Meet the Expert
Andrew Salzman
Partner, The Chasm Group LLC
- Senior operating executive and global marketing leader for 30 years at companies in transition, including Kodak, Compaq, Siebel Systems, others in the U.S., Europe, and Asia-Pacific.
- Consultant for past 3+ years working with Geoffrey Moore, leading tech market strategy theorist ("Crossing the Chasm"), with clients at emerging, fast-growth, and large tech-based enterprises including LinkedIn, Kofax and others.
- Has specialized in growth strategies and plans for technology-based companies, including P&G, Kodak, Masterfoods, Compaq, Siebel, IRI, Saba, and now Chasm Group.
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Driving Transitional Growth for Tech-Based Businesses
Partner, The Chasm Group LLC
Key Trends
- Today's successful tech innovators are solving personal pains that are widely shared.
- Innovation doesn’t come out of nowhere. Most successful innovations start with people who are trying to solve for some personal need or pain and who find there are hundreds of thousands, even millions, of others who share that same pain.
The Nest thermostat is a good example. The inventor, who was at Apple, was building his dream home in Tahoe, and was annoyed with the temperature control situation. He thought, "How come I can’t control the temperature in the various rooms of my house so I can have maximum comfort? Why can’t I have a thermostat that learns my behavior and adjusts to my behavior as opposed to forcing me to repeatedly adjust and readjust as I move around?" He wanted something that would learn and then mirror his personal habits. So, he built the self-learning thermostat. It was a true innovation. Nest answered an enormous market need and was a huge success. The company was recently sold to Google for $3.2 billion.
Uber is another great example. This time, it was the arcane nature of the taxi industry that created the "pain." Why wouldn't you want to give people the opportunity to use their smart phones to request vehicles when and where they want them, without hassling with money and tips? Just have a car on demand! The best innovations come from personal experience and inspiration. - There's a lower price of entry to compete in the market today.
- The advent of open source, crowd-sourcing, cloud-based businesses and digital marketing make it possible for companies to get going much more quickly, and for a fraction of what they once had to spend to become viable competitors in the market.
Particularly in the tech markets, the new web-based technologies have drastically cut the time it takes to develop from an initial idea to the creation of a "minimum viable product," to the launching of that product. It's all been radically truncated from where it was five to 10 years ago.
This also includes the time it takes for marketing to get the word out to a broad audience. With digital marketing and multiple channels through which sales can be securely transacted, the price of entry is much easier today. - We are seeing the emergence of new systems of engagement.
- With the emergence of digital technology and social media, the potential for real time communication and collaboration has exploded. This now has significant impact on product development, business development, acquisition, retention and business management in general.
Mobile technology has created the opportunity to have virtual teams globally. We're seeing a virtualization of work, a distributed workforce, and the ability to work at any time of day and on weekends, as we all do. Not being tethered to a workspace opens up a whole range of opportunities for B2B and B2C companies across so many dimensions, including product development, sales and marketing, and support.
A lot of companies are still mired in the transactional world, and have not yet built systems that enable them to connect with their customers, buyers, partners, or suppliers. They're not yet part of the new ecosystem with what we call "dynamic dialog." What was once sequential has now become concurrent. From the customer end, this is increasingly expected as part of the value proposition. Companies that ignore or resist this trend will render themselves more vulnerable to competition. - Consumers now expect consumerized IT.
- We've seen a big shift in how business is done and how products are developed to fulfill customer demand based on a vast new ability for consumerization. Theoretically, it's now down to an audience of one.
In actuality, of course, it's only down to clusters, but companies encourage the illusion of individualized consumerization. That's the reality of "personalization."
From a marketing standpoint, there are efficiencies associated with thinking in terms of clusters, and also with being able to deliver that highly personalized and very tailored experience customers expect. This ties back to a systems of engagement model that's enabled by the new technologies and capabilities.
If you could model the consumerization of IT, it breaks down the linearity and transactional nature of the power of information. It's a transformative issue that has huge impact on how marketing is done. Companies are increasingly able to fulfill the needs of these discreet smaller audiences. They can use that ability to build a customer experience that really cements the relationship and deepens a customer's feeling of loyalty.
This "consumerization of IT" is influencing how products get created, how they get marketed and how they are sold. - A company can go much more quickly from startup to market leader, and can spend a lot less getting there, too.
- There’s a faster cycle to market leadership. This ties to the lower price of entry. It’s really easy to copy an existing product and really fast to get your marketing going.
While this trend tends to be true across the board, it's particularly true if you’re operating in the world of SaaS (Software as a Service), or infrastructure as a service, or platform as a service, that whole XaaS arena. It’s critical to be fast because it’s a "winner takes all" game when it comes to capturing a market. The time it takes to get to what might be called a market leader position has truly accelerated and the costs have significantly decreased. - SMACS are upending traditional business models.
- This acronym refers to five different vectors:
- Social: The whole area of communication and collaboration has exploded with the advent of social media, with significant implications for business acquisition and retention. The digital age offers the opportunity to have instant real time engagement, along with virtual teams, a distributed workforce, and the ability to work round the clock.
- Mobile: Not being tethered to a workspace has opened up a range of opportunities for B2B and B2C companies across many dimensions, including product development, sales and marketing services, support, and so on.
- Analytics: We’ve got all this data, structured and unstructured, and various new technologies like Hadoop and NoSQL, that give us the ability to harness mass amounts of information that can be very helpful from a marketing standpoint. You can see what was bought, when it was bought, who bought it, why they bought, and if they will likely buy it again. The ability to turn information into insight and insight into action has been talked about for a long time, but the technology has caught up in ways that make it easier for marketers or business analysts to get just the information they need – an on a timdely basis.
- Cloud: The cloud has made developing a product much faster. We can now harness more information in a much more cost-efficient fashion. There are models for acquiring capabilities and technologies on a "pay as you go" basis. It has changed the equation.You’re paying for business outcomes more than paying for the technology. The burden of developing has switched to the vendor instead of being with the buyer.
- Security: Where information had been housed behind firewalls with lots of security and perimeter protection, we've now got all this information floating in the ether and some of it can be business critical, or machine critical. It needs to be protected. There's also the issue of privacy in general, because we've seen the advent of very skilled hackers who not only can tap what’s in the cloud but can also eventually tap what’s behind the firewall. We’ve seen how much damage can be caused by the loss of trade secrets and financial risks associated with stolen credit card information. Hackers can create havoc whether you are a business protecting a new product development schema or a government. (“How am I going to spy on Angela Merkel this week?”)
- Social: The whole area of communication and collaboration has exploded with the advent of social media, with significant implications for business acquisition and retention. The digital age offers the opportunity to have instant real time engagement, along with virtual teams, a distributed workforce, and the ability to work round the clock.
- New financial rules now apply.
If you’re in the B2C world, there has been this notion of ubiquity now and revenue later. If you harken back to 1999, everybody talked about stickiness of eyeballs and they didn’t worry about revenue. Now there has to be at least a record of revenue growth. It is more like ubiquity and revenue now, and profit later.
Companies like Salesforce and Amazon are examples of companies that are engaging in "land-grab economics." So is Workday in the tech world. They've continued to grow their revenue line exponentially, and have continued to grow their customer or user base, but they don’t show profitability. They want to win the market now, and they are willing to wait to get the profits later.
When you look at the financials of SaaS-based businesses, it’s years 3-through-N to deliver massive profits. You cannot afford to lose the market, to cut back on your marketing and sales, when your market is forming because if you wait, it could be too late.
A good example is SolarCity. Unlike Sunrun, SolarCity spent a lot of money to get name recognition up front. Elon Musk's attachment didn’t hurt. It managed to get business traction and mindshare in the market, whereas Sunrun focused on trying to run a financially responsible operation. It's now 8-10 years after the advent of solar for residential uses, and Sunrun has switched course. It's now spending lots of money trying to gain awareness and interest as a player in this space. It had to throw out its financial models because it could see it was falling behind in what turned out to be a "land grab" favoring the approach SolarCity took from the get-go.
Driving Transitional Growth for Tech-Based Businesses:
Key Trends
Expert Topic