Getting It Right the First Time

1. Getting It Right the First Time Anticipating demand for innovative products

2. John Katsaros • John Katsaros - Internet Research Group • IRG is a research and consulting firm focused on the interaction of networks and applications (“infrastructure”); for example security. • IRG helps companies accelerate revenue, profit and market share when dealing with “disruptive” markets • Twice monthly newsletter on infrastructure & security – to subscribe send a note to jkatsaros@irg-intl.com

3. Eric Jackson • Eric Jackson – DeepWeave & Class VI Software • DeepWeave is advisory company for software product strategy and marketing. • Class VI Software develops online tools to help entrepreneurs assess and improve their businesses. • Launch: 1/1/2008 • 20+ years product development experience • Distributed storage, disaster recovery, electronic design automation, process & physics modeling • Contact: eric@deepweave.com

4. The Book

5. Agenda • The Problem • The Solution • The Methodologies • Q&A

6. The Problem “Getting It Right the First Time: How Innovative Companies Anticipate Demand”

7. Disruptive Innovation • Clayton M. Christensen, The Innovator’s Dilemma

8. Disruptive Innovation • Clayton M. Christensen, The Innovator’s Dilemma

9. Disruptive Innovation • Clayton M. Christensen, The Innovator’s Dilemma

10. Principles of Disruptive Innovation “There are times at which it is right not to listen to customers, right to invest in developing lower-performance products that promise lower margins, and right to aggressively pursue small, rather than substantial, markets.” • Clayton M. Christensen, The Innovator’s Dilemma

11. Disruption • High tech progress (e.g. Moore’s Law) is often disruptive • Disruption is not just about technology products • It is usually technology-enabled • Disruption is Good: An opportunity for value and wealth creation by new entrants and ideas • Disruption is Challenging: You can’t use standard market research methods • Principal #3 of disruptive technologies: “Markets that do not exist cannot be analyzed” The Innovator’s Dilemma – Clayton Christensen • Our version: Markets that do not exist cannot be analyzed using traditional techniques

12. Rapid Change, Emerging Markets • Disruption is a specific technology phenomenon, but . . . • Offers vital insight into other rapidly evolving or emerging markets • Watch for related offers that are • Lower quality • Applicable to fringe markets

13. Examples • Disk drives & mechanical excavators • Classic disruptive technology • Music and video on the internet • Foreign Manufacturing • Grocery Business: EarthFare (& Whole Foods, Wild Oats, etc.)

14. What About Right Here, Right Now? • Manufacturing • Health • Grocery • Real Estate • Tourism • Where are the emerging opportunities and threats? • Hint: what new thing are you dismissing?

15. The “Standard” Approach • Market investigation by exploratory selling • Invent the product (technical vision) • Build the product • Ramp up marketing and sales • See what works and refine product and marketing • The problem with this approach • Money is wasted (inefficient early sales) • Time to revenue suffers, market share is lost It often doesn’t work

16. Times Have Changed • You used to have more time • Disruptive change took time: there was a lot of track to put down first • Our “OnDemand” world • Rapidly moving • Financially and competitively demanding • Time now really is money • Usually the infrastructure is already in place • The mistakes can be monumental

17. “Getting It Right the First Time: How Innovative Companies Anticipate Demand” The Solution

18. Our Thesis • Any important emerging market will have important precursor activity now • “Follow the money” • After the fact you can find at least 100 people who can honestly tell you that they knew what was going to happen • Not gurus or visionaries • Rather participants in nearby markets • Early adopters of the technology for business gain • They are “Experts”

19. Looking “Under the Radar” Disruptive Market Event Awareness Time

20. Looking “Under the Radar” General Market Awareness Awareness Limited Market Awareness Time

21. Looking “Under the Radar” Surveys Focus Groups Polls General Market Awareness Awareness Limited Market Awareness Time

22. Looking “Under the Radar” Surveys Focus Groups Polls General Market Awareness Awareness Limited Market Awareness Time Expert Interviews

23. Expert Interviews • Step 1 – Brainstorm the possible applications for who will use what you are building • Step 2 – Identify and interview experts who are likely to be involved with these applications • Step 3 – Develop a dream team of customers, business partners and channel partners

24. Expert Interviews Let You Look Into The Future Success ? Time

25. With Expert Interviews You Can Anticipate The Level of Success Outcome “A” Outcome “B” Outcome “C” Success Time

26. Applying What Experts Tell You • Anticipate Market Changes • Improve Decision Making • Reduce Risk • Develop Strategy • Strategic Positioning • Market Identification & Segmentation • Product Roadmap • Identifying the NEXT BIG THING • What are the disruptive events in your sector that will radically increase demand?

27. “Getting It Right the First Time: How Innovative Companies Anticipate Demand” The Methodologies

28. Expert Interview Project Framework • Step 1 – Brainstorm the possible applications for who will use what you are building and then do lots of secondary research • Step 2 – Identify and interview experts who are likely to be involved with these applications • Step 3 – Develop a “dream team” of customers, business partners and channel partners (in a perfect world, what would be involved?)

29. The Basic Methodology Framework Design Project 15% Conduct interviews Internal Team Preparation Perform electronic &secondary research Create interview discussion guide Build expert database Core 80% Conduct primary interviews 5% Prepare findings and conclusions.

30. The Basic Methodology Elapsed Time Design Project 10 Days Conduct interviews Internal Team Preparation Perform electronic &secondary research Create interview discussion guide Build expert database Core 20 Days Conduct primary interviews 3 Days Prepare findings and conclusions.

31. Four Elements of the Process You probably already know 80% of the answer Much of the information you need is with first buyers, first sellers, first integrators and first distributors Find out who has the potential to buy your product (esp. who will spend the most money) Find the killer app – the function that customers most value – and do it or get next to it

32. Focus for Questions • How strong is the need? • What is the value? • What is the potential volume? • What constitutes a complete product offer? • What are preferred sales channels? • What is best positioning? • Follow-up: • Who else do I talk to? • Hone the questions.

33. Methodology Application 1: Segmentation • Market Segmentation • What is the “universe” of market segments? • Which are the biggest market segments? • Which segments most value the differentiated value offering?

34. Methodology Application 2: Positioning • Strategic Positioning • What are the key categories? • Are there new available subcategories? • What position is of most value and why? • What are the key words that you want to own?

35. Methodology Application 3: Product Roadmap • Product Roadmap • What long term “whole product” solution provides the most value? • How can differentiated value offerings be created and sustained in the market?

36. Methodology Application 4: Competitive Analysis • Competitive Analysis • What are competitors telling customers regarding their long term plans? • How are the market segments reacting? • How strongly are the channel/business partners tied to competitors?

37. Keys to Getting It Right • Develop custom list of Experts • Be skeptical of existing Rolodexes • The more senior the interviewer, the better the discussion • Two interviewers are better than one! • Good notes are essential • Interview summaries are helpful “what did we learn” • Don’t believe everything you hear • Experts generally aren’t completely familiar with the breadth of the topic • Let the project evolve to answer the question • As more facts are learned, the questions evolve • The interviewee list will change as the project progresses • Keep to the schedule • Frequent project management meetings is a must • Don’t let too much time elapse between the first interview and the completion of the project

38. Linking To Product Development • Very different from traditional market analysis • Fast, light, simple . . . though not easy • Can link to any development process, but . . . • Rapidly evolving markets require flexible, light and fast product development processes • One example: Agile Development Processes • Software-specific, but concepts apply more broadly

39. Agile Development Methodologies Regular adaptation to changing circumstances Close, continuous cooperation between business people and developers Even late changes in requirements are welcomed Working versions delivered frequently (weeks, not months) & are principle measure of progress Continuous attention to technical excellence and good design Self-organizing teams

40. You Can Try This At Home You don’t need large numbers The process requires more common sense than specialized knowledge Most importantly . . . DON’T NOT DO IT!

41. Q & A