Friday, October 30, 2009

Creating Intellectual Property & Projects

Creating intellectual property (IP) is the key for success in technology industry. While this statement is taken as to the heart and is preached like a Bible, but not all companies follow it to the core. Even the greatest technology gaints - Cisco, Microsoft, Oracle, GE, EMC, Intel, have pockets of IP inefficiency - where several million dollars are spent on R&D projects which does not produce enough IP.

It is not that people in those projects did not work or were not creative. Engineers who work on R&D projects are inherently creative (though few would admit to be creative), but people in these projects are worried about operational issues such as deadlines, features, project costs, staffing, talent management etc and they ignore protection of intellectual property that they created or they have failed to create substantial IP.

Projects that have spent several million dollars and spread over an year must product substantial IP. If not there is an IP inefficiency in the project, and the project must have an IP audit to identify & protect IP.

Projects that have consumed so much resources must have solved a major problem and therefore the project team has created IP in form of solutions, and that IP must be protected. The other way to look at things is to review the IP created or used in the project and ensure that there has not been any inadvertent violation of other companies/peoples IP. Often times engineers search the Internet looking for similiar solutions and could have copied a patented design. If such a violation had taken place, the company is at risk for all legal liabilities emerging from the IP litigation.

Role of management

In a typical R&D project there will be several managers: engineering manager, project manager, product manager etc. I would recommend that the managers sit down with key stake holders at the very begining of the project and ask the questions:

  • What major problem is this project solving?
  • What competitive advantage we get with this project?
  • What are the opportunities for IP creation exists in this project?
  • Can we create white papers based on the solutions we are implementing?
  • How do we protect the IP rights once the product/solution is released?
Asking these questions before the project starts ensures that all managers and stakeholders are made aware of the IP being created and the need to protect the IP. Once there is a general awareness of the IP involved in the project, it is a good practice to review the answers & questions periodically to see the progress and take steps to protect the IP.

Asking those questions & having answers to them will help in a big way to create & protect intellectual properties - which is vital to gain competitive advantage in the market and enhance shareholder value.

Thursday, October 29, 2009

Entreprenurship - Always create customer references

My friend is an entrepreneur and he quit his day job at Accenture to start Purple Frame. As a startup, it is always an uphill climb to get customers in B2B world. With hard work, every startup gets a few customers in the initial days - many of these customers are also startups.

Being a startup is not easy when it comes to sales as customers do not want to risk with a new vendor. So one has to rely on contacts/friends to get that elusive first order. Once the initial orders get exhausted, the next ones are even tougher to get, and at this stage one needs to use different marketing techniques such as referrals, customer endorsements, white papers etc.

As a seller it is important to understand buyers psychology. All buyers want to feel safe & secure before placing the first order, feel comfortable during the subsequent orders, and lower costs in the long run. Once the buyer priorities are understood, buyers can take advantage of it. Buyers feel safe if they know the supplier is reliable. The importance of safety in the minds of the buyers was played upon by established players - "You wont get fired for buying IBM". Persons who make the purchase decision for the company are employees and for employees job security is important. As Robert T Kiosaki, author of Rich Dad, Poor Dad, puts it "employees feel safe when they have a good paying job with benefits."

Buyers are often very reluctant to buy from unknown or new vendors. This poses the first big challenge to any startup as buyers are reluctant to do business with a new player. So the first task of the seller is to make the buyer feel safe & secure while buying from a new vendor. For established companies, approaching a new client is relatively easy. As the seller has the brand name and company reputation behind him, and he only has to deal with educating the buyer about the new company and the buying process to make the buyer feel comfortable buying from a new firm.

For a startup, the problem is more acute - as he has to deal with the twin challenges of making the buyer feel safe, secure and comfortable in order to compete with an established players.

So what should entrepreneurs do?
Entrepreneurs have to overcome this challenge to succeed in business. There are two ways:
1. Sell to a niche market and avoid competition
2. Make customers feel comfortable buying from them.

Selling to a niche market or a Blue Ocean strategy is preferred route for most startups, unfortunately the market size is also small in the niche segment. So when the market grows larger, big players jump in to spoil the party. As Geoffrey A. Moore puts it in his book - "Crossing the chasm", entrepreneurs must concentrate on the early adapters first, and then comes the chasm between early adapters & majority markets where majority of startup fail to cross over.

Companies that cross over from the niche early adapter market to the majority market are the ones who have successfully addressed the buyer needs in the majority market - i.e., have learnt how to make customers feel comfortable while buying from them.

How to make customers feel comfortable?

First, understand buyers psychology. The first need of the customer is to feel safe while buying from a new vendor, and then feel comfortable while buying. So when a vendor approaches the buyer with solid credentials & referrals (from a known/trusted source) customer will feel safe to order from a new vendor.

Corporate buyers want to feel safe and secure before buying from new vendors. The best way to make the buyers feel safe & comfortable is to approach them through referrals from people whom they know and trust.

I have always noted that satisfied customers are often willing to give references to others.
Satisfied customers willing to serve as references for your new prospects. For a startup, getting successful referrals makes a big difference between winning & losing the sale. It is therefore very important to build a system in place to get referrals, follow up in referrals and maintain the referrals.

There are six steps involved in implementing a successful referral system as part of marketing process:

  1. Ask for referrals
  2. Set proper expectations
  3. Appreciate customer referrals
  4. Avoid overuse of referrals
  5. Stay in touch with customers
  6. Build a referral champion

Step-1: Ask for referrals

Satisfied customers are often willing to give referrals - only if you ask for it. So make it a point to ask for referrals during the final stages of the sales process. Ideally you must pander to the customer ego and let customer talk about his/her expertise & experience in using your product. If necessary help the customer with references - work with customer to setup a meeting with a referred party etc. Satisfied customers are often eager to refer other potential customers to you. So ask for references & ask your customer's permission before you contact the referrals.

Step-2: Set proper expectations

Once you have asked for reference, make it a point to set what you expect from him/her. Please inform the customer on how you plan to use the references. i.e., do you plan to use the references in your web site, or do you intend to use it in marketing campaign, how do yo plan to approach the referred prospects etc.

If you want your customer to talk to his referral or other prospects, let the customer know in advance & set his expectations accordingly.

Also learn & understand the customer company's policies on references. Some companies need explicit approvals for its employees to give referrals. If there is process in place at the customer site, then respect the process & set expectations accordingly.

Step-3: Appreciate customer references

As a startup (and in all businesses), it is very important to keep the customer happy even after the sale. When you are asking for references, then it is even more important to keep the customer happy after the sale. Customers who give references will feel better when you really appreciate their references. Appreciation can be as simple as calling him/her up and thanking for his/her references which helped you in your venture, or giving a simple gift (please follow the laws/rules on receiving gifts at your customer company) etc.

In one case, the customer was asked to come for an all expenses paid trip to Florida and attend a conference where your product was being showcased.

Step-4: Avoid customer burnout

It is good to ask for references but don't over do it. Set a limit on how many references you can ask from any customer. Ideally 2-6 is a good number, but asking for more than 6 references will surely burnout your customer that he may stop buying from you.

Step-5: Stay in touch with customers

Customers who have given you business are customers for life. So keep in touch with the customer on continual basis even if they do not respond or communicate back. For example, if there was a new product launch, invite all your old customers. Send any news item which is of relevance to your product & of customer benefit, keep customer posted on your progress - by sending them a summary of your annual financial statements etc.

Keeping in constant touch with customers will help in getting new orders or getting new referrals. In today's world, you can use social networking sites such as linkedin, facebook etc to keep in constant touch.

Step-6: Groom & Build customer champion

Customers who give you good references can be groomed into becoming your customer champion. For example, offering free samples of the new product before it is released in the market, offer training on use/benefits of new products, Invite customer to new product launches, or invite customer to speak in conferences, invite customers to co-author white papers etc. In this process ensure that the customer learns more about your products and your company.
Actively seek feedback & other inputs from your customer champions. Incorporate their ideas/suggestions in the next version of the product/services.

Having customer champions is the best approach to marketing. Your prospects are more receptive to the messages coming from your customer than the same message coming from your sales team. So make a plan to groom & build customer champions

Closing Thoughts

Customer references is the best way to lower the resistance to buying from a new vendor. It also helps to build a solid sales pipeline and lower your marketing costs. Having a formalized process to handle customer referrals is a must - else it will just slip between the cracks. Once you have acquired the customer, treat the customer with the total value of customer in mind. Having a customer champions will help you win big deals. If you do not have customer champions then treat it like a red flag - an early warning of things going wrong.
Startups often lack a formal marketing program, so the onus of developing the customer referrals falls on sales & company leadership. Use the referral program wisely & it will give you rich dividends.

Sunday, October 18, 2009

Dealing with Customer Enhancement Requests

As a product manager, I often get my usual share of product enhancement request (ER) from customers - usually from the lead customers. In my company we have built an excellent process to document these enhancement requests & all ERs get duly documented and reviewed periodically to develop the Product Requirement Document (PRD).

Good thing about this process is that if we have missed a big functionality in the product, we have a feedback mechanism for customers to request those features and functionalites in the next release. So if it is major functionality - say for example Metro Ethernet or support for BGLP protocol etc, these ERs will get rolled into the PRD and customers will get those features they requested. However, the process has one flaw - minor enhancements which are "nice-to-have" gets dropped out almost every time we drawup the PRD, these Priority-3 requirements will never get built and customer will never get it.

These "nice-to-have" features may not mean much to the product functionality, but implementing this can have big impact on customer satisfaction & customer retention.

I call this as a problem as a hole in product management process. The impact of not doing such "nice-to-have" features is not much in terms of revenue, but it can have a substantial impact on customer satisfaction & customer retention.

Just imagine as a user you made certain requests for new features in MS Outlook and Microsoft delivered it - would be pleased about it? I bet you would be. And if someone from Microsoft calls you up personally and tells you that the feature that you had requested is now available in the latest release of MS Outlook, I bet you will go for the upgrade. Not only that, in such cases, you will remain a loyal customer of Microsoft and may become a evangelist for Outlook as well.

I heard a similar story about Mahindra Scorpio SUV, the owner had given several recommendation for improving the vehicle, and Mahindra implemented those features in the next years model. Now that person never gets tired of promoting Scorpio to all people he could meet.

I have done my inquiry & research with other product managers and found that this problem of "Nice-to-have" priority-3 features is almost universal in the software world. So I decided to find ways to solve it - and there are several ways to solve it. In this article, I have documented three practical methods to solve this problem.

1. Every product release must have 4-5 "Nice-to-have" features.
Since the problem in product development phase is that engineering tends to ignore the priority-3 requirements, make a few of those "Nice-to-have" features mandatory. Product management should classify all the "Nice-to-have" ERs based on customer/market segment importance and then make 4-5 "nice-to-have" & easy-to-do features mandatory in the PRD. This way, few of the requests will be fulfilled.

Do not implement these "nice-to-have" features if it takes substantial engineering efforts or costs.

2. Use the patch release to add small features.

All products will go through minor enhancements/upgrades every year/quarter/month. In the software world, these minor releases can be a monthly release. So every time there is minor release being planned, add 1-2 "nice-to-have" features in everyone of the minor releases.

3. Co-create with customers

This is the era of Open-Innovation, customers are often willing to join hands with the vendor to develop the product. Take advantage of this, and in the early stage of product development, involve the customer to invest engineering resources to develop the feature which the customer wants.

Co-Creation is not for all features or customers. One must exercise caution in choosing co-creation ventures. Ideally, choose your most loyal customer or the lead customer who is really committed to your product. Ask customer to commit time, money, & resources for the project, and once all the commitments are met, go ahead with execution.

Ideally choose features that are important to that customer and that require substantial investments for co-creation projects. In the process negotiate to implement the new feature in ways that helps all other customers as well - avoid getting into a "custom solution" trap where the new feature helps only one customer while it breaks other customers.

Product management should take the lead role of coordinating & negotiating with the customer for the co-development project.

In software world, there are several interesting options for implementing new features. One other way to co-develop the feature with the customer is to provide a product development kit - i.e, a set of tools to the customer so that customer can develop the feature they want themselves and then share that development with the product vendor.

Take the example of iPhone or Facebook. Facebook encourages its customers to develop Facebook apps. Facebook opened up the APIs and software interfaces for third party development and now customers can develop their own applications for Facebook.
When properly implemented, co-creating strategy is the surest way to keep your product relevant to customers & lower the cost of product development at the same time. A customer who has committed to the product by developing certain features in it will never abandon the product.

Closing Thoughts

Product management owes to respond to customer for every product enhancement request. Yet in most organization, many of these ERs which get classified as "Nice-to-have" features get routinely dumped, and product management loses face to answer the customer - this in the long run erodes customer loyalty and can even lead to customer loss. So the solution is to develop the product development process in such a way that these "nice-to-have" features get implemented without costing much. There will be few ERs that require big investments - so choose them carefully and ask the customer if they are interested in co-development of those features. Co-creating, co-invention, co-development are surefire techniques to increase customer loyalty. Co-creation, co-development also places additional burden in product management & project management and if a proper contract is not done, it can open invitation for legal problems. Co-development is not for everybody, it requires a solid legal agreements, customer commitments and solid project planning, project coordination for successful implementation. So chose your co-development projects carefully.

Also see:

Customer as Co-Innovator

Friday, October 16, 2009

How to be more creative?

"Innovation is the key to survival of any business"

The above statement holds an universal truth and must be treated on par with the 10 commandments, and almost all people with whom I discussed this agree with it. Yet when I ask the question to engineers "Are you a creative person?" Most of them answer negatively.

In today's world engineers will loose most of their creative abilities mainly due to the mundane nature of the tasks they do at work - essentially solve problems or build things. Their daily work does not require any creative thinking for 95% of the problems and it would be handled by routine procedures/plans. And when a new challenge emerges - there will be a major problem.

I have observed that for any new challenge that comes up, the answer to that problem will be first identified by a new college graduate or someone below the age of 25. However the idea coming from such an young person will not be fully baked to the taste of senior management - and is most likely to be dismissed. It will take someone in middle management or a senior engineer to polish the original idea, package it neatly and present it once again to senior management for "approval". But in all this process the organization will effectively try to kill any creative spirit of the young engineer.

So how does one retain their creativity while working for a big corporation?

Being creative in life is the key to being creative at work, so forget about all the crazy things that happen at work place and try to keep your creative skills alive. I offer few points/ideas on how one can remain creative always:
  1. Meet & talk to one new person every week.
  2. Avoid watching TV, instead find other forms of entertainment which requires active participation.
  3. Learn to relax & do nothing for 30 min everyday. It is important to give your mind a break.
  4. Read books on diverse subjects. The more diverse range of books you read the better. For example if you are an engineer, read books on physcology or history or economics or health.
  5. Expose yourself to a wide variety of art - be it music, dance, paintings, sculpture etc. Go to watch plays, art exhibitions, art galleries etc., and just relax & enjoy.
  6. Travel to different places. Travel may not necessarily be travel to exotic locales, even travel within the city to places where you have not been before will help. For example, I would travel to city market in the early morning to see the scale of wholesale trade, or go to pottery road & see how potters work, or go to the industrial area etc. If possible travel to historical places and learn the history of that place.
  7. Try your hand in any creative arts - be it painting, music, photography, writing poetry/short stories etc.
  8. Change your daily schedule. If you normally come to office at 9 AM, try coming in at 7 AM or 11 AM. Just commuting at a different time of the day will change your perspectives.

Thursday, October 15, 2009

Managing Innovation & Product Management

As a product manager I have been driving innovation in my business group. Innovation is key for survival in software industry - where companies have to innovate or perish. In order to win in this brutally competitive industry, one needs to innovate faster, cheaper than the competition and most importantly implement the innovative ideas in the right way to win in the market place.

All this implies that in order to win, organization will need: A highly creative workforce which can come up with lots of creative ideas, architects who can translate creative ideas into innovation, and designers who can implement the innovative ideas in ways that delight the customers. This concept can be visualized as follows:

Ideas for all great products start with customer needs/wants. At the early stage of innovation - encourage ideas from all concerned people, especially from customers/users. This is the creative thinking part in the innovation chain.

In software business, innovation is the key to survival - but innovation does not guarantee success. Innovative companies can merely survive - but success is reserved for those who can design great products.

To illustrate this consider the case of WordStar & MS Word. Back in late 1980's WordStar was the leading word processor software, it led in innovations and had several useful features - but lost out on design. While Microsoft concentrated its efforts on ease of printing, user interface, and integration with office automation tools such as Visual Basic for user customization. In the end the customers opted for MS Word & Office. WordStar eventually perished when it stopped innovating.

Another example is that of Yahoo Inc. Yahoo started as a web search services by organizing Web into a directory. It was a breakthrough idea at that time. Eventually Yahoo expanded into various other web services and continued to grow exponentially. Yahoo continued to innovate with new offerings - My Yahoo, Yahoo Maps, Yahoo Finance, Yahoo Answers, Yahoo Mail, Yahoo Photos, etc. As time progressed, competition emerged in form of Google. Google was an innovation super engine, but Google also had an edge over Yahoo in terms of design. Google was a skillful follower of market leaders - but Google excelled in design. Google's search engine could give the same results as Yahoo in most cases - but Google presented it in a user friendly format to gain early market acceptance of its search engine. Soon Google's design of web crawling and web indexing technology - which is product of its design gained an edge over Yahoo and along with it Google won a huge market share. Today when comparing both Yahoo & Google search technologies, both the products are almost identical in terms of innovation - but it was the design/implementation which made the final difference.

Importance of Design

Software design plays a critical part in the success or failure of the product. Design is the phase where innovative ideas are translated into real useful functions for the end user. Today Added, Apple, Google & Microsoft are market leaders in their respective areas. These companies are also leaders of innovation - but most importantly they are leaders of design.

So what is design?

The term "Design" in general stands for several things depending on the context. In the world of software "Design" stands for:

  1. Usability of the product: This often means functions & features

  2. Ease of use - i.e., how easy it is to use the product

  3. Value for Money - how much does it cost to buy & use the product

  4. Timeliness - Does the software meet all my needs today?

Design of a product is always complex and involves tradeoffs. The four aspects of design are usually contradicting - i.e., one can improve one aspect of the design but at the cost of deteriorating another aspect of design. For example adding more functions and features makes the product expensive, delayed release to market and in most cases deteriorating the ease of use.

Getting the right mix of all the four components is the key to good design.

It is the job of the product management to control & drive the four parameters of design. Product management has to deal with all the contradictions of design & get the product out in time to ensure the success of the product.

The four components of design are contradictory and getting it right involves lots of conflict resolution.

Innovation Today for Competitive Advantage

There was a time when companies had sprawling R&D departments which focused on innovation & invention. Companies such as IBM, GE, Du Pont, Johnson & Johnson, P&G, Philips had established research labs with multi-billion dollar budgets. R&D was responsible for developing new products and the company manufactured & sold only those products that was developed by their R&D departments.

Developing new products through this process was slow & risky. So with the advent of globalization, innovation is now no longer the sole responsibility of R&D departments. The new economic forces are shaping how companies approach towards innovation.

As a product manager, I see a constant need innovate & keep the products relevant in the market place. There are four major trends that are shaping innovation today - and shaping products. It is prudent to take advantage of these trends to gain competitive advantage.
Successful developing new products requires mastery over four aspects of design:

  1. Functions & features of the product.

  2. Ease of use - i.e., how easy it is to use the product

  3. Value for Money - how much does it cost to buy & use the product

  4. Timeliness - Does the product meet all my needs today?

R&D departments may not have all the expertise to master all the four aspects of design. While R&D is good at developing functions and features of the product, R&D often falls short when it comes to the other three aspects of design.

In today's competitive age, companies cannot afford to invest huge sums of money on R&D and take a chance in the market place. Shareholders are demanding higher returns on the R&D investments - and that translates to minimizing risks in new product development. It is the role of product management to develop strategies to minimize this risks. As a result, product managers are at the fore front of the new trend in product development.

The four major trends shaping innovation are:

1. Outside-In Innovation
2. Cross Functional Innovation teams
3. War Games
4. Social Networking & Web 2.0

1. Outside - In Innovation

In the new paradigm, innovation is no longer the sole responsibility of the R&D group. In the current times, companies are inviting customers to help their innovation efforts. Customers often have several ideas/suggestions on how to improve the current product. Initially, this process starts as taking inputs/suggestions from customers to improve current products, and as the level of comfort and maturity improves, customers become partners in development - where customers provide design details and take part in testing the new product. At the next level, companies invite customers to become partners in a co-development of the product - especially when it comes to developing new products. Co-Development reduces the risk as there is already a committed customer for the product.

2. Innovation needs cross functional teams

R&D departments may not have all the expertise to master all the four aspects of design. While R&D is good at developing functions and features of the product, R&D often falls short when it comes to the other three aspects of design - This is where cross-functional teams add value to product design & development.

Having members from finance, sales, customer support giving inputs to new product development is the first level of developing cross functional teams. To be very effective, the cross functional team must be involved in all stages of product development.
One example is designing a new product with product serviceability in mind. This helps customer support teams carry out routine service & repairs with ease & thus enable faster turn around on customer complaints. In software world we call it as "Design for Debug". Having specific product features which can explicitly tell the customer/customer support the nature of the problem will help in a quicker time to resolution. A faster turnaround will enhance customer satisfaction.

Having an accountant review the product design and development will help in maintaining the cost of development under control and also reduce the cost of manufacturing/servicing the product, this translates to higher profits and lower risks. Accountants also help in developing pricing model for the product & thus one can achieve the optimum price for the product. (Often times companies get the pricing wrong See: )

3. War Games
War games are often used in business operations to develop Business continuity plans in case of contingencies. Marketing teams also use war games to develop response strategies to competitors discounts. Similarly war games can be used in new product development.
The best way to use war games as tool for product development is to have the entire product development team - i.e., cross functional team for a 2-3 day brain storming session and ask them to develop ideas for:

a. How can we develop a new product that will make our current product obsolete?
b. Face the 10X challenge:
How can we sell a similar product at 1/10th of the current price?
How can we make our product 10 times more effecient/faster than today?
c. What the competitor product will be 5 years from now?
d. What if Scenarios:
What if our raw material costs increases exponentially?
What if our partner (supply chain) goes out of business?

One can frame the questions based on the industry, and ask such pointed questions to the team and let the team brainstorm for ideas. Capture those ideas as creative ideas as inputs for innovation prospects.
This exercise must be done regularly - atleast once a year and this helps in developing new products & getting a radical ideas for product development.

4. Social Networking & Web 2.0

New product development cannot be done in isolation. Innovation has always occurred in areas where there was talent and a cluster of similar industries - Detroit for Automotive, Silicon Valley for electronics & software etc. This cluster provided several advantages in terms of ideas, talent, feedback, etc

With the advent of Web 2.0 technologies it is possible for members in product development team to interact with others and solve complex problems - without divulging secrets. Social Networking sites allows users to interact with each other and with product development groups to get instant feedback. Engineers can understand customer perspective and develop better products.

As a product manager, I use the social network to interact with users, customers & other product managers to understand different perspectives & this helps me develop better products.

Today several companies use Wiki's & Blogs for company employees & customers in different groups to interact. This platform helps accelerate new product development.

Closing thoughts

In today's hyper competitive age innovation management requires a newer approach. Product managers need to drive innovation to keep their product relevant to the times - by controlling all four aspects of product design: Functions & features, Usability, cost, & timeliness - and to do that product managers must embrace the four trends of innovation: Outside-In Innovation, Cross functional teams, War Games & Social networking. Product managers must drive this change in the organization.

Entrepreneurship - Start with a conviction

I have interacted with entrepreneurs in many areas - most of them own a business, few of them are corporate entrepreneurs. Most of these entrepreneurs were successful - in terms of getting a ROI higher than bank deposits. But I could see very few leaders in their market category. To illustrate this, let me take up a simple example of a food court. In any food court, there will be multiple food vendors - but there will be few dominant players, many of them will be successful & profitable and there will be a few who are struggling to keep their shops open.

The story is the same in all the sectors, in all places (with a few exceptions of monopoly markets). Take for example of Internet Search engine business: There is one leader - Google, few successful players - Microsoft, Yahoo & few strugglers -, etc.
In my observation of things, I found few simple truths. Winners have a stronger conviction to be the best in the market place, Winners follow the customer & winners focus on ROI. The ones that can do all the three will be the market leader.

I have seen few entrepreneurs who started with a very strong conviction of being the very best in the market & have steadyfast held that conviction. Many entrepreneurs often start with the notion that "the market opportunity is big and I am here to make a few bucks" or "Let us release this product in the market and see how customers react/adapt to it." or "We need to counter the competition else we are doomed".

When it comes to product positioning - I have seen entrepreneurs behave differently. Very few of them start with a customer centric mindset and are determined to understand customer requirements and deliver for it. But a vast majority start with saying "Here's what I think the customer wants." While few others start with saying "This is my product offering - let the customer adapt to it."

Pricing is a key differentiator between the winners & losers. Winners price the product to the value it provides to the customer & then builds a business model around that selling price, while survivors price the product based on margins, while losers have got the value proposition all worng.

In the end when results are seen the differences between the winners and the rest is clear.

Closing Thoughts

Entrepreneurs who start with a strong conviction to be the best in the market, follow the customer requirements, and deliver value to the customer (without comprmising on ROI) will emerge as the winner.

Tuesday, October 13, 2009

Product Management Strategies - Reva Electric Car

Recently Reva Electric Car Company announced a joint ventire with GM to make electric cars. Under the plan GM will sell all electric version of Chervolet Spark in India & abroad. Under this agreement, Reva will provide the electric systems & GM will provide the automotive platform and market the cars through GM sales network of dealers.

If everything goes through as per plan - i.e., gets approval from GM headquaters in the US, then this will be a very significant victory for Reva Electric company. Though Reva electric cars have been around in Bangalore for last 10 years ( and my wife happens to own one), Reva has seen limited success in Indian markets. This tie-up with GM will give a major boost to Reva in terms of customer acceptance for its technology.
The current agreement sounds like a fair agreement between GM & Reva, but in the immediate term Reva emerges as the biggest winner. An endorsement from GM will propel Reva into the minds & hearts of potential customers who will no longer question Reva's technology & viability, instead people will now look forward to buying cars made by Reva.
Thirsty and odd years ago, IBM made a similar endorsment on Personal Computers - by releasing IBM PC running on Microsoft DOS, and that decision was the turning point in Microsoft's history, the entire world woke up that day and took notice of Microsoft & personal computers.
Can Reva do the same in the automotive world? Can GM take Reva's electric motor technology global? Only time can answer to such questions. But in the mean time, I just want to applaud the product strategy of Reva electric car. It was a brilliant move to associate with a bankrupt GM. GM's troubles in the US market will prevent it from taking full advantage of electric car technologies, and in all likely hood GM will fail to develop its own electric car technology that is suited for emerging markets - thus providing a clear road for Reva to cruise ahead.