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> Lessons Learned > Strategy &
Marketing
Strategy & Marketing
... Analyzing
the Numbers
... Product Strategy
... Picking a Technology
... Product Development
... Marketing
Analyzing the Numbers
| 48 |
A number has meaning only in comparison
to another number. Common and valuable comparisons include those
made to forecasts, targets, budgets, competitors, historical quantities,
estimates of potential, lifetime totals, grand totals, cumulative
totals, and projections based on a model. For example, all of
my initial sales forecasts showed sales of personal computers
relative to total potential sales, a comparison that yielded much
more information than either number by itself. Generally I do
many comparisons to find the one that offers a special insight. |
| 49 |
If in doubt about how to analyze
a market (or a technology), I learned to drive down to the lowest
possible level in search of an element common to all the pieces.
Then, I compare each of the pieces looking for a difference in
the behavior of the common element. Finally, I come back up level-by-level,
analyzing each one for interesting information. |
| 50 |
You should never base a forecast
on an aggregate number; instead, break it down into components
parts, each one thoroughly understood. |
| 51 |
Whenever I generate an estimate
(a projected value for a number I cannot know with certainty),
I try to arrive at a value using more than one independent method.
The closer the separate estimates, the more confident I am of
the result. |
| 52 |
I always examine the sensitivity
of an analysis to changes in the value of every variable and assumption.
If an analysis is highly sensitive to a number that is hard to
estimate (small changes in the number produce large changes to
the outcome), then the analysis may not have much value. |
Product Strategy
| 53 |
To create something
new, you have to know everything that already exists in the same
area, otherwise it is not even possible to know whether the creation
is new. To create something better, you also have to know why
an earlier inventor did things the way he did. In short, to create
something new, you must be the world expert in your field. |
| 54 |
Technology waves result
from newness overcoming whatever existed before, and their effect
is analogous to a wave at the beach pushing a surfer to the shore.
When successful new technologies move along the s-curve from their
flat, erratic beginnings to the phase of exponential growth, they
give complementary products an added push in the market. The more
fundamental and broad-based the technology, the larger is the
wave and the bigger the push. When I plot a strategy, I always
want as many things as possible in my favor. I want to be riding
waves, not swimming against them. |
| 55 |
It is very expensive
to convince someone they have a problem when they are not aware
of it, whereas people who know they have a problem are already
looking for a solution. |
| 56 |
To successfully replace
a customer's existing method for dealing with a problem, you generally
must offer a solution that is ten times better. A 20 percent improvement
does not even get a customer to raise his head from what he is
doing. A 200 or 300 percent improvement may get him to look a
sales person in the eye. A 1000 percent improvement causes people
to reach for their wallets. |
| 57 |
For a totally new
market: limit the initial product to the essential features-keep
it lean and simple. Then listen to customer feedback and upgrade
quickly. |
| 58 |
I always try to obsolete
my own products before someone else does it for me. To maintain
its market position and price, every year a technology product
needs 30 percent more features, functionality, or performance
that customers want. |
| 59 |
When upgrading or
enhancing a product, it is good to give existing customers what
they want, but it is even more valuable to explore the needs of
potential customers, those not currently purchasing the product.
If possible, meet their needs as well, broadening the appeal of
the product. |
| 60 |
A rule of thumb for
determining whether to include additional features in a product:
If it is possible to communicate a rich, extensive feature set
to the customer, then a product obtains higher entry barriers,
better customer value, requires less shelf space, and achieves
higher sales volume. If it is not possible to communicate the
feature set, your are better off with separate products. |
| 61 |
There is danger in
integrating separate products before the underlying technologies
stabilize, for improvements in the separate products may negate
any advantage of integration. |
| 62 |
It is difficult to
exceed the quality norm of the software industry because you must
build on top of the operating system and use third-party code
to speed development or offer competitive features. You are at
the mercy of the quality inherent in these third-party products. |
| 63 |
Sales volume begets
additional sales volume. |
Picking a Technology
| 64 |
You should never use
new technology simply for the sake of using it-customer needs
should determine the appropriate technology. Interestingly, however,
to be competitive and on the leading edge of those trying to solve
a customer problem, you will often end up using leading-edge technology,
keeping both customers and your own engineers happy. |
| 65 |
For product features
where compatibility is an issue (printers, file formats, etc.),
you must always support the mainstream technologies. On the other
hand, you will rarely have the resources to support all marginal
technologies. I found that it is a much better investment to support
new, developing technologies that have a small market share rather
than trailing edge, probably dying technologies that have a small
market share. |
Product Development
| 66 |
A product development
team should be absolutely as small as possible to get the job
done. |
| 67 |
Do not rely on opinion
when facts are cheap. Prototypes, mock-ups, and test beds are
invaluable tools for testing technical assumptions and verifying
conclusions. |
| 68 |
In software development,
good product architecture preserves the freedom you need to enhance
the product in future versions and therefore deserves top management
attention. Developers should plan carefully and leave as much
freedom as conceivable, or throw away the first version when the
program is still relatively small and start over. |
| 69 |
Subordinate the design
to the available materials and subordinate the product feature
set to the schedule-focusing on being resourceful and on-time.
This philosophy helped me obtain the greatest possible functionality
at the lowest possible cost. Unnecessary customization of components
raises costs and increases risk. Extending the schedule burns
cash and risks overshooting your marketing insight. To implement
this philosophy, you should know the priority for every feature
and complete the important ones first. |
| 70 |
All else remaining
equal, increasing a development team's ability to handle changes
to the product specification creates a competitive advantage;
prohibiting late changes creates weakness. |
| 71 |
"Bucks for Bugs"
(paying a bonus for each bug found) is an outstanding motivator
for product testers and an excellent way to train the entire organization
on a new product. |
Marketing
| 72 |
Customers are self-selecting
and carry unique preconceptions, making their feedback much more
valuable than that of friends and colleagues a professional happens
to know. I learned to use a variety of mechanisms to collect customer
feedback, including surveys, canvassing, and technical support
calls. |
| 73 |
Prospective customers
can only extrapolate very small distances from their current experience,
making surveys a weak tool for testing innovative products. Personal
experience with customers offers superior insights. |
| 74 |
Sometimes the words
used to describe a product are vitally important to its ultimate
success, especially when the product represents an entirely new
concept. |
| 75 |
Direct marketing offers
many avenues of experimentation for honing a message or selecting
a price. In many cases, it is less expensive and more reliable
to do an experiment than it is to do additional market research.
Split-run advertisements are one of the most common techniques,
but you can use almost any other customer contact-we often tested
product registration cards. The key is to establish an effective
control or baseline for the purposes of comparison and to measure
all variables without exception. |
| 76 |
I found it tremendously
valuable to enter a new market underneath the radar of my competitors,
without pre-announcement and fanfare. In my mind, the rules are
similar to those of a battlefield. The unarmed man who jumps up
and down making lots of noise is the one who attracts the big
guns of the enemy. It only makes sense if used as a misdirection
or to fulfill a death wish. I prefer to wait until I can let my
own guns do the talking-when I have a strategically targeted product
ready to ship. |
| 77 |
Getting press does
not guarantee success. There is almost no correlation between
the amount of press coverage about a new product and its ultimate
market acceptance. |
| 78 |
You do not need to
cave in to every demand of a distributor if the product is unique
or a market leader. The reality is that an innovative, new product
is as valuable to the distributor as it is to the manufacturer.
If one distributor cannot see the importance of a deal that is
positive for both parties, another will. |
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