterprise, smarter stock trading, training people…there’s just so many things to do these days!
And of course, an engineer can do anything :)
Then comes the shock – otherwise known as the real world. What does that look like?
The world doesn’t just fall madly in love with a great product. There’s human Behaviour. Yes, it exists independent of technology, is often irrational – deal with it!
So you are a top coder. And built this fundamentally different to do list or social engagement analytics tool or mobile app to help optimize one’s commute/finances/whatever or distributed ERP on the mobile phone that will surely help small companies cut costs or a knowledge management tool with the best UI the world has ever seen. Why isn’t the world falling at your feet? Why aren’t people adopting what should be a no brainer?
The world will not adopt it because its good/awesome/logical/rational/cool/new.
You learn the hard way that technology is a tool for most people, and using one isn’t at the top of the list of things that occupies their lives and minds – there’s payments to collect, legal notices to handle, staffing issues, rentals, grocery lists, kids to be dropped at tennis classes, health checkups to be done – you get the idea. On top of that, you are one of many trying to catch their attention to use something that promises to improve or optimize their lives, finances, effectiveness, profits.
Just a good product isn’t enough at all. And nobody owes you “at least a trial” of yours.
Marketing/Sales is easy for “smart people”.
“Our company failed because of bad marketing”
How many times have you said that, or heard that, truly believing that if the folks over at marketing and sales were as smart as the engineers, they’d do a much better chance?
The rejection hits you the first time you try! “No” with no rational reason, not even a fair hearing is not something you’re used to. Impressing people with the tech awesomeness of your product still doesn’t get converts. Even media coverage that gets a nice happy spike in traffic does nothing to the topline, and certainly not to the bottom line. You had it all figured out when you planned the 1-2-3s of marketing, and had a focused approach to sales, but there are so many variables that are not under your control and the results and goals are still your responsibility. And slippage on the numbers or deadlines hurts much much more than it did when you were developing a product. That’s unfair!
And if you do not have the weight of a big brand, it gets only tougher. You cannot even find an audience most times, and people seem to be pointlessly rude!
There’s a whole new world of “smart” to discover.
Coding Solves Things? There’s more.
In my last startup, our approach to every problem was algorithms. Drop in traffic, upcoming alliance hopes with a big brand, and subsequent disappointment, monetization – each of these kicked off an all new feature/product/idea that would surely be accepted by all – how could it not?
We were just rushing right back into our comfort zone – especially post funding – when faced with any sort of a problem instead of actually figuring out what wasn’t working in the real world!
As you step out, staying away from your own comfort zone will be key cause it very easily blinds you. Many many problems need solutions other than what your earlier skillset could solve, so train yourself to keep an open mind.
If someone pays, they OWN you.
That’s how the real world works. “Its just Rs.49/-” is not enough reason for someone to not expect the world from your product. Hell, even consumers of free services expect service, support, quality as a birthright.
No, its not worth THAT much just because your last salary was $n per hour.
Angel investors are NOT keen on funding you so you can continue with your salary.
I’ve had folks discuss their business plans even as they’re just starting out, and factor in salaries close to their last CTC when figuring out how much money to raise!
Yes, your “market salary” was that high. But hey – the market just changed, and you got to first figure out how much this one can make you and support! Neither the customers, nor investors “owe” you that last number, and salaries are outcomes of businesses. That’s a big learning especially if you’re on your own.
If they don’t use it, they’re NOT dumb/stupid. Its YOUR fault.
Prospects who don’t “get it”. Resellers who mis-sell. Customers who download the app but never use it. Folks who would “be much better off” if they used your product or service but don’t seem to want to try it out. Life is full of them. Don’t get frustrated and even more so, irritated.
Its YOUR job to give them a reason to try it out, tools to do things better. This is getting repetitive, but seriously, nobody owes you anything :)
Yes its obvious to you. Not yet to the whole world.
Ah, jargon. Engineers practically live off it!
How can someone NOT understand how to upload their picture using that funky gesture driven uploader you just added? Its soooo obvious! How can they NOT see how semantic search improves their results for the less precise queries by an order of magnitude – and why do they insist on trying out the usual searches on this?
Your presentations, explanations, marketing, discussions, emails MUST keep in mind the audience they’re targeted at. People have different skills, understand the same solution at different levels for different needs. Talk to them about those needs, and then frame the detail around that without making assumptions about what is logical and left as an exercise to the reader. Its NOT obvious to everyone else.
Many people don’t know of or have to know of xkcd jokes.
Just like for jargon, be vary of popular references in communication that your audience might or might not be aware of. Nope, not everyone watches Start Trek, reads tech blogs. And apart from it being a pointless reference, you certainly do not want to be responsible for making anyone – especially customers – feel stupid.
Most users will never care about what language you coded it on.
Well, ‘nuff said :)
This is the mother of them all.
All of the above, and a gazillion more reasons that bring uncertainty, doubt and fuzziness on a daily basis very quickly destroy the romance around “going independent” and “charting your own destiny”.
Like I tell many people, when you step into something you’re doing for the first time, two things are important.
1. Not to trust yourself too much on any point of view
2. Taking a call and backing yourself on it really hard
If that sounds conflicted, it is. And its surely a fine art.
At UnPluggd NCR roadshow, we had Slideshare’s principle designer, Arun J share some of the key design principles at Slideshare.
Here are a few important takeaways for all ye product entrepreneurs:
Ugly teens turn into beautiful adults : It’s okay if your first iteration sucks.
Design for people not for designers.
Design is metrics driven. Design is always data driven and should have a strong feedback loop/system.
The focus is on saying NO.
Date: June 8, 2013. Venue: MLR Convention Center, Brigade Millennium Campus, 7th Phase J.P.Nagar, Bangalore – 560 078. Tickets: Block your seat right away (ticketing link)!
We have super exciting agenda for the summer edition of UnPluggd.
For startups who want to launch at UnPluggd, the deadline is May 23rd (use this link to apply for the demo slot).
[Guest article by Srikanth Thunga, Product Manager at Snapdeal]
I have seen that many companies & business leaders don’t get product management. Generally, leaders tend to have biases around product managers as project managers *guys for requirements gathering on one hand) OR as people who own the vision & are the CEO of the product on the other hand. I am not contesting those definitions. They are just not easily relatable or actionable. Very few leaders can coherently define the role of a product manager in their company as well as make the full use of the potential of product managers.
Every industry has a different need which means that product roles can be defined different across different industries. A product manager at an internet company will behave very differently to the product manager at a SaaS company to a product manager at an enterprise product company mainly because of the environment & not because of the principles.
I have only observed one consistent trend. People define product management at an action level (negotiating, evaluating mockups, marketing plans etc..) rather than at a principle level creating confusion in the definition. Very few leaders realize that they all converge into 3 core principles.
The core principles of products management revolve around 3 things: Business, Product Development & cross-functional/multidisciplinary learnability.
Business, simply put, is about defining a metric, understanding opportunities around that metric & figuring out the impact of each of those opportunities on that metric. Defining a metric is extremely hard. Numbers can be made to say anything. Ideally, the metric should not be too global (conversion) or too local (pageviews). Doing this will not inspire you to look in the right direction to optimize the metric. It is also extremely important to understand the entire business as well as understand all the metrics for the business rather than just the metric that is being driven/optimized by the product manager. This will help in taking the right calls during prioritization of product development bandwidth.
Product developmentis about refining those requirements (AB testing, market research etc..) multiple times until the right requirements are figured out & defined in the system. When in doubt, design for flexibility to be agile on requirements rather than defining the functionality. This is probably one of the reasons why few products look ugly but are extremely successful at what they do (eg: toodledo, ebay). The most critical thing to keep in mind is that the developer bandwidth is limited & the inertia is too high for product development. Once an initiative is started, it is very hard to back out of it & the development time is a sunk cost. Since the sunk cost is high, it is best to understand various aspects of the customer by doing AB testing/market release as well as understand various aspects of product development like UX, programming, so that the cost is effectively utilized.
The product manager’s role is ever evolving(read: Jobs of a PM).
No 2 days are the same. People with a single minded focus have too much inertia in that direction making them hard to reconfigure themselves to solve the problem. A product manager who enjoys learning new things to help solve a problem is more valuable than someone who understands technology or UX. eg: Product managers who come from technology background have a hard time getting solutions done with excel macros instead of software development as it doesn’t fit into their product development model. Multidisciplinary thinking should be a cornerstone of product management thinking to be able to solve problems more effectively.
If you are doing product management right, you will be tracking metrics around opportunities/features/market extremely closely with a 1-3 month opportunity roadmap. You will also be constantly learning new things & solving problems with or without technology product development bandwidth.
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 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.
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 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 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.
A startup is an experiment turned to a company designed to grow fast and achieve the purpose it was intended to serve in its lifecycle. So, if you call your company a startup, you are always trying to make your experiment succeed and turn it into a viable business. So far so good, you saw an opportunity in a space, you worked out an idea to turn that opportunity into business, you got the first product delivered, you raised little money to keep going and now you suddenly realize you would need a Product Manager since everything is growing so fast that it is becoming impossible for you to spend 24×7 of your time thinking and working on your product and even if you are doing so, you require a more dedicated person who is meant only for this job.
A product manager is that person in your organization who is going to wireframe user experience, technology and business of your organization. For a startup till now; you, your engineers, friends, family, neighbors, random acquaintances etc. have helped you in wire framing these or doing all other responsibilities of a product manager and probably would have done an amazing job till now.
Are you seriously thinking a product manager will come and suddenly takeover all these tasks. It’s a good news if you are not thinking like this. Its a good news if you are thinking that Product Manager will be coming to your team, understanding product, you, your team and understand how the product has been built till now. It’s a good news if you are looking for a product manager who is a leader and just not a person who write specifications for your product. It’s a good news if you are looking for a product manager, who at the end of his experience don’t want to say I had spec out the whole product but who will say I helped specing out the whole product helping company to achieve have what we have right now in reality.
Your Product Manager is someone who is going to resolve conflicting situation in terms of features, goals etc. .Conflict is the most important component of any creative process. Lack of conflict resolution skill can kill your startup. The only way to solve them is by interacting more rather reacting. Absorbing each others’ thoughts is going to be the core part of product manager and negotiating everyone’s thoughts, convincing all and coming to a solution is going to be skill of an amazing product manager.
You should be looking for a person (make points while you are interviewing) who is :
1: Aggressive listener
You are not looking for someone who talks a lot. Your product manager has to listen a lot, understanding every bit of it. Human mind’s skill for listening words per second is much more than we talk. Its a normal tendency to think what to react back while listening since you have so much time to think while you are listening to someone. Look for a person who spends lot of effort in listening what you saying. Look for a person whose tendency is not to react after every line you say, but someone who can make you speak more and make you understand that he understands what you are talking since he values accumulating ideas. This is a rare skill to find but so are the people you hunt for in your startup, they are rare!
2: Whose video and audio is in synch
Philosophies and actions have to be in sync for every member of your startup. For a product manager, this is going to be another essential skill you should be looking forward, for he is going to form all the process and organize you better. If his actions and words do not match, you should probably be scared before taking any decision for hiring (you should not have doubt, but you should be scared for this hiring).
Just in the last 4 weeks, we have seen few mergers, shutdowns and well, a lot of ‘I-said-(s)he-said‘ stuff.
But here is the positive part about it – Ecommerce is the next gold rush in India and consumer spend isn’t going down. The harakiri we are seeing is more because of investors’ trying to bring 9 women and deliver a cute baby in 1 month, but that discussion is for another day.
Coming back to the article title, I am often asked what’s the ‘NextBigWhat’ of startups in India and what kind of ideas will I invest in (assuming I do*). Leaving the details of the hard – investment – part, here are two ideas that are ripe for entrepreneurial uptake in the current ecommerce ecosystem:
1. Rapportive for Ecommerce
First, not all customers are the same. Some are more vocal than others. Some are (a lot) more demanding than others.
So Flipkart recently had a serious issue -they shipped stones instead of an iPod and while a few ‘nice’ customers would have just shouted them via support email id, this one chose to tweet about it. And it’s not just about one issue, but given that shipping & delivery is a lot about meeting the 99 percentile statistics curve, errors are bound to happen.
What should companies do when such errors happen? Simple – solve them. What if there are 1000 instances of such errors? Well, prioritize.
That is, attend to customers who matter the most. But given that ecommerce companies in India have yet to implement a rock solid (social) CRM system, the next best alternative is to ‘attend to customers to who can shout the most’.
In comes Rapportive for Ecommerce – a tool that can potentially understand a frustrated customer’s (social) reach and helps the company prioritize support reaction.
You might want to ask – but hey! are companies so dumb that they don’t have such intelligence inbuilt? The answer lies in the fact that most of the ecommerce companies’ are too busy handling support requests and while the support desk (email based) follows its own (ticketing) process, they have no control over social media and even a minor issue can result in PR disaster.
Bundling products primarily means bundling of 2 different products and sell them at an attractive price.
We aren’t talking about packing a phone cover when you buy a phone, but bundling a PowerPack charger with your smartphone buy (after all, you might need one).
So if you are paying INR >25,000 for a smartphone, an attractive deal of INR 26,000 with the charger will make for an easy buy (the 6000 mAH charger typically costs INR 1,500-2,000).
Why most Ecommerce companies won’t do this on their own?
Apart from the fact that they are way too busy finding a profitability path (Flipkart increased minimum order for free delivery to RS. 500), ecommerce companies will find it difficult to justify building the entire technology stack from the scratch, owing to investor’s pressure to improve profitability.
These services should come as a plug and play and ideally, a platform approach will work. That is, plug into a *Kart system and let their support teams tweak the platform according to their requirement.
What are your thoughts? If you are a startup who is willing to bet on these ideas, let’s talk!! And mind you, in the gold rush, the tool makers made the most money!!
*: I am not an angel investor, but am surely excited about products that take a platform approach to solving interesting problemstatements. In short, these are problems worth solving and recommend geeks/hackers to think more platformish concepts than launching another *kart]
[ This one’s a little long. But worth it. And if you read through it all, there’s a ……. ]
Being consistent was such a virtue all these years for brands. Of course it still works for most brands most of the time. But there are diminishing returns on consistency for brands in the times in which we live. Of course we are not talking here of consistency in quality – that definitely needs to continue! We are talking here of the consistency in branding, standardised marketing and promotional activities.
In 2013, marketers, brand managers & agency folks must never forget that the consumer has become highly sceptical and bored of our messaging. Good service is expected and only the lack of it elicits a reaction. Hardsell is a put-off – there is far too much information & brand messaging overload. Everyone needs a break from the brands selling us all the time. One of the many reasons we lap up a Kolaveri or a Gangnam Style video is that it doesn’t try to TELL or SELL us anything.
And in those virals and memes there is a hidden message for us. There is an element of surprise and discovery in those seemingly inane videos.
That’s the 5th P of marketing – surPrise. (“Hey, that’s not a P, it’s an S”. “Well, surprise!!”)
Now, can we make it work for more serious stuff – like branding and marketing?
The scarcity of attention
Once upon a time in the consumer-land there was largely a scarcity of money, then there came a scarcity of time and now there is a new scarcity of attention that marketers must contend with, but refuse to acknowledge. How do you get across to the guy with a remote and a DVR and a shrinking attention span? The cutest ads and the corniest lines get a short shrift. Even Ogilvy can’t make Vodafone ads work all the time!
Today, branded communication is in competition with cute cats, cuter kids from a billion posts and albums, in-depth and/or banal conversation and other stuff that the consumer spends her time on across multiple screens. The same old communication strategies don’t get us the same old results anymore.
The New New Economy
Everything around is changing at warp speed. We are now in the middle of the New New Economy. And in this economy , the consumer doesn’t want the same things to be repeated to him. Many consumers expect to be shown a new idea every single ad exposure, sirji?
If you watch a full length film on any of the movie channels you will realise the enormous nuisance quotient of branded-advertising today!
Surely, going forward this interruption-by-annoying model of advertising is not going to give optimal results. And we are being very generous here. We need to invent a better mouse trap based on this glaring, growing reality in our face!
As we look around the brandscape in a consumer connected era, we find that the brands that get lapped up, liked on facebook, get retweeted on twitter have a common thread. In their brand story, marketing play customer interface and service, there is a strong dose of surPrise!
Whether it’s the quirky mega brand Google that constantly plays with it’s logo and has eschewed all established thinking on logos and branding, or our homegrown youth icon brand – fastrack that has challenged its followers on facebook to give it 10 mn likes in exchange for a name change or a start-up brand Ola Cabs that offered cab rides at auto prices, each of theses brands has managed to surprise the customer!
Using surPrise as a tactical or strategic marketing tool challenges our thinking. We grew up with a watertight model of brand consistency. Right from the brand colour ( just the right pantone shade :-) to the entire campaign having a similar look & feel, consistency in strategy and execution were always the hallmark of a successful advertising and branding campaign.
Even when media proliferated. When 360 communication was the reigning mantra of branding, it was lead by consistency.
But consistency often kills spontaneity. And today consumers are looking for their favourite brands to surprise them. Whether you are a mega brand or a neighbourhood brand, you can pack in a whole lot of surprises. And your consumers will love you for that!
surPrise with Stories
One of the things that most brands forget to factor in their marketing is how smart consumers have become over time – they are very smart at tuning out the noise of the brands. They use the remote, the Tata Sky recorder, youtube to filter and avoid all the repetitive, unnecessary brand messages.
The key words here are repetitive, boring, hyped, outright lies, unsubstantiated claims. However, the same consumer is quite open to new stories about the brand.
Imagine a new high-end range of wooden furniture telling you about how the wood used is from the ‘renewable forest area’. It’s a new story. An authentic one. It adds to the allure, charm , story appeal of the brand for it’s TG. (by the way the brand is Mother Earth )
Using story-as-surPrise has always worked for hotels – big and small. People are very fascinated with the stories of who stayed in the room before – a Bollywood Diva, a princess, an ex President. The story is amplified when narrated with embellishments by the manager or the hotel chef!
And every brand in every category can surPrise its customers. Soap or chocolate brands can tell stories of ingredients ( and what they can do for you), mobile phone brands can share infographics on feature evolution, wine brands could share stories of a wine sommelier and so on…
surPrise with Context
A lot of ‘Post-Advertising’ advertising is about context. When brands ignore the context, to the savvy consumer (now also prosumer) their claims and messages sound hollow (which they often are).
Two societal events captured the imagination of people over the last year – first the Anna movement against corruption and recently the groundswell of protest over the brutal rape and killing of the Delhi girl.
Around both events, almost all the brands that had anything to do with women ( Femina, Dove, etc.) or even corruption (eg. Tata Tea – Jaago Re) largely stayed away from the events. They were busy staying married to their standard messages and their media plans.
Of course it’s difficult and very challenging for most brands to weave in context into their branded narrative. Their ad agencies , PR departments and communication managers were not trained for that . In fact we were all raised to stay away from real context. Brands were happy in their silo make-believe-happy-faces-self-centred world.
But consumers have moved on. In the same internet session, a consumer can like the facebook contest of a noodle brand, sign an online petition on cause.org and snap a deal at an e-commerce site.
Brands will have to recognise and smartly weave into this contextual world of the prosumer. Or else the more media monies they spend, the less they might get!
surPrise with Technology
Till a decade or so back , technology was a just a feature in most of the products we consumed. It was very important but largely hidden. We were happy looking at the shiny packaging of products and many of us even built our identities around the branded messaging and icons.
But this is no longer the case now. Look at a branded eco-system like Google. With it’s search, email, browser, maps, wallet, picasa, places – we the consumer have an intimate relationship with the brand based on pure technology and user experience. We don’t even remember ever seeing a Google or a Facebook or an Amazon ad. True Flipkart does a lot of advertising, but for many the brand relationship is built more on it’s technology supported ‘famed delivery system’, user experience rather than its initially interesting but eventually repetitive advertising!
And technology is now no longer just for mega brands or certain categories. Hotels can make surPrising apps to enhance their discoverability. Small vacation resorts can use the technology based review platform – TripAdvisor to build their brand and surPrise the off-beat traveller with their service. Neighbourhood mom-& pop brands can use technology to make their own neighbouthood newspaper using paper.li or pinterest and surprise the consumer with their in-depth knowledge of the local stuff.
Most service brands must use twitter (some like Airtel are already using it effectively) to address customer complaints and surPrise with real-time (and, of course, useful) response.
surPrise with Humanness
The world no longer only operates on an industrial era paradigm. Yes we do manufacture cars, trains, ships, chips and all kinds of machines on assembly line. But the branding infrastructure built on the manufacturing era of mass media and mass messaging is creaking and not working as efficiently as it did in the past .
The reason is not difficult to fathom. Rapid changes in technology, the existence of parallel information and creative economies and social media led connectivity has shifted a lot of value to human interaction and ‘humanness’!
Consumers want to be treated as audience of One. Many no longer want to be clubbed as SEC A, age 35. A single fits-all tagline, headline or a single campaign crafted with strategic insight, care and perfection in ad agencies is unable to engage the customer for long.
Brands now need to display humanness in the last mile – surPrise them at the store (plan to keep a few ‘unplanned’ giveaways), in the community in which they operate (offer to host something, or sponsor something with nothing in return), in their CSR initiatives, inside the films and video based entertainment they buy their way into, in the packaging. It’s even possible to surPrise consumers in the invoices (fortune cookies did a great job in a similar context!) that you make for them, definitely when you make them wait on call centre lines, on twitter, on facebook, and even in the Terms & Conditions of a product or service purchase!
Surprise consumers with humanness – Be ready to bend or even break a few rules for certain customers, or certain situations – and you will be surprised at the attention, loyalty, WOM publicity that they will shower you in return!
surPrise in Real-Time
Would you agree that ‘Real time is the new Prime Time’? Consumers expect brands to surprise them with real time information. Sometimes it’s location based in real time, other times it’s context based in real time. Its still about context, but the important thing is the ability to recognize opportunities and react on the fly.
Whether you are a cafe brand trying to retain a seemingly ‘disloyal and shifting youth audience’ or a micro credit brand trying to get through the time starved donor, or a new local restaurant brand trying to do neighbourhood marketing, information and utility offered to the consumer in real time could be your best possible chance to achieve your goals. With enough technologies that let you figure out who the consumer is, a random positive surprise on their birthday will go a long way. You don’t need to do much – a gift wrapped delivery with a card is plenty, when done without too much fanfare or PR effort. Let the delighted customer do that for you.
As a brand owner/manager, do not ignore real time ideas from employees, real time conversations with consumers, real time feedback from vendors, real time happenings in the surroundings. Surprise your consumers with authentic participation, benefits and random acts of kindness and see your business grow and WOM publicity shoot .
Everyone loves a surPrise. As the marketing edifice is gradually morphing into a more open, more participative, more collaborative one, have a surPrise or two up your sleeve! You might be pleasantly surPrised at the ROI it gives you.
[ … treat at the end! ] And as we leave you with those thoughts, here’s something we thought we should surPrise you with
With over 16 years of advertising strategy, branding and digital planning experience, across JWT, Ogilvy, Leo Burbett, Digitas, Manish Sinha is now co-founder at travel start-up – Oravel.com & curates neighbourhood brands in Gurgaon – Cinnamon Stays – a homestay and Tikdam – a quirky creative studio.
[Editorial Notes: Guest post by Naman Sarawagi, founder of FindYogi.com – a product comparison engine]
With the rise of organised retail in India there has been a flood of loyalty and reward programs in the market. It started with plastic cards from premium stores, which added to our social ego and are now useless bulk in our wallet and at times in email. Most of us don’t know what to do with these!.
In the past few years I have enrolled into every such program that I could and owned a lot of such cards – but there are only 3 that I am actually loyal to and have benefited from:
A. PayBack - Came as a replacement to the rewards system from my ICICI credit card. B. T24 Mobile- A virtual mobile network from Future Group (Pantaloons, Big Bazaar et al.). You get free talktime for your T24 mobile number every time you purchase at a Future Group store. C. Zoppies from ZopNow – Points earned on daily household needs shopping at ZopNow.com.
Here are some commendable elements in these 3 systems that sets them apart. You will notice that the Zoppies model can be adapted by a lot of online/offline stores.
1. Minimal effort to credit points:
Payback – Points auto-credited from the ICICI bank credit card statement. For online purchase, it’s only about copying the card number in a text box hence that is fine. One generally misses-out on offline purchases where Payback card needs to be swiped, one can’t quote the card number or his phone number.
T24 GSM – The credit note comes along with the invoice. User needs to go to another section in the store. One would take the pain of standing in queue at the credit redemption section only when the credit amount is too high.
Zoppies – Auto-credited on checkout.
2. Multiple options to earn points:
Payback is accepted at a lot of places including gas stations, grocery stores, online stores, gift shops and all whole of Future Group retail. But the effort of earning points at any other place, apart from ICICI statement, has a certain amount of friction, resulting in lower usage. My credit card covers all my expenses, so around 30 transactions a month.
T24 GSM – About all Future Group stores – including grocery, apparels, electronics etc. Covers all kinds of purchases, hence ends up getting used can come back to it about 2-3 times a month.
Zoppies – Grocery purchase is a weekly activity, so that is about 4-5 transactions a month. There is only 1 store but ZopNow encourages you to change delivery time to a less congested time slot by rewarding more Zoppies. The gain is not mentioned as 10 more Zoppies (only Rs.1), but “25% extra Zoppies”. Higher numbers is always better. Zoppies system is Ad Valorem but not linear – higher the billing amount, higher Zoppies earned per Rupee spent.
3. Minimal threshold for redemption:
Payback – Redemption options start at less than Rs.200 worth of points.
T24 GSM – As little as Rs.20.
Zoppies – At Rs.0.10.
4. Multiple meaningful options to redeem:
Payback – Can be redeemed for Gift cards, Fuel cards, Products – as good as cash. Payback has started giving coupons, which are readily available, labelled as Gift Vouchers – this reduces the value.
T24 GSM – Mobile Talktime is almost a currency at low denominations in India. T24 GSM’s network quality becomes a major deterrent. One can only use it as an extra phone for outgoing of random calls or for the household help.
Zoppies – As good as cash at ZopNow for your next grocery purchase, which is bound to happen within the next 20-30 days.. The dropping out customers can be emailed to redeem their Zoppies.
5. The rewards numbers/value should be high and quantifiable:
Payback – Each payback point is about Rs.0.25 in value during redemption. This value is not mentioned anywhere explicitly. Earning a point is variable depending on store. The effective reward value could be as low as 0.01% of money spent in case where there is no Ad Valorem credits.
T24 GSM – Effective about 1-2% in talk time.
Zoppies – Each Zoppies is Rs.0.10. The effective reward on money spent is 1-2.5%.
All of these sound so trivial, yet no one has been following these simple rules. I hardly save Rs.5-10 every week due to Zoppies but this reward system is so well integrated to the ZopNow experience that they can easily influence our behavior by using this system. Though this system is almost like a closed wallet but the way ZopNow has leveraged this is commendable.
ZopNow will gain majorly by enabling trials of PCGs (Packaged Consumer Goods) and that is when Zoppies will convert from an expense head to a revenue head – earn Zoppies to write testimonial and feedback on products – remember those slogan contests. Indirect competitors, like AaramShop, are targeting this market primarily.
There is an entire industry trying to accelerate the trial of PCGs through rewards such as talktime, movie tickets (Winpin from bookmyshow), free salon/spa experience, mail in rebates (not very popular in India). There is a need for a common currency as rewards for trying new products. The currency has to be valued by the consumer and the cost of distributing that currency has to be minimal.
The currencies mentioned above are inefficient in a way that the rewards delivered to end consumer is at times lower than the overhead incurred. As a result the enabling agencies have to squeeze margins. To make up for the profits, they make the redemption system so complex that they end up earning more from leakage/non-redemption than from the actual agency fees. There is need to change that now and ZopNow seems to be on track for that.
Well, you would never hear a product manager introduce themselves as “Manager.Product Manager”, but there are lot of similarities in characteristics, attitudes and approach to problem solving that reminds you of James Bond or Lara Croft! Here are 10 similarities and my interpretation (with a sprinkling of advice to the uninitiated) of what it means for product managers.
1. Undying allegiance to the Queen of England = Undying allegiance to the customer!
James Bond: The overarching goals of any mission is very clear, nevermind the taunts of rogue agents and villains!
Product Managers: Having clarity at all times on why we are doing a feature or a product or a distribution partnership and how it impacts the business and customers is crucial. Not only to explain to oneself but also to anyone who asks! Keep a maniacal focus on customer delight.
2. Riding bike on roof tops in hot pursuit = Making do with scarce resources!
James Bond: He can get out of any situation when you almost thought he was cornered. Even with no weapons and in entirely alien hostile conditions, James Bond will figure out a way to beat the enemy. He is trained in martial arts, a dozen languages, deciphering body language and of course possesses immense strength and skill.
Product Managers: Not as glamorous, but aggressively prioritizing features with a deep understanding of customer needs, creating insanely delightful products with not more than 6 member teams and working really hard to meet the time to market needs is the stuff product management legends are made of.
3. Diplomatic, Passionate and Decisive = Diplomatic, Passionate and Decisive! We are tied at the hip on this one!
James Bond: Always smooth and suave,charming and eloquent. Knows how to make the other person feel important to get the job done.
Product Managers: Diplomacy with stakeholders in selling a vision or working through the details, pushing a project for the sake of customers. And yet carrying along the team with decisions.
4. Q = Love for technology!
James Bond: James Bond loves gadgets! Especially the Aston Martin cars! However, when it comes to using them he doesn’t care about how beautiful they look. They are all deployed, even stress tested and sometimes abandoned in serving the mission!
Product Managers: Ready to tinker with new developing technology! Not afraid to break it open and understand the strengths and limitations. Still, having a firmer view that ultimately technology is an enabler. It needs to be serve a bigger purpose i.e. the business needs.
5. M = Executive sponsorship
James Bond: M is the boss from whom James Bond gets instructions and to whom he is answerable on strategic and tactical outcomes of the missions. M has complete visibility into everything that is happening in other organizations including assignments given to other agents. Bond does not always listen to M. He sometimes seeks forgiveness than permission and does what he thinks is the right thing… for the Queen of England!
Product Managers: Getting executive sponsorship is crucial so to garner the right and necessary resources. PMs are answerable to their bosses – Chief Products Officer or CEO on the success of the products and the impact it has made on the lives of the customers and on the profits of the company. There are some PMs who also seek forgiveness than permission and build products with secret resources to avoid premature death of radical ideas.
6. See you out on the field = See you out in the markets!
James Bond: This is where all the action is – where conspiracies get unraveled, pursuits are hot, friends become enemies, enemies become partners and death is just a shadow away!
Product Managers: Ultimately, how many products have you shipped? How many customers have you delighted? How much revenue and profits have you brought in to your business? How did you encounter technical, business, people challenges while doing so?
7. Moneypenny = Fans and Supporters
James Bond: Moneypenny is a staunch supporter of James Bond!
Product Managers: Always creative and with a mission to delight, product managers should not ignore the need to build friendships and alliances and forge partnerships even when there is no agreement.
8. The Villain = Competition!
James Bond: Some villains are elaborately complex and some are just evil geniuses. For e.g. the guy who ran a huge criminal network just to be able to write tomorrow’s news! Lopsided cost/benefit!
Product Managers: Sounds familiar? The villain is really the complexity. If a product manager can hide the complexity behind simplicity with awesome product design, then they have beat the competition.
9. The girl who gets killed in the middle of the movie = Crossing the Chasm My apologies if anyone is offended by this casual statement, but if you are a fan of James Bond, you know this happens all the time in the movies. James Bond: The girl who works for the villain and who helps James Bond get close to the villain knowing fully well that she could be compromised in the bargain! Product Managers: A product has early adopters. To think early adopters as the only market and not have the vision to grow the markets would be defeating. Product Managers need to have a deeper understanding of the market plot and craft success with appropriate differentiation strategies.
10. Bond girl rescued in the end = Happy Customers and Insane Profits!
James Bond: Beat the villain, save the world from disaster with milliseconds to go, and get the girl! Check.
Product Managers: Hmm.. let’s see.. Beat the competition, delight the customers and drive profits! Check!
[Editorial notes: Guest article contributed by Bharath Mohan, Cofounder of Pugmarks.me]
Its 3PM and you are engrossed in a discussion with a new found acquaintance, discussing the future of technology. Your phone beeps. You think its a message from a friend. It is your phone itself, “The next meeting you have may take 40 minutes from where you are – there’s a new traffic situation. You should be leaving now.” You are about to meet a famous investor. Yes, you are prepared for the meeting. You have all the questions about your business answered. In long and short. You feel prepared and powerful. But how about knowing something other than business, that you can talk to him for the first few minutes of your meeting – just to cool the nerves? You open the last email he sent to you – hoping to get cues somewhere. Flash! He has an opinion on the Open Data Project. That’s something you know a bit about.
Its the weekend, and its 12 PM. You are considering what to do. Lunch at home, or meet a few friends at a restaurant? Your phone beeps. There’s a new restaurant two blocks away, and they serve exquisite Mediterranean – something you love.
Monday, and you are waiting in the airport, traveling to another city to make a business deal. You’ve checked in and have an hour to kill. There are a 100 other people with an hour to kill. Should you slip into a book, or make a new contact? You are now used to your phone giving you surprises. There you go! A CIO of a medium sized company is in the same plane. You also seem to have friends in common. You have just killed an hour, and knocked on opportunities.
Are these warm up scenes from a sci-fi movie? Or are they preludes to a visionary book on the future of technology? Wrong. These are actually happening to people right now. Check out some product promos that offer these experiences.
These are not just promos. People are “getting” them, and even blogging about them. Here’s Fred Wilson – a famous VC, writing about his experience with Google Now.
This is the dawn of Context Engines.
What is a context engine?
We all know about search. There’s this text box. You type some text in, and it gives you results – largely relevant to what you asked. Sometimes, they know who you are, where you are asking from, and tailor results to suit you better. Now what if you can get information without asking for anything? What if this super-smart engine guesses exactly what you need, in the context you are in, and gives you something useful? Thats a context engine. There is no mind reading here. Just plain algorithms playing on a lot of data the “cloud” knows about you – of course with your permission. We are just scratching the surface of possibilities here.
Just by being yourself, at the place where you are, knowing people you’ve known, and doing the things you are doing – a lot can be guessed about your context.
Most of your life is now digitized – you have a search history, you’ve searched from your office and home – from the Macbook Air, and the latest Android phone. Your professional network is known. Your classmates from school are on Facebook. They have their search histories, and connect to the web from their devices. Your life is digitized. Your friends’ lives are too.
Now what about the things you are doing now? Or going to do soon? Your phone knows that its lunch time now, and its a week day. Your calendar knows that you have a meeting at 3PM with this new Marketing person – who’s profile is also available. You are just reading this article on segmentation strategy. What you are doing now – is also digitized.
There’s more. What do you normally do at 6PM on a weekday? Worry about the commute back home. And how is this different from what do at 6PM on a weekend? Where should we do dinner. What do you talk with colleagues you meet everyday? News. What do you talk with someone you are meeting for the first time? Your life’s summary. History. There are patterns in human behavior.
Now connect the dots. The context engine knows you, and your taste. It knows your friends and their tastes. The context engine knows what you are doing now. It has learnt patterns in human information needs over time. It knows if you are doing something routine, novel, or extra ordinary. Putting all of this together, it guesses what would be the most useful information to you – right now!
For a context engine to be successful, it needs to crack many multi-disciplinary challenges. Smart algorithms for context understanding, design innovation to interact with users, address privacy and security considerations of users, and market an unknown latent need. To make things tractable, the products are taking one aspect of your life at a time. Google Now is going after your lifestyle. Tempo.AI and CueUp are going after your calendar and time management. Pugmarks.me is going after professional online reading. Each of these domains will have different rules to deduce context – which we’ll cover in following posts. There are some common characteristics irrespective of the aspects they cover.
Common characteristics of context engines
Context engines have to be there with you, when you are doing things. The curse of any recommender system is that a user never asks for one. The recommender system has to just be there when the user is doing something, and make a suggestion. If the user loves the suggestion, there’s wow – like in that Fred Wilson article. If he hates it, there are curses. This is why context engines have to neatly fold into the experience of something you are doing already. Google Now is slipped into that Android device. Tempo.AI is slipped into a compelling calendar app. Pugmarks.me is a browser add on.
Context engines have to be extremely interesting and precise.
Do you recall Clippy? That annoying personal assistant on MS Office, that’d popup and tell you the obvious. “I see that you are typing a letter, do you want me to help?” Context engines that say the obvious will be shunned. They have to tell something interesting every time they show up.
Context engines cannot make errors. Even a right thing, if told at a wrong time is annoying. They cannot make an error in judgment and notify the user at a wrong time. Once they’ve caught his mindshare, what is said – better be precise. The user is in no mood for mistakes.
These add considerable design challenges to context engines. Google Now was not released to the whole world from day one. They chose a small section of early adopters, by restricting to Jelly Bean. Its not available on the iOS or the earlier Android phones – even though there’s nothing that prevents them to launch. They wanted to delay the user acquisition – constantly learning from user reaction. Raj Singh of Tempo.AI speaks of how they’ve been delaying a big launch – after studying user behavior. This is something we understand at Pugmarks.me. With a Chrome browser plugin thats always on the browser – we had to say something useful, and never annoy users. One misbehavior would cause angry users to uninstall us.
Context engines are personal, and should offer personalized recommendations.
I may love Mediterranean food, but only during lunch time. You may love Greek, but only on weekends. A personal assistant that gathers your trust, must grow on it – on continued usage. It should offer explanations, ask for feedback and constantly learn and react.
Personal assistants are long term companions.
Its like marriage. Personal assistants have to find that sweet spot where users will continue to have them even after the honeymoon phase. Users need to feel in control.
Context engines are here to stay. You’ll see a lot more of them in the near future. Your kids will wonder how life even worked without them. So get ready to know them better in some of our following posts. We’ll cover “The rules of context”, and “Security considerations in context engines” soon.
Shoaib Ahmed is called the enterprise specialist at Tally Solutions, one of the few successful software products from India that has stood the test of time. Ahmed is one of the few who have stuck around for long enough to see how technology has changed everything. We are talking of the early 90s when you had to print barcodes using a dot-matrix printer and stick it on merchandise to automate retail outlets to this day, when shops have radio based perimeter fencing which talks to a smartphone app and delivers deals on the shoppers mobile phone.
As the president of Tally, he heads sales and marketing and was instrumental in setting up the company’s partner network which has now proven to be the company’s most potent weapon against the entry of multinational companies which have recently entered the market. We caught up with him last month to understand a thing or two about software products and building to last. Tally has over 7.5 lakh licensed customers but if you include the unregistered ones, its easily over 20 lakh, estimates Ahmed. Here are some lessons from the Tally story:
1. Many companies have developed business management and accounting software and gone after the small and medium user. How does Tally maintain its leadership. What can entrepreneurs emulate?
There a few key elements to it. Firstly, the sharpness of the delivery of the product. The ability to deploy and start using the product within 60 seconds, even when you are early in your product life cycle is key. For Tally in the beginning, while functional capabilities were limited, it was easy to deploy.
Secondly, the ability of the customer to intuitively use the product. I could go on about this.
The next element, is the simplification of customer engagement while he or she is making a buying decision. The product must be clear about delivery and the pain point it solves and there should be no confusion when it comes to pricing. We used to have a simple pricing. There was no opportunistic pricing (per seat licenses) when we launched. That’s because once the customer wants the product, it should be easy to make the buying decision. They shouldn’t worry anymore about what happens when I grow bigger than the 10 seat license I have. It all comes back to productization.
2. What’s next when you scale up?
As customers grew, the next issue is how do you ensure that the entire ecosystem which includes education institutions, chartered accountants etc continue to recommend Tally. Word of mouth is a very powerful method and if you want to make everyone succeed, it becomes effective. The sales and marketing needs to be designed in that way. This means creating a strong backend as well so that its easy to work with partners and the field sales team.
3. What’s unique about the Indian market?
Indian market is a reach-out market. That is, people will buy from a trusted vendor and they want someone to come and install it for them. Keeping these in mind, we developed a robust partner system where even if someone comes online and buys, the partners still get a commission. Because the customer has finally come to buy because the partner has worked in the market.
Constantly updating the product is also important.
4. How does cloud computing change the game?
For a customer, it doesn’t matter. The whole world is moving to the cloud. But what is right for the customer? As far as Tally is concerned, one of the first problems we solved was deployment. Most companies are now using cloud to make deployment easy. But thats something we already dealt with.
Many companies that offer cloud, the cost of license is high. We priced it in such a way that everyone should be able to afford it. We also offered the customer a rental per month license. So those were already available when cloud came along.
Yet, three years ago, we launched Tally.NET, our cloud based solution. This will help customers to access data from anywhere or on multiple devices. For instance, a Chartered Account can work from his home or office to audit a company. More than half of our users have already signed up for the cloud product.
5. What was your entrepreneurial journey like?
My journey as a startup? Desperate (laughs).
That was the time when PCs were launched. That was the year of inspiration that software will be the next big thing. There was an opportunity to develop a software for a customer who was ready to pay for it. Mine was a pure customer funded journey. It was an accounting software till Tally came and wiped us out (laughs). Vedha Automations Pvt Ltd, our company was sold to Tally. We started the product called Shoper.
It was in 1990. We focused on retail more as a strategic reaction to Tally. When they came and took the accounting space, we realised that there was no point competing here. Retail wasn’t addressed by anyone there. We were the first to bring barcoding, first to bring Point of Sale machine and we innovated on every product. Those days we printed bar codes on a dot matrix printer. My first customer was Prestige, when they were just moving to real estate. He had garment and textile retail shops at that time. My first corporate customer was Madura Garments. In 10 years, before they grew big and put in SAP, we were handling all their systems. So we had a deep understanding of the entire supply chain and productizing retail. Today, Shoper is still on the Tally site.