SmoothSpan Blog

For Executives, Entrepreneurs, and other Digerati who need to know about SaaS and Web 2.0.

Archive for October 25th, 2007

The World Wants Results, Not Promises

Posted by Bob Warfield on October 25, 2007

Nick Carr says platforms want to be free, but that title is a bit misleading.  His examples, Amazon and Google, are platforms that charge for results and not promises.  They’re not really free, but they match the expense a customer pays much more closely to the value the customer receives.  In Amazon’s case, there is no listing fee, only a 15% fee if the sale is made.  For Google, you don’t pay for the ad unless someone clicks through.

This is not limited to selling and advertising platforms.  SaaS and Open Source are using this disruptive model as well.  Let me explain.

The basic mantra behind commercial open source is that dabblers can play with it as much as they like and pay nothing.  I have mySQL installed on my machine as we speak.  I downloaded it from the Internet, I’m playing with it, and I pay nothing.  However, there are incentives so that if one wants to make a lot of money from open source, they need to pay.  This is accomplished in a variety of ways, and Joe Cooper has a great roundup of how Open Source vendors create these dual tracks where they can give away source code and let people use the software for free, but make money when others make money on the Open Source.

SaaS also matches cost to benefit much more closely than traditional Enterprise Software.  In a recent article, Chris Cabrera (CEO of SaaS vendor Xactly) writes:

In the on-demand world, the customer is truly in the driver’s seat. The software is “rented” on a per-month basis, and if a vendor does not deliver a consistently high level of value or fails to meet expectations, the customer can cut that vendor off in a blink of an eye — almost as easily as switching mobile phone services. Hence, customers need to be central to everything a successful on-demand vendor does, from product development and implementation to partnering with other vendors and customer care.

This approach contrasts tremendously with traditional enterprise software, with its lengthy implementation cycles, long-term licenses and enormous sunk costs that breed customer inertia. With enterprise software, customers wait months or even beyond a year for their application to be scoped, tested and deployed.

The customer may never be successful with the traditional enterprise software, but they’ve paid the big bucks up front.  They paid for a promise, instead of for results.

Posted in business, strategy | 1 Comment »

The Medici Effect: How Do You Make Creativity A Process?

Posted by Bob Warfield on October 25, 2007

This post in Jeff Monaghan’s blog struck a chord with a process I’ve used for a long time to stimulate creativity:

The basic premise is that true creativity can be found through the cross-fertilization of ideas from different, and unrelated fields.

I will broaden it a bit to reflect my own process:  true creativity can be found through exploring the unknown relationships of unrelated ideas.  In the most extreme, the ideas may even be randomly generated.

How can this work?

Consider a brainstorming exercise.  Take as many ideas as you can that are interesting to you no matter what the reason.  Write them on slips of paper (or do it in software if you prefer) and put the slips in a hat.  Shuffle, and start pulling out pairs of slips.  Write down the combinations.  The idea for SmoothSpan happened because “Viral” and “Enterprise Software” happened to come out of a hat at the same time.  I will say no more about SmoothSpan at this time, and people familiar with the idea will likely say it isn’t viral at all, but it was that unlikely juxtaposition (after all, what Enterprise Software even wants to be associated with the idea of being viral?) that got the creative juices flowing.

For some people, this process is automatic.  These are the intuitive thinkers.  If you are an overly top down and logical thinker, don’t underestimate the value of adding a randomizer to break you out of your rut and help you see around corners.  There are two other helpful techniques I will add to this. 

First, creativity is often stimulated by conversation if you have an open mind.  When you start out explaining an idea, the other person will often leap to an unexpected conclusion about what you’re trying to say.  Don’t scold them or drag them back on track too quickly.  Register their misconception and think about whether it isn’t an improvement on your idea rather than an error.

Second, learn to think about isomorphisms and abstractions.  Isomorphism is a fancy mathematical term for what a lot of folks would call a metaphor.  Technically, an isomorphism is a structure-preserving mapping.  Practically, if you think in those terms, you more reasily recognize when apparently unrelated things contain principles that apply to one another.  Abstraction is related in this context.  Abstraction involves eliminating details that don’t matter to the behaviour of a thing until we have the most generic possible view of the thing.  It’s like jumping up to 100,000 feet to look at it.  If you abstract unrelated things, it will be easier to see the isomorphisms that may link the two together because there is less detail to confuse the issue. 

Perfect those techniques and you’ll be borrowing useful insights from everything you encounter.

Posted in business, strategy | 4 Comments »

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