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Unlocking Trapped Value from the Technology Adoption Lifecycle

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Unlocking Trapped Value from the Technology Adoption Lifecycle

GUEST POST from Geoffrey A. Moore

For some time now I have been making the case that investment decisions, be they made by customers engaging with a new product and vendor or private equity firms backing a new technology and entrepreneur, should begin with finding the intersection between the innovation at hand and a pool of trapped value it can release, thereby creating the return on investment. That said, one of the core principles of investing is called risk-adjusted returns, meaning that the greater the risk you take, the higher the return needs to be. My expertise is in the risks related to technology adoption, where the risk factors change over the course of a new technology’s deployment. With that thought in mind, here is how the trapped value thesis needs to risk-adjust to adapt:

  • Early Market: very high technology adoption risk. The prize here has to be quite large indeed. Typically it will come in one of two forms. For B2B investments, it will be like an oil reservoir that, if tapped correctly, will produce a gusher. Regulated industries have pockets of trapped value all over the place that fit the bill. Also, industries like automotive and real estate, which are restructuring their relationships with dealers and agents, would qualify. By contrast, B2C investments tap into trapped value that looks more like shale oil—no deep pockets, but incredibly broad presence. Media, transportation, and hospitality have funded extraordinary returns for Netflix, Uber, and Airbnb, not because the trapped value was severe but because it was so pervasive. The point is, early-stage venture investing needs to target home-run bets to warrant the risks it takes. Same goes for visionary customers in B2B markets who are the early adopters of these technologies. They are taking on significant risk so they need to be targeting outstanding rewards.
  • Crossing the Chasm: high technology adoption risk, but readily mitigated. The challenge here is that the technology has great potential for any number of use cases but needs some additional support in every case to achieve the desired end result. The chasm-crossing playbook focuses on a single use case in a single industry and geography in order to create a killer “whole product” that nails the use case and to build a coalition of customer references and partner successes that will keep the market growing even as the technology vendor expands into other segments. Here the trapped value should be intense but narrowly confined, designed to meet three critical success factors:
    1. Big enough to matter (it should be able to generate 10X your current year’s billings target)
    2. Small enough to lead (if you crush your plans, you should get 50% segment share)
    3. Good fit with your crown jewels (if you win, nobody is going to displace you).

    As you can see, there is risk here, but it is manageable through market focus and disciplined execution, the key risk reduction factor being how compelling is the customer’s reason to buy.

  • Bowling Alley: modest adoption risk. The challenge here is to expand beyond your first “beachhead” vertical into adjacent use cases with the same segment as well as adjacent segments with the same use case. Part of the source of reduced risk is that you have a working playbook from the first vertical. Much of the source, however, comes from the emergence of local ecosystems of partners who complete the whole product solutions for each use case. These partners make their living supplementing the technology vendor’s product or platform, and their extra talent, domain expertise, and segment focus represent a major risk reduction. As a result, the trapped value rewards have a lower hurdle to clear to garner investor interest and customer buy-in.
  • Tornado: low adoption risk. The risk here is the opposite—getting left behind as the world embraces the shift to a new normal. The trapped value that drives a tornado is released by “killer apps.” These apps may not release the most trapped value, but they represent a sure winner to start with, making the buying decision a no-brainer. The point is, if you want to get any traction in the tornado, you have to lead with a killer app, a no-regrets offering that delivers simple-to-consume rewards and gets everyone onto the new platform. That means the trapped value must be easy to target and the value of releasing it must be obvious to all, especially to the end users who will be the prime beneficiaries.
  • Main Street: very low adoption risk. The primary adoption challenge here is converting conservative end users who simply do not want to switch to yet another new technology. The trapped value now exists in nuisances, little bits of inefficiency that have workarounds but are annoying. From the point of view of productivity, the cost savings from eliminating them are minimal. But in terms of the user experience, as well as customer satisfaction, the impact can be substantial. B2C enterprises spend most of their R&D here focused either on eliminating “hygiene” issues or innovating with new “delighters,” both of which can increase demand, the cornerstone for volume operations success. B2B enterprises use six-sigma analytics to scout their value chains for bottlenecks that increase latency, something that adds risk without adding value, and frustrates even their most loyal customers.

The key takeaway is that there are different kinds of trapped value, each occupying a different sweet spot in the Technology Adoption Life Cycle. As a vendor and potential leader of a go-to-market ecosystem, you must be crystal clear about the kind of trapped value you are targeting, the kind of risk-taking it warrants, and the kinds of solutions that will get the most traction.

That’s what I think. What do you think?

Image Credit: Unsplash

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Delivering Customer Value is the Key to Success

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Delivering Customer Value is the Key to Success

GUEST POST from Mike Shipulski

Whatever your initiative, start with customer value. Whatever your project, base it on customer value. And whatever your new technology, you guessed it, customer value should be front and center.

Whenever the discussion turns to customer value, expect confusion, disagreement, and, likely, anger. To help things move forward, here’s an operational definition I’ve found helpful:

When they buy it for more than your cost to make it, you have customer value.

And when there’s no way to pull out of the death spiral of disagreement, use this operational definition to avoid (or stop) bad projects:

When no one will buy it, you don’t have customer value and it’s a bad project.

As two words, customer and value don’t seem all that special. But, when you put them together, they become words to live by. But, also, when you do put them together, things get complicated. Here’s why.

To provide customer value, you’ve got to know (and name) the customer. When you asked “Who is the customer?” the wheels fall off. Here are some wrong answers to that tricky question. The Board of Directors is the customer. The shareholders are the customers. The distributor is the customer. The OEM that integrates your product is the customer. And the people that use the product are the customer. Here’s an operational definition that will set you free:

When someone buys it, they are the customer.

When the discussions get sticky, hold onto that definition. Others will try to bait you into thinking differently, but don’t bite. It will be difficult to stand your ground. And if you feel the group is headed in the wrong direction, try to set things right with this operational definition:

When you’ve found the person who opens their wallet, you’ve found the customer.

Now, let’s talk about value. Isn’t value subjective? Yes, it is. And the only opinion that matters is the customer’s. And here’s an operational definition to help you create customer value:

When you solve an important customer problem, they find it valuable.

And there you have it. Putting it all together, here’s the recipe for customer value:

  • Understand who will buy it.
  • Understand their work and identify their biggest problem.
  • Solve their problem and embed it in your offering.
  • Sell it for more than it costs you to make it.

Image credit: Unsplash

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Value Doesn’t Disappear

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It Shifts From One Place to Another

Value Doesn't Disappear

GUEST POST from Greg Satell

A few years ago, I published an article about no-code software platforms, which was very well received. Before long, however, I began to get angry — and sometimes downright nasty — comments from software engineers who were horrified by the notion that you can produce software without actually understanding the code behind it.

Of course, no-code platforms don’t obviate the need for software engineers, but rather automate basic tasks so that amateurs can design applications by themselves. These platforms are, necessarily, limited but can increase productivity dramatically and help line managers customize technology to fit the task at hand.

Similarly, when FORTRAN, the first real computer language, was invented, many who wrote machine code objected, much like the software engineers did to my article. Yet Fortran didn’t destroy computer programming, but democratized and expanded it. The truth is that value never disappears. It just shifts to another place and that’s what we need to learn to focus on.

Why Robots Aren’t Taking Our Jobs

Ever since the financial crisis we’ve been hearing about robots taking our jobs. Yet just the opposite seems to be happening. In fact, we increasingly find ourselves in a labor shortage. Most tellingly, the shortage is especially acute in manufacturing, where automation is most pervasive. So what’s going on?

The fact is that automation doesn’t actually replace jobs, it replaces tasks. To understand how this works, think about the last time you walked into a highly automated Apple store, which actually employs more people than a typical retail location of the same size. They aren’t there to ring up your purchase any faster, but to do all the things that a machine can’t do, like answer your questions and solve your problems.

A few years ago I came across an even more stark example when I asked Vijay Mehta, Chief Innovation Officer for Consumer Information Services at Experian about the effect that shifting to the cloud had on his firm’s business. The first order effect was simple, they needed a lot less technicians to manage its infrastructure and those people could easily be laid off.

Yet they weren’t. Instead Experian shifted a lot of that talent and expertise to focus on creating new services for its customers. One of these, a cloud enabled “data on demand” platform called Ascend has since become one of the $4 billion company’s most profitable products.

Now think of what would have happened if Experian had merely seen cloud technology as an opportunity to cut costs. Sure, it would have fattened its profit margins temporarily, but as its competitors moved to the cloud that advantage would have soon been eroded and, without new products its business would soon decline.

The Outsourcing Dilemma

Another source of disruption in the job market has been outsourcing. While no one seemed to notice when large multinational corporations were outsourcing blue-collar jobs to low cost countries, now so-called “gig economy” sites like Upwork and Fiverr are doing the same thing for white collar professionals like graphic designers and web developers.

So you would expect to see a high degree of unemployment for those job categories, right? Actually no. The Bureau of Labor Statistics expects demand for graphic designers to increase 4% by 2026 and web developers to increase 15%. The site Mashable recently named web development as one of 8 skills you need to get hired in today’s economy.

It’s not hard to see why. While it is true that a skilled professional in a low-cost country can do small projects of the same caliber as those in high cost countries, those tasks do not constitute a whole job. For large, important projects, professionals must collaborate closely to solve complex problems. It’s hard to do that through text messages on a website.

So while it’s true that many tasks are being outsourced, the number of jobs has actually increased. Just like with automation, outsourcing doesn’t make value disappear, but shifts it somewhere else.

The Social Impact

None of this is to say that the effects of technology and globalization hasn’t been real. While it’s fine to speak analytically about value shifting here and there, if a task that you spent years to learn to do well becomes devalued, you take it hard. Economists have also found evidence that disruptions in the job market have contributed to political polarization.

The most obvious thing to do is retrain workers that have been displaced, but it turns out that’s not so simple. In Janesville, a book which chronicles a small town’s struggle to recover from the closing of a GM plant, author Amy Goldstein found that the workers that sought retraining actually did worse than those that didn’t.

When someone loses their job, they don’t need training. They need another job and removing yourself from the job market to take training courses can have serious costs. Work relationships begin to decay and there is no guarantee that the new skills you learn will be in any more demand than the old ones you already had.

In fact, Peter Capelli at the Wharton School argues that the entire notion of a skills gap in America is largely a myth. One reason that there is such a mismatch between the rhetoric about skills and the data is that the most effective training often comes on the job from an employer. It is augmenting skills, not replacing them that creates value.

At the same time, increased complexity in the economy is making collaboration more important, so often the most important skills workers need to learn are soft skills, like writing, listening and being a better team player.

You Can’t Compete With A Robot By Acting Like One

The future is always hard to predict. While it was easy to see that Amazon posed a real problem for large chain bookstores like Barnes & Noble and Borders, it was much less obvious that small independent bookstores would thrive. In much the same way, few saw that ten years after the launch of the Kindle that paper books would surge amid a decline in e-books.

The one overriding trend over the past 50 years or so is that the future is always more human. In Dan Schawbel’s recent book, Back to Human, the author finds that the antidote for our overly automated age is deeper personal relationships. Things like trust, empathy and caring can’t be automated or outsourced.

There are some things a machine will never do. It will never strike out in a little league game, have its heart broken or see its child born. That makes it hard — impossible really — for a machine ever to work effectively with humans as a real person would. The work of humans is increasingly to work with other humans to design work for machines.

That why perhaps the biggest shift in value is from cognitive to social skills. The high paying jobs today have less to do with the ability to retain facts or manipulate numbers (we now use a computer for those things), but require more deep collaboration, teamwork and emotional intelligence.

So while even the most technically inept line manager can now easily produce an application that it would have once required a highly skilled software engineer, to design the next generation of technology, we need engineers and line managers to work more closely together.

— Article courtesy of the Digital Tonto blog and previously appeared on Inc.com
— Image credits: Pixabay

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Price is Relevant Only in the Absence of Value

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Price is Relevant Only in the Absence of Value

GUEST POST from Shep Hyken

The title of this article may sound like a lesson in sales, but it’s much bigger than that. It’s about the entire customer experience. If a promise to provide value in the CX is built into a company’s mission and values statements, it potentially becomes part of the culture.

Imagine if your organization were bold enough to state that the value it delivers to customers would make price irrelevant. How do you define that value? It’s simple. It’s the value provided in the customer experience. But, remember that your definition of this value is only good if it aligns with what customers want and hope for.

Let’s talk about making price irrelevant. My good friend and fellow customer experience expert John DiJulius has often said, “Make price irrelevant.” He and I jab at each other over this statement. I’ve said, “Make price less relevant. There’s no way you can make price completely irrelevant.” John knows this, and he admits it, but at the same time, he argues the point that if you provide enough value with the experience, you can distance your company from the competition, even while charging more than others. I can live with that because he’s right. We’re just using different words to get us to the same outcome.

Shep Hyken Knockout Cartoon

So, let’s not get caught up in the semantics of these two sentences. We are both in alignment, and you should be, too.

Furthermore, this way of thinking crosses over to the employee experience (EX). Can you create an employment opportunity so fulfilling that people would line up to apply for the job, even though they might make more elsewhere? There are companies, like Disney, that have achieved that. The Disney culture is so powerful that people love the company more than a higher paycheck from another employer. Of course, every company, Disney included, has to be somewhat competitive with compensation and benefits. But in the end, for many, happiness and fulfillment are more important than a few extra dollars in their paycheck.

Let’s close by considering three ideas:

  1. The Alignment: Value in the customer experience and employee experience is non-negotiable. You can’t have one without the other.
  2. The Opportunity: Create experiences that are so enriching that neither customers nor employees can easily walk away, regardless of dollars.
  3. The Challenge: I challenge you to define your version of value and make it so compelling you’re willing to include it in your mission and value statements.

Image Credit: Shep Hyken

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That’s Innovation with Two V’s

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innovvation starts here

Should innovation be spelled with two v’s instead of one?

With so many words starting with the letter v being so central to innovation and rolling up into two even more powerful v words, maybe we should spell it innovvation to help organizations remember to focus on the two keys to successful innovation:

  1. Value
  2. Veracity

The Importance of Value to Innovation

The first v in innovvation is value. Value is such an important v that you will hear me say often that Innovation is All About Value and is composed of three elements:

  1. Value Creation is pretty self-explanatory. Your innovation investment must create incremental or completely new value large enough to overcome the switching costs of moving to your new solution from the old solution (including the ‘Do Nothing Solution’). New value can be created by making something more efficient, more effective, possible that wasn’t possible before, or create new psychological or emotional benefits.

  2. Value Access could also be thought of as friction reduction. How easy do you make it for customers and consumers to access the value you’ve created. How well has the product or service been designed to allow people to access the value easily? How easy is it for the solution to be created? How easy is it for people to do business with you?

  3. Value Translation is all about helping people understand the value you’ve created and how it fits into their lives. Value translation is also about understanding where on a continuum between the need for explanation and education that your solution falls. Incremental innovations can usually just be explained to people because they anchor to something they already understand, but radical or disruptive innovations inevitably require some level of education (often far in advance of the launch).

All of the details of what each of these three keys to innovation success are reside in my previous article Innovation is All About Value. It’s well worth the investment of time to read it.

The Importance of Innovation Veracity

A few years ago I wrote about the importance of innovation veracity and how when it comes to innovation, veracity is all that matters. As a quick refresher, let’s look at the definition of the word veracity from our friends over at Merriam-Webster:

Veracity

1: devotion to the truth : truthfulness
2: power of conveying or perceiving truth

So, veracity is the second v in innovvation. There is probably no better way to spend your innovation time than to spend it identifying the right customer insight and the right way to communicate the solution with customers which you’ve created to serve the insight.

For the three components below that will help you get to veracity, I must give credit to the documentary A Good American (a must see). I will stay away from the politics of the movie so I don’t give away the punchline, and just say that it profiles the work of a group of computer scientists who designed a system to protect American citizens from terrorism at a lower cost and with greater privacy protections than the system that was eventually funded and profiled in a different movie – Snowden.

It’s probably no coincidence that Oliver Stone was involved with both films, but that fact is of course irrelevant to the discussion here. What is important is that the film A Good American contains great monologues by the protagonist that provide insight into the power of meta data.

As an innovation coach what’s important to me so I can help a wide variety of clients, is not the particular context of any particular client, so much as the meta information in a variety of applicable tools and frameworks that I collect or create to serve them. What’s important are the insights that can be applied across all industries and all innovation contexts.

What I’ve been able to extract out of this particular film and into the innovation context, so that I can share them with you, are the protagonist’s view of three components that help you identify signals and drive the transformation of DATA into INTELLIGENCE (or innovation veracity in our context), and they are:

  1. Volume – in order to derive meaningful conclusions you need a lot of data inputs, in this case, lots of idea fragments (ideas come later)

  2. Variety – multiple perspectives are necessary to avoid blind spots and increase the potential for connecting idea fragments

  3. Velocity – volume by itself is not enough, momentum is important too. You have to keep Stoking Your Innovation Bonfire

Conclusion

By focusing on value and veracity in our innovation efforts we will arrive at the most important goal of our innovation pursuits – and yet another v – Victory!

So dig deeply to understand where value comes from in your context, and then keep digging. Only when we truly understand the sources of value in any particular context can we create new sources of value for the value consumers in that context, create the proper means of accessing the value, and translate that value for people in the context and in adjacent contexts that might expand the consumption of the new value.

And strive to also understand the indisputable truths in your context that will enable you to achieve the veracity and the resonance you will need to renew the organization’s permission to exist in your context, fuel your continued success, and ensure your next victory.

Download the PDF version here:

Innovation Should be Spelled with Two V's PDF

Keep innovating!

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