Friday, July 11, 2008

Water for Fuel?

My son sent this video clip to me some time ago. Even though I am an engineer, I do not why no one has picked up this opportunity to convert water into fuel? Maybe I am missing something here? Is it really expensive to convert an engine? Is it too volatile? Or is it just too simple to comprehend? In any case, I hope this guy gets his patents soon and starts bringing it to market. I sure as shoot will invest.

Wednesday, July 9, 2008

The First Idea May Not be the Best Idea

One thing I have found out is that your first idea about a product or service is usually not your best idea. As a general rule, be prepared to change your original idea in order to hit the moving target you planned on hitting. Some notables on this rule are Intel: It started out as a memory company, and its original numeric processor was made for factory automation, not the PC. Motorola: started out making radios receivers for automobiles. MCI: It started out as a radio network for truckers. Google: It started just looking up the number references to a particular thesis.

Part of the reason why this happens is because when you start your product or company, you are only guessing what your potential customer might want or need, or how they will use a product. When you first release your product or service, you are trying to solve a problem or fill a need that you think needs to be solved or filled. Your perception of that need might not be totally accurate, or the need might have changed substantially since you conceived the idea.

Also, you might have just bee
n looking a one particular problem, and have been oblivious to an adjacent one that holds a much bigger, profitable market. So, no matter how well you research and test your market, you will have to come to the realization that things change, and that what you cooked up in the lab and how it is recieved in the market may be miles apart.  So, in order to be successful, you will need to change as well. In the modern day vernacular, this is called a pivot (more on that later).

With so many unknowns out there, it is amazing (and extremely) lucky if you hit the market (target) dead on. Usually, products take months if not years to develop, and the one constant in life is change. But it you do to hit that target dead on on your first try, kudos to you. For everyone else, it will be back to the drawing board to see how your original idea might need to be altered in order to get to the goal of macromental growth.

Tuesday, July 8, 2008

Knowledge versus Know-how

Once, I was asked to help an existing company recruit some sales help by their VP of Sales and Marketing. They needed someone who could grow a new software product they were developing, and who had both a technical expertise and business savvy about them. We had narrowed down the field to two people. One guy was in his forties, and had a 15-year track record of substantial sales and marketing experience and success. He actually was an electrical engineer, who during his career had migrated into sales and marketing. He understood the product perfectly, and both the VP and I felt that he would be an excellent fit. He was driven, self-assured, personable, and hungry.

The other candidate had just graduated from a pretty prestigious MBA B-School program, but did not have any direct selling experience. He did know all the latest buzzwords and jargon, and was very knowledgeable on all the latest strategies in selling. I felt that while this guy was personable and knowledgeable, he did not really have any real sales experience and would not be able to carry the load of this new position.  He 'knew' a lot, but he did not yet prove he could do a lot. 
Needless to say, the CEO of the company was more impressed about this guy's pedigree than actually what he could do for the company, and the guy with knowledge but no know-how was hired. Fast-forward 1 year. The guy they hired was an absolute disaster. He could not and did not sell anywhere close to the quota he established. The other guy went on to help another startup grow to $25 million in sales in the SAME time period! Why did this happen? The company that ended up hiring the wrong guy eventually went out of business and was backed by some pretty prominent investors.

So, if you where in that position what would you do? But first, let me ask the question another way and in a different scenario: baseball.  If you have bases loaded, two out, one-run down, in the bottom of the 9th; who would you rather have in the batter’s box, a guy who is a perennial all-star, has 10-years of major league experience, has been an MVP a few times, and is hitting .330? Or someone who knows everything about the game of baseball, every statistic or every player, and the odds of any player hitting off any pitcher; but who has never seen a 90 mph pitch? Simple, yes! Everyone will answer that question correctly, but the majority of people hiring someone for a sales or marketing or engineering job will not. You cannot substitute know-how for knowledge when you need real execution. Most people are afraid to hire a person who knows how to get things done. Instead, they often think they are taking the 'safe bet' and hiring someone from a prestigious school.  That is why as companies grow, they usually grow worse.

As the saying goes, “I would rather surround myself with a few very talented people, than with a plethora of mediocre ones.”  Even though what someone has done in the past is no indication of what they can do in the future, it is better to know that a person has the know-how than not.

Saturday, July 5, 2008

What you don't Know you don't Know

I promised that I would try to give some practical advice on how to improve your business in simple to understand concepts and ideas. One of the most pressings issues for any company is how to increase sales profitably with the least amount of effort, or something I call 'Return on Effort.' Most people believe that the best way to grow a company is to either get your existing customers to purchase more or to get them to tell their friends and acquaintances to purchase from you. While repeat business is much easier the get than new business, and referrals can help you grow, you are at best looking at incremental gains. It is like fishing in the same pond trying to catch different fish. What most companies would like are macromental gains and in sales and profits. In order to get to the lofty goals, you are going to have to abandon some old held beliefs, and move far enough away from the safe harbor so as to no longer see the shore.

First, I have to diagram what I am talking about (click on image above). Draw four progressively larger, concentric circles, with the smallest being “What you know you know,” the next largest titled “What you don’t know you know,” the third largest “What you know you don’t know,” and the last being much, much larger circle titled “What you don’t know you don’t know.” If you look at the diagram, you will notice what we know, either as an individual or company, is pretty small in comparison to the infinitely large what we do not know we do not know.  Even with "big data" we still now know what we do not know, which is a start.

Most companies and individuals like to operate in the sphere of what they know they already know. They conduct surveys with customers they already have to see how they the purchase and discover their likes and dislikes. Essentially, this type of market research just reinforces the beliefs (be they right or wrong) you have come to accept as truths about the types of customers you should be selling to. This is similar to driving looking in the rear-view mirror.

A few brave individuals will try to expand their horizons and knowledge (and customer base) by venturing to discover what might be in “adjacent ponds” and discover what they once knew and have forgotten or what they know but have not yet realized. They will do a little research of customers who look very much like the customers they have now, or whom they think should like their product or service.

The hardest thing you will ever do is to take that step into the unknown, but in order to really make any type of impact, that is exactly where you have to go. I cannot imagine what would have happened (or failed to happened), if the founders of this country (Adams, Washington, Madison, Franklin, Jefferson, Payne, Lafayette, etc.), had NOT taken that first fateful step. They ventured into the space of “what they did not know what they did not know.”

Closer to home, I look at a few notables: Apple and Microsoft to name a few. What is interesting is that both of these companies MISSED the Internet revolution when access the world wide web was virtually an unknown entity! During the time that the Internet went from being just an oddity to a mainstream event, Mac lost 50% of its market share, and Netscape became the darling of the industry. To give Microsoft credit, they did regroup rapidly to put out a browser to compete with Netscape, and actually due to their leverage already in the PC market, was able to muscle out Netscape. Incredibly, Microsoft missed out again with open sourced software when Linux came to the fore. Again, this was something Microsoft did not know what they did not know, and instead choose to ignore it.

To Apple’s credit, they did jump out into the unknown with the iPod / iTunes. They did NOT know that iTunes would be such a hit (it now accounted for 80% of their 2010 stock valuation). It is sort of amazing to see Apple move (almost over night) from a failing PC manufacturer, to the leader in the digital media world. They accounted for 25% of ALL music sales worldwide in the last 3 years. Essentially, they began to operate in a industry the did not know. Credit to the late Steve Jobs, here doubled down with the iPhone, essentially once again going where he did not know what he did not know, mobile phones.

If you look at the most successful companies that have emerged from the advent of the Internet they have been companies that created something that no market data could have shown them: eBay, craigslist, PayPal, Amazon, Facebook, and Twitter.  They essentially went where no one had gone before, and reaped the benefits of getting unknown customers.  

Bottom line is: Go to where you do not know what you do not know. That is where you will find all your opportunities.