SmoothSpan Blog

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

Archive for June 7th, 2010

iPhone 4: Ho hum, but at least it fuels some trickle down economics…

Posted by Bob Warfield on June 7, 2010

Despite being plastered all over Techmeme, there’s nothing about the iPhone 4 that really gets my blood pumping.  About the same look, about the same feel, a few more features here and there, none of which I’m dying to get my hands on.  But at least its cheap.

Some years ago, there was the constant urge to upgrade one’s PC.  You had to get the new hotness, and it was hot.  Without the latest greatest, you couldn’t run the newest video games, and of course it was faster.  Yum!

We’re now an all-smartphone family.  The two kids and I have iPhones and my wife has an Android (like many women, she wanted a real keyboard because her fingernails made the iPhone hit or miss).  That’s cool, because like those PC ugrades of yore, there’s a farm team here which likes the upgrade-hand-me-downs.  My poor daughter has my original non-3G iPhone, though she still loves it.  Frankly, getting an iPhone 4 would make her happier than any of us, no matter whether she actually got the iPhone 4 or one of the hand-me-downs. 

With PC’s, there was more flexibility.  Give one kid the better video and the other the better mobo post-upgrade.  Then switch.  Harder to do that sort of thing with these new devices.  But there is still some hope of hand-me-down goodness.  After all, there are 2 Kindles, and that raises the question of a potential iPad incoming, which would free up a Kindle.

Welcome to the new device trickle down economics.

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Blue Oceans and Quanta of Competitive Differentiaton

Posted by Bob Warfield on June 7, 2010

Do markets drive “AND” to the exclusion of “OR?” 
 
Sometimes it seems like it, but the reality is deeper and more mysterious.  This post was sparked by an interesting discussion among the Enterprise Irregulars group.  They were discussing how WebEx had steadily made their offering more and more difficult to love through feature bloat and how Skype’s newer screen sharing features were so easy.  I remarked by asking whether any had read the book “Different: Escaping the Competitive Herd.”
 
It’s a fascinating look at how many businesses are failing at competition simply because of what is essentially feature bloat.  We’ve trained scores of marketers (especially product managers) and consumers to think in terms of big feature matrices.  The theory is that if you can check off more boxes than the other guy, you win.  That has certainly been endemic to the software industry.
 
But, as the book points out, this practice completely kills the passion, makes for lousy products, costs the product’s owners a fortune, and ultimately leads to faster commoditization. 
 
This discussion of WebEx vs Skype is exactly the kind of thing the book writes about.  But Vinnie Mirchandani, who has written a fascinating book (well worth a read!) called “The New Polymath” sees it differently.  He says, “Bob, goes in waves.  Markets drive AND not OR as my book points out over and over.”
 
Vinnie, I hear what you’re saying, but I interpret it differently.  Markets do not drive AND over OR.  Markets know nothing of either.  They are both simpler and more complex, contradictory and inscrutable, sometimes “this” and sometimes “that”.   Markets simply optimize for what they (meaning “we”) like to buy.  Like the judge and the pornography, they don’t know how to quantify or codify what they like, they simply know it when they see it.  They are not open-ended, they are closed, and feed on themselves.  As is so often the case, this means we cannot simply extrapolate the trend and assume the line keeps going.  There are strange attractors of many kinds wherever behavior can be found and especially in Darwinian systems like markets.
 
In this case, “AND” is not a universal principle because of attention span.  When you’ve successfully added your 237th feature, and competing products already have 229 other features, in most cases the market’s attention span long ago gave up caring about your next AND.  After dragging buyers through hundreds of skirmishes over these features, they know your competitors will short have features through 237.  They’re bored, confused, or just too darned tired to care any longer.  For a time they may turn to analysts whose job it is to keep up with the minutiae, but if someone can offer an alternative, they can be reached.  They are immediately attracted to the OR proposition of not having to care about that AND.  In fact, they are often relieved to hear that all those angels on the head of that pin were actually unimportant after all. 
 
The point of the “Different” book is not to even get started on the AND treadmill in the first place.  Is it so surprising that real design rather than simple-minded list building can create a more interesting result?  Not at all.  We see it constantly at work.  If we had to build into our software every single thing the last guy had built, we would never see paradigm shifts.  That which is SaaS exists precisely because the giants are buried in their own minutiae, and the world was tired of it.  It wanted that OR.
 
As the quantum of competitive advantage gets smaller and smaller, it should not be suprising that different physics entirely can take hold.  We must understand whether our market is in the grip of the Newtonian (many features, very small quanta = brands and the Gestalt experience rule) or Quantum (few features, large quanta = features rule) realms in order to be truly successful.  Students of the “Art of War” will know what this means from a competitive standpoint:
 
–  If your market is in the grip of Newtonian physics, where brands rule, throw the feature list out.  Do something different.  Be a Marc Benioff.
–  If your market is in the grip of Quantum physics, where features rule, build a brand.  VC’s instinctively know it isn’t about the features, it’s about who will get big firstest and fastest.  Those companies are building brands.
 
Notice how in neither case was building 237 features the winning formula?
 
These insights from “Different” are just variations on finding the Blue Oceans, but they work.  Surprising how much more often we’re starting to hear this kind of sentiment.  I see it echoed in 37Signals tomes as well as my favorite blogger, Seth Godin.
Go ahead, do something different.

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