Mark Cavender, Founder and Managing Director, Chasm Institute LLC

Steve Jobs: Master of the "Whole Product"

Fri, 26 Aug 2011 06:34:00 GMT

Much has been written in the last two days about the legacy of Steve Jobs. And I must say that I agree with most all that's been said. But I have one thing to add.

Steve knew what it meant to create a "whole product." First, a quick definition: the whole product is "everything required to assure that the target customers can fufill their compelling reason to buy," (Geoffrey Moore, Crossing the Chasm: Marketing and Selling Technology Products to Mainstream Customers).

When I bought my first digital music player (a RioRiot), I had to complete the "whole product" on my own. I had to first buy the CDs, then burn them (by the way, which format do I burn them in...MP3, WMF) and what music quality should I choose (lostless, etc., etc)?

Enter the iPod. Users could go to a site called iTunes and download any song they wanted for a mere 99 cents. And the rest is history. Steve Jobs changed the way we purchase and listen to music by creating the whole product. Not just an iPod, but an iPod with iTunes (not to mention the cooperation of the major music producers).

And he did it again with the iPhone, with thousands and thousands of developers creating apps to make the iPhone a whole product.

And he did it again with the iPad.

Nuff said.

Steve, we'll miss you, and wish you well. A fitting tribute any company can do for Mr. Jobs? Make sure you create a whole product.

Godspeed.

Caught on Tape by a Cell Phone Camera

Mon, 19 Jul 2010 10:13:00 GMT

I try to be serious in most of my blogs, but tonight is going to be an exception. One of my favorite pasttimes is noticing inconsistencies in everyday life. So, I was watching a show on TV tonight, and the reporter made the following comment: "...much of it was caught on tape by a cell phone camera..."

Why do I find this entertaining? First, as my friends in Europe told me long ago, it's no longer cell phones, it's mobile phones. Cell phones died way back when. But more importantly, have you ever seen a mobile phone with a tape recorder built-in? What's the smallest tape? Micro DV? Probably so. Do any of you find this as amusing as I do? TV reporters are not as savvy as they may think they are :)

Note to Tucker Carlson: please don't take this personally :)

Is Crossing the Chasm a Bad Thing for Your Startup? Not so Fast.

Fri, 04 Jun 2010 07:03:00 GMT

Yesterday I responded to a blog about the Technology Adoption Life Cycle. In it, Mike Stokes posits that there is no longer a "Chasm" between Early Adopters and Pragmatists, but instead the "Chasm" exists between Pragmatists and Conservatives.

I completely understand how Mike (and many others for that matter) could reach that conclusion. After all, this is a time where consumers are adopting technology en masse. But rather than saying that more and more consumers are to the left of the Chasm, I posit that lots of technologies introduced into the market today are introduced not in the Early Market, but instead as whole products into the Mainstream Market of pragmatists. Hence, there is no Chasm to cross. Want to read the blog plus my response? It's here: http://www.helpburner.com/blog/crossing-the-chasm-is-a-bad-thing-for-your-start-up/.

Comments welcome.

12th Annual TOP Ten Tech Trends - Churchill Club

Thu, 20 May 2010 06:41:00 GMT

Tonight I attended the 12th Annual Top 10 Tech Trends program of the Churchill Club in San Jose. Five Silicon Valley luminaries gave their predictions of what's going to be hot in the next 12 months. Potential winners included product categories such as social networking, health care, new life forms and connected devices plus more general ideas such as the best time to start a company and long-term accountability, The audience was given the opportunity to cast their vote on each, courtesy of a real-time voting device provided by iml Connector (www.imlworldwide.com/beyondvoting). The event can be viewed here (registration required) http://fora.tv/conference/top_ten_tech_trends_2010. FYI, I have no relationship with either of these companis.

Presenting their thoughts were a panel including:

Ron Conway, Angel Investor, SV Angel
Esther Dyson, Chairman, EDventure Holdings
Kevin Efrusy, General Partner, Accel Partners
Steve Jurvetson, Managing Director, Draper Fisher Jurvetson
David Weiden, General Partner, Khosla Ventures

So, in the Dave Letterman tradition (minus the humor), here are the Top Ten, based on audience voting:

10. Home-Brew Health (Esther Dyson, 188 yes votes). "We don't neeed no stinkin' health care!" There will be a huge market for self-administered health care devices, beyond measuring your weight, moving into steps walked per day, blood pressure monitoring, and more. Beyond early adopters, would be funded by both employers and insurance companies.

9. The Web is Now Truly Social (Ron Conway, 198 yes votes). Facebook will be at 500M users in the next few years. Twitter is one-to-many. Searching is a huge opportunity. Twitter has 1B tweets per day, up from 600M a few months ago. Just look at "chatroulotte.com." It could grow in a huge way once the porn is eliminated. This is an example of behaviorial engineering.

8. Long-Term Accountability (Esther Dyson, 223 yes votes). Long-term accountability is the new transparancy. Examples include funded.com. "Is this a good place to work?"

7. The Next 100B Connected Devices (David Weiden, 230 yes votes). Apple has a $200B market valuation; RIM's is $40B. "Hardware is the new software."

6. Code Comes Alive (Steve Jurvetson, 267 yes votes). An application will become a life form. Examples include waste conversion and water purification. Steve cited Moore's law as a moderate growth curve, gene sequencing as a higher curve, and the code of life as a hyper curve. Examples include DNA synthesis. But watch out...there could be a few potential problems, ala Frankenstein (my words).

5. The Real-Time Web (Ron Conway, 272 yes votes). There is a huge commerce opportunity coming. Examples include Twitter and Foursquare.

4. It's a Wonderful Time to Start a Company (Steve Jurvetson, 290 yes votes). Of the companies in the Dow Jones Industrial Average, 63% were started in a recession. Why does this work? Less competition, easier to recruit great people, and an intense focus on winning.

3. The Internet Gets a New Patient: Health Care (David Weiden, 299 yes votes). The federal government will be paying $44K to any doctor who "makes an effort" to use electronic medical records. With the recently passed health care initiative, there will be an additional 30M insured patients. Applications such as electronic prescriptions are just the tip of the iceberg.

2. The Rise of the New Software Stack (Kevin Efrusy, 302 yes votes). Business transaction data will seem like a drop in the bucket vs. web application data on the growth curve. Look for companies like NorthScale and Cloudera to be influential in this category in the future.

And the Number One Tech Trend for the next 12 months:

1. The Social Web as a Substitute for New Category Killers (Kevin Efrusy, 337 yes votes). In the category of televisions, we believed what we were told. Then we moved to web portals such as Yahoo. Then search engines. The social web takes us to the next level with such applications as groupon.com and zynga.com.

Kevin Efrusy was voted by the audience as the "Trend Idol."

Want to know the details of how the audience voted? See below.

TREND	PREDICTED BY:	YES	NO	TOTAL	% YES
Home-Brew Health	Esther Dyson	188	217	405	46.42%
The Web is Now Truly Social	Ron Conway	198	142	340	58.24%
Long-Term Accountability	Esther Dyson	223	147	370	60.27%
The Next 100,000,000,000 Connected Devices	David Weiden	230	166	396	58.08%
Code Comes Alive	Steve Jurvetson	267	102	369	72.36%
The Real-Time Web	Ron Conway	272	102	374	72.73%
It's a Wonderfuyl Time to Start a Company	Steve Jurvetson	290	107	397	73.05%
The Internet Gets a New Patient: Health Care	David Weiden	299	45	344	86.92%
The Rise of the New Software Stack	Kevin Efrusy	302	55	357	84.59%
Social Web as Substitute for New Category Killers	Kevin Efrusy	337	59	396	85.10%

SAP Acquires Sybase for $5.8B - The ERP Industry is Definitely Consolidating

Thu, 13 May 2010 06:53:00 GMT

Today SAP announced the acquisition of Sybase for $5.8B US.

I remember in the 1980s. I was working for a company called McComack & Dodge. We provided financial applications including general ledger, accounts payable, purchasing, and fixed assets. Each of these applications were often sold stand-alone, and companies would buy best-of-breed from either McCormack & Dodge, Management Science America, or Data Design. As the market matured, McCormack & Dodge bought a human resource application, and we began selling "financial" systems or "human resource" systems.

Then the market moved to applications based on a relational database management system (RDBMS). Companies bought Oracle's RDBMS along with their financial systems. Later, they bought Oracle's human resource and manufacturing systems. All those applications became known as "ERP" systems plus an RDBMS. SAP had a similar offering of ERP systems coupled with one of several different RDBMS systems.

It wasn't long before Oracle acquired business intelligence (BI) provider Hyperion and SAP acquired BI provider Business Objects. Equal game except that Oracle also offered an RDBMS.

Now the game's equal. Oracle offers ERP, BI and an RDBMS. SAP offers an ERP, BI, and now RDBMS as the result of the Sybase acquisition. But it may be more. Sybase brings to SAP the capability of developing mobile applications.

What I find interesting about all this is that it's a classic sign of a maturing enterprise software industry. It started with point solutions, moved to product families, then to broader enterprise solutions. A sign of the times in a maturing market.

NB Microsoft has similar offerings, albeit for SMB.

DEMOspring2010 is a Wrap, and the Winner is eXaudios

Tue, 23 Mar 2010 07:00:00 GMT

For 20 years DEMO has been THE event for launching a start-up technology company. At each conference the attendees choose their favorite, and this year it is eXaudios, with their MagInify Call Center, a customer call center that can detect customer's emotions.

Like lots of other products debuted at DEMO, eXaudios MagInify Call Center is a disruptive innovation. So, to get initial adoption they will need to find visionary line-of-business executives who are looking to use this technology as a way to gain a competitive advantage. Down the road as they cross the chasm, they will need to focus on a specific market segment and deliver a complete, whole product solution that solves a broken, mission-critical business process.

One question I have: Why would they have a separate company name (eXaudios) and product name (MagInify Call Center)? Why not just eXaudios Call Center? Remember when Oracle only had Oracle RDBMS? Plus, I found the name MagInify confusing. Just my opinion...

It will be interesting to follow eXaudios' strategy moving forward. I wish them well, as I'm personally a big fan of emerging technologies.

"Crossing the Chasm in the Belly of a Whale"

Sat, 27 Feb 2010 07:00:00 GMT

Recently I attended a talk by my friend and colleague Geoffrey Moore at the Association for Strategic Planning California Chapter, sponsored by the Strategy & Growth Roundtable for the Harvard Business School Association of Northern California. His talk was called "Hierarchy of Powers: A Framework to Organize the Strategic Conversations and Decisions Across Organizations." It is the beginning of a new book that he will be releasing in the future. In my humble opinion, this will do for large companies what Crossing the Chasm did for technology start-ups.

Geoffrey introduces a hierarchy of powers and discussed their purpose. He then discusses how to optimized the hierarchy of powers. This hierarchy plays out as follows and includes:

Category power - total economic potential to generate future returns
Company power - assets, status and leverage
Market power - category power specific to a target market segment
Offer power - offer differentiation relative to target customer values
Performance power - effectivenes and efficiency of execution

It serves three purposes:

Organizing strategy dialogs
Diagnose the current state of affairs
Prioritizing executive focus

Geoffrey then describes planning horizons:

Horizon 1 is 0-12 months and is focused on current business for generating cash flow today. Think profitable business from current customers.
Horizon 2 is 12-36 months and is focused on high-growth business where substantial resources are required for success. Think "crossing the chasm in the belly of a whale."
Horizon 3 is 36-72 months and is focused on future high-growth business. Think Early Market success with name-brand customers.

He then drilled down in to Horizon 2 planning, and why it is so difficult.

There is no material contribution to revenues
There is a heavy cost burden that will only get heavier over time
It competes for scarce, high-quality resources
It makes high demands on management attention

Finally, he offers three shared values / best practices for making Horizon 2 planning and execution successful:

Create a high-growth buisness that contribute materially to revenues and earnings
Do so as qickly as possible to reduce the current drag on resource, earnings an management attention
Measure success in terms of substantial customer acquisitions in the targeted market segment

After the talk Geoffrey was interviewed by Adrian Ott, Founder and CEO of Exponential Edge, Inc. You can read the interview here, where there is also access to a full recording of Geoffrey's presentation and the slide, courtesy of Exponential Edge, Inc.

The Evolving Nature of Business Solution Partnerships

Thu, 05 Mar 2009 20:34:00 GMT

Today I spoke at the Fourth Annual SBIR ASSETs Forum in Boston. My topic was "Crafting a Winning Strategic Partnership: Using Technology Adoption Life Cycle Concepts to Better Plan, Develop and Execute a Joint Strategy." SBIR stands for Small Business Innovation Research and is a federal government program to encourage innovation and entrepreneurship. This particular event was focused on bringing together SBIR companies with prospective business partners, most of which are large F100 companies.

Is your workforce equipped to select, recruit, and manage business partnerships? Business partnerships need to evolve over the life of a product category. Early Market partnerships tend to be to support a "transaction" for a single customer. Bowling Alley partnerships are focused on building the whole product for a target segment. Tornado partnerships evolve into a "best few" to serve the mass market. On Main Street partnerships may be eliminated as companies look for more ways of improving margins.

In the Early Market, you assemble partners to help a visionary achieve their goal of competitive advantage. Partnerships should be viewed as "transactions" to solve a specific customer goals. Deep systems integration and business process reengineering knowledge and experience are key qualifications for prospective partners dealing with new technology categories.

In the Bowling Alley, partners are recruited to help complete the whole product for a specific target customer segment. Microsoft originally partnered with Visio for drawing tools to complement its Office product.

In the Tornado, we work to limit the number of partners in order to reduce friction between conflicting partners. There emerges a set of de-facto partners supporting a gorilla. An example was in the ERP tornado, when SAP turned to HP for the server, Accenture for systems integration, and Oracle for the relational database.

On Main Street, partners are sometimes eliminated in order to retain margins. Rather then eliminated Visio, Microsoft purchased them.

Today's Chasm Institute webinar also happened to be on this same topic. The archive of it will be available by next Tuesday.

The Making of a Market Leader: Lessons from Oracle, SAP and Apple

Thu, 19 Feb 2009 16:36:00 GMT

Thinking about market leadership may be far from a lot of people's minds these days, but there are lessons in leadership that we can apply in today's economy. Now is the time to get your strategy right. What do Apple, SAP and Oracle have in common? They are all market leaders in a product category. And how did they do it? The answer lies in a single common denominator: they all were first to market in their category, not with just a product, but with a complete whole product.

Apple was not first to market with the iPod. But they are the market leader. Remember Creative Labs and the Rio Riot? It was a powerful MP3 player for its time...so long as you knew how to download songs and transfer them to the device. It appealed to technology enthusiasts. But pragmatists were a different story. Apple wisely created iTunes as a simple way to store and transfer music to the iPod device. And the rest is history.

In the category of ERP software, Oracle was first to market with a new generation of financial software applications. PeopleSoft was first to market with a new generation of human resource software applications. A new generation of MRP applications was nothing more than a pipe dream. Then SAP came along. A complete set of financial, HR and MRP applications. And the rest is history.

When relational database management systems (RDBMS) first came out they were released for specific platforms. But IT managers were reluctant to commit to an RDBMS that was optimized for a specific hardware platforms. Oracle came to the rescue by introducing an RDBMS that worked on any hardware platform. And the rest is history.

What do all these companies have in common? They may not have been the first to market in their category, but they were first to market with a complete whole product solution. Apple provided not only the iPod player but also iTunes as a way of storing and transferring music to the iPod. SAP was the first ERP firm to offer an integrated set of financial, HR and MRP business applications. And Oracle was the first to offer an RDBMS that was platform-neutral.

What's the lesson? Get the whole product right. There are lots of other examples of other companies who got the whole product right. Including Blackberry, Salesforce.com, Amazon.com, Nokia and Google. First to market with the whole product usually wins.

Compelling Reason to Buy (CRTB) - Lessons from McDonald's

Fri, 06 Feb 2009 02:40:00 GMT

Why is compelling reason to buy so important? It's what creates demand, especially in this economy.

Last night I was watching "Nightline" on ABC. They had a special about McDonald's. Among other things, McDonald's had a sales increase of 6.9% this year over previous years. And, they were one of two companies in the Dow 30 whose stock value actually increased. While obviously not a high-tech company, they offer some lessons in providing value to customers, especially for those companies whose product categories are on Main Street.

Take their Double Cheeseburger. In the past it sold for 99 cents. It had two, yes two, pieces of cheese along with two beef patties. But when the price of cheese skyrocketed, they were left in a conundrum. Do they raise prices, and if they did would it alienate all those customers who valued a 99 cent double cheeseburger? No. Instead, they offered a "McDouble" which is a double meat burger with only one piece of cheese for 99 cents. And they raised the price of the Double Cheeseburger to $1.19. But they didn't do either until they conducted extensive research with their customers. It worked. Mickey D's had a great year, all things considered. They understood the compelling reason to buy (CRTB) for both products. For the "McDouble", the CRTB was "prefer to forfeit an extra slice of cheese on a double-meat cheeseburger in order to buy it for less." For the "Double Cheeseburger" it was "who prefer two slices of cheese on their double-meat cheeseburger and don't mind paying extra for it." One is value-based, the other is more premium-based. Congrats McDonald's, you got the CRTB right.

Today in our webinar we discussed the issue of the "law of legitimate opposites." Any stated compelling reason to buy should also be logical if the opposite were stated. In McDonald's case of the McDouble, the CRTB is "prefer to forfeit an extra slice of cheese on a double-meat cheeseburger in order to buy it for less",. It would sound different with the opposite expression, which would be "prefer two slices of cheese on their double-meat cheeseburger and don't mind paying extra for it." Funny, that's the CRTB for their Double Cheeseburger.

Maybe we in high-tech could learn a few lessons.