Monthly Archives: August 2012

Samsung vs Apple – who’s the victim?

There’s a lot of stuff in the blogosphere and tech media about the current patent wars between Apple and Samsung. The merits of each side’s case are debated fiercely and people are defending their allegiances with an almost religious zeal. In truth, it shows neither company in a great light as they push the boundaries of patent law and the English language.

In my opinion, Samsung did copy the Apple iPhone and iPad. (NB since I wrote this, a US court has also taken this view). They produced products that are barely distinguishable to the novice eye, an impression that persists when the screen lights up and shows a similar-looking interface. So why did they do that, rather than come up with their own unique designs?

Obviously, it’s faster and cheaper to copy someone else. In this case, they also benefited from the ‘halo’ effect of the Apple brand by inferring their products had the same quality and style. But who were they trying to fool? Not the innovators and early adopters, who know all the technical specs and software features and reckoned the Apple products to be superior, albeit more expensive.

Let’s remember, these are consumer products. They are aimed at the mass market, the less-knowledgeable buyer. Now, you can see that for a first-time smartphone (or tablet) buyer, looking at the two products in a phone shop, they might assume they are practically the same thing. Except one is much cheaper than the other, and is also a ‘good’ brand. Which one do you think they will go with?

Only Apple provide more than just a product, they provide an ecosystem containing iTunes and the App store, their shops and more – a complete customer experience. Samsung are barely on the map in this regard.

So, were Samsung trying to rip off Apple? Or the consumer?

Why pandering to your audience never works. And playing safe is the riskier option.

When I left corporate life I didn’t really know anyone outside of the companies I had worked in. I didn’t have ‘a network’ of much substance. So, I went on ‘the circuit’ and set about building one.

I didn’t know what I wanted to offer either. I had done many different things in my career and had worn many different hats, and had been pretty competent at most things I had turned my hand to. I felt I could do pretty much anything.

So I did what seemed like the safest option. I had a network of people that knew me, liked me and trusted me. I decided to put something together that would appeal to my network. It couldn’t be hard, could it? I mean, I know all about defining requirements, creating products and services, marketing them effectively. It should have been a doddle.

I have had several ideas about what they want and what they need. I have started a few initiatives but none of them have sustained, none have got traction. It’s just seemed like really hard work. And the reason it’s not working, I have realised, is because I am doing it the wrong way around. I may care about them but I don’t really care about their issues. Don’t get me wrong, I want to help them but their stuff just isn’t my stuff. I am not passionate about what I am doing for them, and they can tell.

So, now I am starting with what I care about. What really gets my juices flowing, what I feel I really know about. And then I am going to find the market for it. And because I care about it, I know I will find the people I need.

It seems the much riskier option. But it feels a much better bet. I can’t wait to get started.

(I knew this, of course, from Seth Godin and Simon Sinek and others. But now I KNOW it.)

Product or service – what’s the difference?

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When we talk about developing new products and services, we use the words product and service as if they are interchangeable. In fact, the preferred shorthand is to use ‘product’ for both. However, I feel this masks a very real difference and can lead to dangerous misconceptions.

To me, the difference is in the delivery. A product is a one-off, whilst a service is continuing. For example, a mobile phone is a product. It’s a single purchase, they have one shot at pleasing you. Once you’ve bought it there’s no reason for you to have any further contact with them (unless it goes wrong).

Your mobile network, however, quite different. All the time your phone is on, you are using their service. Every time you make a call or use an app, you are a buyer again and they can delight or disappoint you. You have a relationship with your service provider that is continual and under constant evaluation.

It seems to me that providing a service that delights the customer is several orders of magnitude harder to pull off than delivering a great product. It’s also much more complicated and demanding. You can afford a short-term perspective with a product that would be disastrous with a service, where you have to think long-term.

I’ve exaggerated the difference to illustrate my point and it is, in fact, more of a continuum with product and service at opposite ends. However, I think it dangerous to conceal these very real differences by using ‘product’ so freely as a synonym for service. Be very clear at the start about the scale of the challenge you are taking on. A service is much, much harder to pull off than a product. Don’t let sloppy language lead to sloppy thinking.

The proof of the pudding

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Have you ever seen someone else’s dessert in a restaurant and thought “That looks fantastic, I’ll order that” only to be disappointed when you eat it? Or had what looks like a bowl of slop put in front of you and then found it tastes amazing? (If not, order Eton Mess next time it’s on the menu!).

In the first case, the marketing is great but the execution is disappointing. Next time you choose something different.

In the second case, the execution is great but the marketing is non-existent. You might choose it again but you’d be reluctant to recommend it to many people. I mean, it looks like slop!

Too often we get seduce by the shiny stuff and believe that we can sell anything if we get the marketing right. The truth is that execution is just as important. It’s the delivery of the promise. If the look gets you salivating, then the delivery has to delight your taste buds.

I’d go as far as to say that the execution is more important. Few people manage remarkable execution, lots can do remarkable marketing. It’s easier to fix the presentation than to fix the cook. But it’s the cook that makes the difference.

Terminological inexactitude No.3 – Common Sense

It isn’t.

If you find someone who has some, befriend them, hire them, marry them or kidnap them. Don’t let them go. They are invaluable.

The hidden cost of customers

When talking to start-ups I often hear them say “Well, it costs almost nothing to put on a new customer”. What they mean is that the marginal cost of one more customer, in terms of computing and networking resources, is almost nothing. However, there’s a lot more to bringing on and supporting a customer than that. And some of those other things can really bite you in the backside.

To be clear, I am not referring to what it costs you to get a customer – the acquisition cost. I am talking about once the client has decided to buy your service. There are a number of areas of potential cost that you need to consider:

Contracts:
This may be a one-off cost for a consumer product or service, you just get some T’s and C’s drawn up and put them on the website. However, if you are selling in the B2B space and dealing with large corporations, this can be a major issue and different for each client.

Registration:
It is a mistake to assume that clients will self-register and so there will not be a cost. You may require them to give you information that is not readily to hand, or requires some validation. They might not easily understand what information you need, or have to go through a lengthy online dialogue to submit it, leading to high drop-out rates. You may have to phone them up and take them through the process, which is much more expensive.

Fulfilment:
Does the service require you to physically send them something, like a security device, or reader of some sort? Physical fulfilment will cost extra, delay the start of service take-up and possibly cause some to drop out.

Billing, payment and debt collection:
It sounds obvious but you have to send a clear and understandable bill and collect the money. Remember transaction charges, from credit cards companies to Paypal. If you are dealing with corporates, you may have to integrate with their payment systems, which will differ and may incur transaction charges. And you never get all the money from everyone, each new customer can also represent a new line of credit you are extending. You are not a bank, it costs you money.

Customer Service:
Customers get stuff wrong and need help to get using your product or service. This is a potential black hole for resources and can kill your business if you get it wrong. Generally, new customers require more support, particularly for more complex and high-value services. A steep increase in sign-ups will create a steep increase in customer service, so you need to be ready for it. Also, as calls increase, efficiency often falls because the systems and team get overloaded. That one extra customer could be the straw that breaks the camel’s back.

It is possible to design your service to minimise the costs in some of these areas but your primary aim is to develop what the customer wants, not what you want to deliver. Sometimes you just have to accept that’s how it has to be and swallow the cost. You are not in a position to dictate to the customer (I don’t recommend that as a long term strategy in any case, even for the likes of Ryanair).

An over-optimistic evaluation of the costs of supporting customers will cause you to underprice your service and make a viable product unprofitable. Think about all aspects carefully and keep them under review as you develop and extend your product set.

How to change the world

Here’s how you change the world.

1. Find some friends

2. Meet regularly

3. Discuss your problems, issues and challenges

4. Listen to your friends ideas, views and advice

5. Decide on your course of action

6. Do it

That’s the basic structure for a mastermind group. I have always thought they are incredibly powerful and this was re-inforced in a talk given by Ann Hawkins at the NRG West End lunch. She told the story of The Lunar Society that began in the 1780s in Birmingham and shaped the Industrial Revolution. They really did change the world through networking and collaborating in a deep and powerful way.

I’m have recently become part of a mastermind group. We may not be changing the world, but we are starting to change our worlds. And who knows where that might lead?