Customer & Market Analyses for Focus and Validation

Customer & Market Analyses for Focus and Validation Instructor: Gregory H. Watson Introduction to Strategy, Technology and Integration ETM 5111 Session 1 – Part 3

Looking at the way we really work: To our customers, we look like this.... $ £ ¥ Desired Results But, to ourselves, we appear differently.... To ourselves we are a complex network of systems, structures, processes, and people. How we combine to do the work of our “black box” is described by the process model of our business as cascaded down to the level of our individual work activities.

Y f (x) = INTERACTION Customer Supplier Need Do Non-value- added cost Missed Opportunities Begin with customer value: How do we increase the value delivered to customers? Customers and suppliers develop a mutually-dependent value proposition through this “need-do” interaction.

f (x) = Y High Quality Customer Requirements x1 Superior Reliability Process Capabilities Robust Process Predictable Factory Customer Satisfaction Business Results Consistent Performance x2 “Robust” processes drive a predictable factory: it is able to accept input variation without changing output variation. On-Time Delivery Material Capabilities Lower Costs x3 …Customer satisfaction is a significant business driver! The total relationship...

Customer-oriented self-assessment: Review your approach to customers to determine how well they are being served. A few of the issues that should be addressed include the following questions: • Where do we deal with customers (where do we interact with our customers (touch-points)? How good do these processes operate? What is our customer’s opinion about our way of working? Is there a gap between our perception and theirs? • Where do we collect customer information? • What do we do with all the information we collect? • How do we use it to improve our services? • How do we use it to improve our new products? • How do we use it to improve our customer relationships? • What additional information do we need to collect? • How can we use the information that we have differently? • What are our priorities for performance improvement for customers?

Basic customer questions: • Who are our customers? Which of these customers are the most valuable to us? • What is important to these customers about the goods or services that we deliver as well as our relationship with them? • How do we know how well we are performing in the eyes of these customers? What measures do we monitor for this performance? What customer events trigger a strategic response that changes our business operations? • What other organizations are providing our customers with similar goods or services (these are our direct competitors)? What other organizations could choose to provide our customers with similar goods or services (these are our latent competitors)? • Who is best in the eyes of our most important customers? • What differentiates these top performers from their competition? “To obtain sustained success measured by business results, excellence must be expressly embedded into your customer’s experience.”

Defining the “customer problem:” HYPOTHESIS: Customers will not repurchase a company’s product if they are not satisfied with the performance of a current version of that company’s product. COROLLARY: The stronger the degree of satisfaction with a company’s current product the greater the likelihood that a customer will repurchase similar products from that company in the future.

Satisfaction or loyalty? Which is the proper measure of performance? • Satisfaction: Satisfaction is the relative degree of acceptability from a response to a customer’s requirement. The more closely aligned with the expectations of a customer, the higher the satisfaction level. This must also be measured relative to options for achieving the same expectation -- either from direct competitors or alternative sources. • Loyalty: Loyalty is the combination of willingness to provide references to potential customers, willingness to reconsider for the next similar purchase, and the actual behavior at the time of repurchase when compared with alternative choices for similar goods or services.

Customer Loyalty Surplus Cash Reinvested Growth Superior Customer Value Investor Loyalty Right New Employees Compensation Advantage Right New Investors Employee Loyalty Profits Cost Advantage Superior Productivity Loyalty stimulates continuous growth! Right New Customers

Customer focus or brand focus? Where should loyalty be encouraged? • Customer: A customer is most strongly influenced by the quality of the latest engagement that they have with a company in their relationship with it. Customer satisfaction is the perception of a level of performance by an individual which is then combined to provide a collective view of the market average viewpoint. • Brand: A brand represents the effect of a company’s sustained performance over time. Brand is the image that is imposed by the actions of a company upon its market. Brand has a unique point of origin that may be different from or aligned with the individual product concept perspectives. Brand is the enduring value of customer experience.

Who are your customers? There are three categories of customers: • Surrogate Customer: The driving customer in many business organizations is the top management which is responsible to obtain investments, define products, seek markets and define the work that the organization performs. • Internal Customers: Colleagues who collaborate together in order to deliver the products or services requested by their external customers. One can differentiate between two kinds of internal customers: those that depend on your work output and would be willing to pay for it if they had to, and those that would not want your output if it was just produced for them. • External Customers: People who consume goods or services received from an organization – they always pay! In the final analysis only external customers really matter – everyone must maintain ‘line-of-sight’ to their needs!

What do external customers want? • External Customers may be further divided into: • End User (Consumer): Individual purchaser of products • Economic Customers: Large purchasers of products • Investors: Investors who provide funds for business growth • Advisory: Stock analysts and other third party advisors • Regulatory: Governmental regulators for safety or business • Public: Citizens in all local communities • Customer requirements: • Desired performance: Innovative customer experience at the “delight” level • Preferred performance: Targeted response level to customers • Acceptable performance: Minimum level without causing any customer dissatisfaction What do we offer as a service guarantee? Do our customers care?

Requirement Critical-to-Quality Output Minimum Customer Type by Requirement Measure Performance Feedback Customer for Customer (CTS) Standard System What is their threshold? What is their requirement? How do we deliver it? Who are my customers? By what means will we know? Customer requirements matrix:

Customer Satisfaction The degree that customers appreciate the product or service offering and are willing to recommend it to others, and follow-up with a purchase at their next point of need. DESIRED DIRECTION • Degree of Fulfillment The degree to which the design of a product or service is able to perform its designed function relative to the capabilities of the competing products or industry standards. Better design leads to enhanced relative position of the product or service as a choice for customers. BAD PLACETO BE! Understanding the playing field:

Dimensions of performance quality: Must Be Quality Requirements: (also called expected, implicit or basic quality requirements). Customers expect this requirement to be consistently met by a product. Dissatisfaction is increased if the requirement is not met, but satisfaction is not increased if the requirement is met. Requirements are “dissatisfiers” (not delivering customer satisfaction) or “satisficers” (delivering compromises in performance that do not fully meet the promise leading to satisfaction) – the company wants minimum cost and no additional capability in these areas because they do not influence purchasing decisions of buyers. Poor performance evokes negative customer emotions. One Dimensional Quality Requirements: (called normal, competitive or explicit requirements). These ‘checklist items’ will deliver the either satisfaction or dissatisfaction, based upon degree of fulfillment of requirements as compared to competitive offerings. They are called ‘one-dimensional’ because they focus on how specific quality aspects are delivered. Attractive Quality Requirements: This function reflects all of the undiscovered quality requirements that may be a surprise to the customer because these requirements anticipate a customer’s need and delight them when customers discover the utility provided in their application. The customer is not aware of them – so if the requirement is met, then the customer is excited by the surprise provided in the design. However, if the requirement is not met, the customer will not be dissatisfied because they were not aware of the need in their first place. This quality function builds competitive value in a product or service. These requirements are the ‘exciters’ in the customer procurement process. They invoke a positive emotive response from buyers.

Customer Satisfaction Attractive Quality One-Dimensional Quality • Degree of Fulfillment Must be Quality The Kano “theory of attractive quality”: Dr. Noriaki Kano Tokyo Science University

Customers don’t know what they need! • Product features may be characterized using three different curves on this grid. One of these curves represents the openly stated or explicit purchase requirement (this is what Dr. Kano calls this the “spoken” requirement for product features or quality characteristics). In addition to this description of the data relationship, there are two more curves which represent differing types of “unspoken” quality requirements for product features or capability. The first type is unspoken because the requirements are so well known that they are assumed to be obvious to any “knowledgeable” consumer. In the second relationship quality requirements remain unspoken because they have not been discovered by the consumer and they have no idea how this type of application can increase the value of their work or personal activity by it’s existence. • Let’s consider each of these relationships in turn in order to discover their implications for product development.

Customer Satisfaction Unspoken Quality Characteristics Spoken Quality Characteristics • Degree of Fulfillment Unspoken Quality Characteristics The Kano “theory of attractive quality”: Dr. Noriaki Kano Tokyo Science University

Dimensions of business quality: • Compliance Quality – The ‘must be’ quality requirements can be thought of as compliance quality – delivering the minimal level of requirement that is deemed essential by customers. People do not make purchasing decisions based on compliance quality items – it is only a minimal consideration – competition is based on price only. • Competitive Quality – The ‘one-dimensional’ quality requirements can be thought of as competitive quality – comparative performance in delivering these requirements results in marketing success. People make most purchasing decisions based on relative choices between offerings as differentiated on these features. • Innovative Quality – The ‘attractive’ quality requirements can be thought of as the results of innovative quality – creative analysis and consideration of customer needs and the customer’s application environment leads to an introduction of new product features or the reformulation of product features in a way that is more appealing to customers and provides a unique approach to the product.

Customer Satisfaction Innovative Quality Competitive Quality • Execution Excellence Compliance Quality Kano’s model revisited for business quality: Gregory H. Watson Business Systems Solutions, Inc.

Competitive products win consumer choice: • Products that are represented by the middle curve have one common characteristic: the customer is able to define what their purchase criteria are for evaluating differences among the various competitive offerings. This “spoken need” is a set of criteria which, when most fully fulfilled (e.g., “best” execution excellence of the design) yields the highest level of customer satisfaction, and therefore also wins a sale for it’s company. • This middle curve represents a traditional perspective of a competitive market as described by Michael Porter in his book Competitive Strategy. However, this curve does not provide a complete description of these relationships. Two other curves need to be considered in order to understand the relationship between customer satisfaction and product design.

Competitive Product Features Customer Satisfaction • Execution Excellence The better a product is designed, the more likely it is to achieve higher satisfaction with its intended customers. In addition, the more poorly executed product (or service) designs are most likely to dissatisfy customers. This relationship is true for each feature included in criteria used for customer decision-making. Competitive Performance Differentiated products earn market share:

Commodity products compete on price: • Products that are on the second curve are “assumed products” in other words, customers do not speak about their most basic requirements for product performance and ‘assumes’ that each of these product design fundamentals are understood by all of the most serious bidders for their business. This is also called “unspoken quality” because these requirements are not stated explicitly by the customers, nor are they considered in the set of purchase criteria used to evaluate alternative offerings. The customer actually only considers these factors in their absence. • The most interesting observation about this “standard” level of product performance, is that no matter how well these product features are designed, they will never satisfy a customer. Since this set of product features is not satisfying, this implies that competition is only on “price” and that the company with the lowest cost of operations wins the market dominant position.

Customer Satisfaction Those product features that are so closely related to the basic concept that they are not perceived to be in any way distinct from the operation of the product as a whole are called basic product features. These define a product but do not differentiate its performance from competitors. • Execution Excellence Satisfaction GAP Standard Performance Basic Product Features Business controls and compliance quality:

Exciting features satisfy despite design deficiency: • Distinctive products capture the imagination of customers. If a product’s features are so unique that it virtually has no competition, then it has created a competitive niche that it is able to dominate. Note that this will occur whenever the unique features are highly desirable for customer-valued product (or service) applications. When the customer both ‘sees’ and ‘believes’ in the value of the feature a distinction is created that will drive the buying behavior of the market. • It is important to note that features in this category do not have competition. They represent the thought leaders who have established a new frontier in the product arena. This means that there is a desire to possess the uniqueness for many early adapters of technology who will cope with any design problems in order to have the opportunity to find a new way to gain new knowledge using this unique feature.

Customer Satisfaction Exciting Product Features LeadershipPerformance • Execution Excellence The job of design engineers is to find “unknown future requirements” of their customers and to make imaginative use of new technology to create a large gap in satisfaction that will distinguish the product (or service) as truly unique in its competitive market. This strategy can provide “first-in-class” advantage for a product’s position. Satisfaction Advantage Design leadership and competitive advantage:

Eventually innovation decays into mediocrity: • Individual product features can be characterized using this set of curves (e.g., this feature is ranked “exciting” or “standard” or “competitive”) and thereby assist the design team to set design parameters for the feature in order to optimize their requirement and accomplish their design objective. • It is also important to note that these three relationships are not independent, but over time the “exciting” features will migrate into “competitive” features as competitors and the purchasers understand their value. Likewise, “competitive” features will become “standard” as the market accepts their routine benefit and associates these features with the basic product concept (e.g., the ability to steer a car is not a competitive benefit, but it’s absence is much more notable). The law of entropy applies and all features degrade in “competitive significance” over time.

Customer Satisfaction 2 The time that it takes for this transition (“leadership” to “basic” performance) is a function of the viable market life of the product’s innovative “technology.” The effect of gravity! • Execution Excellence 3 1 There is a natural progression in the development of features of innovative products. While the feature will first be introduced in a “leadership” level, it will fall to the “competitive” level of performance, as competitors see its market acceptance. Eventually it will become a “basic” feature of the product as customers expect that all viable products have this capability. This natural transition of innovative product features, leads customers to anticipate certain trends in a pathway of “feature migration.” Each competitor must learn to observe the market place expectations. Customers expect each new product will equal or surpass the prior generation’s capability at a lower cost – at better quality. Entropy influences all products:

Innovation obscures underlying issues: • While catastrophic product failure is never excused by a customer, products at the “bleeding edge” of technology will typically enjoy a high degree of customer’s forgiveness for relatively minor quality issues or bugs. This occurs because “early technology adopters” realize that they must “pay a price” for being the first to apply the technology, but generally the competitive advantage that is gained by learning how to use a newly emerging technology far outweighs the disadvantage that is suffered from its lack of product maturity. • However, there are two related concerns that these customers share. First, they do not want to feel that they are being taken advantage of by serving as a Beta test site for all new product releases. Second, they expect that problems reported with the product will be rapidly corrected and their operations will not be interrupted as a result of any product-related problems.

Customer Satisfaction More Tolerance for Quality Problems Based on speed of this transition, Six Sigma may be required! Innovative Quality INNOVATIVE PRODUCT • Execution Excellence Competitive Quality Compliance Quality COMMODITY PRODUCT NO Tolerance for Quality Problems Managers must emphasize technology transition!

Leaders imagine the emerging customer needs: • What product development strategy should a company take in order to overcome this application of the law of entropy? In the late 1980’s Hewlett-Packard defined their strategy to pursue IU2N (John Doyle, an HP corporate senior vice president, coined this acronym: “an imaginative understanding of user needs”). At Disney they call those people who invent their attractions “imagineers” to emphasize their creative focus and encourage them to ‘see things differently’. • The net effect of gravity is to loose competitive product positioning (and any market advantage), therefore it is important for a company to continuously refresh its products in order to keep them from becoming commodities and to assure that they are perceived as “innovative.” This product recreating cycle is the driver for introduction of a product line’s continuous flow of new product concepts, each in its own way extending the customer capability in a way that directly improves perceived performance in the customer’s application environment. The customer must perceive “value” in order to maintain an edge.

Innovation LeadershipPerformance But, what is the half-life of “new” innovations in your business? Competitive Performance • Execution Excellence Innovation requires the ‘creative destruction of the comfortable, familiar ways of doing work and embracing new approaches, new ideas and concepts to challenge your historical ways of operating. Standard Performance Loss of Competitive Advantage COMMODITY PRODUCT Customer Satisfaction Success requires sustained innovation!

Technology transition speeds competition! The key question for any company is: what is the speed of transition for innovative concepts to become competitive concepts and then to move on down to the basic product concept level? The time that it takes an industry to accept a technology and for it to become “ubiquitous” within that industry is observable. Once this is known, then an innovative company must change it’s planning horizon to assure that it stays ahead of industry trends. The industry’s planning horizon – the period used to encourage the “creative destruction” of it’s product line – should be set so that the “half-life” of its technology base (half of the industry’s transition time from one generation of technology to the next) approximates the strategic planning horizon. This implies that in some industries, strategic product planning should become a continuous event! Competitive excellence is achieved when a company is able to consistently recreate high levels of “exciting quality” while also paying attention to the foundations of both product reliability and the design of product functions or features which correctly anticipate the true needs of its customers.

Does product line rollover create a cycle of doom? • Better, faster, cheaper are typical comments from customer voices. • Customer expect more capability for equal or lower prices. • New products are the platform for new technologies. • New technologies tend to make mature products obsolete • Product feature proliferation tends to increase application complexity. • Application complexity tends to decrease customer satisfaction. • Lower customer satisfaction leads to decreasing commercial value. • Decreasing commercial value leads to lower market share. • Lower market share leads to insolvency. “Business begins and ends with the customer.” ~ Peter F. Drucker It pays to meet the real needs of customers.

What is the half-life of your technology? • Why set a stretch goal for an organization? It is not because anyone believes that the goal is “correct” or even “achievable” – the reason for a stretch goal is to establish the frequency with which an organization evaluates its performance to determine what requires management attention for strategic change. • Technology half-life is a measure of the time it takes for the turnover in an organization’s fundamental area of technology application (e.g., it indicates the “half-life of change for turnover in technology – for instance in the electronics industry Moore’s Law indicates the rate of turnover of technology for computer memory devices. Half the duration of the current cycle for the application of Moore’s Law would be the half-life for this technology area). • This establishes the minimum frequency for scanning the technology environment to look for changes to the critical technology assumptions in a business model.

Technology Exploiter Positioning Exploiter Companies compete using strengths. CustomerSatisfaction Marketing Agility Product Innovation Business Looser Price Competitor • Execution Excellence Operations Excellence Competitive Alternative corporate improvement strategies: • To achieve business leadership through sustained growth, a company must demonstrate their consistent excellence in at least one of the following critical business competence areas: • Innovative features or concepts • Marketing leadership • Efficient and effective processes Business leaders can not be weak in any of these competencies!

Actions speak louder than words! • It is fair to state: the competitive challenge for any company is to obtain and retain it’s customer base, while at the same time growing into new market niches. A company achieves “competitive excellence” based on it’s ability to grow sales revenue through an increase in transactions with its current customers (growing “product share” within a customer) and by the extension of its offerings to new customers (growing its “share of the market” of potential customers). • Since share of a competitive market place is captured at the expense of an adversary, this means that the winner must be able to provide a perceivably superior product or service and subsequently sustain that performance perception over time as its customers continue their product or service experience. In other words, ability to “perform” is more valuable to a company than its ability to “inform” or advertise.

Business design rule for a competitive era: • If you make a mistake in the bottom two curves, then no matter how innovative your product creation strategy or how extensive your capability to design exciting products and features……..It simply does not matter. Example: The Ford Taurus was one of the most creative new product concepts in automotive history, however, it had reliability problems in it’s drive train, which causes history to judge the initial year’s production as a “lemon” rather than a “leader.” • The Discipline of Market Leaders (Treacy and Wiersema, 1995) describes three ways to deliver value to customers: • The promise made to customers to deliver a certain combination of service, convenience, price, quality, selection, etc. • The set of business processes, cultural norms, operating systems and functional competence that creates the ability to deliver on the value proposition, and • The value discipline that combines the features of their operating model for the delivery of their value proposition in order to be the best in their chosen market. Treacy and Wiersema identify three different value disciplines that create different types of customer value (product leadership, customer intimacy and operational excellence). • The challenge for organizations is to deliver “lasting excellence” as described by Porras and Collins in their 1995 book Built to Last – business leadership through sustained growth. • In Lean Thinking Womack and Jones (1996) focus on the methods for creating value for their customers – the value stream flows smoothly from a pull of customer demand through the processes for delivering that demand.

Which customer viewpoint is right? External Customers: • Application User – Customers who use the product or service. • Economic Buyer – Customers who make the purchasing decision. • Business Designer – Managers who integrate products for their use. • Product Reviewer – Third parties who publicly critique the product. • Latent Customers – Potential customers, not yet realized. • Customer Persona – Personalization of significant customer archetypes. Internal Customers: • Design Engineer – Designers interpret technology applications. • Marketing Analyst – Analysts determine competitive needs. • Cost Accountant – Accountants determine appropriate pricing. • Product Line Planner – Planners assign feature introduction sequence. • Surrogate Customers – Decision-makers who act on customer’s behalf. How do you listen to the voice of innovation?

Listening to the customers’ voice: • The Voice of the Customer is often very different from the words that the engineers of product planners use to define a new product or specify service improvements. In order to make the right design decisions, companies must collect and organize the words and phrases of customers and create a structure that reflects the relationships and importance of the various needs. Only when the Voice of the Customer is known and also understood can products and services be created that will excite and delight customers. • Customer attributes must be analyzed carefully before making design decisions. Some attributes will be expected by every customer – a cost-of-entry feature without which you cannot be competitive. Others will be the more common type where improved performance leads to increasing satisfaction. And a few may be the type that customers do not expect, but which can provide an opportunity to truly excite and delight. When used in a QFD analysis, the Voice of the Customer is organized into a hierarchy that is matched systematically against internal performance measures and engineering characteristics. The importance of each attribute at each level is typically assessed to facilitate tradeoffs and permit the entire design and development team to use a common understanding of customer information to support all customer driven decisions.

Voice of the Customer Narrative Commentary Application Context Customer Demanded Quality Level Kano Attractiveness Level Regulatory Required Minimum Customer Importance Customer and Application Deposition Analysis Industry Company Position Person Where What How When Customer tables define market focus areas: Customer Table Customers Tend to Mumble: “The eminent linguist, S. I. Hayakawa in Language in Thought and Action (1990) defines three major types of language data. When customers speak they mumble all three together which makes understanding their true needs difficult. Reports are verifiable, inferences are a statement about the unknown based on the known, and a judgment expresses approval or disapproval. To the QFD team, verbatim customer language data will contain a mixture of requirements (reports), wishes (inferences) and complaints (judgments).” ~ Glenn Mazur Focus customer tables on customers that transition the market.

Common errors in customer analysis: Problem with customer tables – is the average response required or is a specific customer response desired? This is a critical consideration – if the average is required then the product is positioned for a mass market, not for individual decision-makers who purchase the product. What is the alternative? Choosing the specific selection criteria for which a product is optimized based on the understanding of a specific customer segment that is important to the purchasing dynamic of an entire market. • Errors in Analysis: • Failing to recognize data sources • Transitioning variable data into attributes • Tyranny of the mean – missing variation • Failure to specify true logical sub-groups • Confounding data perspectives • Performing math on secondary functions • Weighting data based on analyst opinion • Failing to plot both variation and average • Failure to understand sample size impact • Drawing conclusions that are not warranted • Quantifying the unquantifiable • Indexing data – obscuring facts • Generalizing conclusions from a single sample “The average almost never happens!” ~ Jack Welch, GE

Understanding the customers’ voice: • It is essential to investigate and probe behind customers’ actual words to get at the real underlying need and their true requirements. If we do not do this, we can wind up with a Voice of the Customer that is weighted toward common knowledge and current ways of doing things. When this happens the subsequent design activities will be unnecessarily constrained and new insights will be much less likely to emerge. We have to continually ask our customers “Why is that a benefit?” and “You want that so that you can?” But even then there is no guarantee that the customer will be able to think ahead of their current need and extrapolate future needs. • Market research captures data about customers and looks for trend information – summarizing what is known according to the artificial categories used for combining data called ‘segments.’ • Consider a lesson learned from technology diffusion theory – not all customers are of equal importance to the commercial success of a product or service. So, how should the relative importance of the customer types be factored into product design?

Gaining clarity to become competitive Is this the next step to gaining customer knowledge? • In The Inmates are Running the Asylum Alan Cooper (1999) presents the thesis that ‘software products fail because of a lack of knowledge of the user’s requirements.’ • Cooper recommends creating personas – psychometric profiles that define conditions of purchase for ‘customer types’ in each of the market segments to put flesh and blood into their understanding of the customer knowledge gained in research. Cooper emphasizes what the person does with the product, not what will cause them to buy the product. These personae are ‘developmental archetypes’ that can be used to test creative applications of emerging marketing concepts or new product features. • Taking this idea one step further, a company should focus on those personae that produce clarifying knowledge about early adopters – segmenting by early adopter archetype until the market transition path across this market segment (only 13% of the market must be investigated in depth) is clearly defined. • This can be modeled as a Bayesian-based Markov chain. Sequential events and transition probabilities define how this market moves and the definitions of personae bring it to life in a human form.

Cycle of Doom! FACT DATA INFORMATION KNOWLEDGE UNDERSTANDING Beware the knowledge trap! How can you lose the competitive battle for customers? • Ignoring the voice of the customer • Focusing on too broad a customer requirement • Focusing on too narrow a customer requirement • Allowing technology to drive product definition • Misapplying data analysis and confusing knowledge with wisdom “Wisdom is the fruit of understanding….”

Technology Forecasting &Innovation Management Instructor: Gregory H. Watson Introduction to Strategy, Technology and Integration ETM 5111 – Summer 2003

We assume = But actual = Exponential function (ex) S-curve function The patterns of progress: • Each of these functions has an implication for how we do business. • The exponential function (used for compound growth) assumes that there is no end to the period of growth. • The S-curve has the same optimistic rise in the curve function, but reaches a point where its growth slows down and stagnates. • Which function best describes your industry’s potential today?

Post-Industrial Industrial Progress Agricultural Hunter-Gatherer Time Consider the history of mankind:

Pattern of evolution: Characteristics of Progressive Evolution: • Series of S-curves • Evolve out of discontinuities • Organization comes out of a fractal process • Succession of the dominant form • Increasing intricacy, complexity and interdependence • Backward integration • Accelerating rate of change past inflection point Pattern: • Inevitable and unpredictable The same pattern is observed in technological evolution!

END GAME • Increasingly hard progress • Rapidly declining payback START • Little related prior knowledge • Slow hard progress • Much effort - low result • Little Industry Infrastructure • Few Players • High Failure rate MID Measurement • Exponential Progress • Good Results with Reasonable Effort • Strong Industry infrastructure • Many Players Time Three phases of an S-curve:

Customer & Market Analyses for Focus and Validation