January 11, 2006

7 Habits of Highly Successful Developers

Posted in Innovation, Product Development at 10:13 pm by scottmaxwell

As long as I am on the topic of development, I recently found a great number of links to Phil Chu‘s great set of resources for programmers, including Seven Habits of Highly Effective Programmers. Great material for emerging development teams…


Development Process Tool- Check out Rally’s Product

Posted in Product Development at 8:46 pm by scottmaxwell

We had our annual Development Forum yesterday in Cambridge (Don Dodge has a post on some of his take-aways). This forum is one of several that we put on each year for our portfolio companies (and a small number of others) to promote best practices in various areas.

One of the special attendees and presenters was Ryan Martens from Rally Software Development. I was first introduced to Ryan by Brad Feld of Mobius Venture Capital, as Brad is an investor in Ryan’s company (and has become a friend through our work together as VC advisors to Microsoft) and was interested in gaining an introduction to one of my portfolio companies. I checked with our CTO, Steve Rabin, after the introduction and Steve told me that he had evaluated Rally for another portfolio company and was a “huge fan” of the product. I had a follow-up conversation with the guys from Rally and both Steve and I thought that they would be great to include in the forum yesterday (they rang all of our bells).

I spoke to the Rally team (Ryan as well as Tim Miller and Don Hazell) before our Monday night cocktail party, and they told me more about the Rally product and services and the traction that they are getting with customers. I then went to our cocktail party and met three companies (two of which are my portfolio companies) that are using Rally’s product, all giving glowing reviews (this is a critical group, so I took the comments pretty seriously).

Net net, by the time Ryan presented at the conference (he gave an excellent presentation), I was a huge believer in what they are doing and am recommending that all development groups at least take a look at it (which will probably lead to a lot of new users). While many companies compare themselves to Salesforce.com, these guys truly are the Salesforce.com for developers. They not only have the on-demand (SAAS) product for managing the agile product development process, but also have a top notch professional services group to help companies implement the agile process AND they can connect to products that the development group is currently using. The other nice thing about their product is that it is easy to get started with and relatively low cost (similar to the Salesforce.com pricing model).

Take a look at their site and the Rally quick tour demo. Let me know what you think…

December 22, 2005

How David Can Beat Goliath- Summary of Strategies

Posted in culture, customer service, David vs. Goliath, Economic Model, finance, management, marketing, Metrics, Product Development, Sales at 11:50 am by scottmaxwell

This post is an overall summary of the David vs. Goliath Series and meant to act as a pointer to all of the posts in the series. There are three overarching points for the series:

  1. Emerging growth companies have several natural advantages over larger companies that they can amplify,
  2. Large companies have several advantages that emerging growth companies can minimize, and
  3. Emerging growth companies can (and should) take a series of specific short-term actions that over time will accumulate into a long-term defensible competitive advantage (by amplifying their advantages and minimizing the large company advantages)

I can’t emphasize enough how important it is for emerging growth companies to think through these issues and develop a clear point of view on what they are trying to achieve. Regardless of the long-term goal (a sale of the company or remaining independent), building a defensible advantage will make life much better for you (easier time in the product markets, better growth, better bottom line, higher valuation, etc.). Of course, once you know what you want to achieve, you need to execute against it!

The Nine Major Themes:

  1. Create an Information Advantage. The emerging growth company has the natural advantage of being closer to the customer that the large company. You can truly capitalize on this advantage by taking steps to increase the information flow into your company even more.
  2. Create the Time Advantage. The large company has a disadvantage as it grows, as solid communication between employees gets much much more difficult as companies grow. This communication difficulty turns into a time advantage for emerging growth companies, as larger companies have difficulty doing anything quickly, while emerging growth companies, with their smaller staffs, can turn on a dime. The emerging growth company can take several steps to capitalize on this natural advantage.
  3. Create the Scope Advantage. The emerging growth company has the ability to focus on one product market. The larger companies naturally need to increase their scope in order to sustain growth. The emerging growth company can exploit this natural advantage by staying focused and continuously improving “ownership? of its product market.
  4. Create the Scale Advantage. Large companies have difficulty seeing and/or addressing small markets, even if they are very high growth. This gives the emerging growth company time to establish a foothold in the market as well as create some level of defensibility before the large company enters the market.
  5. Create the Innovation Advantage. Large companies have difficulty executing against certain types of innovation (for example, innovations that cross department boundaries, such as new products with new channels of distribution and new customer service approaches). If emerging growth companies innovate against these natural advantages, they can create an edge against the large companies.
  6. Set Your Operating Point Closer to the Funnel Singularity. This is the strategy of allocating your resources against nailing the customer experience at low price points to the customer instead of allocating significant resources against sales and marketing activities. If you do this well in the right markets, you can create a large, profitable business that is very difficult for the large companies to compete against. This is a classic strategy, but the internet-based sales and marketing approaches now allows the strategy to be executed more aggressively.
  7. Attenuate Goliath’s Strengths. The large company does have some natural advantages itself. The posts below address each of the large company advantages as well as what the emerging growth company can do to minimize the large company strengths (and in many of the cases, create an edge):
  8. Defend Against Goliath’s Attack. No matter what you do, if you are successful then Goliath will eventually attack. These posts address the nature of Goliath’s attacks as well as how the emerging growth company can set up in advance to defend against the attack. I point out that the results of the attack will be determined well in advance of the attack! The two posts are:
  9. Execute Against Execution. All of the prior posts are about what the emerging growth company can do to create a strategic advantage. This post is about how to maximize the pace of your company toward the series of goals that you have set for your company. The higher your pace toward your goals, the faster your company will develop into a large profitable company with a defensible competitive advantage.

I am going to take a breather from this series for now, but I do intend to put together the implications for each department so that some of the more esoteric points will be made more tangible for each functional group. When I post each of the functional implications, I will place a link on this post below so that this post will act as the index of the major strategies in addition to the specific implications for each function.

November 29, 2005

Attenuate Goliath’s Technical Talent Strength

Posted in management, Product Development at 10:19 am by scottmaxwell

This post is part of the overall posting “How Can David Beat Goliath?- Strategy #7: Attenuate Goliath’s Strength“:

Large companies have a large division of great technical talent. How can smaller companies compete with this large company advantage?

Well, actually…in my view, this is more of a perceived advantage than a real advantage, as most great products originate from a small group of talented architects, engineers, and developers rather than a large group (take a look at The Mythical Man Month. Some of Fred Brooks‘ points are substantially similar. If you don’t have the time, Wikipedia has a summary).
Creating the Edge…

Small companies actually start off with a strategic edge with respect to the technical talent issue and, if they focus on a few staffing and organizational, they can increase their advantage:

  1. Inject the customer into the process and the people.  The closer the development group is too the customers needs, the better!
  2. Everyone should sit together. Yes, projects can get done without people all sitting together, but if everyone sits together then the results will be better.  The more communication opportunities the better!
  3. Architecture matters! My sense is that architects can design only what they know…if you want the best architecture, you need to start with the best architects.
  4. The core group of up to 3-5 highly talented “grade A” people who together have a very good feel for the issues and approaches around building the product and are highly productive programmers. Having too many people in this group actually hurts!
  5. Expand the group (only when the product is ready for it) by hiring only “A caliber” people!
  6. As the group expands, create an organization “structure” that activates a healthy tension between groups. The tension is really important to create, as it will result in better technology through (healthy) debates. If you separate out the people into several groups (and rotate many of them), do not allow one of the groups to have more “power” than the other groups, and encourage debate, you will be able to create the healthy tension. I would at a minimum separate out:
    • Group 1: The people who design,
    • Group 2: The people who develop, and
    • Group 3: The people who test the results (including aspects of software delivery, installation, and configuration).
  7. Rapid development cycles for all aspects of the product AND supporting activities (installation, configuration, training, service, marketing, etc.). This approach seems to be gaining rapid adoption, as it works really well. It gives you great starting points to examine, share with prospects, and generally improve, which results in much more rapid product and even business model evolution. It also seems to keep people excited about coming to work (instant gratification is good!) AND it forces all aspects of the business to work in a well-choreographed manner (they get lots of practice!), which has significant benefits.

As the organization grows further, separating the development group further by natural technology segments (e.g., UI, API, kernel, and other natural components) works really well. It allows the teams to remain very small, and the teams align with the technology. (You will want to shift people around and think of them as a pool of resources to some extent, as the natural groups will change over time as the technology changes.)
Many books and software programs have been written to facilitate technology development that are better studied than summarized, but my sense is that the points above are the key leverage points in most emerging growth technology companies at the expansion stage.

Does offshore development create a strategic advantage?

Many companies are going offshore for parts of their development effort. In my view, this is an economic advantage rather than a strategic advantage. Offshoring can help you economically, but in most cases will hurt you strategically (in the very best cases, it is neutral strategically). The major issue around offshoring is around communication (the communication between departments generally goes through only a few people, which essentially creates a low bandwidth pipe that makes managing that much more difficult even if you solve all of the other issues around offshore staff).

I have found that there is one situation where offshore development is both an economic advantage and not a strategic disadvantage (and I have made several investments in the approach). The situation is when the development effort started offshore and continues to be run completely out of the same offshore location. This has the economic advantage of offshore staff and does not have the strategic disadvantages noted above. Also, there are some great technology people offshore! From a strategic perspective, it does not really matter where the company is based, as long as the company staff is all-together, at least initially!

The technology advantage of the large companies is more of a perception than a reality. Emerging growth companies start with the advantage and can grow the advantage if they approach it right!

November 21, 2005

How Can David Beat Goliath?- Strategy #5: Create the Innovation Advantage!

Posted in David vs. Goliath, Innovation, management, Product Development at 8:23 pm by scottmaxwell

I always get confused when I read about innovation. There seem to be a lot of different working definitions, new and interesting terminology, tremendous academic and government attention, reports, books and many, many frameworks and methodologies. I generally get confused because the topic is not as complicated as people make it, especially from the perspective of the emerging growth company.

Below, I try to distill all the concepts down to their essence (at least from my point of view) and, more importantly, describe how the emerging growth company can gain an innovation advantage vs. the large company.

Innovation defined…

So what is innovation? It is one of those words that seems to have many different meanings. My meaning here is that innovation is “the creation and application of new ideas that someone finds useful or entertaining.? The key points here are:

  • Someone needs to find the new idea useful or entertaining-In my (strong) view, innovation both starts and ends with the “customer? (see, for example, Ali Alwattari’s article “Need breakthrough innovation? Resist the temptation to build a better mousetrap?)
  • The idea needs to be new– this is a key point for the purposes of this post, as extrapolations or extensions of older ideas do not fit this definition, nor does borrowing ideas from other companies that have already successfully used the idea (these are great activities, just not what I mean by innovation here.)
  • The idea needs to be applied and used– an idea by itself is just an idea.

The innovation terminology boils down to degree of change…

The innovation can be relatively easy or difficult to apply depending on:

  • The users’ degree of change or effort implementing the innovation until it becomes “intuitive.? This includes:
  • Understanding the benefits of the idea initially
  • Convincing the decision-maker(s) to implement the idea
  • Implementing the idea
  • Getting the user(s) up the learning curve
  • The innovator’s degree of change or effort applying the idea, introducing it to the prospective users, and getting them to become users. This can include real effort in one or more departments, including:
  • Research
  • Development
  • Manufacturing
  • Suppliers and partners
  • Logistics
  • Marketing
  • Distribution (both direct sales and indirect channel)
  • Customer service

All of the different terms that people put on innovation seem to boil down to the degree of change and where the ideas are coming from. This includes:

  • Incremental innovation, evolutionary innovation (less change)
  • Radical innovation, revolutionary innovation (more change)
  • Closed innovation (ideas and application approaches come from inside a single organization)
  • Open innovation (ideas and application approaches come from inside and outside an organization)

The Large Company Challenge…

The list of issues faced by well-run large companies (large companies that are not well run have a significantly larger list), includes the following:

  • Large companies must focus mostly on their core product markets
  • Most large companies are public and need to show revenue and earnings growth each quarter…the best way to do this is to focus on the larger opportunities in their core markets. For example, a 2 percent revenue improvement on a $1 billion revenue, $100 million profit company with 90% gross margins (from their core business) is as much as $18 million in new profits (that is an 18% increase in profits!). Most new initiatives will take several years to get to $18 million in revenue, let alone $18 million in profit!
  • Large companies get this huge economic benefit from leveraging their strengths, including products/platforms already in place, customer relationships, channels of distribution already in place.
  • Large companies tend to be fact-based and sometimes political in their decision-making, which rejects a lot of the new ideas in favor of “lower risk? initiatives (ideas are very fragile when they are new).
  • Decision-making at Large companies need fact-based analysis in order to make good decisions. The need for fact-based analysis comes from some combination of management training (business schools teach fact-based analysis), some level of needing “proof? or evidence that a project will be successful, and the need to reduce proposed new initiatives to numerical analysis, which makes it easier to set priorities.
  • I also find that mental models get in the way of decision-making for new ideas. The model, or intuition, is based on the fact pattern that a person has learned over time (again, fact-based analysis, just expressed differently). New ideas a lot of time conflict with various unknown mental models in the organization. The immediate reaction from the person with the mental model is that “this must be wrong?, and if the conversation takes place away from a person that can defend the new idea, it could kill the initiative.
  • Politics at large companies also gets in the way of appropriate decision-making. As companies grow, the incentive for individuals to “grow the pie? reduces relative to the incentive of individuals to “get a larger piece of the pie.? Also, individuals are concerned with their career advancement, which generally aligns them with the needs of their supervisors and other “power centers? which don’t always align with the needs of the company. (Note, this can happen at small companies as well, but the larger companies have amplified structural issues).
  • Large companies tend to be very difficult to change, let alone to change quickly. And if the change must be coordinated across departments, the difficulty level grows geometrically.
  • Large companies rely on economies of scale and economies of scope, which are powerful economic concepts that help them reduce their cost structure and get higher operating margins. Essentially, this means that different products share manufacturing processes, distribution, finance, marketing, and all of the other areas of the company. This economic gain creates less ability to change (due to complexity in each department), especially when change is significant.
  • New initiatives generally work better when there is one person that controls and coordinates ALL the resources. The problem with the large company is that the one person is generally the CEO, who has a core business to run!
  • Large Companies are older. Most of the time the people who originally did the thinking behind the processes in each department are gone from the company or at least the department. The employees that are left generally know how things work but they don’t know why things work the way they do. When asked why they do things a certain way, they generally respond “that’s the way we do things around here? or “not sure, but it seems to work? or “good question.? This creates much more work, as people need to think through all of the interdependencies before they can make changes (think about taking on someone else’s software code and being expected to add feature/function to it…a lot of work!)

A partial solution for the large companies…

Even with the difficulties, department level change efforts can and do get done. But when it comes to significant multi-departmental innovation, the best way large companies can set up is to put together a separate “company? which has all of the control over the innovation resources and, therefore, is not bound by the constraints of the overall organization. However, even if the large company sets up this approach, they still face a number of significant limitations:

  • The governance of the effort is 100% in the hands of the large company, rather than shared with the person in charge of the effort and a small number of others who have a significant incentive to make the project succeed (and who are very involved in the project and give ongoing guidance). This governance structure reduces the robustness of decision-making, which is particularly important during difficult periods (Note the contrast to the emerging growth company governance structure!).
  • It is difficult to assign their best managers to a new project.
  • Most large companies have constraints on the number of “A? caliber senior managers. The companies are better off if their “A? producers are focused on evolution of current core of the company rather than new, small innovations.
  • The large company functional-department heads want to keep their “rising stars? not give them up for a “speculative? project. They did all the work finding, hiring, and grooming their staff…how do they benefit?
  • The best managers also want to work in the core of the company, as that is where they will find the better risk adjusted economic gain and career opportunities. Why take the risk on innovation, as the downside is career suicide and the upside is not high on a risk-adjusted basis.
  • The net result is that the large companies have difficulty staffing the unit internally with the best people.
  • It is difficult to recruit, motivate, and retain the entrepreneurial innovation leaders from the outside.
  • Companies can’t pay “A? leaders from outside the company what they can make in a successful emerging growth company stock price appreciation is key!
  • Many of the personalities of the entrepreneurial leaders don’t fit with the large company cultures.
  • The net result is that the large companies have difficulty staffing the unit externally with the best people.
  • While large companies in total have large networks, the staff of the new small unit generally lacks the “ecosystem? that develops around the best small companies. In fact, most large companies don’t even recognize that the ecosystem is available. This ecosystem includes quite a few individuals and professional groups that enjoy helping to build something great (strong personal satisfaction and economic incentives!), such as former and existing large company managers, accountants, lawyers, third party marketing, sales, development firms, and of course venture capitalists. These networks allow the small companies to tap into expertise and advice (for innovation) that the small units of the large companies have more difficulty tapping into. This is partly due to the information disadvantage and partly due to the scale disadvantage of the larger companies.
  • Large companies need to put constraints on the innovation (they can’t let the group go for the largest financial gain). When new companies form around an idea, they can start in one direction and morph into another direction very easily. My early stage VC friends tell me that this happens all the time and is necessary to truly “find the market?. This morph may include the product and the target customer but also will ultimately include the channels of distribution. It also includes bringing on new experts in various areas to help. This is very difficult for an established company to do. They put more constraints on the target customer, the technology, and the channels of distribution.

The emerging growth company opportunity…

Emerging growth companies can create an innovation advantage on the issues of the large company if they focus on the right opportunities:

  • Hire the “A? team into the company.
  • Focus on innovations that conflict with the large companies’ decision-making process. The fewer facts available, the more difficulty the large companies will have, as their fact-based analysis will get in the way. This suggests going after
  • New technologies for the product (note: this point is not valid for large companies with reasonably sized research budgets, as they will be very good at experimenting with new technologies)
  • Customer segments not addressed by the large competitor
  • Latent markets
  • Channels of distribution that are completely new
  • Approaches to customer service that are completely new
  • Make it difficult to incorporate into the core business of the large companies. For example,
  • A technology that they would have difficulty building into their current platform,
  • An approach that requires changes to more than one department in order for them to implement (the more departments the better), or
  • An approach that requires significant changes to at least one department.
  • If you aim directly at the core business of a large company, you need an innovation that completely disrupts their business or economic model (you are going after their core strengths). For example, price the product or service considerably lower, go through much lower cost distribution (such as the internet-based approaches), and have a product or service that uniquely meets the user’s need. The large company needs the economic results, so will protect their margin as much as they can.
  • Choose innovations where you have a long runway. This will allow you to continue innovating and make it harder for the large company to catch up.
  • Accelerate down the innovation runway. The more advances you can make increasing your lead, the better. This generally means that you will want to
  • Focus on rapid development cycles,
  • Distribute early adopter versions (e.g., beta versions) of your products and services to get feedback and build it into your products,
  • Really, really, really work hard at getting your customers to help you innovate (take a look at Eric Von Hippel’s new book, as an example),
  • Make sure that your technology platform supports rapid development cycles. For digital technologies, browser-based services will be easiest to innovate, followed by rich/thick client applications, followed by installed server/appliance applications. The most difficult will be hardware
  • Make the change required by the customers as small as possible. Change includes their decision-making to use your innovation, installation, configuration, training, usability, how the product fits into users’ environment/process, etc. The more the change can be “one click of the button? and the more the technology is intuitive, the better.
  • Build the best network possible to help guide you. There is a tremendous ecosystem of potential users, senior managers (both retired and active), Venture Capitalists, consultants, accountants, and lawyers that are all interested in helping emerging growth companies get up the innovation curve and build their companies. The more you build your network, the more it will help your innovation.

Set up right, emerging growth companies can have a significant innovation advantage over the large companies. The key is to really understand the leverage points!

Note: Clayton Christensen has some great ideas and data supporting some of these points in his book The Innovator’s Dilemma. He and Michael Raynor also work to help large companies address these issues in their book The Innovator’s Solution. Some of the ideas overlap with their conclusions and recommendations, but my advice is targeted specifically at the emerging growth company’s efforts. Also, I do not believe that there is a true “solution” for large companies, only best practices that can still leave them at a disadvantage to enterprising emerging growth companies (assuming the small companies approach it correctly!). A possible approach for large companies is to help the small companies build and then purchase them. Some companies, such as Cisco, have had great results with this strategy.

Next Time: Strategy #6: Set Your Operating Point Closer to the Funnel Singularity!

November 8, 2005

Extreme Funnel Economics- Aiming Toward the Economic Singularity

Posted in Economic Model, management, marketing, Product Development, Sales at 7:12 pm by scottmaxwell

As I have been working on trying to frame out some of the strategies related to Funnel Economics over the last few years, my favorite is the strategy of companies putting much more energy into building better, simpler products (from the user perspective), charging less for them, and using very efficient sales and marketing approaches (rather than building an acceptable product and trying to have as high a price as possible through a value-based sale and aggressive sales and marketing efforts).

The Strategy Has Help Shape Many Success Stories…

Some notable example companies deploying the strategy are Microsoft and Intuit, which have been successful for a long time, and Google, Skype, Salesforce.com (and many others) more recently (the internet has been an important recent enabler).

How it Relates to the Funnel

Funnel Economics is essentially the (inflowing) cash flow generated by “sales and marketing” activity divided by the “sales and marketing” expenses. If you shrink the denominator faster than the numerator, the limit is a singularity (the singularity is actually zero in the denominator, but try dividing a really small number by a really really small number on your calculator and you will see that you get a large number). From a business standpoint, if you aim for this economic singularity in a very large market, it could be a formula for a very successful company and huge wealth creation (i.e., take the previous number on your calculator and multiply it by a very large number and you get an even larger very large number).

The strategy has some really basic, but powerful elements

  1. Make something useful and make it really, really, really easy to install, configure, use, and update. This approach increases the value to the user base, increases use, and reduces product abandonment. (The idea works with all technology products including, but not limited to, appliances, server applications and both browser applications and rich client applications so long as they follow the “really easy” principle)
  2. Constantly make the product better with rapid development cycles. Economically, this continues to increase the value to the user base (by better meeting their needs), gives the users something to “sing” about, and reduces the cost of customer service (the customers don’t need service, as the product works and is easy to figure out!).
  3. Design into the package one or more “features” that will compel users to tell people about it and influential people to write and talk about it. The most prevalent approaches either build in the network effect or have unbelievable usability or other characteristics that make people want to talk about them (see Jeremy Levine’s posting for a pretty amusing extreme example of this). If you can’t come up with any ideas here for your product, focus on points 1 and 2 (above) even harder. Economically, this leads to very low sales and marketing expenses, as others are doing the selling for you!
  4. Give it away free for beta and trial purposes, and price it competitively once the free period ends. No one wants to be oversold these days. Give it to the users and let them see if it is worth using, and make sure that they feel they are getting a great deal when you actually charge them for it (note that looking at advertising counts as payment here)! This approach increases conversion rates of prospects to customers (assuming the product works!).
  5. Make the “purchase” transaction as simple and easy as possible. For consumers, the extreme version of this seems to be the “micropayment” vehicle called “advertising” (at this point in time), although SkypeOut allows you to make a single credit card purchase that will last for a very long time and Amazon.com has one-click purchases, both of which are very simple and easy. For business customers, the credit card model or simple contract/billing model seems to be acceptable, although it would be great if something better came along. (Perhaps my friends at IPCommerce will create something to address this issue better for both consumers and businesses!). Economically, this approach increases value to the user and conversion rates of prospects to customers.
  6. Keep the sales and marketing expenses (the denominator) as low as possible, and put your resources toward the first five elements of the strategy, which should drive customer adoption. Economically, bringing this cost to zero creates the singularity! (Note: I expect that most B2B and many B2C companies will still need sales and marketing, at least in the current environment. The key is to keep pushing for the efficiency and to keep this cost as low as possible relative to the gross profit generated by the activity).

Don’t confuse this approach with just eliminating sales and marketing and calling it a day. If a company sets the right operating point in the right market situation, the company should still be growing, possibly explosively, just growing for reasons other than a purely aggressive sales and marketing effort.

To perfect the execution, you need to determine the optimal operating point…

I am a strong believer in the six themes outlined above, but there are four major issues that every company needs to address:

  1. The larger the market, the better the strategy works. Companies that sell to consumers and the universe of small/midsized businesses will have a better outcome than companies that only have a few hundred (or fewer) possible customers.
  2. Each company needs to find its optimal “operating point.” The best way to think about this is that each of the six elements above have knobs controlling them that company management can rotate to set the “level” for each element. The optimal set point for each element has to do with how sensitive user response is to that element (this gets more complex when you build in the issue of path dependent outcomes, which I won’t cover here). The ultimate goal is to have the right set points for each of the knobs. The core assumption that needs to be tested is that you can improve your results by decrease sales and marketing resources, increase resources spent on the product, and reducing the price (or eliminating it for a period of time).
  3. Once you set your initial operating point, it is easier to move away from the singularity than toward it. That is, it is easier to move from a simple product to a complex product than a complex product to a simple product and it is easier to add sales and marketing activities and expenses than it is to subtract them! As an example of an extreme starting point, the concepts around Web 2.0 are essentially the extreme version of the strategy aimed at consumers. (I particularly liked Charles O’Donnell’s posting “10 Steps to a Hugely Successful Web 2.0 Company” as an example of the web 2.0 themes). In my view this is a great starting point for these types of companies, as it is the extreme from which to start turning the dials to tune in the optimal operating point.
  4. You can use this strategy against your competitors (and they can use it against you). Some people say that Google is out-Microsofting Microsoft. Essentially, the point is that Google has set its operating point closer to the singularity and it will be difficult for Microsoft to respond (harder to move toward the singularity!)…It will be interesting to see what happens. It will also be interesting to see if someone eventually out-Googles Google (perhaps Microsoft?)!

    I have seen these themes in place in companies selling to consumers, small businesses, and large enterprises in all areas of information technology (infrastructure, applications, software as a service, etc.) and entertainment (particularly gaming). The strategy can be deployed in different forms at different operating points by every company selling to any customer segment (so long as it is a large enough segment!)…All you need to do is focus on aiming toward the economic singularity (also, make sure that you start closer to it than your competitors do)!

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